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1 IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JAIPUR BENCH, JAIPUR 1.S.B. SALES TAX REVISION PETITION No.327 of 2008 PETITIONER :- ASSISTANT COMMERCIAL TAXES OFFICER, WARD-III, CIRCLE -B, KOTA V.E.R.S.U.S. RESPONDENT :- M/s. Raj Timber Mart, Chota Talab, Kota 2.S.B. SALES TAX REVISION PETITION No.323 of 2008 PETITIONER :- ASSISTANT COMMERCIAL TAXES OFFICER, WARD-III, CIRCLE -B, KOTA V.E.R.S.U.S. RESPONDENT :- M/s. MAHADEV TIMBER & FURNITUR, CHOTA TALAB, KOTA 3.S.B. SALES TAX REVISION PETITION No.320 of 2008 PETITIONER :- ASSISTANT COMMERCIAL TAXES OFFICER, WARD-III, CIRCLE -B, KOTA V.E.R.S.U.S. RESPONDENT :- M/s. MAHADEV TIMBER & FURNITUR, CHOTA TALAB, KOTA 4.S.B. SALES TAX REVISION PETITION No.296 of 2008 PETITIONER :- ASSISTANT COMMERCIAL TAXES OFFICER, WARD-III, CIRCLE -B, KOTA V.E.R.S.U.S. RESPONDENT :- M/s. MAHADEV TIMBER & FURNITUR, CHOTA TALAB, KOTA 5.S.B. SALES TAX REVISION PETITION No.324 of 2008 PETITIONER :- ASSISTANT COMMERCIAL TAXES OFFICER, WARD-III, CIRCLE -B, KOTA
2 V.E.R.S.U.S. RESPONDENT :- M/s. MAHADEV TIMBER MERCHANT, NEAR GEETA BHAWAN, KOTA 6.S.B. SALES TAX REVISION PETITION No.452 of 2008 PETITIONER :- ASSISTANT COMMERCIAL TAXES OFFICER, WARD-III, CIRCLE -B, KOTA V.E.R.S.U.S. RESPONDENTS :- 1. M/s. RIJHUMAL JEEVANDAS, CHOTA TALAB, KOTA. 2. RAJASTHAN TAX BOARD, AJMER. 7.S.B. SALES TAX REVISION PETITION No.325 of 2008 PETITIONER :- ASSISTANT COMMERCIAL TAXES OFFICER, WARD-III, CIRCLE -B, KOTA V.E.R.S.U.S. RESPONDENT :- M/S. NARAYAN DAS AADUMAL CHOTA TALAB, KOTA 8.S.B. SALES TAX REVISION PETITION No.372 of 2008 PETITIONER :- ASSISTANT COMMERCIAL TAXES OFFICER, WARD-III, CIRCLE -B, KOTA V.E.R.S.U.S. RESPONDENT :- M/S. AJIT SINGH, CHANDRA PRAKASH, CHOTA TALAB, KOTA JUDGMENT RESERVED ON : 28th November, 2016 JUDGMENT PRONOUNCED ON : 22nd December, 2016 HON'BLE MR.JAINENDRA KUMAR RANKA,J. Ms. Tanvi Sahai Adv. for petitioners. Mr. Mahesh Sharma Adv., Mr. T.C. Jain Adv. & Mr. V.K. Gogra Adv. for respondents.
3 JUDGMENT --------- 1. All these petitions involving common question at the instance of the revenue are directed against the orders dt.18.07.2006 & 11.06.2007 passed by the Rajasthan Tax Board (in short 'the Tax Board'). It relates to the assessment years 1998-99, 1999-2000 & 2001-02 respectively. 2. The Brief facts of the leading case bearing STR No.327 of 2008 (ACTO Vs. M/s. Raj Timber Mart) are taken into consideration. The assessee is engaged in the business of Timber and also sold “Balli” and paid tax @ 8% on such “Balli” whereas according to the Assessing Officer “Balli” being timber was taxable @ 10%, accordingly, issued notice while in some of the cases on the basis of Audit objection, notice u/Sec.37 was given but in some of the cases regular assessment has been made. The assessee-respondent contended that “Balli” is not a timber and is entirely a different product and the assessee accordingly objected to holding “Balli” as timber. However, the Assessing Officer being not satisfied, charged tax @ 12% holding to be the same as timber. 3. The matter was assailed before the Dy. Commissioner (A) and the Dy. Commissioner (A) was satisfied with the explanation offered and held that the Assessing Officer was not justified in passing an order u/Sec.37 as the same did not fall within the definition of rectification and also on merits came to the conclusion that the usage of “Balli” being entirely a different product held that the rate declared by the assessee @ 4% was proper.
