# Awadh Timber Merchant and Commission Agent Semri Road Revisionist v. Commissioner Trade Tax U.P. Gomti Nagar Lucknow

- **Citation:** (2019) 4 ILRA 821
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2019-12-05
- **Case number:** Trade Tax Revision No. 268 of 2010
- **Bench:** Piyush Agrawal
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/awadh-timber-merchant-and-commission-agent-semri-road-revisionist-v-44954
- **Pages:** 11

## Headnote

A. Tax Law - Uttar Pradesh Trade Tax
Act, 1948: Section 2(e-1); Notification
dated 23.11.1998 - TIF-2-2375/XI-9
(251)/97-UP Act 15/48-order 98 - Only
one set of tax can be levied by the State
in the event the commodity remains the
same.
For
imposition
of
tax, after
processing,
some
new
commercial
commodity must come into existence
822 INDIAN LAW REPORTS ALLAHABAD SERIES
which may be identified differently from
its original.

The wood log, purchased by the revisionist as
timber, remains the same even after obtaining
veneer (chiran) as it does not loose its original
identity of timber and it does not undergo any
physical/commercial or any kind of change.
The process of cutting and converting timber
from wood log does not come under the
definition of "Manufacturing" as provided u/s
2(e-1) of the Act. (Para 33, 34, 37)

B. Notification dated 15.01.2000 - KA.
NI-2-101/XI-9 (231)/94-UP Act 15/48order 2000 - It is not justified to impose
increased tax on timber during the period
01.02.2000 to 31.03.2000 as notification came
into existence w.e.f. 01.01.2000, by which the
rate of tax was enhanced from 15% to 16%,
which is not relevant for assessment year in
dispute. (Para 36)

Trade Tax Revision allowed. (E-4)

Precedent followed:

## Text

4 All. M/s Awadh Timber Merchant and Commission Agent Semri Road Vs. Commissioner Trade Tax U.P. Gomti NagarLucknow 821
machinery also, insofar as machinery is
concerned, it may remain both capital
goods as also non-capital goods including
consumer goods as well.

16. Any machinery that may be put to
use in manufacture of goods may be treated as
capital goods in the context of any particular
legislation, especially fiscal statutes. However,
that treatment given to some machineries for
specified purposes would not have any impact
on the identity of certain other goods that may
continue to be machinery, though not capital
goods. Thus, even as to principle, treatment of
any goods as non-capital goods, would remain
extraneous so far as the taxability of those
goods is concerned. That issue would have to
be decided purely on the basis of treatment
given by the legislature under the taxing
provision and entry. In the context of the Act,
the legislature has not classified 'capital goods'
as a class of goods to be taxed as such. Only
"List of Industrial Inputs" have been so
identified and classified under Part C,
Schedule II of the Act.

17. Commonly, even in homes and
non-commercial
or
non-industrial
establishment machines come to be used
on a daily basis. A common example of
such machine is a ceiling fan. In absence
of a special taxing entry to categorize it
otherwise, merely because a ceiling fan
may be used both in an industrial
establishment and also at a residential
establishment would not change its
identity and therefore its taxability as a
machine. It cannot be treated both as an
classified and unclassified goods solely
on the basis of its installation, whether at
an industrial establishment or a home.

18. In view of the above, order
passed by the Tribunal
is
wholly
unsustainable. The same is set aside and
the matter is remitted to the Tribunal to
pass a fresh order in accordance with law,
keeping in mind the observations made
above.

19. Accordingly, the question of law
is left unanswered. The proceedings in
remand
may
be
completed
as
expeditiously as possible, preferably
within a period of six months from the
date of production of a certified copy of
this order.

20. With the aforesaid observations,
the revision stands disposed of.
----------
(2019)12 ILR A821

REVISIONAL JURISDICTION
CIVIL SIDE
DATED: LUCKNOW 05.12.2019

BEFORE
THE HON'BLE PIYUSH AGRAWAL, J.

Trade Tax Revision No. 268 of 2010

M/S
Awadh
Timber
Merchant
and
Commission Agent Semri Road
 ...Revisionist
Versus
Commissioner Trade Tax U.P. Gomti
Nagar Lucknow ...Opposite Party

Counsel for the Revisionist:
N.C. Mishra

Counsel for the Opposite Party:
C.S.C.

