TMI Blog2019 (12) TMI 427X X X X Extracts X X X X X X X X Extracts X X X X ..... ge. The identity of timber remains same. Thus the process of cutting and converting timber for log does not come under the definition of manufacturing as provided under Section 2 (e-1) of the UP Trade Tax Act. Thus, the position of law, which emerges, is that after processing, some new commercial commodity must come into existence which may be identified differently from its original - In the case in hand, timber logs were purchased and the same were sliced converting into veneer (chiran) and the same were sold by cutting the wood log converting into veneer (chiran), no new commercial commodity come into existence. The Tribunal was not justified in confirming imposition of tax at the time of purchase of timber (as purchase tax), which has not been challenged by the revisionist and has accepted even in the best judgement assessment, by which its turnover was enhanced, the veneer (chiran), which has been obtained after cutting wood log into small sizes and have been sold, cannot be taxed again - the process of cutting and converting timber from wood log does not come under the definition of Manufacturing as provided under section 2(e- 1) of the Act. Revision allowed. - T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the levy of tax on the purchase of timber log even on the best judgement assessment i.e. enhancement of its turnover. But after manufacture of veneer (chiran) from it no tax can be charged on its sales subsequently. 8. It was further argued that rate of tax can be levied only as per the rate mentioned in the notification and not otherwise. 9. In support of his contention the counsel for the revisionist has relied upon Notification No. T.I.F.-2-2375/XI- 9(251)/97-U.P. Act-15-48-order-98 dated 23.11.1998 which is quoted below: In exercise of powers under clause 9d) of subsection (1) of section 3A of the Uttar Pradesh Trade Tax Act, 1948 (UP Act No. 15 of 1948) , read with section 21 of the Uttar Pradesh General Clauses Act, 1904 (U.P. Act No. 1 of 1904) and in supersession of all previous notifications issued in this behalf, the Governor is pleased to declare that with effect from December 1, 1998, turnover in respect of the goods mentioned in column 2 of the Schedule below shall be liable to tax at the point of sale specified in column 3 of the said Schedule at the rate specified against each in column 4 the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax on timber. 11. The counsel for the revisionist submitted that neither tax can be levied twice i.e. one as purchase tax and the other on its sale nor the rate of tax can be enhanced to 16% instead of 15 %. More precisely 1 % enhanced tax cannot be levied on the sale of veneer (chiran). 12. The counsel for the revisionist has relied upon the certain judgements of Supreme Court, this Court as well as other High Courts i.e. Deputy Commissioner of Sales Tax Vs. Pio Food Packers, Commissioner of Sales Tax, UP Lucknow Vs. M/s Packing Aids, Agra, Commissioner Sales Tax Vs. Murlidhar and sons, State of Tamil Nadu Vs. C. Kanchanamala, G. Ramaswamy and others Vs. State of Andra Pradesh and others, Commissioner Sales Tax Vs. Lal Kuwa Stone Crusher Pvt. Ltd. and Kalptaru Agro Forest Enterprises Pvt. Ltd. Vs Commissioner Commercial Tax. 13. Rebutting the submissions of the learned counsel for the revisionist, the learned Standing Counsel submits that timber log was purchased by the revisionist from an unregistered dealer so that the tax was levied, therefore, commercial commodity i.e. veneer (chiran) has bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... each process suffered, the original commodity experiences a change. But it is only when the change, or a series of changes, take the commodity to the point where commercially it can no longer be regarded as the original commodity but instead is recognised as a new and distinct article that a manufacture can be said to take place. Where there is no essential difference in identity between the original commodity and the processed article it is not possible to say that one commodity has been consumed in the manufacture of another. Although it has undergone a degree of processing, it must be regarded as still retaining its original identity. 6. A large number of cases has been placed before us by the parties, and in each of them the same principle has been applied: Does the processing of the original commodity bring into existence a commercially different and distinct article ? Some of the cases where it was held by this Court that a different commercial article had come into existence include Anwarkhan Mehboob Co. v. The State of Bombay and Others (where raw tobacco was manufactured into bidi patti), A Hajee Abdul Shukoor and Co. v. The State of Madras ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re. 18. Apex Court has very clearly said that even after pineapple have been slices and canned does not changes its identity. 19. This Court in Commissioner of Sales Tax, UP Lucknow Vs. M/s Packing Aids, Agra reported in 1980 UPTC, 901 has held here in below: 7. Now coming to the other question the Assessing Officer observed that the claim made by the assessee that batton and shooks fell in the category of timber was incorrect because it was only making planks or joining planks by nails and that was treated by the assessee as shooks and the same could not be treated as timber. The Revising Authority has, however, observed that batton and bhooks appear to be nothing but wooden planks or pieces used for making wooden cases or Pattis and hence the case of the assessee was correct that what it was dealing with was timber. In my opinion no clear finding has been recorded either by the Assessing Authority or by the Revising Authority in regard to the nature of the products which the assessee is making. If the assessee is only making planks, that would come in the category of timber because the planks would be saw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... This Court in the case of C.S.T Vs. M/s Packing AIDS, Agra 1980 UPTC 901 has held that the wooden planks and pieces used for making wooden goods fall within the category of timber. Respectfully following the aforesaid decision, I do not find any legal error in the order of the Tribunal. The revision is dismissed. 22. Similar view has been taken by Madras High Court in the case of State of Tamil Nadu Vs. C. Kanchanamala (1994) 93 STC 87 in which it has held as follows:- 3. The finding of the Tribunal is as follows : ..... It is found that the appellant had effected purchase of timber, sliced the same into splints and sold the splints to various dealers among the match manufacturers. Hence, we are of the view that provisions of section 7A cannot be applied to the purchase turnover of timber and accordingly we set aside the assessment of the purchaser turnover ...... 8. From a perusal of the ratios laid down in all these cases, there is no difficulty in upholding the view taken by the Tribunal as the splints obtained by slicing the timber definitely retain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ably long time, the Government directed to tax these goods prospectively under Section 5 treating them as general goods. One thing which is conspicuous is that even in the subsequent stand the Government has taken, they do not say that the planks, rafters, etc., do not come within the meaning of timber used in item 63. What they say is that planks, rafters and cut sizes, etc., obtained from nascent timber have to be treated as falling under general goods . 38. What must follow is that planks, rafters, cut sizes, etc., obtained from logs of wood according to the popular or commercial usage or the interpretation placed by the administration is timber within the meaning of item 63 of Schedule I to the Act. 45. Applying these principles thus decided to the facts of the present cases, we have no hesitation in reaching the conclusion that merely because planks, rafters and cut sizes, etc., are sawn or cut from logs of wood, they do not alter their character. They still continue to be raw materials which by themselves and in the same form cannot be directly put to use for construction purposes. The log of wood purchased by the ti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 29. The case-law cited by the learned Standing Counsel is not applicable to the facts of this case as no new commercial commodity come into existence, which has been sold by the revisionist. 30. The Standing Counsel has placed emphasis on the definition of Section 2(e1) of UP Trade Tax Act and has tried to convince the Court that in view of the definition, the manufacturing and cutting of wood into sizes amounts to new commercial commodity comes into existence. 31. The provision of section 2(e-1) of the Act is quoted below:- 2(e1): Manufacture means producing, making, mining, collecting, extracting, altering, ornamenting, finishing, or otherwise processing, treating or adapting any goods; but does not include such manufactures or manufacturing processes as may be prescribed; 32. Section 2 (e-1) of the UP Trade Tax Act shows that the process of cutting is not being included within the definition of manufacturing. Thus the process of cutting the wood from different sizes and converting the wood log into plank, no new commercial commodity comes into existence. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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