Standing rubber trees treated as timber, making sale proceeds taxable and denying business-sale deduction under tax law.

Standing rubber trees sold for cutting and removal were treated as "timber" under the Kerala General Sales Tax Act, so they fell outside agricultural produce and the sale proceeds formed part of taxable turnover. The Court distinguished the Supreme Court authority relied on by the assessees, holding that no universal test applied and that the goods there were materially different. Deduction under rule 9(g) was also denied because it applies only to a sale of the business as a whole, not to the sale of rubber trees by an agriculturist.

---

---

Issues: (i) Whether standing rubber trees sold for cutting and removal are "timber" within the meaning of section 2(xxvii) of the Kerala General Sales Tax Act, 1963 and therefore outside agricultural produce for the purpose of turnover. (ii) Whether the sale proceeds of rubber trees are deductible under rule 9(g).

Issue (i): Whether standing rubber trees sold for cutting and removal are "timber" within the meaning of section 2(xxvii) of the Kerala General Sales Tax Act, 1963 and therefore outside agricultural produce for the purpose of turnover.

Analysis: The rubber trees sold by the assessees were intended to be cut and removed, and the Court reaffirmed its earlier view that rubber trees in Kerala fall within the expression "timber". Explanation (1)(ii) to section 2(xxvii) excludes timber from agricultural produce. The Supreme Court decision relied on by the assessees was distinguished on the footing that no universal test can be laid down and that the nature and description of the goods in that case were materially different.

Conclusion: The rubber trees were timber and their sale proceeds formed part of the taxable turnover.

Issue (ii): Whether the sale proceeds of rubber trees are deductible under rule 9(g).

Analysis: Rule 9(g) was held to apply only where there is a sale of the business as a whole. The sale of rubber trees by an agriculturist did not amount to such a transaction, and the contention that the land functioned as a warehouse of trees was rejected as having no bearing on the rule.

Conclusion: The deduction under rule 9(g) was not available.

Final Conclusion: The revision petitions failed on all substantive issues, and the turnover arising from the sale of rubber trees remained taxable under the Act.

Ratio Decidendi: Where rubber trees are sold for cutting and removal, they may be treated as timber, and proceeds from such sale are taxable turnover; an exemption limited to sale of agricultural produce or to sale of business as a whole cannot be extended to such transactions.

---