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TMI Blog1996 (11) TMI 433X X X X Extracts X X X X X X X X Extracts X X X X ..... (from 1-4-81 to 15-9-81) Do. from 15-9-81 to 31-3-82 Rubber tree sales 4% 9,46,971 12,47,631 15,322 20,187 18,55,105 47,349 31,191 766 505 74,204 4,735 3,119 77 51 7,420 54 of 1995 1980-81 Tea 5% Tea sale expenses 5% Rubber tree sale 4% 18,89,531 32,375 2,31,000 94,477 1,619 9,240 55 of 1995 1984-85 Tea sales 5% Exemption claimed for tea sold at Cochin auction 5% Rubber tree sales 5% 1,83,651 18,40,863 10,17,500 9,182 92,043 50,875 1,377 13,806 7,631 5% " " 56 of 1995 1973-74 Tea 5% (excluding sale expenses) Tea sales expenses 5% Sale of rubber trees 3% 9,54,896 21,895 1,55,980 47,774 1,094 46,794 57 of 1995 1977-78 Tea 5% Tea sale expenses 5% Tree sales 4% 32,35,258 59,454 1,75,200 1,61,763 2,973 7,008 58 of 1995 1986-87 Tea sold through auction (exemption claimed 5%) Rubber tree sales 5% Rubber tree stumps 5% 5,28,329 12,78,300 25,000 26,416 63,915 1,250 5,283 12,783 250 20% 59 of 1995 1985-86 Rubber tree sales 5% Rubber tree stumps 5% 30,54,450 26,500 1,52,723 1,325 30,545 265 20%" 60 of 1995 1978-79 Tea 5% Tea sales expenses 5% Tree sales 4% 24,00,900 45,849 3,25,300 1,20,045 2,292 16,265 61 of 1995 1979-80 Tea 5% (e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hin the expression of timber and so excluded from 'agricultural produce' within the meaning of explanation 1(ii) of section 2(xxvii) of the Kerala General Sales Tax Act?" making it clear that in view of the meagre amounts involved with regard to question Nos. 3 and 4 relating to the tea sale expenses and expenses relating to sale of dunlop cart and livestock and miscellaneous receipts, the said aspects need not be considered as not having been pressed on instructions obtained in regard thereto before us. 3. Thus, the only aspect that we would consider would be whether the standing rubber trees sold by the assessee could be understood as timber exigible to tax because the standing rubber trees would satisfy the requirements of the expression "timber" and would be consequently excluded from "agricultural produce" within the meaning of explanation 1(ii) of section 2(xxvii) of the Kerala General Sales Tax Act, 1963. It would be necessary to reproduce the relevant statutory provision of section 2(xxvii) and explanation 1(ii) thereto. They are as follows: "(xxvii) 'turnover' means the aggregate amount for which goods are either bought or sold, supplied or distributed by a dealer, eithe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion that the trees are being sold with a view to replant rubber in the said areas. The agreements also specify that the rubber trees were standing on the land of the assessees. The agreements provide a further period specified for uprooting and removal of the trees in view of the time required for uprooting the trees, the difficulties in transportation, labour problem, etc. The agreements further provide for the modes and the time periods relating to execution thereof. The assessees contended that the wood of rubber trees is only used as fuel and is never used for construction or building purposes or for repairs to the structures. As a consequence, it was contended that the trees cannot be considered as "timber" within the meaning of section 2(xxvii), Explanation I(ii) of the Kerala General Sales Tax Act, 1963. It is contended that the rubber trees are purely an agricultural produce and, therefore, rubber trees cannot be considered to be "timber" within the statutory provisions of the Kerala General Sales Tax Act, 1963. 5.. The assessing authority, in all these matters, considered the question and held that the sales of rubber trees are liable to tax. In reaching this conclusion, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... produced certain documents to contend and show that rubber trees will not constitute timber liable to be assessed. 8.. One of the documents produced, which was referred to in the judgment by the Tribunal, is a correspondence from the Director of Research, Rubber Institute of India, Rubber Board, Kottayam. The assessees produced photostat copies of other materials. The learned Senior Counsel also submitted before us that even other decisions were placed for consideration of the Tribunal. Incidentally, the said decisions were the decisions of the apex Court and they have been placed by the learned Senior Counsel for our consideration also in support of his contentions. The Tribunal found that the decision of this Court in Kanakapalam Estates case [1989] 73 STC 336; (1989) 1 KLT 270 is directly on the point and, therefore, following the dictum laid down in the judgment of this Court in Kanakapalam Estates' case [1989] 73 STC 336; (1989) 1 KLT 270, the Tribunal endorsed the views of the two authorities that the turnover of sales of rubber trees has rightly been brought to tax in the assessment by the assessing authority. 