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TMI Blog1990 (11) TMI 372X X X X Extracts X X X X X X X X Extracts X X X X ..... tea in the State of West Bengal and outside. During the period of four quarters ending December 31, 1981, the applicant sold certain big standing trees of its gardens at a total value of Rs. 1,03,500 which were planted for giving protection to the green tea leaves. The applicant did not charge any tax on the sale of the said standing trees as these are exempt from tax under the said Act. But the Commercial Tax Officer, Jorasanko Charge, in the course of assessment for the said period levied tax at the rate of 8 per cent on the said sale of trees for Rs.1,03,500 and an additional demand of Rs. 7,679.70 was raised against the applicant. An appeal was filed against the said order by the applicant before the Assistant Commissioner, Commercial Taxes, Calcutta North Circle, who, however, confirmed the order of the Commercial Tax Officer. Thereafter a revision petition was filed before the West Bengal Commercial Taxes Tribunal, which also rejected the petition by its order dated January 30, 1989, which is under challenge here. 3.. The subject-matter of challenge in this application is the levy of sales tax on the sale of standing trees, which are planted at the tea gardens for giving sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of Sales Tax [1966] 18 STC 424 was also cited. In this case the decision in Husenali Adamji's case [1956] 7 STC 88 (Nag) mentioned above was followed. It was decided therein that standing timber in the forest for the cutting of which the contract was given to the petitioner is not goods within the definition of "goods" contained in the Bombay Sales Tax Act, 1959, as the standing trees are very much attached to the earth and, therefore, could not be regarded as movable property. The definition of "goods" on the basis of which the abovementioned decision was rendered was later retrospectively amended to include at all relevant times "standing timber agreed to be severed before sale or under contract of sale". In view of this amended definition of "goods" the Supreme Court held* that the sale of goods agreed to be severed under the terms of the contract would be regarded as sale of goods and was chargeable to sales tax under the Bombay Sales Tax Act, 1959. Mr. A.K. Chakraborty argued that though the earlier decision of the High Court was reversed by the Supreme Court on review in the context of the altered definition of "goods", but earlier it had accepted the finding of the High C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n from these observations are reproduced below: "Thus, trees which are ready to be felled would be standing timber and, therefore, movable property. What is, however, material for our purpose is that while trees (including bamboos) rooted in the earth being things attached to the earth are immovable property and if they are standing timber are movable property, trees (including bamboos) rooted in the earth which are agreed to be severed before sale or under the contract of sale are not only movable property but also goods." 10.. The entire line of argument by the learned State Representative appears to be rather fallacious. The Sale of Goods Act, though relevant for the purpose of delineating the ambit of powers of the State Legislature with regard to entry 54 of the State List and certain other matters, cannot obviously be used as an instrument of taxation in a field where legislation by the State does not exist. If certain items have not been included in the definition of "goods" in the State Sales Tax Act, we cannot refer to the Sale of Goods Act to show that such items as have been regarded as goods in the latter Act could be treated as having been included in the State Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nding trees in this case takes place after the trees are cut and severed. The mere description in the bills that these were "standing trees" does not alter the real character of the transaction. It is clear that the sale here is a sale of goods and not an interest in immovable property, i.e., standing trees rooted in the earth. Had it been a sale of standing trees with interest in the land in which these are rooted, the matter would have been different. 13.. No tax can be imposed unless the taxable event (namely, the transfer of property in the goods from the seller to the buyer) takes place; standing trees continue to be the property of the seller until felled and, therefore, the title to such goods is transferred in favour of the buyer only when the trees are felled and severed after complying with the contract. In the facts and circumstances, therefore, the sale of standing trees here amounts to sale of chattel or goods exigible to tax. The challenge on this count thus cannot be sustained. 14.. The next point urged by the applicant is that the sale of trees is declared tax-free under section 6 of the Act vide entry 47 of Schedule I. Mr. Chakraborty drew our attention to the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... however, appears from the facts of the case that the claims of exemption of certain demands were entertained by the Tribunal, though the demands were earlier voluntarily admitted and accepted by the assessee before the appellate authority and also at the lower stage. It is in this context that the decision of the High Court was rendered. The case, therefore, is clearly distinguishable and cannot help the respondents. 16.. As regards the admissibility of this plea, Mr. Chakraborty, learned advocate for the applicant, referred to two decisions, one of the Division Bench of the Calcutta High Court in Eastern Cold Storage (P.) Ltd. v. Commissioner of Income-tax [1983] 139 ITR 664, and another of the Supreme Court in Commissioner of Income-tax v. Mahalakshmi Textile Mills Ltd. [1967] 66 ITR 710. In the earlier case it has been held that if the amount of depreciation is on record the fact that the assessee had not claimed a deduction before the Income-tax Officer would be immaterial and the Income-tax Officer would be bound to set-off the unabsorbed depreciation against the balancing charge. 17.. In the next case the High Court had earlier held that the Tribunal had jurisdiction to pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f interpretation of a statutory entry. The applicant had already claimed exemption on certain grounds. By way of an alternative argument it has also staked its claim by taking the help of a statutory provision to support it. If for technical reasons the plea is thrown out and the issue is remanded to the lower authorities, it will mean unnecessary loss of time, energy and money. Apart from the wide discretionary powers, which can brush aside technical objections, if any, inhibiting speedy justice, the Tribunal has been specifically armed in section 8(3) of the West Bengal Taxation Tribunal Act with powers to take care of the present situation. In view of the reasons given above, we overrule the objection of the learned State Representative and hold that this point urged by the learned Advocate for the applicant should be considered on its merits by this Tribunal. 20.. As regards the merits of the plea, the learned State Representative contended that "plants" mentioned in the relevant entry did not include trees and hence trees are not exempted from tax. By referring to the rule of interpretation of associated words he argued that the juxtaposition of "flowers" and "plants" in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... He further contended that to constitute business there should be these four elements, viz., frequency, continuity, volume and regularity and as the sale of standing trees is neither frequent, nor continuous, voluminous or regular, it could not possibly amount to business. He admitted that the applicant was a dealer carrying on the business of selling tea, but argued that the selling of standing trees could not be considered as ancillary and incidental to such business. He relied in this connection on a decision of the Supreme Court in Board of Revenue v. Ansari [1976] 38 STC 577. It was held in the said case that to constitute business there should be volume, frequency, continuity and regularity of transactions of sale. 25.. Shri Majumdar, the learned State Representative, however, argued that plantation of shade trees is essential for the purpose of nurturing tea plants and is an integral part of the process of manufacture of tea the applicant is engaged in. He further argued that the selling of such trees is, therefore, ancillary and incidental to the applicant's main business of selling tea. He relied on two decisions of the Supreme Court in State of Tamil Nadu v. Binny Ltd. [ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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