The revenue carried the matter in appeal before the Tax Board who also upheld the order of the Dy. Commissioner (A). 5. Counsel for the petitioner vehemently contended that “Balli” is also prepared out of timber and once it is a part of timber, the Assessing Officer was well justified in levying tax @ 10%. Counsel also contended that timber is wide enough to cover all wood and he relied upon judgment of the Allahabad High Court in the case of National Timber Mart Vs. Commissioner of Sales Tax 1979 (44) STC 205 and also judgment of the Apex Court in the case of Shantabai Vs. State of Bombay and Ors. AIR 1958 SC 532 and contended that this question has been considered by various courts and it was further contended that since there was a mistake apparent, the Assessing Officer was justified in passing rectificatory order as the assessee knowing fully well that “Balli” is a timber still tried to pay tax @ 4%. 6. Per-contra, learned counsel for the respondent jointly contended that there is no mistake apparent on the face of record and the issue being debatable provisions of section 37 cannot be applied and its not a mistake apparent on the face of record which could have been rectified and contended that it is a case of review which is impermissible under the Act. Counsel on merits contended that “Balli” is entirely a different product and contended that timber is understood to be “imarathi Lakdi” and all wood is not “timber” as, indeed, all wood is not “fire-wood” and
5 accordingly contended that both the Appellate Authorities have rightly come to the said conclusion and further contended that “Balli” is specifically used for construction purposes and its use is important so also common parlance test is required to be looked into and proper meaning of “Balli” can be noticed being not a timber. He relied upon the judgments of the Apex Court in the case of ACTO Vs. M/s. Makkad Plastic Agencies (2011) 4 SCC 750, Deva Metal Powders Pvt. Ltd Vs. Commissioner, Trade Tax, U.P. (2008) Vol.9 VAT Reporter 4 (SC), Mukesh Kumar Aggarwal & Co. Vs. State of Madhya Pradesh and Others 1988 (68) STC 324, Ballabhdas Paddar Vs. Commissioner of Sales Tax Jabalpur 1988 (46) STC 330, Deputy Commissioner Vs. Western India Plywoods (P) Ltd. 1988 (46) STC 331, P.G. Foils Limited Vs. Commercial Taxes Officer, Special, Circle, Pali 1995 (99) STC 421, Annapurana Biscuit Manufacturing Co. Vs. Commissioner of Sales Tax, U.P. Lucknow 1981 (48) STC 254, Shree Metallic Yarn Industries, Ajmer Vs. The Commercial Taxes Officer, Ajmer & Ors. 2007 (8) VAT Reporter 176, Steel Authority of India Ltd. Vs. Asstt. Commissioner, Jaipur 2007 (45) STC 181, The Deputy Commissioner of Sales Tax (LaW), Board of Revenue (Taxes) Ernakulam Vs. G.S. Pai & Co. (1980) Vol.45 STC 58, Divisional Controller, Karnataka State Road Transport Corporation Vs. M.G. Vittal Rao (2012) 1 SCC 442, Sanjeev Kumar Jain Vs. Raghubir Saran Charitable Trust and Others (2012) 1 SCC 455, Deputy Inspector General of Police and Another Vs. S. Samuthiram (2013) 1 SCC 598, Indian and Eastern Newspaper society Vs. Commissioner of Income Tax, New Delhi (1979) 119 ITR 996 & judgments of the Punjab and Haryana High Court in the case of
6 Bal Chand Pradeep Kumar Vs. State of Punjab and Another (2009) 25 VST 420 (P & H), Haryana Co- operative Sugar Mills Limited Vs. State of Harayana (1997) 107 STC 103, Judgment of the Kerala High Court in the case of J & S Granites Company Vs. State of Kerala and Others (2009) 25 VST 424 (Ker), Judgment of the Bombay High Court in the case of Air India Vs. V.K. Srivastava C.I.T. And Others (1995) 213 ITR 739, Judgment of this Court in the case of Brig. B. Lall Vs. Wealth-Tax Officer, A-Ward, Jodhpur, and Another & Smt. Nawal Kanwar Vs. Wealth-Tax Officer, A-Ward, Jodhpur and Another (1981) 127 STC 308, Judgment of the Madhya Pradesh High Court in the case of Commissioner of Income Tax, M.P. Vs. Smt. Sethani Godwaribai (1981) Vol.127 ITR 249. 7. I have considered the arguments advanced by the counsel for the parties and have perused the material available on record. 8. All these petitions were admitted on the following substantial questions of law:- In STR No.327/2008 In STR No.296/2008 In STR No.320/2008 In STR No.323/2008 In STR No.324/2008 “Whether in the facts and circumstances of the case the Rajasthan Tax Board has not acted illegally and perversely in holding that Balli wood used in construction) is not timber and such rate of tax would be general rate and not the rate specified for timber” In STR No.452/2008 “Whether the goods/good used and dealt with by the respondent assessee could be classified as non timber so as to enable the respondent assessee to pay tax @ 8% while bally comes in the category of timber wood and upon which the tax is
