2013 (10) TMI 539 - HC - VAT and Sales Tax

Tax exemption - Sale of tree - Agricultural produce - Held that - Appellate Assistant Commissioner was convinced of the expenditure incurred for reusing the trees, there was no material produced to prove that standing trees were cut and sold - Thereore, proper course herein is to set aside the order of the Sales Tax Appellate Tribunal and restore the matter to the file of the Assessing Officer to consider the claim of the assessee in proper perspective in the light of the materials produced. The assessee is directed to place all necessary materials that are in their possession, as far as cutting of trees are concerned and in support of the claim for exemption - Decided in favour of assessee.

Summary

Issues:
1. Whether the Tribunal correctly determined if the petitioner sold only agricultural produce.
2. Whether the Tribunal was correct in assessing the sale of Standing Trees.
3. Whether the Tribunal's decision on the eligibility for exemption of standing trees was accurate.
4. Whether the Tribunal's disallowance of exemption was justified based on previous year's exemption.

Issue 1:
The petitioner challenged the Sales Tax Appellate Tribunal's order for the assessment year 2002-03, questioning the correctness of the Tribunal's finding that the petitioner did not prove with records that they sold only agricultural produce. The petitioner presented documents before the Appellate Authority to demonstrate expenses incurred for producing shade trees. The Appellate Authority observed that the petitioner proved expenses related to shade trees but lacked details on the nature of sales. The High Court emphasized the necessity of proving that the standing trees sold were agricultural produce eligible for exemption.

Issue 2:
The assessee, engaged in tea manufacturing and dealing, planted shade trees in their tea plantation for crop shade. The Forest Department permitted the assessee to cut and reuse some shade trees, which were exempt from tax as agricultural produce. However, the Assessing Officer assessed the trees as timber taxable at 10%. The Appellate Assistant Commissioner highlighted the absence of sale invoices and agreements to prove the nature of transactions regarding the sale of shade trees, leading to the rejection of the exemption claim. The Sales Tax Appellate Tribunal upheld this decision, prompting the assessee to appeal to the High Court.

Issue 3:
The High Court deliberated on the nature of the business and the requirement to determine whether the trees cut under Forest Department orders were timber. The Tribunal noted the lack of details on the nature of sales and the failure to establish that the sold trees were agricultural produce. Despite acknowledging the expenses incurred for reusing the trees, there was a lack of evidence demonstrating that standing trees were cut and sold. The High Court emphasized the importance of presenting all necessary materials, especially regarding the cutting of trees, to support the claim for exemption.

Issue 4:
The Tribunal's decision to disallow exemption for the current year, despite allowing it in the previous year, raised questions about the consistency of treatment regarding the standing shade trees as agricultural produce. The High Court, considering the facts and the First Appellate Court's findings, set aside the Tribunal's order and directed the matter to be reconsidered by the Assessing Officer. The petitioner was instructed to provide all relevant materials for the assessment to be conducted in accordance with the law, ensuring a fair evaluation of the exemption claim.