PETITIONER:
MUKESH KUMAR AGGARWAL & ORS.
Vs.
RESPONDENT:
STATE OF MADHYA PRADESH & ORS.
DATE OF JUDGMENT18/12/1987
BENCH:
VENKATACHALLIAH, M.N. (J)
BENCH:
VENKATACHALLIAH, M.N. (J)
NATRAJAN, S. (J)
CITATION:
1988 AIR 563 1988 SCR (2) 501
1988 SCC Supl. 232 JT 1988 (1) 50
1988 SCALE (1)1
ACT:
Madhya Pradesh General Sales Tax Act, 1958: Schedule 11
Part 1I Entry 32A and Part V, Entry 12-Stacks of ‘Eucalyptus
wood’ sold by forest department after separating the
‘Ballies’ and ‘Poles’-Whether ‘Timber’ or ‘firewood’-
Llability for sales Tax.
HEADNOTE:
%
Words and Phrases-’Timer’-'Fire’-wood’-Meaning of.
The Forest Department of Madhya Pradesh sold to the
appellants, who are dealers in timber, stacks of
“eucalyptus-wood” after separating the “Ballies” and
“poles”. Sales tax at the rate of 16% ad-valorem leviable on
the sale of ‘timber’ under Entry 32A of part II of Schedule
Il of the Madhya Pradesh General Sales Tax Act, 1958, was
sought to be recovered from the appellants on the grounds
that what was sold was ‘timber’. The levy was challenged by
the appellants in the High Court of Madhya Pradesh.
The High Court rejected the appellants’ contention that
what was sold, being left-overs after the extraction of
“poles” and “Ballies”, was merely ‘fire-wood’ within the
meaning of and attracting entry No. 12 of Part V of Schedule
II of the Act and thus liable to sales tax only at the rate
of 3%. The High Court upheld the levy on the view that the
goods were ‘Timber’ and attracted entry 32A of Part II. The
High Court took the view that where the wood was not, in the
normally accepted commercial practice, fire wood, and more
especially, where the wood was sold and purchased subject to
specifications which conduce the wood to particular purposes
other than fuel, the goods sold cannot be regarded as
firewood.
The appellants’ contentions reiterated before this
Court were (t) that what was sold were the left-overs and
remnants, (2) that the forest department had itself
described the goods in the tender notice as ‘fire wood
heaps’, (3) that the wood-stacks could, by no stretch of
imagination, be held to answer the well-known concept of
‘Timber’, and (4) that the wood sold was ‘fire-wood’ or at
all events, plain ‘wood’ not amounting to ’Timber’ or
‘firewood’ in which case it fell within the residuary entry.
502
The respondents, on the other hand, urged that the
‘wood’ sold did not admit of being described as ‘fire-wood’
because nobody used eucalyptus wood as fire-wood due to its
very high cost.
Allowing the appeal in part and remitting the matter to
the High Court it was,
^
HELD: (I) The finding of the High Court that the goods
was ‘Timber’ appears to have been reached as necessary
consequence and logical corollory of the goods not being
‘fire-wood’. If the wood is pot “fire-wood” it need not
necessarily and for that reason alone be ‘Timber’. All wood
is not timber as, indeed, all wood is not ‘fire-wood’ either
though perhaps it may not be incorrect to say that both
‘firewood’ and ‘Timber’ are ‘wood’ in its generic
sense.[508C]
(2) All parts of portions of even a timber tree need
not necessarily be ‘Timber’. Some parts are timber, some
parts merely ‘fire-wood’, and yet others merely ‘wood’.
[509F]
(3) In a taxing statute words which are not technical
expressions or words of art, but are words of everyday use,
must be understood and given a meaning, not in their
technical or scientific sense, but in a sense as understood
in common parlance i.e. “that sense which people conversant
with the subject matter with which the statute is dealing,
would attribute to it. ” Such words must be understood in
their popular sense. [505B-C]
(4) The use to which the ‘goods’ are capable of being
put is not determinative of the nature of the goods; nor
even the nomenclature of the goods as given by till
theoretic is determinative. The fact that the purchasers
were dealers in timber is also not conclusive. [508G]
(5) The expression ‘Timber’ has an accepted and well-
recognised legal connotation and is nomen-juris. It has also
a popular meaning as a word of everyday use. In its popular
sense, ‘timber’ is understood to be ‘imarathi-Lakdi’. In a
popular-sense ‘Timber’ has certain association of ideas: as
to its size, stability, utility, durability, the unit of
measure of quantity and of valuation etc. [505D; 507A]
(6) Having regard. to the size, nature and description
of the wood in the present case, the ‘wood-heaps’ were not
susceptible to be or did not admit of being called ‘Timber’
with all the concomitants and associations of that idea.
