2008 (12) TMI 710 - HC - VAT and Sales Tax

Summary

Issues:
Claim for sales tax exemption on purchase turnover of rubber wood for manufacturing packing cases under Notification S.R.O. No. 1090/99 before and after an amendment.

Analysis:
The petitioner, engaged in manufacturing packing cases, claimed sales tax exemption under item 41 of Notification S.R.O. No. 1090/99 on the purchase turnover of rubber wood used in manufacturing. The exemption was denied due to an amendment (S.R.O. No. 278/2004) specifically bringing rubber wood under the exemption, which was not applicable earlier. The Tribunal upheld the disallowance based on the pre-amendment status. The key issue was whether rubber wood qualifies as "softwood" under the original entry 41 of the notification.

The exemption under item 41 of S.R.O. No. 1090/1999 pertains to the turnover of softwood for specific manufacturing purposes, with the condition of payment of sales tax under relevant Acts. The petitioner had sold packing cases outside the State, subject to Central sales tax. The debate centered on whether rubber wood, prior to the amendment, falls under the definition of "softwood." The petitioner argued that the amendment was clarificatory, as rubber wood is a type of softwood commonly used in making packing cases. The Government Pleader contended that rubber wood does not meet the softwood criteria, necessitating the later amendment.

The Court accepted the petitioner's argument, emphasizing that softwood is a broad term encompassing various wood types falling under the softwood category. While hard wood is durable for construction and furniture, softwood is used for packing cases, plywood, etc. Rubber wood, although perishable in its natural state, is commonly utilized for making packing cases, plywood, and other products. The Court noted that the amendment likely aimed to prevent disputes by explicitly including rubber wood as a softwood item. Given rubber wood's characteristics and common usage in making packing cases, the Court deemed the amendment clarificatory, thus entitling the petitioner to exemption from the original notification date.

As a result, the Court allowed the revision case, affirming the petitioner's eligibility for exemption and directing the officer to revise the assessment to grant exemption on the purchase turnover of rubber wood.