V.M. Abdul Najeeb vs State of Kerala

C.N. Ramachandran Nair, J.—The petitioner is a dealer engaged in the manufacture and sale of packing cases. In the Kerala general sales tax assessment for the year 2001-02, the petitioner claimed sales tax exemption under item 41 of Notification S. R. O. No. 1090/99 on the purchase turnover of rubber wood used in the manufacture of packing cases for sale. However, exemption was declined for the reason that rubber wood was specifically brought under notification through an amendment by S. R. O. No. 278/2004 dated March 19, 2004. In appeal, the Tribunal confirmed the disallowance for the reason that prior to the amendment to the notification bringing rubber wood specifically within the scope of exemption, the petitioner was not entitled to exemption. We have heard senior counsel appearing for the assessee and the Government Pleader for the respondent.

The exemption provided under item 41 of S. R. O. No. 1090/1999 is "on the turnover of purchase of softwood for use in the manufacture of matches, packing cases, plywood flints, tea chests, wooden crates, wooden cabledrums or veneers". The condition for eligibility for exemption is payment of sales tax on the goods manufactured either under the Kerala General Sales Tax Act or under the Central Sales Tax Act. Admittedly and what is clear from annexure A order is that the petitioner has manufactured and sold packing cases outside the State on which Central sales tax is collected and remitted. Therefore, the only question to be considered is whether rubber wood purchased by the petitioner answers the description of "softwood" as contained in original entry 41 of S. R. O. No. 1090/1999. It is the conceded position that through another Notification S. R. O. No. 278/2004, the original notification was amended bringing rubber wood specifically within the exemption clause. The contention of senior counsel for the petitioner is that the amendment is clarificatory in nature and since rubber wood is also softwood, exemption is available to the assessee even for period prior to the amendment. The Government Pleader on the other hand contended that rubber wood does not fall within the description of softwood and that is the reason why amendment was introduced later to cover rubber wood also.

We are inclined to accept the contention of counsel for the petitioner because softwood is a generic term used to cover several varieties of wood all of which fall within the category of softwood. In fact the two general categories of wood are hard and softwood. While the former category is durable and used for construction purposes, furniture making, etc., the latter one is used for making packing cases, plywood, wood pulp, etc. It is a well known fact that rubber wood is a highly perishable softwood which can be made into durable hardwood through complicated process involving chemical impregnation. In fact untreated rubber wood is highly perishable and so much so, it is generally used for making packing cases, plywood, as firewood, etc. Since rubber wood is a common item used for making packing cases, the Government wanted to avoid unnecessary litigation and that could be why it is specifically brought as an item falling under the category "softwood" through amendment. Since rubber wood answers the description of "softwood", we hold that the amendment is only clarificatory in nature and exemption was available from the date of original Notification, i.e., S. R. O. No. 1090/1999. We, therefore, allow the revision case by declaring the petitioner''s eligibility for exemption and vacate the order of the Tribunal with direction to the officer to revise the assessment granting exemption on purchase turnover of rubber wood.