2002 (12) TMI 579 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Correctness of the Special Tribunal's order rejecting the petitioner's claim for tax exemption.
2. Classification of "Karuvelan wood" as "firewood" under the Notification No. II(1)/Rev/386(g)/74 dated March 4, 1974.
3. Applicability of the Supreme Court's decision in Mukesh Kumar Aggarwal & Co. v. State of Madhya Pradesh.
4. Relevance of the Supreme Court's unreported decision in A. Subramanyam v. State of Tamil Nadu.
5. Consideration of other relevant judgments cited at the Bar.

Detailed Analysis:

1. Correctness of the Special Tribunal's Order:
The petitioner challenged the Special Tribunal's order dated September 12, 2000, which rejected the claim of tax exemption on a turnover of Rs. 6,02,140 based on the Notification No. II(1)/Rev/386(g)/74 dated March 4, 1974. The petitioner argued that "Karuvelan wood" sold to Tamil Nadu News Print and Papers Limited should be classified as "firewood" and thus exempt from tax. The Special Tribunal, however, did not accept this claim.

2. Classification of "Karuvelan Wood" as "Firewood":
The petitioner contended that "Karuvelan wood" is firewood and should be exempt under the notification. The court examined the nature of "Karuvelan wood," noting that it can be used for various purposes including manufacturing bullock cart wheels, boats, and tanning leather, besides being used as firewood. The court emphasized that not all wood that burns qualifies as "firewood." The contract between the petitioner and Tamil Nadu News Print and Papers Limited specified "Karuvelan wood" and not "firewood." Hence, the court held that the petitioner failed to prove that the goods sold were firewood.

3. Applicability of Mukesh Kumar Aggarwal & Co. v. State of Madhya Pradesh:
The petitioner relied on the Supreme Court's decision in Mukesh Kumar Aggarwal & Co. v. State of Madhya Pradesh, which held that user theory, though logical, is not conclusive. The court noted that the case involved "eucalyptus wood-heaps" and not "Karuvelan wood." The Supreme Court's caution against laying down general tests of validity was highlighted. The court concluded that Mukesh Kumar Aggarwal & Co. was not directly applicable as it did not consider the specific exemption notification in question.

4. Relevance of the Supreme Court's Decision in A. Subramanyam v. State of Tamil Nadu:
The respondents argued that the Supreme Court's unreported decision in A. Subramanyam v. State of Tamil Nadu, which involved "Karuvelan wood" supplied to a paper manufacturing unit, held that such wood is not entitled to the benefit of the notification. The court agreed, stating that the exemption for firewood was intended for those who buy or sell it for use as firewood, not for manufacturing purposes. The court emphasized that it was bound to follow the Supreme Court's decision.

5. Consideration of Other Relevant Judgments:
The court also considered other judgments cited at the Bar:
- In A.H.K. and Company v. State of Tamil Nadu, the court held that goods sold under specifications indicating non-firewood use were not exempt.
- In Malayalee Stores v. State of Tamil Nadu, the court ruled that eucalyptus trees sold as "pulpwood" were not exempt as firewood.
- In P.R. Lakshmi v. State of Tamil Nadu, the court distinguished between firewood and other wood based on commercial practice and market vocabulary.

Conclusion:
The court dismissed the writ petition, affirming the Special Tribunal's order. It held that "Karuvelan wood" sold for manufacturing purposes does not qualify as "firewood" under the exemption notification. The Supreme Court's decision in A. Subramanyam v. State of Tamil Nadu was binding, and the petitioner failed to prove that the goods sold were firewood. Consequently, the connected W.M.P. was also closed.