Holding

The wood‑heaps are not "Timber" within the meaning of entry 32A of the Act.

Summary

The Supreme Court examined whether stacks of eucalyptus wood sold by the Madhya Pradesh Forest Department, after removal of poles and ballies, qualified as "Timber" under entry 32A of the Madhya Pradesh General Sales Tax Act, 1958, thereby attracting a 16% sales tax, or as "fire‑wood" under entry 12, attracting a 3% tax, or fell under the residuary entry. The High Court had held the wood to be "Timber" and upheld the 16% levy. The Supreme Court held that the term "Timber" must be given its popular, everyday meaning and that the wood‑heaps, being remnants and not suitable for building purposes, could not be classified as "Timber". Consequently, the Court set aside the High Court’s finding, remitted the matter for determination of the correct entry, and directed a refund of the excess tax collected. The appeals were allowed in part and the case was remitted to the High Court.

Issues considered

Whether stacks of eucalyptus wood sold after removal of poles and ballies constitute "Timber" under entry 32A of Part II of Schedule II of the Madhya Pradesh General Sales Tax Act, 1958.
Whether the same wood should be treated as "fire‑wood" under entry 12 of Part V or fall under the residuary entry of the Act.
How the terms "Timber" and "fire‑wood" are to be interpreted in a taxing statute – technical versus popular meaning.

Legislation cited

Madhya Pradesh General Sales Tax Act, 1958s. Schedule II Part II Entry 32A, s. Schedule II Part V Entry 12, s. Schedule II Part VI Entry 1

Subjects

Sales taxTimberFire‑woodStatutory interpretationMadhya Pradesh General Sales Tax ActEucalyptus woodTax classificationRemandRefund

Judgment

MUKESH KUMAR AGGARWAL & ORS.
v. A
STATE OF MADHYA PRADESH & ORS.

DECEMBER 18, 1987

[S. NATARAJAN AND M.N. VENKATACHALIAH, JJ.)
B
Madhya Pradesh General Sales Tax Act, 1958: Schedule II Part
II Entry 32A and Part V, Entry 12-Stacks of 'Eucalyptus wood' sold
b forest department after separating the 'Ba/lies' and 'Poles'-Whether
Timber' or 'firewood'-Liability for sales-Tax.

Words and Phrases-Timer'-'Fire' -wood'-Meaning of. c
The Forest Department of Madhya Pradesh sold to the appellants,
' who are dealers in timber, stacks of "eucalyptns-wood" after separat-
ing 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 Schednle
.. II of the Madhya Pradesh General Sales Tax Act, 1958, was sought to D
be recovered from the appellants on the gronnds 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", E
was merely 'lire-wood' within the meaning of and attracting entry No.
,.,. t 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
"-i: 2oods we,re 'Timber' and attracted entry 32A of Part II. The High
'tourt took the view that where the wood was not, in the normally
)" accepted commercial practice, lire wood, and more especially, where F
the wood was sold and purchased subject to specifications which
condnce the wood to particular purposes other than fuel, the goods sold
cannot be regarded as firewood.
The appellants' contentions reiterated before this Court were (l)
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 'lire G
~ wood heaps', (3) that the wood-stacks could, by no stretch of imagina-
tion, be held to answer the well-known concept of 'Timber', and (4)
that the wood sold was 'lire-wood' or at all events, plain 'wood' not
amounting to 'Timber' or 'firewood' in which case it fell within the
residuary entry.
H
501
502 SUPREME COURT REPORTS [1988) 2 .S.C.R.

A The respondents, on the other hand, urged that the 'wood' sold
did not admit of being described as 'fire-wood' because nobody used
encalypt_us 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,
B
HELD: ( l) 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 ~ot
"fire-wood" it need not necessarily and for that reason alone -ht
'Timber'. All wood is not timber as, indeed, all wood is not 'fire-wood'
C either though perhaps it may not be incorrect to say that both 'fire-
wood' and 'Timber' are 'wood' in its generic sense. [SOSC)

(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)
D
(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 •n common parlance i.e. "that sense which people
conversant with the subject matter with which the statute is dealing,
E 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
1
determinative of the nature of the goods; nor even the nomenclature of
the goods as given by the authorities is determinative. The fact that th~
F purchasers were dealers in timber is also not conclusive. (508G I

(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
G of ideas: as to its size, stability, utility, durability, the unit of meas-
ure of quantity and of valuation etc. [505D; 507A]

( 6) Having regard· to the size, nature and description ofthe wood
in the present case, the 'wood-heaps' were not susceptible to be or did
not admit of being calJed 'Timber" with all the concomitants and
H ~ssociations of that idea. [509F]
M.K. AGGARWAL v. STATE OF M.P. [VENKATACHALIAH. J.) 503

.f; (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 differen·
ces of kind. [509E·Gl
B
Shantabai v. State of Bombay, [1959] SCR 265; referred to.

