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Commissioner of Sales Tax Vs. Marwah and Co. - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtAllahabad High Court
Decided On
Case NumberS.T.R. No. 1248 of 1977
Judge
Reported in[1979]43STC435(All)
AppellantCommissioner of Sales Tax
RespondentMarwah and Co.
Appellant Advocate The Standing Counsel
Respondent Advocate R.R. Agarwal, Adv.
Cases ReferredAgra v. Commissioner of Sales Tax
Excerpt:
- - a simple appliance like a spade or a shovel can be cited to illustrate this point. the fortuitous event of the factory being located in the vicinity, which used kokat as raw material for producing paper, cannot be taken as a good ground for classifying it differently from the category of firewood. this being so, an interpretation, which holds good for the entire state of u......in holding for the assessment years in question that kokat sold by the dealers constituted firewood and not an unclassified item ?2. the assessee dealt in lime, bamboo and fuel wood. the fuel wood was purchased by the dealer from the forest department as also by local purchase. the fuel wood purchased by the dealer consisted of wood of various types of trees. the wood purchased was supplied to the paper mills by the assessee in pieces of 10 cm. to 20 cm. in diameter, with the further condition that no piece was to weigh more than 100 kg. the price payable to dealer was at the rate of rs. 5 per quintal. the mills after purchasing the wood, which was called kokat in the local area, used it for purposes of manufacturing paper. the sales tax officer taking the view that the wood sold.....
Judgment:

C.S.P. Singh, J.

1. The revising authority has referred the following question of law for opinion of this Court:

Whether, on the facts and in the circumstances of the case, the Additional Revising Authority, Sales Tax, Saharanpur, was legally justified in holding for the assessment years in question that kokat sold by the dealers constituted firewood and not an unclassified item ?

2. The assessee dealt in lime, bamboo and fuel wood. The fuel wood was purchased by the dealer from the forest department as also by local purchase. The fuel wood purchased by the dealer consisted of wood of various types of trees. The wood purchased was supplied to the paper mills by the assessee in pieces of 10 cm. to 20 cm. in diameter, with the further condition that no piece was to weigh more than 100 kg. The price payable to dealer was at the rate of Rs. 5 per quintal. The mills after purchasing the wood, which was called kokat in the local area, used it for purposes of manufacturing paper. The Sales Tax Officer taking the view that the wood sold by the assessee was pulp wood taxed it as an unclassified commodity. The assessee appealed. The appellate authority found that most of the wood sold by the assessee was about one metre in length and the diameter was also very small. It also found that the wood sold was waste wood which was normally used only as fuel wood. On this finding, he held that the wood sold by the assessee could not be classified as timber but was firewood. The revising authority found, on a revision being filed by the Commissioner of Sales Tax, that the pieces of wood sold to the mills were small both in length and girth and were waste wood which were generally used as firewood and should have been taxed at the rate applicable for firewood and not as an unclassified item. As a result, the revision filed was dismissed.

3. Sri V.D. Singh, the counsel for the department, contends that the wood sold by the assessee was not firewood, as it has been used for making paper. It was also urged that as the assessee had sold it to the paper mills for being used for making paper, it had to be taxed as an unclassified item. According to the learned counsel, the use of the wood was decisive of the question as to whether it should be treated as firewood or otherwise.

4. It has been seen earlier that the Judge (Revisions) has found that kokat sold by the assessee to the mills is waste wood of different types of trees and is primarily used as fuel wood. The contention has to be disposed of keeping this finding in view. The weight of authority appears to favour the contention of the assessee's counsel that the special user of a particular commodity does not determine the category in which it has to be put in the relevant taxing notification. In Commissioner of Sales Tax, U.P. v. Narain Das Barey Lal [1978] 42 S.T.C. 470, the question arose as to whether rice bran was cattle fodder. The assessee in that case had sold rice bran to mills which extracted oil out of it. It was held that as rice bran was normally used as cattle fodder, its special use did not take it out of the category of cattle fodder. In the case of Engineering Traders, Begum Bridge Road, Meerut v. State of Uttar Pradesh 1973 U.P.T.C. 91, the question was as to whether pumping sets sold by the assessee fell within the category of agricultural machines. It was urged on behalf of the State that as pumping sets could be used for non-agricultural purposes, they should not be treated as agricultural machines. Repelling this contention, the Full Bench observed:

