IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HON'BLE THE CHIEF JUSTICE MR.H.L.DATTU & THE HONOURABLE MR. JUSTICE A.K.BASHEER MONDAY, THE 15TH SEPTEMBER 2008 / 24TH BHADRA 1930 ST.Rev..No. 550 of 2004 ------------------------------- TA.298/2000 OF DY.COMMR.KERALA AGRL.IT &STAT,KZD. .................... REVISION PETITIONER/RESPONDENT/REVENUE: --------------------------------------------------------------------- STATE OF KERALA, REPRESENTED BY THE DEPUTY COMMISSIONER (LAW), COMMERCIAL TAXES, ERNAKULAM. BY SPL. GOVERNMENT PLEADER SRI.VINOD CHANDRAN. RESPONDENTS/ APPELLANT/ASSESSEE: --------------------------------------------------------- THE WESTERN INDIA PLYWOOD LTD., BALIAPATTANAM, KANNUR. BY ADV. SMT.S.AMINA THIS SALES TAX REVISION HAVING BEEN FINALLY HEARD ON 15/09/2008, ALONG WITH S.T.RVS.18/2005, 74/2005 & 85/2005, THE COURT ON THE SAME DAY PASSED THE FOLLOWING: H.L.DATTU, C.J. & A.K.BASHEER, J. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - S.T.Rev.Nos.550 OF 2004, 18 OF 2005, 74 OF 2005 & 85 OF 2005 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Dated this the 15th day of September 2008 ORDER H.L.DATTU, C.J. These revision petitions are heard and disposed of by this common order, since the facts and the legal issues involved in these revision petitions are identical. 2. In S.T.Revision Case No. 550 of 2004 and S.T.Revision Case No.74 of 2005, the assessing authority, while completing the assessment in the case of respondents, for the assessment years 1995-96 and 1997-98 respectively, had assessed the purchase turnover of firewood at 12%, on the ground that the same would fall under item No.8 of Fifth Schedule to the Act. The first appellate authority has confirmed the quantification made by the assessing authority. In the second appeal filed by the respondents, the Appellate Tribunal has come to the conclusion, that, the firewood does not fall under Entry 8 of Fifth Schedule and therefore, requires to be classified as residuary item under Entry 156 of the First Schedule to the Act and taxable at 6%. It is the correctness or otherwise of the findings of the Tribunal is questioned by the Revenue in these two revision cases. 3. In S.T.Revision Case No. 18 of 2005, the respondent/assessee is a Forest Contractor. While completing the assessment for the year 1994-95, the S.T.Rev.Nos.550 OF 2004, 18 OF 2005, 74 OF 2005 & 85 OF 2005 :: 2 :: assessing authority has assessed the sales turnover of firewood at 2%, on the premise that the said turnover falls under Entry No.8 of the Fifth Schedule to the KGST Act. After unsuccessful attempt before the first appellate authority, the assessee was before the Sales Tax Appellate Tribunal. The Appellate Tribunal is of the view that, the sales turnover requires to be taxed only under Entry 156 of First Schedule to KGST Act and not under Entry 8 of First Schedule as has been done by the assessing authority. 4. In S.T.Revision Case No.85 of 2005, the assessing authority while completing the assessment of the respondent/assessee for the assessment year 1996-97, has assessed the purchase turnover of firewood under Section 5A of the KGST Act at 12.5%, treating it as an item falling under Entry 8 of the Fifth Schedule and the findings of the assessing authority is confirmed by the first appellate authority. However, in the second appeal filed by the assessee, the Appellate Tribunal is of the view that the 'firewood' sold by the assessee is an unclassified item and requires to be taxed only under Entry 156 of First Schedule to KGST Act. 5. The Revenue being aggrieved by the findings and conclusions reached by the Tribunal in the aforesaid appeals is before us in these tax revision cases. 6. The question of law framed by the Revenue for our consideration S.T.Rev.Nos.550 OF 2004, 18 OF 2005, 74 OF 2005 & 85 OF 2005 :: 3 :: and consequent decision is as under: “Whether on the facts and circumstances of the case, the Tribunal is justified in its finding that firewood is an unclassified item and will not fall under entry 8 of Fifth Schedule to the Act?” 7. The relevant entries for the relevant assessment years to be taken note of are as under: Entry 8 of Fifth Schedule: --------------------------------------------------------------------------------------------------- Sl. Description First Point Rate of 2nd Point Rate of Where there are Rate of No. of goods of levy Tax of levy tax no 2 points of tax (percent) (percent) levy in the State (percent) ------------------------------------------------------------------------------------------------------------------------------- 8 Timber At the point of 10 At the point of 2 At the point of 12 first sale by a sale by a first sale to a registered dealer registered person other than to a registered dealer a registered dealer dealer --------------------------------------------------------------------------------------------------- Explanation: Timber includes all kinds of woods, standing trees, logs, planks, rafters of any size or variety. Historical data Period: Rate Entry No. Point of levy From 1.4.93 to 31.3.94 4/4/8 Sch. V/8 Refer Schedule From 1.4.94 to 31.3.95 6/2/8 Sch. V/8 Refer Schedule From 1.4.1995 10/2/12 Sch.V/8 Refer Schedule 8. Entry 156 is as under: 156. All other goods not coming under At the point of first sale in the any entry in any of the Schedules State by a dealer who is liable to tax under Section 5 S.T.Rev.Nos.550 OF 2004, 18 OF 2005, 74 OF 2005 & 85 OF 2005 :: 4 :: 9. Before we comment on the issues raised in these revision petitions, it is necessary for us to notice the undisputed facts. They are, the respondents have purchased firewood from