[509F]
503
(7) No tests of general validity applicable to or
governing all A cases can at all be laid-down. 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.
[509E-G]
Shantabai v. State of Bombay, [1959] SCR 265; referred
to.
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 4026-27 of
1987.
From the judgment and order dated 10.9.1986 of the
Madhya Pradesh High Court in M.P. No. 2191 and 413 of 1985.
A.K. Sanghi for the Appellant in C.A. No. 4026 of 1987.
G.L. Sanghi and J.R. Das for the Appellant in C.A. No.
4027 of 1987.
S.N. Khare, R.K. Sharma and T.C. Sharma for the
Respondents.
The Judgment of the Court was delivered by
VENKATACHALIAH, J. In these petitions under Article 136
of the Constitution of India, petitioners seek special leave
to appeal from the Judgment and order dated, 10.9.1986 of
the Madhya Pradesh High Court in Misc. Petition 2919 of 1985
and Misc. Petition No. 413 of 1985 respectively.
The appeals raise a short and interesting question
whether stacks of “eucalyptus-wood’ sold by the forest-
department after separating the “Ballies” and “poles”
constitute and answer the description of ‘Timber’ under
entry 32 A of Part 11 of Schedule II to the Madhya Pradesh
General Sales Tax Act 1958 (The ‘Act’). The High Court,
rejecting the appellant’s contention that what was sold,
being left- overs after the extraction of ”poles” and
“Ballies” of Eucalyptus ‘ (Nilgiri) Trees, was merely ‘fire-
wood’ within the meaning of and attracting entry No. 12 of
Part V of Schedule II of the Act, held that the goods were
‘Timber’ under the said entry 32 A. It was, accordingly,
held that appellants were liable to pay sales-tax at the
rate of 16% ad-valorem.
504
2. Special Leave is granted in both the cases. The
appeals are taken-up for final hearing, heard and disposed
of by this common judgment. We have heard Shri G.L. Sanghi,
Senior Counsel and Shri A.K. Sanghi for the appellants and
Shri T.C. Sharma for the respondents .
3. Though, the notification inviting tenders and
certain other documents appear to describes the goods
variously as “eucalyputs fire-wood stacks’., “eucalyptus
wood stacks”, ‘Nilgiri fuel wood’ etc., the nomenclature is
not determinative or conclusive of the nature of the “goods”
which will have to be determined by the application of
certain well-settled principles, guiding the matter.
Three entries as they then stood in the Schedule to the
‘Act’ were pointed out by learned counsel as the possible
alternatives:
Schedule II
Part II
Entry 32 A: Timber… 16%
PART V
Entry 12 : Fire-wood &
charcoal . . 3%
Part Vl
Entry I : All other goods
not included in
Schedule I or any
other part of
the Schedule . . . 10%
Appellants contention urged before the High Court-and
reiterated before us-was that what was sold were the
leftovers and remnants of eucalyptus trees after the
extraction of the substantial timber in the form of “poles”
and “Ballies” and that even on the basis of what the forest-
department itself described the goods to be while putting
the ‘goods’ to tender, the goods were ‘fire wood heaps’. It
was urged that having regard to the well-known concept of
what constitutes ‘Timber’ the wood-stacks sold could, by no
stretch of imagination, be held to answer the description of
‘Timber’. The wood sold, it was said
505
“fire-wood” or at all events, plain ‘wood’ not amounting to
‘Timber’ or A ‘firewood’ in which case the goods fall within
the residuary-entry. This contention did not find favour
with the High Court.
4. In a taxing statute words which are not technical
expressions or words of art, but are words of everyday use,
must be understood and given a meaning, not in their
technical or scientific sense, but in a sense as under-stood
in common parlance i.e. “that sense which people conversant
with the subject matter with which the statute is dealing,
would attribute to it”. Such words must be understood in
their ‘popular sense’. 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 “for the legislature does not suppose our
merchants to be naturalists or geologists or botonists”.
