Commercial sense of timber and proof for excluding purchase-related charges under sales tax law

Soft wood logs were held to fall within "timber" in entry 84 of the Tamil Nadu General Sales Tax Act because the term was construed in its ordinary commercial sense and the intended end use did not change the character of the goods. Cutting, loading, unloading and freight charges were held not to be excludible from purchase turnover under section 7-A because the assessee failed to prove, with reliable evidence, that they were post-purchase expenses and not part of the price paid to the seller. The Tribunal's contrary view was set aside and the Revenue's assessments were restored.

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Issues: (i) Whether soft wood logs purchased by the assessee fell within the expression "timber" under entry 84 of the First Schedule to the Tamil Nadu General Sales Tax Act, 1959; (ii) whether cutting, loading, unloading and freight charges were liable to be excluded from the purchase turnover under section 7-A of the Act.

Issue (i): Whether soft wood logs purchased by the assessee fell within the expression "timber" under entry 84 of the First Schedule to the Tamil Nadu General Sales Tax Act, 1959.

Analysis: The expression "timber" was construed in its ordinary commercial sense. Logs do not cease to be timber merely because they are intended for manufacture of splints or are described as soft wood. The nature of the goods, not the particular use to which the assessee put them, was the governing consideration. On the facts, the purchased logs were capable of ordinary timber use and were not shown to be outside the ambit of timber.

Conclusion: The goods were timber within entry 84 and were not liable to be treated as mere multipoint wood.

Issue (ii): Whether cutting, loading, unloading and freight charges were liable to be excluded from the purchase turnover under section 7-A of the Act.

Analysis: Exclusion of such charges depended on proof that they were post-purchase expenses and did not form part of the price paid to the seller. The assessee bore the burden of producing acceptable material to establish the claimed exclusion. Mere vouchers prepared by the assessee themselves, without reliable supporting evidence such as seller's bills or prescribed transport documents, were insufficient to displace the assessment authorities' finding.

Conclusion: The charges were not proved to be excludible from the purchase turnover, and the Tribunal's contrary view was unsustainable.

Final Conclusion: The Tribunal's order was set aside and the tax cases were allowed, leaving the assessments as restored by the Revenue authorities.

Ratio Decidendi: In sales tax classification, "timber" is to be understood in its common commercial sense, and exclusion of ancillary purchase-related charges from purchase turnover can be granted only on satisfactory evidence that such charges were not part of the price paid for the goods.

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