A. Tax Law - Uttar Pradesh Trade Tax
Act, 1948: Section 2(e-1); Notification
dated 23.11.1998 - TIF-2-2375/XI-9
(251)/97-UP Act 15/48-order 98 - Only
one set of tax can be levied by the State
in the event the commodity remains the
same.
For
imposition
of
tax, after
processing,
some
new
commercial
commodity must come into existence
822 INDIAN LAW REPORTS ALLAHABAD SERIES
which may be identified differently from
its original.

The wood log, purchased by the revisionist as
timber, remains the same even after obtaining
veneer (chiran) as it does not loose its original
identity of timber and it does not undergo any
physical/commercial or any kind of change.
The process of cutting and converting timber
from wood log does not come under the
definition of "Manufacturing" as provided u/s
2(e-1) of the Act. (Para 33, 34, 37)

B. Notification dated 15.01.2000 - KA.
NI-2-101/XI-9 (231)/94-UP Act 15/48order 2000 - It is not justified to impose
increased tax on timber during the period
01.02.2000 to 31.03.2000 as notification came
into existence w.e.f. 01.01.2000, by which the
rate of tax was enhanced from 15% to 16%,
which is not relevant for assessment year in
dispute. (Para 36)

Trade Tax Revision allowed. (E-4)

Precedent followed:

1. Deputy Commissioner of Sales Tax Vs. Pio
food Packers, 1981 UPTC 667 (Para 12, 17)

2. Commissioner of Sales Tax, UP Lucknow Vs.
M/s Packing Aids, Agra, 1980 UPTC, 901 (Para
12, 19)

3. Commissioner Sales Tax Vs. Murlidhar and
sons, 2006 (29) NTN 154 (Para 12, 21)

4. State of Tamil Nadu Vs. C. Kanchanamala,
(1994) 93 STC 87 (Para 12, 22)

5. G. Ramaswamy and others Vs. State of
Andhra Pradesh and others, (1973) 32 STC
309 AP (Para 12, 24)

6. Commissioner State Tax Vs Lal Kuwa Stone
Crusher Pvt. Ltd., 2000 UPTC 463 (SC) (Para
12, 25)

7. Kalptaru Agro Forest Enterprises Pvt. Ltd.
Vs.
Commissioner
Commercial
Tax,
UP
Lucknow, 2016 NTN (Vol. 61) 143 (Para 26)

Precedent distinguished:
1. Commissioner of Commercial Tax Vs. Om
Trading, TTR No. 1237 of 2000, decided on
22.08.2008 (Para 13, 28)

Present revision is against order dated
20.05.2010, passed by Commercial Tax
Tribunal,
Faizabad
Bench,
Faizabad.
(Assessment Year 1999 - 2000)

(Delivered by Hon'ble Piyush Agrawal,J.)

1. The present revision has been
filed against the order dated 20.5.2010
passed by Commercial Tax Tribunal,
Faizabad Bench, Faizabad in Second
Appeal No. 126 of 2008 (Assessment
Year 1999-2000).

2. During pendency of the present
revision,
the
revisionist
filed
an
amendment
application,
which
was
allowed by this Court by order dated
25.4.2019. The revisionist by way of
amendment has raised the following
questions of law for consideration of this
Court:-

"1.
Whether
tribunal
was
justified in law to impose tax both on
timber in log and timber in chiran?

2.
Whether
tribunal
was
justified in law to impose tax on timber @
16 % during period 01.02.2000 to
31.03.2000?"

3. The counsel for the revisionist
submits that he only wants to press the
aforesaid question of law.

4. It has been averred that the
revisionist being registered dealer is
engaged in the business of timber and
manufacture and sale of veneer (chiran).
The business premises of the revisionist
was surveyed on 22.12.1999 on the basis
of which the best judgement assessment
4 All. M/s Awadh Timber Merchant and Commission Agent Semri Road Vs. Commissioner Trade Tax U.P. Gomti NagarLucknow 823
was made. On the purchase of timber log
tax was levied as purchase tax and after
manufacture of veneer (chiran) from it,
tax was levied on its sale amounting
double taxation, which is not permissible
under the law. The said imposition of tax
has been confirmed up to the stage of
Tribunal by the impugned order.

