COMMISSIONER OF SALES TAX Vs. DURGA SHELLAC FACTORY.

JUDGEMENT

(1.) AT the instance of the Commissioner, Sales Tax, M.P., the Tribunal (the Board of Revenue), in exercise of power under section 44 of the Madhya Pradesh General Sales Tax Act, 1958, has referred the following question for this Court's opinion

(2.) THE assessee, M/s. Durga Shellac Factory, Bilaspur is a dealer registered under the Madhya Pradesh General Sales Tax Act, 1958. He is also a forest contractor. He purchased standing trees from forest coupes and paid full sales tax on these transactions. When the assessee's turnover for the Diwali year 1972 -73 was being assessed for purposes of sales tax, he claimed that the tax -paid by him on purchase of standing trees from the forest department should be set off against the sales tax assessed. Its contention was that the entry in its registration certificate mentions "timber" and that would cover standing trees also. The entry in the registration certificate was modified after May 7, 1973 to include standing trees also. The assessing authority as also the appellate authority rejected the assessee's aforesaid claim for set off prior to May 7, 1973 holding that the entry in the registration certificate did not include the standing trees. In further appeal before the Tribunal, the assessee's contention prevailed and the Tribunal held that the contract was for sale of standing trees agreed to be severed. Such was the agreement between the forest department and the assessee. The Tribunal also held that the entry "timber" in the registration certificate would include standing trees. The set off claimed by the assessee was thus allowed. It is in these circumstances that the above mentioned question has been referred to this Court for opinion.

(3.) THE question before the Division Bench of Andhra Pradesh High Court, in Ramaswamy v. State of Andhra Pradesh [1973] 32 STC 309, was whether planks, rafters, cut sizes, etc., were timber. While holding that such planks, rafters, cut sizes, etc., were timber it was observed that the word "timber" may in the context mean the timber tree; when it is felled, the wood, when it is cut into logs for convenience of transport, the ballis cut to sizes or even the planks, rafters, cut sizes, etc., for the use of construction of buildings or such other like purposes. Chief Justice Ekbote, who delivered the judgment of the court, expressed an opinion that "one of the most significant aids of construction in determining the meaning of a tax provision is the administrative interpretation given to it by the agency that is responsible for its administration and enforcement, and in interpreting a word used in a statute, the courts may have regard to the interpretation placed by those who are presumed to be acquainted with the economic significance of the tax in question". The court referred to certain opinions expressed by the department and the Board of Revenue as to the significance of the term "timber" and with the assistance of those opinions, reached the conclusion as aforesaid. This Court also, in Mohanlal Vishram v. Commissioner of Sales Tax, M.P. [1969] 24 STC 101, opined that by felling standing timber trees, cutting them and converting some of them into ballis, the character of the goods is not altered and the goods still continue to be "timber".