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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.

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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.

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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

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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)

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    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

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         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

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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