Case: Karnataka Forest Devlp. Corporation Limited Vs. Cantreads Private Limited &amp; Others

latex, which is the natural produce, hardened by application of the sulphuric acid and given the shape or form of sheets and thereafter dried with the help of smoke and graded into grades of I to V could not be treated as forest produce, for the process applied resulted in bringing out a commodity which was different from latex, and therefore, no tax could be levied on it. 4.Caoutchouc is included as one of the forest produce under subsection (7) of Section 2 of the Karnataka Forest Act. In Chambers English Dictionary, caoutchouc is defined as India-rubber, gum-elastic; the latex of rubber trees. In Random House Dictionary, rubber is defined as India rubber, natural rubber, gum-elastic caoutchouc a highly elastic, light cream or dark amber coloured, solid substance polymerized by the drying and coagulation of the latex or milky juice of rubber trees and plants. Caoutchouc is described in Encycl opedia Britannica as, the principal constituent of natural rubber and therefore sometimes called pure rubber. It occurs as a vegetable gum, mixed with 1/20 to 8 times its own weight of other substances. Caoutchouc is a white resilient solid; at 0-10 degree Celsius it is hard and opaque, but it becomes soft and translucent above 20 degree Celsius. In the same book Rubber is described as, an organic substance - obtained from natural sources or synthesized artificially which has the desirable properties of extensibility, stretchability, and toughness. Previously known as caoutchouc, a term that has become limited to the chemically pure form of the substance. In Encyclopedia of Social Sciences, Vol. XIII- XIV it is de scribed thus, "Latex, which is not the sap of the tree but a milky fluid contained in the bark, is obtained by narrow incisions in the bark. During the period of high prices trees were tapped once or even twice a day. With lower prices it has become customary to tap less frequently, but over a wider circumference of the tree. The trees are ordinarily rested for two months or more each year. After the latex has been gathered it is brought to the plantation warehouses and coagulated by acetic acid or some other chemical. The resulting rubber comes on the market as crepe rubber or, if it has gone through a smoking process, as smoked sheet." * 5. Caoutchouc is, thus natural rubber which includes latex. The natural rubber or latex is milky flu id obtained by incisions, in the bark of trees. It can not remain as such for long therefore it needs processing. 6. In the Rubber Growers Companion 1991 it is mentioned that the main crop for the rubber tree is latex, a milky white dispersion of rubber in water which is harvested by the process of tapping. The latex that flows out from the rubber trees on tapping is channeled into a container attached to them. The latex gets dried up on the tapping panel (tree lace) and the collection cups (shell scrap) form part of the crop and are collected by the tapper. The different kinds of crops harvested from rubber plantations are highly susceptible to bacterial action due to contamination on keeping. Therefore, it is essential to process them into forms that will allow safe storage and marketing. One of the marketable items is ribbed sheet rubber. It further discusses how the latex is converted into ribbed sheets. Latex is coagulated in suitable containers into thin slabs of a coagulum and sheet through a set of smooth rollers followed by a grooved set and dried to obtain ribbed sheet rubbers; depending upon the drying method sheets rubbers are classified into two ribbed smoked sheets and the air dried sheets. It is further mentioned that the ribbed sheets after 2 or 3 hours are put in the smoke-house where the certain degree of temperature is maintained. The completely dried sheets are removed to the packing sheets where they are carefully inspected and classified according to standards published by the Rubber Manufacturers Association. 7. The High Court found that since what was sold by the appellant was not rubber obtained from the trees but sheet s or blocks of rubber which were chemically and mechanically processed it could not be held to be forest produce. The High Court applied the test of commercial parlance and held that where latex produced from the tree underwent processing howsoever meager it was the resultant produce obtained by addition of sulphuric acid could not be treated to be forest produce. It was further found that since Government rubber plantations itself treated grade rubber sheets as different from wet latex while selling the same in auction it could not claim that the latex after processing remained the same.Neither reasoning appears to be well founded. The meaning of the word caoutchouc has been discussed. Latex is the modem name for caoutchouc. It is nothing but natural rubber. Caoutchouc or latex means not only milky substance obtained from the trees but it included all milky substance processed, till it is made marketable. Since the processing does not result in bringing out a new comm odity but it preserves the same and renders it fit for being marketed, it does not change its character. It was caoutchouc or latex when it was obtained from the trees, it continued to be caoutchouc or latex when it was treated by sulphuric acid and continued to be so even after it is dried with smoke to obtain the shape of sheets.8. The test of commercial parlance while considering entries in Sales Tax Act was evolved as the tax under the Sales Tax enactments is normally either on sale or purchase or on manufacture or import etc. Therefore, it is the understanding or the knowledge of the item by the common man or persons dealing in it in the market and not in the technical or botanical sense which was accepted by this Court as the deciding factor. But that test cannot be applied while considering the definition of forest produce.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]7. The High Court found that since what was sold by the appellant was not rubber obtained from the trees but sheet s or blocks of rubber which were chemically and mechanically processed it could not be held to be forest produce. The High Court applied the test of commercial parlance and held that where latex produced from the tree underwent processing howsoever meager it was the resultant produce obtained by addition of sulphuric acid could not be treated to be forest produce. It was further found that since Government rubber plantations itself treated grade rubber sheets as different from wet latex while selling the same in auction it could not claim that the latex after processing remained the same.Neither reasoning appears to be well founded. The meaning of the word caoutchouc has been discussed. Latex is the modem name for caoutchouc. It is nothing but natural rubber. Caoutchouc or latex means not only milky substance obtained from the trees but it included all milky substance processed, till it is made marketable. Since the processing does not result in bringing out a new comm odity but it preserves the same and renders it fit for being marketed, it does not change its character. It was caoutchouc or latex when it was obtained from the trees, it continued to be caoutchouc or latex when it was treated by sulphuric acid and continued to be so even after it is dried with smoke to obtain the shape of sheets.8. The test of commercial parlance while considering entries in Sales Tax Act was evolved as the tax under the Sales Tax enactments is normally either on sale or purchase or on manufacture or import etc. Therefore, it is the understanding or the knowledge of the item by the common man or persons dealing in it in the market and not in the technical or botanical sense which was accepted by this Court as the deciding factor. But that test cannot be applied while considering the definition of forest produce.