2006 (9) TMI 508 - HC - VAT and Sales Tax

Summary

Issues involved:
The issue involves determining whether the 'khair' wood sold by the dealer is considered as 'timber' and taxable as such for the assessment year 1983-84.

Summary of Judgment:

Facts and Background:
M/s. Panwar Timber, a registered dealer, was taxed at four percent for inter-State sale of 'khair' wood to M/s. Mahesh Wood Products (P) Limited. The additional demand included penalty and interest under relevant sections of the Central Sales Tax Act, 1956 and the Punjab General Sales Tax Act, 1948. Appeals were filed but were dismissed by the authorities, including the Sales Tax Tribunal, Punjab.

Legal Analysis:
The Tribunal examined whether 'khair' wood falls under the definition of 'timber'. It was held that 'timber' is wood used in house construction, while 'khair' is primarily used for katha preparation. Reference was made to judgments from the Orissa High Court and the Supreme Court, emphasizing interpreting words in their popular sense.

Arguments:
The assessee argued that 'khair' wood should be considered 'timber' based on definitions from the Himachal Pradesh Private Forest Act, 1954 and the Webster Universal Dictionary. They also cited a Supreme Court case regarding the classification of eucalyptus wood.

Court's Decision:
The Court considered common parlance and commercial understanding to determine that 'khair' wood and 'timber' are distinct commodities. Judicial decisions supported the view that 'khair' wood is raw material for katha and not equivalent to timber. The Court rejected the argument that 'khair' wood could be used for construction purposes, holding that in common parlance, 'khair' wood is not treated as timber. The question was answered against the assessee and in favor of the Revenue.

Conclusion:
The Court held that 'khair' wood is different from timber for tax purposes, based on common parlance and commercial usage. The reference was disposed of accordingly.