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. 2191and413 of 1985. C

>- A.K. Sanghi for the Appellant in C.A. No. 4026 of 1987.

. 1987.
G.L. Sanghi and J.R. Das for the Appellant in C.A. No. 4027 of
D
-< S.N. Khare, R.K. Sharma and T.C. Sharma for the Respon-
clents.

The J udgment c< the Court .was delivered by

°'r VENKATACHALIAH, J. In these petitions under Article 136 E
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 F
)' 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 af ter the extraction of "poles" and "Ballies" of Eucalyptus G
(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.
H
504 SUPREME COURT REPORTS [1988] 2 S.C.R.

2. Special Leave is granted in both the cases. The appeals are )\
A
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 respon-
dents.

B 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 ~f
certain weil-settled principles, guiding the matter.
c Three entries as they then stood in the Schedule to the 'Act' were
pointed out by learned counsel as the possible alternatives:

Schedule II

D Part II

Entry 32 A: Timber ... 16%

PARTY

E Entry 12 Fire-wood&
charcoal .. 3 %

Part VI
Entry 1 All other goods
not included in
F 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 left-overs and remnants of
G 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 regad to the well-known concept of what constitutes 'Timber'
the wood-stacks sold could, by no stretch of imagination, be held to
H answer the description of 'Timber'. The wood sold, it was said
M.K. AGGARWAL v. STATE OF M.P. [VENKATACHALIAH, J.] 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 B
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 com-
mon, commercial understanding of those terms used and not in their c
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 D
meanings of 'Timber' the legal and the popular, coalesce and are
broadly subsumed in each other.

In Honeywood v. Honeywood, 11874], 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
, I
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 F
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, :md it varies in two ways. First of all, you may G
have trees called timber by the custom of the country-
beech in some countries, hornbeam in others, and even
whitethorn and black-thorn, and many other trees, are con-
sidered 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 H
506 SUPREME COURT REPORTS [1988] 2 S.C.R.
A 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."

B In Shantabai 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).
c
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
D 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':
E
"wood meant for building or such like use".

In the Chambers 20th Century Dictionary, the meaning of the
word 'Timber' is this: · 1

F 'wood suitable for building or carpentry, whether growing or cut:
standing trees of oak, ash, elm, (locality by custom) other kinds
etc.'
(emphasis supplied)

G 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.'

H (emphasis supplied)
M.K. AGGARWAL v. STATE OF M.P. [VENKATACHALIAH, LI 507

5. In its popular sense, 'timber' is understood to be 'Imarathi- A
Lakdi'. In a popular-sense 'Timber' has certain association of ideas: as
to its size, stability, utility, durability, the unit or measur.e 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
8
of "Timber''. When 'standing-timber, is sold as uncut tree different con-
siderations 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 Ix !. 25 x 2 mtrs. With C
each piece of a length of 1.25 meters and a girth, at the thinner end, of
~ not less than JO ems. 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 rnw 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 D
~ 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 endeavour to controvert appellants' con-
tention that the wood sold was "fire-wood" went on to say that while E
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 eucalyp-
tus 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: F

"Fire-wood in common commercial parlance and as under-
stood 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 G
· 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
H
who may indulge their fancies in specialities in firewood.
508 SUPREME COURT REPORTS [1988] 2 S.C.R.

A But that, again, is not the test. Where the wood is not, in
the normally accepted commercial practice, firewood, a~d
more especially, where the wood is sold and purchased
subject to specifications which conduce the wood to particu-
lar purposes other than fuel, which is the case in the pre-.
sent two revisions, the goods sold cannot be regarded as
B firewood."

While something, perhaps, could be argued in support of this reason-
ing, 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
c 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 'fire-
wood' and 'Timber' are 'wood' in its generic sense.

The High Court further reasoned:
D
" ...... 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 ........ "

E " ..... 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
F 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
G 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
M.K. AGGARWAL v. STATE OF M.P. [VENKATACHALIAH, J.) 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 :elative con-
cept 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.
B
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 C
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 D
'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 E
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 F
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. Differ-
ences of degree can bring about differences of kind. G

~ 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 H
510 SUPREME COURT REPORTS [1988] 2 S.C.R.
A
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.

B 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 dis-
posed of accordingly.
c 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
D would only be 10% and that respondents, accordingly, should be di-
rected to refund to the appellants sums equivalent to 6% of the tax,
wherever tax at 16% has been collected, without waiting for a decison
on remand as indeed, there would be no prospect of the goods attract-
ing tax at a rate higher than 10%-now that entry 32 A is held inapplic-
able. This, in our opinion is a reasonable request and requires to be
E accepted. The concerned Respondents are directed to refund to the
appellants' s\Ims equivalent to 6% wherever the taxes are already
recovered at 16%.

10. In the circumstances, there will be no order as to costs. i
R.S.S. Appeals allowed.
y