The expression ‘Timber’, it seems to us, has an
accepted and well-recognised legal connotation and is nomen-
juris. It has also a popular meaning as a word of everyday
use. In this case, the two meanings to ‘Timber’ the legal
and the popular, coalesce and are broadly subsumed in each
other.
In Honeywood v. Honeywood, [1874], L.R. 18 Eq. 306, at
p. 309. Sir George Jessel referred to what distinguishes and
is “Timber”: E
“The question of what timber is depends, first on
general law, that is, the law of England; and
secondly, on the special custom of a locality. By
the general rule of England, oak, ash and elm are
timber, provided they are of the age of 20 years
and upwards, provided also they are not so old as
not to have a reasonable quantity of useable wood
in them, sufficient .. to make a good post.
Timber, that is, the kind of tree which may be
called timber, may be varied by local custom.
There is what is called the custom of the country,
that is, of a particular country or division of a
country, and it varies in two ways. First of all,
you may have trees called timber by the custom of
the countrybeech in some countries, hornbeam in
others. and even whitethorn and black-thorn, and
many other trees are considered timber in peculiar
localities-in addition to the ordinary timber
trees. Then again, in certain localities, arising
probably from the nature of the soil, the trees of
506
even 20 years old are not necessarily timber, but
may go to 24 years, or even to a later period, I
suppose, if necessary; and in other places the
test of when a tree becomes timber is not its age
but its girth.”
In Shantabal v. State of Bombay & Ors. [1959] SCR 265
this court, referring to the distinctions between ‘standing
timber’ and ‘tree’ referred to the following lexicographic
meaning of ‘timber’:
“(30) Timber is well enough known to be-”wood
suitable for building houses, bridges, ships etc.,
whether on the tree or cut and seasoned”.
(Webster’s Collegiate Dictionary). .
It was, accordingly, held:
Therefore, “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 still standing.
(emphasis supplied)
Legal Glossary, (published by the Ministry of Company
Affairs Law & Justice) gives this meaning of ‘Timber’:
“wood meant for building or such like use”.
In the Chambers 20th Century Dictionary, the meaning of
the word ‘Timber’ is this:
‘wood suitable for building or carpentry, whether
growing or cut: standing trees of oak, ash, elm,
(locality by custom) other kinds etc.
(emphasis supplied)
In words and phrases by John B. Saunders (Vol. 5) ‘Timber’
is heed to be:
‘Trees less than six inches in diameter have been said
not to be timber.
(emphasis supplied)
507
5. In its popular sense, ‘timber’ is understood to be
‘Imarathi-Lakdi’. In a popular-sense Timber’ has certain
association of ideas: as to its size, stability, utility,
durability, the unit or measure of quantity and of valuation
etc. The question is whether by the standards of these
popular connotations, the ‘wood-stacks’ or ‘wood-heaps’ sold
to, and purchased by, the appellants can be held to answer
the popular notions of ”Timber”. When ‘standing-timber, is
sold as uncut tree different considerations may arise.
The nature of the “wood” sold is described in the
letter, dated, 30.5.1985, addressed by the Divisional Forest
officer. The subject matter of the sale has been referred to
as ‘Nilgiri fuel-wood’. The wood was offered for sale in
stacks of the size of l x 1. 25 x 2 mtrs. With each piece of
a length of 1.25 meters and a girth, at the thinner end, of
not less than 10 cms. They were sold not by volume or by the
number of pieces. The wood was offered with a particular
kind of user in mind, viz, as a source of industrial-raw
material for ‘pulp’ in the manufacture of synthetic fibre.
As pointed out by the High-Court, in the returns filed by
the respondents, it was mentioned that eucalyptus-plantation
was a recent development and promoted with the specific-
purpose for use in specifically in the preparation of pulp
and sold throughout the state with this specific object.
Respondents in their endeavor to controvert appellants’
contention that the wood sold was “fire-wood” went on to say
that while stacks of fire-wood of similar sizes fetch prices
between Rs.20 to Rs.80 each, the stacks of the eucalyptus-
wood on the other hand, fetch to Rs.300 to Rs.600 per stack
and that, therefore, nobody uses eucalyptus as “fire-wood”.