There is hardly any appliance or equipment which is not capable of being put to more than one use. A simple appliance like a spade or a shovel can be cited to illustrate this point. No one can dispute that shovels and spades are agricultural implements but they are used quite extensively in building operations also. In order that an appliance may be an agricultural implement, the real test is not that it should be exclusively used for agricultural purposes but that it should be commonly so used and it should be intimately and directly connected with agricultural operations.

5. Similarly, in the case of Bhagwan Oil and Cakes Company, Budaun v. State of U.P. [1975] 35 S.T.C. 514, the question was as to whether oilcakes fell within the category of cattle fodder. The question had arisen because the assessee had sold oilcakes to mills, who thereafter, instead of selling it as cattle fodder, extracted oil from it. It was held that as oilcakes were generally used as cattle fodder, the fact that a part of the production was sold to a firm which did not put it to its common use will not alter the nature of the product. As, in the present case, the Judge (Revisions) has found that as kokat was being used essentially as firewood, the fact that the assessee sold it to the mills for purposes of being used as raw material for paper did not destroy its character as firewood. It is the common user of an article and not its special use that detefmines the category in which a particular commodity is to be classified under the notification. Let us suppose for an instance that the mills which were purchasing kokat from the assessee closed down. In that event the kokat would be sold to consumers for use as firewood. In such a situation, it will not be possible for the department to contend that kokat was not firewood. The fortuitous event of the factory being located in the vicinity, which used kokat as raw material for producing paper, cannot be taken as a good ground for classifying it differently from the category of firewood.

6. Sri V.D. Singh, the learned standing counsel, placed great reliance on two decisions of this Court, one given in the case of Bishambar Dayal Shri Niwas v. Commissioner of Sales Tax, Uttar Pradesh [1963] 14 S.T.C. 184, and the other in the case of Indian Ceramic House, Agra v. Commissioner of Sales Tax, U.P., Lucknow [1970] 26 S.T.C. 413. In the first case, the question was as to whether red lead and zinc oxide are covered by the term 'dyes and colours' or fall under the head of 'chemicals of all kinds' as used in a second notification. Dyes and chemicals were taxable under a notification under Section 3-A dated 30th March, 1949, while chemicals of all kinds were taxable under Section 3-A under a notification of 8th June, 1948. As read lead and zinc oxide were undoubtedly chemicals and also used as dyes and colours, it became necessary for the Bench to decide as to under which notification they should be taxed. The test applied for classifying these commodities was the test of user, and as to how the seller treated these articles. The learned standing counsel, Sri V. D. Singh, urged that the test applied for classifying a commodity, under a notification, is the use to which it is put. The contention to that limited extent is undoubtedly correct. But the test must be of common user, and not of special use to which a commodity is put. The decision relied upon is not an authority for the proposition that the special use to which a commodity is put will determine its classification. The other decision of this Court in Indian Ceramic House, Agra [1970] 26 S.T.C. 413, also in no way helps the department's contention.

7. It is not possible also to accept the contention that as kokat was being used primarily in the locality as raw material for making paper, it should not in that area be treated as firewood. The notification in respect of firewood has been issued under Section 3-A and is applicable to the entire State. This being so, an interpretation, which holds good for the entire State of U.P., should be put on the word 'firewood'. Firewood as commonly understood includes all wood, which are used primarily for purposes of fuel. Kokat undoubtedly answers this description and would, therefore, fall within the ambit of the word 'firewood' as used in the relevant notification.

8. The question referred is answered in the affirmative in favour of the assessee and against the department. The assessee is entitled to his cost, which is assessed at Rs. 200.


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