1998 (8) TMI 575 - HC - VAT and Sales Tax

Summary

Issues:
Validity of gazette notification fixing rate of cess on forest produce timber and demands of cess on cut and finished timber.

Analysis:
In the case, three writ petitions were filed challenging the validity of a gazette notification that fixed the rate of cess at three per centum on the sale price of forest produce timber. The petitioners, including a society of timber traders and various saw mills, argued that the imposition of cess on cut and finished timber purchased by them was ultra vires section 4 of the Bengal Cess Act, 1980. They contended that cut and finished timber should not be considered immovable property, and therefore, should not be subject to the levy of cess. The government pleader referred to a previous judgment where it was held that cut and finished timber was amenable to the levy of cess based on a similar notification.

The petitioners' counsel argued that the previous judgment was incorrect and required reconsideration. She cited a Supreme Court decision which clarified that cut timber did not qualify as immovable property. She contended that this decision should be applied to interpret the definition of "immovable property" under the Cess Act. However, the court, after considering all arguments, upheld the previous judgment, stating that the controversy was concluded by it.

The court further examined the impugned notification and noted that the cess was imposed on forest produce timber, not on cut pieces of timber. It explained that the liability of cess was passed on from the licensee cutting the trees to the purchaser of the cut timber, similar to the liability of sales tax. The court concluded that the question of whether cut and finished timber was movable or immovable property was irrelevant in this context.

Ultimately, the court found no merit in the writ petitions and dismissed them, vacating the interim orders previously passed. The judgment was agreed upon by both judges, leading to the dismissal of the writ petitions.