TMI Blog1981 (1) TMI 232X X X X Extracts X X X X X X X X Extracts X X X X ..... hased timber from the forest department and sold the same on the ground that they were first sales by dealers. In Vajhala Venkata Ramana v. State of Andhra Pradesh[1973] 31 S.T.C. 55. this Court held that the forest department was a "dealer" and hence the sale by it must be considered to be the first sale liable to tax. This view was upheld by the Supreme Court on appeal. Another question that arose was whether timber cut and sold as planks, rafters, beams, etc., could be regarded as "timber" within the meaning of entry 63 of the First Schedule. Till 1969 the department took the view that "timber" though cut into sizes continued to be timber and hence tax could not be levied on the sales of the timber so cut into sizes, as under the Act the same commodity could not be subjected to levy of sales tax more than once. However, in 1969 there was a change of opinion by the department to the effect that when timber was cut and sold in different sizes, the sales of such timber were also liable to tax. The legality of such levy was challenged by certain dealers in Writ Petition No. 1500 of 1971 and batch in Ramaswamy v. State of Andhra Pradesh[1973] 32 S.T.C. 309. This Court in its judg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... " though cut into sizes continues to be "timber" within the meaning of entry 63 and hence it is taxable only at the point of first sale, i.e., when the forest department sold it to the petitioners and it cannot again be taxed at the point of sale by the dealers in the form of cut sizes of timber. It is further contended that the levy of tax, both under entry 63 and entry 145 of the First Schedule, offends article 14. Timber which has been selected for single point tax levy cannot, by duplication of entries in the schedule, be subjected to tax twice. Goods covered by other entries in the same schedule are subjected to tax only once. The classification of the same commercial commodity into two items 63 and 145 is arbitrary and artificial and has no rational nexus to the object of the Sales Tax Act and hence offends article 14 of the Constitution. This classification under two entries amounts to fraud on power. Lastly it is contended that the impugned levy of tax under entry 145 constitutes an unreasonable restriction on the petitioners' right to trade and hence it offends article 19(1)(g) of the Constitution. It is seen that all these contentions rest on the principal claim of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment, viz., that the expression "timber" would also include cut sizes of timber: We are unable to agree with this contention. This argument overlooks the important circumstance that the legislature chose to introduce another entry, viz., entry 145. It is true that entry 63 remained unaltered, but the legislature added another entry to the First Schedule, viz., entry 145. Having regard to the circumstances under which this entry was introduced, it is clear that the intention of the legislature was to treat cut sizes of timber such as beams, rafters, planks, etc., as different commodity from timber. In Kuttirayin Co. v. State of Kerala[1976] 38 S.T.C. 282. the High Court of Kerala had the occasion to consider the question whether a dealer, who purchases timber and converts it into sizes, planks or scantlings, can be said to consume such timber in the manufacture of other goods for sale within the meaning of section 5A(1)(a) of the Kerala General Sales Tax Act. The Kerala High Court observed that the test is: "Are the goods the same articles of merchandise or different articles of merchandise as understood in commercial language or in common parlance, before and after the conversi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods consisting of "steel rounds, flats, angles, plates, bars" or similar goods in other forms and shapes could be taxed again even if the material out of which they were made had already been subjected to sales tax once as iron and steel scrap. It was held further that the ordinary meaning to be assigned to a taxable item in a list of specified items is that each item so specified is considered as a separately taxable item for purposes of single point taxation in a series of sales unless the contrary is shown. The mere fact that the substance or raw material out of which it is made has also been taxed in some other form, when it was sold as a separate commercial commodity, would make no difference for purposes of the law of sales tax. The object is to tax sale of each commercial commodity and not the sale of the substance out of which they are made. Each commercial commodity becomes a separate object of taxation in a series of sales of that commercial commodity so long as it retains its identity as that commodity. Reliance was placed by the learned Advocate for the petitioners on another Supreme Court decision in Commissioner of Sales Tax v. D.S. Bist Sons[1979] 44 S.T.C. 39 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... forest department, the tax is to be collected only at one point, viz., at the point of sale by the forest contractor of timber as such, or in any form or size thereof. However, if the timber is purchased by ordinary dealers from the forest department in auction the tax should be imposed at two stages, viz., at the point of sale by the forest department and again at the point of sale of cut sizes by the petitioners. Thus, the incidence of taxation would depend upon the person purchasing the timber from the forest department and as to how it is purchased. This differential treatment has no nexus with the object sought to be achieved. It should not make any difference whether the purchaser is a forest contractor or any other dealer. There is no reason why the tax burden should vary depending upon the purchaser and the method of purchase. This argument in our view proceeds upon a misconception of the scope of the explanation. The explanation was introduced by Act No. 4 of 1974 in order to get over the decision of this Court in Vajhala Venkata Ramana v. State of Andhra Pradesh[1973] 31 S.T.C. 55. where it was held that the forest department is a dealer and hence the sale by the fores ..... X X X X Extracts X X X X X X X X Extracts X X X X
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