5. Heard Sri N.C. Mishra, learned
counsel for the revisionist and learned
Standing
Counsel
and
perused
the
records.

6. The counsel for the revisionist
submits that as per the provisions and
notification either the items in which the
revisionist is dealing can be taxed at the
point of import or manufacturing. In other
words only one set of tax can be charged.
Tax can be levied either at the time of its
import in the State or in the hand of its
manufacturer.

7. The counsel for the revisionist
further submitted that in the present case
revisionist accepts the levy of tax on the
purchase of timber log even on the best
judgement assessment i.e. enhancement of
its turnover. But after manufacture of
veneer (chiran) from it no tax can be
charged on its sales subsequently.

8. It was further argued that rate of
tax can be levied only as per the rate
mentioned in the notification and not
otherwise.

9. In support of his contention the
counsel for the revisionist has relied upon
Notification
No.
T.I.F.-2-2375/XI9(251)/97-U.P.
Act-15-48-order-98
dated 23.11.1998 which is quoted below:

In exercise of powers under
clause 9d) of sub-section (1) of section 3A of the Uttar Pradesh Trade Tax Act,
1948 (UP Act No. 15 of 1948) , read with
section 21 of the Uttar Pradesh General
Clauses Act, 1904 (U.P. Act No. 1 of
1904) and in supersession of all previous
notifications issued in this behalf, the
Governor is pleased to declare that with
effect from December 1, 1998, turnover in
respect of the goods mentioned in column
2 of the Schedule below shall be liable to
tax at the point of sale specified in column
3 of the said Schedule at the rate specified
against each in column 4 thereof.

Woods and timber
 Sale
by
Forest department, the UP Forest 15%
of all kinds and of
Corporation or by
private owner of forest or by
all trees of

importer
or
manufacturer;
whatever species
 Provided
that
where the sale is by the forest
including ballies
 department
to
the UP Forest Corporation the
and bamboos

 tax
shall
be
levied on the point of sale by the
whether growing
 said Corporation
and not at the point of sale by
or cut or sawn but
the
Forest
Department.
excluding their
products and fire
wood.

10. The aforesaid notification was
modified by Notification KA. NI. -2101/XI-9(231)/94-UPAct-15-48- order-
2000 dated Lucknow:15 January, 2000,
which is quoted below :-

In exercise of the powers under
clause (e) of sub section (1) of section 3 -
A of the Uttar Pradesh Trade Tax Act,
1948 (UP Act No. XV of 1948) read with
Section 21 of the Uttar Pradesh General
Clauses Act, 1904 (UP Act No. 1 of
824 INDIAN LAW REPORTS ALLAHABAD SERIES
1904), and in supersession of all previous
notifications issued in this behalf, the
Governor is pleased to declare that, with
effect from January 17, 2000, the turnover
in respect of the goods mentioned in
column 2 of the List below shall be liable
to tax at the point of sale specified in
column 3 of said List at the rate specified
against each in column 4 thereof.

29(i) Woods and

 Importer

20%
timber of all kinds
and of all trees of
whatever species
including ballies
and bamboos,
whether growing
or cut or sawn
imported from out
side india.

(ii) Woods and

Sales
by
Forest Department the UP Forest 16%
timber of all kinds

Corporation
or by private owner of forest or by
and of all trees of
importer
or
manufacturer.
whatever species
 Provided
that
where the sale is by the forest
whether growing
department to the
UP Forest Corporation the
or cut or sawn not
 tax
shall
be
levied on the point of sale by the
included above but

 said
corporation and not at the point of sale by
excluding their

 Forest
Department.
products and
firewoods.

By the aforesaid notifications rate of
tax has been enhanced from 15 % to 20 %
and there was no change in levy of tax on
timber.

11. The counsel for the revisionist
submitted that neither tax can be levied
twice i.e. one as purchase tax and the
other on its sale nor the rate of tax can be
enhanced to 16% instead of 15 %. More
precisely 1 % enhanced tax cannot be
levied on the sale of veneer (chiran).

