Cut/sized share trees not liable to tax under TNGST Act, 1959

United Nilgiri Tea Estates Company Ltd. Vs Tamil Nadu Sales Tax Appellate Tribunal (Madras High Court)

Held that that the cut/ sized shade trees would constitute ‘agricultural produce; and therefore, fall outside the purview of TNGST Act, 1959.

Facts- The short question that arises for consideration herein is, whether the sales of cut / sized Silver Oak grown as shade trees in the Tea Estates of the petitioner admittedly in cubic metre and charged per cubic metre would constitute “agricultural produce” in terms of Section 2(r) of the Tamil Nadu General Sales Tax Act, 1959 (TNGST Act, 1959) or would constitute sales of “firewood” and thus exempt in terms of Entry 52 of Part B of the Third Schedule to the TNGST Act, 1959 or would constitute sales of “timber” liable to tax under the TNGST Act, 1959.

Conclusion- The shade trees have their origin in Australia, an exotic plant variety and they are used as shade trees in tea estates in southern parts of India. These shade trees viz., Silver Oak need to be attended to periodically and they have to be planted and grown at particular intervals/distance to serve its purpose as shade trees for growth of tea plants. It is not the case of the Revenue that the growth of Silver Oak is wild or spontaneous, rather it is the case of the petitioner, which remains uncontroverted, these require human effort/labour and attention and thus, would constitute “agricultural produce”.

Held that that the cut/ sized shade trees would constitute “agricultural produce” and therefore, fall outside the purview of TNGST Act, 1959.

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