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TMI Blog2009 (1) TMI 803X X X X Extracts X X X X X X X X Extracts X X X X ..... as such which cannot be used for construction purpose or for making furniture except after chemical treatment for it's durability, it is timber covered by the definition clause. However, we are of the view that this finding has no significance for deciding the petitioner's claim for exemption which will be available only if old and unyielding rubber trees sold by the petitioner is agricultural produce which issue is already held against the petitioner. - - - - - Dated:- 29-1-2009 - RAMACHANDRAN NAIR C.N. AND ABDUL REHIM C.K. , JJ. The judgment of the court was delivered by C.N. RAMACHANDRAN NAIR J. The question arising in all the connected tax revision cases filed by the petitioner, which is a rubber plantation company, is whether it is entitled to exemption from sales tax on the sale of old and unyielding rubber trees. The issue was earlier decided by this court against the petitioner and when matter was taken up in appeal before the Supreme Court, the Supreme Court set aside the judgment of this court, vacated the orders of the Tribunal and remanded the case back to the Sales Tax Appellate Tribunal for decision by them. In the proceedings pursuant to the remand by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt and remanded the matter back to the Tribunal through judgment produced as annexure D in ST Rev. No. 17 of 2008. In fresh proceedings after remand, the Tribunal again decided the matter against the assessee, which is confirmed by a Division Bench of this court in the decision Tropical Plantations Ltd. v. State of Kerala reported in [2001] 9 KTR 68. The assessee filed appeal against the judgment of this court before the Supreme Court and the Supreme Court vide order produced as annexure F in this case remanded the case again to the Tribunal to decide the following issues: (1) Whether the agreement to sell by itself would amount to sale of goods; or that the sale would be constituted only after the trees are cut and thereafter become exigible to the levy of tax; (2) Whether the standing rubber trees would be timber for the purpose of levy of sales tax under the Act; and (3) Whether the impugned assessment order passed by the assessing authority is legal and valid. The Tribunal considered all the above issues and answered all the questions against the petitioner through common order in the batch cases produced as annexure H in this ST Rev. It is against this common order of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or horticultural produce, grown by himself or grown on any land in which he has an interest whether as owner, usufructuary mortgagee, tenant or otherwise, shall be excluded from his turnover. Explanation (1): 'Agricultural or horticultural produce' shall not include, (i) such produce as has been subjected to any physical, chemical or other process for being made fit for consumption, save mere cleaning, grading, sorting, drying or dehusking; (ii) tea, coffee, rubber, cardamom or timber. From the above it is clear that exemption is granted to agricultural or horticultural produce and the exemption is only to the growers of the same. Explanation (1) makes it clear that physical, chemical or other processing of agricultural or horticultural produce to make it fit for consumption except mere cleaning, grading, sorting, drying or dehusking, will disentitle the item for exemption. Besides this tea, coffee, rubber, cardamom or timber will not be entitled to exemption, even when grower of the same sells it as such. As already stated, the basic condition for claiming exemption is to prove that item sold is agricultural or horticultural produce . Therefore the question ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trees is not agricultural income which means that trees sold are not agricultural produce . In fact, it is pertinent to note that the petitioner has not accounted the sale proceeds as income from sale of agricultural produce which would have led to liability for income-tax under the Kerala Agricultural Income-tax Act, which the petitioner is not conceding. Therefore there is self-contradiction in the stand of the petitioner themselves inasmuch as they do not concede any income from sale of old and unyielding rubber trees as income on sale of agricultural produce, but at the same time, they contended for the purpose of sales tax that old and unyielding rubber trees sold are agricultural produce. Besides this we are of the view that rubber trees do not constitute agricultural produce though trees are planted, nursed and grown up by the planter in a systematic manner, because agricultural produce is the crop received from the tree, that is latex extracted from rubber trees for 20 to 25 years after the trees start yielding. In fact, rubber tree is only the income-generating apparatus and the agricultural produce therefrom is rubber obtained in the form of latex. Various agricultural p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f timber referred to in clause (ii) of Explanation 1 to section 2(xxvii) of the Act. We do not find any significance for this issue because since rubber trees or the wood extracted therefrom answers the description of goods it is liable to tax unless the petitioner establishes that it is agricultural produce which only is entitled to exemption. In fact the petitioners are well aware of this position and consequently from the very beginning onwards they canvassed the position that rubber trees is agricultural produce . It is only when this is turned down, the petitioner raised the argument that it is not timber only, to mislead the authorities. So long as both soft wood and hard wood fall within the definition of goods exclusion is possible only if the petitioner proves that the goods are agricultural produce which we have already found against the petitioner. In any case, since the petitioner has raised the contention that rubber trees is not timber we have to consider the same for the sake of it. No doubt rubber wood as such is not hard wood fit for making furniture or for use in house construction, though of late, it is used for such purposes after chemical treatment. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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