DY COMMISSIONER Vs. WESTERN INDIAN PLYWOODS P LID

JUDGEMENT

(1.) These revision petitions have been filed by the Deputy Commissioner of Sales Tax (Law), Board of Revenue (Taxes), Ernakulam against the decision rendered by the Kerala Sales Tax Appellate Tribunal, Additional Bench, Kozhikode allowing three appeals filed by the respondent - assessee and holding that the assessing authority was not justified in levying tax at 3 per cent on the turnover of the assessee relating to purchase of firewood which was admittedly put to use as raw material for the manufacture of hard board and directing the assessing authority to tax the disputed turnover at one per cent.

(2.) The assessment years concerned are 1971-72, 1972-73 and 1973-74. The assessee. The Western India Plywoods (P) Limited, Baliapatam - is engaged, among other things, in the manufacture of hard board. Large quantities of material described as firewood were purchased by the assessee during the assessment years in question and a substantial portion thereof had been admittedly used as raw material for the manufacture of hard board. "Firewood" is taxable only at the concessional rate of one per cent as it forms subject - matter of Item No. 55 in Schedule I to the Kerala General Sales Tax Act, 1963 (hereinafter called the Act).

(3.) The assessing authority took the view that since only a small portion of the total quantity of the material purchased by the assessee during the assessment years 1971-72 and 1972-73 had been actually used as fuel for the boilers in the factory and the balance quantity was used as raw material for manufacture of hard board and since the entirety of the quantity purchased in 1973-74 was used only as raw material for the manufacture of hard board it must be taken that the assessee had known that what they purchased was 'timber', and not firewood as understood in common parlance. In the view of the assessing authority timber purchased and used for the manufacture of hard board is not understood as "firewood" in common parlance and in commercial circles. On this ground the assessing authority held that except in respect of the material actually used by the assessee as fuel for the boilers, the balance quantity had to be regarded as 'timber' and subjected to the levy of tax at 3 1/2 per cent under S.5(2) read with S.5A of the Act. The Deputy Commissioner (Appeals), Agricultural Income Tax and, Sales Tax, Kozhikode before whom the matter was carried in . appeal by the assessee confirmed the assessments made by the Sales Tax Officer. The assessee thereupon filed appeals before the Sales Tax Appellate Tribunal. The Tribunal allowed the appeals holding that the material purchased by the assessee was firewood falling within the description contained in Item No. 55 of Schedule I and the mere fact that it had been used as raw material for the manufacture of hard board did not take it out of the scope of the said item so as to deprive the assessee of the benefit of the concessional rate of taxation at one per cent. Pointing out that the assessing authority itself had treated part of the very same material as firewood on the ground that the said quantity had been actually used as fuel, the Tribunal held that the balance quantity of the same material could not be regarded as a different commodity falling outside the scope of Item No. 55 of Schedule I merely because it had been put to some use other than as fuel, namely, as raw material for the manufacture of hardboard. In this view the Tribunal held that the entirety of the disputed purchase turnover of the assessee was liable to be taxed only at one per cent. The legality and correctness of the said conclusion recorded by the Tribunal are under challenge by the State in these Tax Revision Cases.