12. The counsel for the revisionist
has relied upon the certain judgements of
Supreme Court, this Court as well as other
High Courts i.e. Deputy Commissioner
of Sales Tax Vs. Pio Food Packers,
Commissioner
of
Sales
Tax,
UP
Lucknow Vs. M/s Packing Aids, Agra,
Commissioner Sales Tax Vs. Murlidhar
and sons, State of Tamil Nadu Vs. C.
Kanchanamala, G. Ramaswamy and
others Vs. State of Andra Pradesh and
others, Commissioner Sales Tax Vs. Lal
Kuwa Stone Crusher Pvt. Ltd. and
Kalptaru Agro Forest Enterprises Pvt.
Ltd. Vs Commissioner Commercial
Tax.

13. Rebutting the submissions of the
learned counsel for the revisionist, the
learned Standing Counsel submits that
timber
log
was
purchased
by
the
revisionist from an unregistered dealer so
that the tax was levied, therefore,
commercial
commodity
i.e.
veneer
(chiran) has been produced. Therefore the
tax has rightly been imposed. He relied
upon the judgement of this Court in
Trade Tax Revision No. 1237 of 2000,
Commissioner of Commercial Tax Vs.
Om Trading decided on 22.8.2008. He
submits that the issue involved in the
present revisionist is squarely covered by
the aforesaid judgement.

14. It is not disputed by either of the
parties that the revisionist has purchased
timber log on which the tax was levied.
4 All. M/s Awadh Timber Merchant and Commission Agent Semri Road Vs. Commissioner Trade Tax U.P. Gomti NagarLucknow 825
The only dispute for consideration of this
Court is that whether the sale of veneer
(chiran) can again be taxed from 1.4.1999
to 31.4.2000 @ 15 % and from 1.2.2000
to 31.3.2000 @ 16 %.

15. It is admitted between the parties
that after purchase of timber log, the same
was cut in different sizes and planks were
obtained, which were used by the
revisionist as veneer (chiran). Tax has
been levied on the basis of best judgement
assessment which has not been disputed
by either of the parties.

16. According to the counsel for the
revisionist once the tax has been charged
on the purchase of timber log even on the
best judgement assessment, there is no
justification to levy tax on the sale of
veneer (chiran) again. He further argued
that timber remain timber even after cut to
small sizes/planks/chiran.

17. Apex Court is the case of
Deputy Commissioner of Sales Tax Vs.
Pio Food Packers 1981 UPTC 667, has
held as follows:-

5.Section
5-A(1)(a)
of
the
Kerala General Sales Tax Act envisages
the consumption of a commodity in the
manufacture of another commodity. The
goods purchased should be consumed, the
consumption should be in the process of
manufacture, and the result must be the
manufacture of other goods. There are
several criteria for determining whether a
commodity
is
consumed
in
the
manufacture of another. The generally
prevalent test is whether the article
produced is regarded in the trade, by
those who deal in it, as distinct in identity
from the commodity involved in its
manufacture. Commonly, manufacture is
the end result of one or more processes
through which the original commodity is
made to pass. The nature and extent of
processing may vary from one case to
another, and indeed there may be several
stages of processing and perhaps a
different kind of processing at each stage.
With each process suffered, the original
commodity experiences a change. But it is
only when the change, or a series of
changes, take the commodity to the point
where commercially it can no longer be
regarded as the original commodity but
instead is recognised as a new and
distinct article that a manufacture can be
said to take place. Where there is no
essential difference in identity between
the original commodity and the processed
article it is not possible to say that one
commodity has been consumed in the
manufacture of another. Although it has
undergone a degree of processing, it must
be regarded as still retaining its original
identity.

6. A large number of cases has
been placed before us by the parties, and
in each of them the same principle has
been applied: Does the processing of the
original commodity bring into existence a
commercially different and distinct article
? Some of the cases where it was held by
this Court that a different commercial
article had come into existence include
Anwarkhan Mehboob Co. v. The State of
Bombay and Others (where raw tobacco
was manufactured into bidi patti), A
Hajee Abdul Shukoor and Co. v. The State
of
Madras
(raw
hides
and
skins
constituted a different commodity from
dressed hides and skins with different
physical properties), The State of Madras
v.
Swasthik
Tobacco
Factory
(raw
tobacco
manufactured
into
chewing
tobacco) and Ganesh Trading Co. Karnal
v. State of Haryana and Another, (paddy
826 INDIAN LAW REPORTS ALLAHABAD SERIES
dehusked into rice). On the other side,
cases where this Court has held that
although the original commodity has
undergone a degree of processing it has
not lost its original identity include
Tungabhadra Industries Ltd., Kurnool v.
Commercial Tax Officer, Kurnool (where
hydrogenated groundnut oil was regarded
as groundnut oil) and Commissioner of
Sales Tax, U.P., Lucknow v. Harbilas Rai
and sons (where bristles plucked from
pigs, boiled, washed with soap and other
chemicals and sorted out in bundles
according to their size and colour were
regarded
as
remaining
the
same
commercial commodity, pigs bristles).

