TaxTMI 
TaxTMI 
1996 (11) TMI 433
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....le expenses 5% 21,82,971 41,391 1,09,149 2,070 53 of 1995 1981-82 Tea (excluding expenses) from 1-4-81 to 15-9-81 Do. From 16-9-81 to 31-3-82-2.5% Tea sale expenses 5% (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 sale....
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....the submission of the learned Senior Counsel for the assessees, all these twenty-three tax revision cases came to be clubbed together by our earlier order with a further direction to place them in a group on October 29, 1996. The tax revision cases were heard extensively yesterday and today. The characteristic fairness of the learned Senior Counsel confined the controversy to the following two questions of law: "(i) Whether, on the facts and in the circumstances of the case, the Tribunal is right in holding that the standing rubber trees sold by the assessee are timber exigible to tax? (ii) Whether, on the facts and in the circumstances of the case, the Tribunal is right in holding that the standing rubber trees will come within 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 ....
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....nt years could be considered as "timber or agricultural produce or otherwise". This is because the agricultural or horticultural produce is statutorily to be excluded from his turnover. 4.. The petitioners are rubber planters in the context of the question for consideration and consequent decision, and are assessees under the Kerala General Sales Tax Act on the files of the Assistant Commissioner (Assessment), Special Circle, Sales Tax Office, Kottayam. The assessees entered into agreements for sale of the standing rubber trees. Some of the common features of these agreements would be necessary to be born in mind. The agreements mention that rubber trees planted many years back have become old and very uneconomical. The agreements also mention 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 r....
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.... said decision being the decision of the jurisdictional High Court was, naturally, held binding by the Tribunal. However, it was brought to the notice of the Tribunal that the decision of this Court in Kanakapalam Estate's case [1989] 73 STC 336; (1989) 1 KLT 270 was taken up before the apex Court and it was submitted in that connection that though the special leave petitions came to be dismissed, the apex Court passed the following order: "It will be open to the petitioner to place adequate materials to establish that rubber trees did not constitute timber in subsequent year, as alleged." The assessees acted on the above observation of the apex Court dated November 27, 1989 while dismissing the special leave petition in Kanakapalam Estates' case and 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 othe....
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....s with regard to tree and standing timber and the distinction in regard thereto in the context of the provisions of the Transfer of Property Act, 1882. It is observed with reference to the provisions of the Transfer of Property Act that "trees" are regarded as immovable property because they are attached to or rooted in the earth and at the other end, "standing timber, growing crops or grass" would not be considered as immovable property in the context. 12.. It is in this connection, the apex Court was required to consider the difference between standing timber and a tree, especially with reference to the situation that in the first sense, it is to be understood as immovable property and in the other sense, it is not. The apex Court referred to the Webster's Collegiate 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 stil....
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....e set out the definition of the word 'timber' contained in the Webster Collegiate Dictionary occurring in the passage from the judgment of Vivian Bose, J., in Shrimati Shantabai v. State of Bombay [1959] SCR 265. The relevant meanings of the term 'timber' given in the Shorter Oxford Dictionary, Third Edition, are 'building material generally; wood used for the building of houses, ships, etc., or for the use of the carpenter, joiner or other artisan'. This definition also states that the word is 'applied to the wood of growing trees capable of being used for structural purposes; hence collectively to the trees themselves'. Amongst the meanings given in the Concise Oxford Dictionary, Sixth Edition, are 'wood prepared for building, carpentry, etc.; trees suitable for this; woods, forests, 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 C....
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....ellants can be held to answer the popular notions of "timber". With reference to the question whether "eucalyptus" tree is or is not a "timber" tree, it is observed that, apart from its utility as a source of gum and medicinal oils, the slow-growing species are especially known for the quality of its timber marked for strength, size and durability. In spite of this position, the apex Court has observed thereafter in the following manner: "...........But the question is whether the subsidiary parts of the tree sold in heaps after the 'ballies' and 'poles' are separated, can be called 'imarathi-lakdi' or 'timber'." and it is observed that it would be somewhat of a strain on the popular meaning of the expression "timber" with the sense, size and utility implicit in the idea, to call these wood-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 Cou....
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....d., Kottayam with reference to the letter dated April 21, 1989 as to whether old rubber trees which are removed for replanting purposes can be used as timber without further treatment for construction of houses, boats, etc. 18.. Then we have the publication from the Rubber Research Institute of India, Kottayam relating to rubber wood, production and utilisation. In chapter one itself relating to growth, availability and present status, in paragraph 1.4.6. at page 10, we find the following observations to show development of excessive cracking, severe borer attacks, warping and twisting also: "1.4.6. Almost all these industries are however facing different types of problems in the use of rubber wood. Some feel that logs stored in yards develop excessive cracking, some have complained of severe borer attacks, some 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 est....
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.... issue of "Rubber Asia" for the month of July, August, 1994, because we find that the contents thereof are in the nature of a propaganda literature for sale promotion in regard thereto of rubber produce meant for furniture and partition. Thus, from the material on record, it would be seen that even after all the assessment years in question, the position with regard to the rubber trees agreed to be sold as standing trees could not be understood as timber in any sense of the situation. In fact, the material clearly shows that for long durability purposes like construction of houses, boats, etc., adequate and effective treatment methods are still obscure. It is further seen that the rubber wood is very susceptible to fungal and insect attack. We have also pointed out that even the rubber logs develop excessive cracking, severe borer attacks, warping 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 ob....