The High Court, felt pursuaded to the view that the ‘wood’
sold did not admit of being described as “fire-wood”. It
reasoned:
“Fire-wood in common commercial parlance and as
understood by the trade as well as by the
consuming public, is not just any wood that can be
used as logs of fuel. Every kind of wood is
potential fire-wood, for you can start a fire with
any wood. But this is not the test. Firewood is
wood of a kind which has attained notoriety as
fuel. Nobody who sells fire-wood debarks the wood
before sale. Nobody who buys firewood requires
them to be shaved and debarked. Purchasers may
desire the wood to be cut to size. But that is
all. There may be eccentric sellers and eccentric
buyers who may indulge their fancies in
specialities in firewood.
508
But that, again, is not the test. Where the wood
is not, in the normally accepted commercial
practice, firewood, and more especially, where the
wood is sold and purchased subject to
specifications which conduce the wood to
particular purposes other than fuel, which is the
case in the present two revisions, the goods sold
cannot be regarded as firewood.”
While something, perhaps, could be argued in support of this
reasoning, what however, emerges is that the finding that
the goods was ‘Timber’ appears to have been reached as a
necessary consequence and logical corollory of the goods not
being ‘fire-wood’: If the wood is not “fire-wood”, it need
not necessarily and for that reason alone be ‘Timber’. All
wood is not timber as, indeed, all wood is not ‘fire-wood’
either though perhaps it may not be incorrect to say that
both ‘firewood’ and ‘Timber’ are ‘wood’ in its generic
sense.
The High Court further reasoned:
” … It has also been mentioned that timber is
obtained by cutting standing trees. It may be hard
wood timber or soft wood timber. Eucalyptus trees
are covered by soft wood timber .. ”
” … The petitioners offered to purchase the
goods which could be used for manufacture of
woodware, furniture, etc. as well as manufacture
of Pulp. The petitioners deal in timber ……
Here again, pushed to its logical conclusions, the reasoning
incurs the criticism of proceeding to determine the nature
of the ’goods’ by the test of the use to which they are
capable of being put. The ‘user-test’ is 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. Even as the
description of the goods by the authorities of the forest-
department who called them varyingly as ‘eucalyptus fuel-
wood’ ‘eucalyptus wood-heap’ etc. is not determinative, the
fact that the purchasers were dealers in timber is also not
conclusive.
The High Court also observed:
“….. The length of the pieces is not relevant
criteria to
509
determine whether the wood is timber or not. The
goods A offered for sale were eucalyptus wood-
stacks …..
Length is, no doubt a relevant consideration; but it is a
relative concept and associated with the idea of utility. A
piece of rope, it is said, is itself a rope, provided It
serves the purpose of one.
6. 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
Austrailia, Tasmania and Malaysis. 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
page 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 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 emphasis is that all parts
or portions of even a timber-tree need not necessarily be
‘Timber’. Some parts are timber, some parts merely “fire-
wood” 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.
7. What emerges therefore, is that the goods in
question are not ‘Timber’ within the meaning and for
purposes of entry 32A of the Act.
In regard to the question as to what other description
the goods answer and which other entry they fall under,
learned counsel on both
510
sides submitted that, if we hold that entry 32 A is not
the appropriate one, the matter be remitted to the High
Court for a fresh consideration of the matter in the light
of such other or further material the parties may place
before the High Court. We accept this submission.
8. In the result, these appeals are allowed in part and
the finding of the High Court that the goods in question
fall within and attract entry 32 A of Part II of Schedule II
of the ’Act’ is set aside and the matter is remitted to the
High Court for an appropriate decision as to which other
entry the goods in question attract. The appeals are
disposed of accordingly.
9. We might advert to yet another submission of Sri
Sanghi. He submitted that consistent with the finding that
the ‘goods’ do not attract tax at 16% under the said entry
32A respondents cannot retain the tax already collected at
16%. Learned Counsel submitted that even if the goods are
said to fall under the Residuary entry, the rate of tax
would only be 10% and that respondents, accordingly, should
be directed to refund to the appellants sums equivalent to
6% of the tax, wherever tax at 16% has been collected,
without waiting for a decision on remand as indeed, there
would be no prospect of the goods attracting tax at a rate
higher than 10% now that entry 32 A is held inapplicable.
This, in our opinion is a reasonable request and requires to
be accepted. The concerned Respondents are directed to
refund to the appellants’ sums equivalent to 6% wherever the
taxes are already recovered at 16%.
10. In the circumstances, there will be no order as to
costs.
R.S.S. Appeals allowed.
511