....

12.The comment applies fully in
the case before us. Although a degree of
processing is involved in preparing
pineapple slices from the original fruit,
the commodity continues to possess its
original identity, notwithstanding the
removal of inedible portions, the slicing
and thereafter canning it on adding sugar
to preserve it. It is contended for the
Revenue that pineapple slices have a
higher price in the market than the
original fruit and that implies that the
slices constitute a different commercial
commodity. The higher price, it seems to
us, is occasioned only because of the
labour put into making the fruit more
readily consumable and because of the
can employed to contain it. It is not as if
the higher price is claimed because it is a
different commercial commodity. It is said
that pineapple slices appeal to a different
sector of the trade and that when a
customer asks for a can of pineapple
slices he has in mind something very
different from fresh pineapple fruit. Here
again, the distinction in the mind of the
consumer arises not from any difference
in the essential identity of the two, but is
derived from the mere form in which the
fruit is desired.

...

14. In the result, we hold that
when pineapple fruit is processed into
pineapple slices for the purpose of being
sold
in
sealed
cans
there
is
no
consumption of the original pineapple
fruit for the purpose of manufacture.

18. Apex Court has very clearly said
that even after pineapple have been slices
and canned does not changes its identity.

19. This Court in Commissioner of
Sales Tax, UP Lucknow Vs. M/s
Packing Aids, Agra reported in 1980
UPTC, 901 has held here in below:

"7. Now coming to the other
question the Assessing Officer observed
that the claim made by the assessee that
batton and shooks fell in the category of
timber was incorrect because it was only
making planks or joining planks by nails
and that was treated by the assessee as
shooks and the same could not be treated
as timber. The Revising Authority has,
however, observed that batton and bhooks
appear to be nothing but wooden planks
or pieces used for making wooden cases
or Pattis and hence the case of the
assessee was correct that what it was
dealing with was timber. In my opinion no
clear finding has been recorded either by
the Assessing Authority or by the Revising
Authority in regard to the nature of the
products which the assessee is making. If
the assessee is only making planks, that
would come in the category of timber
because the planks would be sawn timber
or wood and would be covered by Entry
97 aforesaid. But if the assessee is further
joining the planks by nails, that would
have to be treated as timber product. The
import of the expression "product" came
up for consideration before a Division
4 All. M/s Awadh Timber Merchant and Commission Agent Semri Road Vs. Commissioner Trade Tax U.P. Gomti NagarLucknow 827
Bench of this Court in Commissioner of
Sales Tax v. B.M. Wood Works No.1,
(1973) 32 STC 66. The question referred
to this Court was : "Whether boxes made
of
Chir
are
timber
products
as
contemplated by Notification No. ST-3393
dated 1st July, 1962, as amended by
Notification No. 6869 dated 19th January,
1963". The view taken was that the word
product in the notification was intended to
be used in its full and comprehensive
meaning viz. A thing produced by any
action, operation or work, and not in the
narrow
and
restricted
meaning
of
something produced by nature or a
natural process. Now sawn timber has
been placed specifically in the category of
timber under Entry 97 aforesaid, but the
joining of planks by nails would certainly
be a thing produced by an action or
operation of work and would have to be
treated as timber product and not as
timber. Both the Department and the
assessee have not been, in their minds,
clear about the nature of the assessee's
business and it needs consideration
afresh. The occasion for carrying out the
direction given by the Revising Authority
would arise only if it is found that batton
and shooks in which the assessee dealt
are covered by Entry 97 aforesaid. If,
however, it is found that they are timber
products, there would be no occasion for
any such further enquiry."

20. The court has held that if the
dealer is making planks then it will come
in the category of timber. But if the
joining of planks by nails would have to
be treated as timber product.