the forest department and have sold to a government company for use as a fuel. The assessing authority had treated the wood so purchased by the respondents herein as an item falling under Entry 8 of Fifth Schedule to the Kerala General Sales Tax Act. The respondents in these revision petitions, being aggrieved by the assessment order so passed by the assessing authority, had carried the matter before the First Appellate Authority who in turn had rejected the appeals. The assessees were before the Tribunal by filing separate appeals. The Tribunal is of the view that the wood sold by the assessees is fire wood and, therefore, requires to be classified as an item falling under residuary entry. The findings and the conclusion reached by the Tribunal is as under:- “8. The first question for consideration is regarding the legality of rate of tax adopted in the case of firewood and the disallowance of exemption claimed on firewood being second sales. The appellant sold firewood to M/s.Travancore Sugars. The above company used the firewood only as fuel for manufacturing arrack. Firewood is a commodity distinctly understood as a separate commercial commodity in common parlance and commercial parlance. The fifth Schedule of KGST Act and the Explanation thereto does not treat timber as firewood. The explanation says: S.T.Rev.Nos.550 OF 2004, 18 OF 2005, 74 OF 2005 & 85 OF 2005 :: 5 :: “Timber includes all kinds of wood, standing trees, logs, planks, rafters, of any size or variety”. It is a fact that this Explanation was not in the statute book during the year 1994-95 and the assessment was made on 25-2-2000 without looking into the statutory position during the year 1994-95. Even otherwise, timber does not take in “firewood” within the meaning of the explanation to that entry in Fifth Schedule. The word all kinds of wood in the context and connotation means timber only. The legislature has expressed no intention to include the same in the category of timber. The department publication namely “Commodity Referencer” published by Centre for Taxation Studies treats firewood as falling under residuary Entry (page 149). Considering the above facts, we are of the view that the contentions raised by the appellant deserve consideration. So we direct the assessing authority to treat firewood sold to M/s.Travancore Sugars as an item falling under Entry 156 (Residuary Entry) of I Schedule. Admittedly, the appellant purchased the entire firewood from the Government Forest Department by paying first point tax and so the appellant is not liable to pay tax.”. 10. While disposing of these revision petitions, we are not entering into the question whether the wood that was sold by the respondent assessee is timber or not. In the instant case, the wood that was sold by the assessee to a Government Company was for the purpose of using it as a fuel. This factor is not in dispute nor disputed by the revenue either before the Tribunal nor before us S.T.Rev.Nos.550 OF 2004, 18 OF 2005, 74 OF 2005 & 85 OF 2005 :: 6 :: at the time of hearing these revision petitions by the learned Government Advocate, which only means what was sold by the assessee is a fire wood and not a timber. What is a fire wood and what is a timber is explained by the Apex Court in Mukesh Kumar Aggarwal & Company v. State of Madhya Pradesh and Others [1988 SCC 324]. In the said decision, the Apex Court has stated as under: “If wood is not “fire-wood”, it need not necessarily and for that reason alone be “timber”. All wood not “timber”, nor, indeed, is all wood “fire-wood”, though both “fire-wood” and “timber” are wood in its generic sense. The nature of goods cannot be determined by the test of the use to which they are capable of being put. The user test is logical but inconclusive. The particular use to which an article can be applied in the hands of a special consumer is not determinative of the nature of the goods. In a taxing statute, words which are not technical expressions or words of art, but are words of every day use, must be understood and given a meaning, not in their technical or scientific sense, but in a sense as understood in common parlance. The particular terms used by the legislature in the denomination of articles are to be understood according to the common commercial understanding of those terms used and not in their scientific and technical sense. ” 11. We are conscious of the views expressed by various courts that S.T.Rev.Nos.550 OF 2004, 18 OF 2005, 74 OF 2005 & 85 OF 2005 :: 7 :: the user test is only logical; but is again inconclusive. The particular use to which an article can be applied in the hands of a special consumer is not determinative of the nature of the goods. In the facts and circumstances of this case, in our view, the other tests which are commonly applied for interpreting the taxing entry need not be resorted to, since the facts in the instant case, clearly demonstrates that the commodity purchased and sold is only “firewood”, and therefore, in our view, the Appellate Tribunal was justified in classifying the commodity as a residuary item falling under Entry 156 of First Schedule to KGST Act. Therefore, we are of the view that, the Tribunal has not committed any error on facts which would call for interference. 12. Accordingly, keeping in view the facts situation which is not disputed by either side, that, the assessee had sold the wood to the purchaser, namely, a Government Company only as “firewood” and not as timber, while sustaining the orders passed by the Tribunal, we reject these revision petitions. Ordered accordingly. (H.L.DATTU) CHIEF JUSTICE (A.K.BASHEER) JUDGE jes/dk