7 payable @ 12%?.” 9. In my view, the reasoning given by the Tax Board as also by the Dy. Commissioner (A) is just and proper and in my view, the timber or “imarathi Lakdi” can be said to be entirely different and the “Balli” is normally used when the construction of a building or property takes place for support purposes or installing Tent or Pandals etc. and timber or “imarathi Lakdi” is used for preparing of wood wares, furniture, doors, Almirah or similar products. 10. The Apex Court in the case of Mukesh Kumar Agarwal (supra) had an occasion to consider the fine distinction whether stacks of “eucalyptus wood” sold by the forest department after separating the “Ballies” and “Poles” constitute and answer the description of “timber”. It would be appropriate to quote para-6 of the judgment which reads ad-infra:- “The question is not really whether "Eucalyptus" (Nilgiri) Tree is or is not a 'Timber' tree. By every reckoning it is. Eucalyptus is a large, rapid growing, evergreen tree of the myrtle family, originally a native of Australia, Tasmania and Malaysia. There are a large number of its species. The ideal species under ideal conditions, it would appear, reaches a height of 370 ft. with a girth of nearly 25 ft. 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 (See: Encyclopaedia Britannica: 1968 Vol.8 Pages-806, 807; Encyclopaedia American: Vol.10 pages 648 & 649. 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'. We think, 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
8 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 "fire-wood". We must, however, add that no tests of general validity applicable to or governing all cases can at all be laid-down. The point to note and emphasise is that all parts or portions of even a timber-tree need not necessarily be 'Timber'. Some parts are timber, some parts merely "firewood" and yet others merely 'wood'. Having regard to the nature and description of the wood in the present case, we think, the 'wood-heaps' are not susceptible to be or admit of being called 'Timber' with all the concomitants and associations of that idea. Perhaps, different considerations might apply if, say, the pieces of eucalyptus wood are of a longer-length or of a higher girth. Differences of degree can bring about differences of kind.”
In a case like this and classification, the Apex Court has time and again held that one is required to take into consideration the common parlance test and if the same is taken into consideration, in my view, “Balli” is entirely a different product. How the wood is known in the trade and treated in the trade literature, is the relevant, significant and rather decisive factors. if special type of goods is subject matter of a fiscal entry then that entry must be understood in the context of that particular trade, bearing in mind that particular word. The trade meaning is one which is prevalent. Therefore, common parlance test is required to be taken into consideration and the trade meaning is one which is prevalent in that particular trade where the goods is known or traded. The words used in a law imposing a tax should be construed in the same way in which they are understood in ordinary parlance. 12. Taking the aforesaid judgment and applying the
9 test of common parlance, in my view, the question is required to be answered in favour of the assessee and against the revenue. Since the question is answered on merits, the question of deciding as to whether the Assessing Officer was justified in passing a rectificatory order or not is not taken into consideration. 13. All the petitions are accordingly dismissed with no order as to cost.
(JAINENDRA KUMAR RANKA),J. S.Kumawat Jr. P.A.