21. This Court in the case of
Commissioner Sales Tax Vs. Murlidhar
and sons, 2006 (29) NTN 154 has held
herein below:

1.....

"2. Heard the counsel for the
parties. The dispute relates to the
Assessment Year 1988-89. The dealer
opp. Party deals in timber, timber product
and burada etc. In the assessment year in
question the Assessing Authority held that
planks made by the assessee is a timber
product. The said finding has been set
aside by the First Appellate Authority
which has been confirmed by the
Tribunal. This Court in the case of C.S.T
Vs. M/s Packing AIDS, Agra 1980 UPTC
901 has held that the wooden planks and
pieces used for making wooden goods fall
within the category of timber. Respectfully
following the aforesaid decision, I do not
find any legal error in the order of the
Tribunal. The revision is dismissed."

22. Similar view has been taken by
Madras High Court in the case of State of
Tamil Nadu Vs. C. Kanchanamala
(1994) 93 STC 87 in which it has held as
follows:-

3. The finding of the Tribunal is
as follows :

"..... It is found that the
appellant had effected purchase of timber,
sliced the same into splints and sold the
splints to various dealers among the
match manufacturers. Hence, we are of
the view that provisions of section 7-A
cannot be applied to the purchase
turnover of timber and accordingly we set
aside the assessment of the purchaser
turnover ......"

...

8. From a perusal of the ratios
laid down in all these cases, there is no
difficulty in upholding the view taken by
the Tribunal as the splints obtained by
slicing the timber definitely retain the
identity of timber and, therefore, it cannot
828 INDIAN LAW REPORTS ALLAHABAD SERIES
be said that the timber has been
consumed in the manufacture of splints.

9. Now, coming to the decision
on which reliance was placed by the
learned Additional Government Pleader,
it is seen that no facts, it is entirely a
different one. In that case, the assessee
purchased timber in logs, cut the same
into slices and planks and thereafter
manufactured packing cases. In those
circumstances, this Court held that a
packing case in any sense of the term,
cannot be called timber. ...

23. Madras High Court has clearly
opined that slicing of timber definitely
retain the identity of timber.

24. Similar view has been taken by
Andra Pradesh High Court in the case of
G. Ramaswamy and others Vs. State of
Andra Pradesh and others 1973 32 STC
309 AP in which it has held as follows

3. Under Section 5(2)(a) read
with item "63. Timber" in the First
Schedule to the Act a dealer in timber is
liable to pay sales tax thereon at 3 pies in
a rupee at the point of first sale. The
petitioners are sought to be taxed on
"planks, rafters, cut sizes, etc.," which
they sell to the customers under Section 5
of the Act treating them as general goods.
The contention of the petitioners is that
they deal in timber and since the sales
which they effect are not the first sales,
they are not therefore liable to pay any
tax under item 63 of the First Schedule to
the Act. They submit that since the
transactions fall under item 63 as they
deal in timber, they cannot be taxed under
Section 5 of the Act.

....

14. Thus 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 purpose.

37. It will thus be plain that
right from the inception, the Commercial
Taxes Department has been treating
planks, rafters and cut sizes as timber and
never taxed them till the attention of the
Government
was
drawn
by
the
Accountant-General, Andhra Pradesh.
Realising that the commodity was not so
taxed in view of the construction which
the Government had placed on the word
"timber" for a considerably long time, the
Government directed to tax these goods
prospectively under Section 5 treating
them as general goods. One thing which
is conspicuous is that even in the
subsequent stand the Government has
taken, they do not say that the planks,
rafters, etc., do not come within the
meaning of timber used in item 63. What
they say is that "planks, rafters and cut
sizes, etc., obtained from nascent timber
have to be treated as falling under
general goods".

38. What must follow is that
planks, rafters, cut sizes, etc., obtained
from logs of wood according to the
popular or commercial usage or the
interpretation
placed
by
the
administration is "timber" within the
meaning of item 63 of Schedule I to the
Act.