9.. We have already spread over the statutory requirement and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... legiate Dictionary defining timber as follows: "Wood suitable for building houses, bridges, ships, etc., whether on the tree or cut and seasoned". It is observed, therefore, that standing timber must be a tree that is in a State fit for these purposes and, further a tree that is meant to be converted into timber so shortly that it can already be looked upon as timber for all practical purposes even though it is still standing. If not, it is still a tree because, unlike timber, it will continue to draw sustenance from the soil. In the process of reasoning, the apex Court, in paragraph 32 of the judgment, has referred to Mulla's Transfer of Property Act to make it known what would be the standing timber and the following paragraph is quoted in support thereof: "Standing timber are trees fit for use for building or repairing houses. This is an exception to the general rule that growing trees are immovable property". Even trees and shrubs and the observations in regard thereto and in addition reference to English Law in regard thereto is also made use of as a support to declare the law in the context (in paragraph 33) that before a tree can be regarded as "standing timber", it must ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , piece of wood, beam'. One of the meanings of the word 'timber' given in Webster's Third New International Dictionary is 'wood used for or suitable for building (as a house or boat) or for carpentry or joinery'. A 'log' according to the Shorter Oxford English Dictionary means 'a bulky mass of wood; now usually an unhewn portion of a felled tree, or a length cut-off for firewood' and according to the Concise Oxford Dictionary it means 'unhewn piece of felled tree, or similar rough mass of wood especially cut for firewood'. Thus, logs will be nothing more than wood cut up or sawn and would be timber." 15.. The apex Court yet in the third decision in Mukesh Kumar Aggarwal & Co's case [1988] 68 STC 324, dealt with the situation as to whether "ballies" and "poles" from amongst the eucalyptus wood-heaps sold by the forest department would constitute and answer the description of timber in the context of entry 32A of Part II of Second Schedule to the Madhya Pradesh General Sales Tax Act, 1958. In paragraph 4 of the said judgment, we get the following approach: "4. In a taxing statute words which are not technical expressions or words of art, but are words of everyday use, must be under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -heaps "timber", meant or fit for building purposes. Persons conversant with the subject-matter will not call these wood-heaps "timber " whatever else the goods might, otherwise, be. It would appear that at one stage the forest department itself opined that the "goods" were not timber, but only "firewood". 16.. The approach that is available from the above three decisions of the apex Court would be required to be seen in the light of the material on record. This is especially in view of the peculiar situation that the proceedings for the assessment years 1973-74 onwards up to 1988 are awaiting for the answer, in spite of the fact that the assessees acting in the light of the observations of the apex Court dated November 27, 1989 keeping the question open to establish that the rubber trees did not constitute "timber" in subsequent years. We have already stated that the Tribunal has considered the question as closed in view of the decision of this Court in Kanakapalam Estates' case [1989] 73 STC 336; (1989) 1 KLT 270. The material on record consists of documents and photostat extracts of research assertions as well as the following two standard books (i) Rubberwood Production and Ut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me have complained of warping and twisting of thin sections, veneers and splints. Some have noted unwanted cross grain, and loose grain. Varying types of knots have marred the appearance of surfaces in some types of sections of timber in buildings. Depending on ideal storage period for logs or for finished goods, losses on account of the abovementioned defects are estimated to be around 25 per cent to 30 per cent. While many of these defects are attributable to the inherent nature of rubber wood itself and to the practices in the existing plantation maintenance methods, there are also some due to improper technological practices adopted in various industries............" Then there is Rubber Board Bulletin No. 4 (at pages 35-38) of the paper book. We get certain tendencies of the rubber wood giving cautions in regard thereto. They are as follows: "Untreated rubber wood is very susceptible to fungal and insect attack due to high starch and soluble sugar contents and also due to the lack of phenolics which are inhibitory to fungus infection causes discolouration of wood making it less attractive and insects create bore holes which in turn make the wood less suitable especially fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arping and twisting. It is also seen that this is the position emerging from the material that came to be published in 1989 and onwards, not to speak of the situation in regard thereto during the period of the assessment years for consideration before us. 20.. We find that the Tribunal did not attach due and proper importance to the observations of the apex Court dated November 27, 1989, showing that even the apex Court left it open to consider adequate material to establish that the rubber trees did not constitute timber. It is obvious that the assessees before us placed the material in the context of the above observations. However, the Tribunal has found itself covered by the decision of the jurisdictional High Court in Kanakapalam Estates' case [1989] 73 STC 336; (1989) 1 KLT 270. The Tribunal has not noticed that the observations of the apex Court dated November 27, 1989 relate to the special leave petition in regard to the same case. 21.. We have been taken through the said decision by the learned Government Pleader for the State Revenue for his submission that the Tribunal would not be considered to be in error in any way in view of the said decision. We have gone through ..... X X X X Extracts X X X X X X X X Extracts X X X X
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