45. Applying these principles
thus decided to the facts of the present
cases, we have no hesitation in reaching
the conclusion that merely because
planks, rafters and cut sizes, etc., are
sawn or cut from logs of wood, they do
not alter their character. They still
continue to be raw materials which by
4 All. M/s Awadh Timber Merchant and Commission Agent Semri Road Vs. Commissioner Trade Tax U.P. Gomti NagarLucknow 829
themselves and in the same form cannot
be directly put to use for construction
purposes. The log of wood purchased by
the timber merchant is merely cut or sawn
to sizes for convenience sake and to make
them acceptable to the customers. They
do not in that process lose their character
as timber. They retain the same character.
What the merchants purchased in the
form of log of wood was timber. What
they sold to their customers in the shape
of planks, rafters and cut sizes after
processing them was also timber. The
customers purchased timber. There is no
other name suggested to such planks,
rafters, etc., except timber.

47. It was a common ground
that since timber is taxed at first point of
sale, when the Forest Department sells
the standing timber trees, is the first sale
and the sale by the timber merchants in
the form of planks, rafters and cut sizes,
etc., cannot be taxed a second time, as
item 63 permits levy of tax at the point of
first sale. The timber having suffered tax
once cannot be taxed again.

25. Supreme Court in the case of
Commissioner Sales Tax Vs. Lal Kuwa
Stone Crusher Pvt. Ltd. 2000 UPTC
463 (SC) has held that converting the
stone from boulder to small pieces i.e.
stone chip, gitti etc. will not amount to
change the nature of the commodity and
boulder will remain boulder and no tax
can be imposed as such.

26. This Court in Kalptaru Agro
Forest
Enterprises
Pvt.
Ltd.
Vs
Commissioner Commercial Tax, UP
Lucknow, 2016 NTN (Vol.61) 143 has
held that every type of operation of the
goods or finishing of goods would not
amount to manufacture unless it results in
emergence
of
a
new
commercial
commodity.

27. In view of the aforesaid
judgments the view emerges that no new
commercial
commodity
come
into
existence which could be said to be a
different
commodity.
Wooden
log
(timber) will remain wooden log (timber)
in its original character even after cutting
the same into sizes.

28. The Standing Counsel has relied
upon the judgment of Om Trading
(supra) wherein it has been held that the
goods were admittedly purchased from an
unregistered dealer without payment of
any tax and after purchase, it was cut into
sizes and new commodity was admittedly
be manufactured as pulp wood. The tax
was imposed under Section 3 AAAA of
UP Trade Tax Act on the purchase of
goods
and
thereafter
when
new
commodity as pulp wood was sold, again
tax was imposed.

29. The case-law cited by the
learned
Standing
Counsel
is
not
applicable to the facts of this case as no
new commercial commodity come into
existence, which has been sold by the
revisionist.

30. The Standing Counsel has
placed emphasis on the definition of
Section 2(e1) of UP Trade Tax Act and
has tried to convince the Court that in
view of the definition, the manufacturing
and cutting of wood into sizes amounts to
new commercial commodity comes into
existence.

31. The provision of section 2(e-1)
of the Act is quoted below:-
830 INDIAN LAW REPORTS ALLAHABAD SERIES

"2(e-1):
''Manufacture'
means
producing,
making,
mining,
collecting,
extracting,
altering,
ornamenting,
finishing,
or
otherwise
processing, treating or adapting any goods;
but does not include such manufactures or
manufacturing
processes
as
may
be
prescribed;"

32. Section 2 (e-1) of the UP Trade
Tax Act shows that the process of cutting
is not being included within the definition
of manufacturing. Thus the process of
cutting the wood from different sizes and
converting the wood log into plank, no
new commercial commodity comes into
existence. Timber remain timber and after
cutting the timber it does not loose its
original identity of timber and it does not
undergo any physical/commercial or any
kind of change. The identity of timber
remains same. Thus the process of cutting
and converting timber for log does not
come
under
the
definition
of
manufacturing as provided under Section
2 (e-1) of the UP Trade Tax Act.

33. In view of the aforesaid
observation of the Hon'ble Apex Court as
well as of this Court and other High
Courts, the position of law, which
emerges, is that after processing, some
new commercial commodity must come
into existence which may be identified
differently from its original.

34. In the case in hand, timber logs
were purchased and the same were sliced
converting into veneer (chiran) and the
same were sold by cutting the wood log
converting into veneer (chiran), no new
commercial
commodity
come
into
existence. Timber does not looses its
original identity of timber and it remains
the same.

35. In view of the aforesaid
observation of the various Courts, the
Tribunal was not justified in confirming
imposition of tax at the time of purchase
of timber (as purchase tax), which has not
been challenged by the revisionist and has
accepted even in the best judgement
assessment, by which its turnover was
enhanced, the veneer (chiran), which has
been obtained after cutting wood log into
small sizes and have been sold, cannot be
taxed again.

36. The notification, as mentioned
above, clearly shows that the subsequent
notification came into existence with
effect from 01.01.2000, by which the rate
of tax was enhanced from 15% to 16%,
which is not relevant for the assessment
year in dispute.

37. Moreover, when only one set
of tax can be levied by the State in the
event the commodity remains the same.
In the case in hand, the wood log, which
was purchased by the revisionist as
timber, remains the same even after
obtaining veneer (chiran) as it does not
looses its original identity of timber and
it
does
not
undergo
any
physical/commercial or any kind of
change. Thus, the process of cutting and
converting timber from wood log does
not come under the definition of
"Manufacturing" as provided under
section 2(e-1) of the Act.

38. In the results, the impugned
order is modified to that extent. The
question of law is answered accordingly
in favour of the assessee and against the
department.

39. The revision is allowed.
----------
4 All. M/s Awadh Timber Merchant and Commission Agent Semri Road Vs. Commissioner Trade Tax U.P. Gomti NagarLucknow 831
(2019)12 ILR A831

REVISIONAL JURISDICTION
CIVIL SIDE
DATED: LUCKNOW 05.12.2019

BEFORE
THE HON'BLE PIYUSH AGRAWAL, J.

Trade Tax Revision No. 269 of 2010

M/S
Awadh
Timber
Merchant
And
Commissioner Agent Semri Road
 ...Revisionist
Versus
Commissioner Trade Tax U.P. Gomti
Nagar Lucknow ...Opposite Party

Counsel for the Revisionist:
N.C. Mishra

Counsel for the Opposite Party:
C.S.C.

A. Tax Law - Central Sales Tax Act, 1956:
Section 8(2), 14(ia); Notification dated
23.11.1998 - TIF-2-2372/XI-9 (251)/97UP Act 15/48-order 98

The sale of coal was made without requisite
Form-C as prescribed under the Act. Coal is a
declared commodity u/s 14 (ia) and the rate of
tax as per notification is 4%. Therefore,
revisionist can be taxed at twice the rate
applicable i.e. 8% and not beyond that. (Para
11, 12, 13)

Trade Tax Revision allowed. (E-4)

Present revision is against order dated
20.05.2010, passed by Commercial Tax
Tribunal, Faizabad Bench, Faizabad.

(Delivered by Hon'ble Piyush Agrawal, J.)

1. The present revision has been
filed by the assessee against the order
dated 20.5.2010 passed by Commercial
Tax Tribunal, Faizabad Bench, Faizabad
in Second Appeal No. 120 of 2008
(Assessment Year 1999-2000) under
Central
Sales
Tax
Act
(hereinafter
referred to as the Act).

2. It has been averred that the
revisionist is engaged in the business of
manufacturing and sale of veneer (chiran)
as well as trading of coal. The business
premises of the revisionist was surveyed
on 27.12.1999, in which some loose
papers were found and it has also been
found that the revisionist had made sale of
coal without Form-C on the basis of
which the tax was imposed @ 10 % on
the sale of coal and best judgment
assessment was made. Feeling aggrieved
by the said order, the revisionist preferred
a first appeal, which was partly allowed
and taxable turnover was reduced and
thereafter the second appeal was filed
before the Tribunal. The Tribunal by the
impugned has confirmed the tax on the
sale of coal without Form-C @ 10 %.
Hence the present revision has been filed.

3. During pendency of the present
revision,
the
revisionist
filed
an
amendment
application,
which
was
allowed by this Court by order dated
25.4.2019. The revisionist by way of
amendment has raised the following
questions of law for consideration of this
Court:-

"1.
Whether
tribunal
was
justified in law to impose tax @ 10 % on
sale of coal against the provisions of
section 8 (2) of CST Act."

4. Heard Sri N.C. Mishra, learned
counsel for the revisionist and learned
Standing Counsel.

5. The counsel for the revisionist
submits that he only want to press the