The Hindu Business Line : Forest walks are wide and spacious

FORESTS are where many stories begin from, such as, "Long, long ago, there lived a deer in a forest, and not far away was this wily fox!" If that can be terrifying, rest assured that children learn simple romance too from rhymes like, "Little maid, pretty maid, whither goest thou? Down in the forest to milk my cow. Shall I go with thee? No, not now; when I send for thee, then come thou." But the invite that came to Rohilkhand Cement Spun Pipes (P) Ltd was not from the pretty maid but the taxman who sent for it when going down in the forest to milk the company of some tax!

"The greatest book is not the one whose message engraves itself on the brain — but the one whose vital impact opens up other viewpoints, and from writer to reader spreads the fire that is fed by the various essences, until it becomes a vast conflagration leaping from forest to forest," reminds Romain Rolland.

So too, when the Commissioner of Sales Tax, Uttar Pradesh, saw a forest in Rohilkhand's premises, I'm sure the thought must have spread from officer to officer till it snowballed into forceful arguments that won the case for the Department at the Tribunal.

But what was the issue? During the assessment year 1986-87, the company, carrying on the business of manufacture and sale of cement pipes and jute bags, filed its financial particulars. One of the items related to a revenue of Rs 1,82,300 from `sale of trees'. The assessing officer (AO) imposed sales tax of Rs 21,876 on this, citing notification No. 6071 dated September 30, 1983. A secret ambush on the forest side, you may say of that, drawing a line from King Henry VI, Part III. And Rohilkhand was not prepared to wait `till Birnam forest come to Dunsinane,' as in Macbeth. So the dispute went to the Allahabad High Court, before Justice Prakash Krishna.

There, the notification was discussed threadbare — that the point of tax is "sale (i) by the Forest Department; (ii) UP Forest Corporation; or (iii) by private owner of forest; or (iv) by importer".

According to the Department, the sale of the eucalyptus trees was taxable, considering the company a `private owner of forest'. Rohilkhand protested, saying that it was not the owner of any private forest. "Therefore, the crux of the controversy is whether the applicant can be treated as a private owner of forest, to fasten liability on it," reads the text of the judgment dated May 20.

The phrase `private owner of forest' was not defined in the UP Sales Tax Act or in the Rules framed thereunder or in any notification, observed the court, and pointed out the need to interpret the words `as they are understood in common parlance'. Forest gets formed by spontaneous or natural growth; however, people grow trees to maintain ecological balance, using scientific methods, said the court. Groups of such trees are treated as forests; therefore, the intention of the legislature in the said notification was to also cover trees grown by persons in huge quantities.

Lao Tzu speaks of how the career of a sage is of two kinds: "He is either honoured by all in the world, like a flower waving its head, or else he disappears into the silent forest." Judgments too are of two kinds: Those that interpret the provisions of the Act with words and phrases in the law; and those that would have to disappear into the silent forest of dictionaries to explore for the meaning and then emerge to give the verdict. Thus, Justice Krishna took the assistance of dictionaries to explain the meaning of forest.

For instance, forest is defined in Random House Dictionary as "an extensive area, preserving some or all of its primitive wildness and usually having game or wild animals in it."

Stout's Judicial Dictionary defines forest as "a place privileged by royal authority or by prescription for peaceful abiding and nourishment of beasts or birds of the forest." Webster's Third New International Dictionary defines `forest' as "a dense growth of trees and underbrush covering a large tract of land, an extensive plant community of shrubs and trees in all stages of growth and decay with a close canopy having the quality of perpetuation or development into an ecological climax, such a growth or community together with the land on which it stands."

According to the Shorter Oxford English Dictionary, forest is "an extensive tract of land covered with trees and undergrowth, sometimes intermingled with pasture; a woodland district usually belonging to the King, set apart for hunting wild beasts and games, and so on; and a wild uncultivated waste." The court noted what a full Bench of the Bombay High Court had said in Janu Chandra Waghmare and Ors vs State of Maharashtra explaining forest as including all these: "trees with fruits on them, shrubs, bushes, woody vegetation, undergrowth, pastures, honeycombs attached to a tree, juices derived on trees, things embodied on other like mines and quarries etc."

A half-century-old decision of the Exchequer Court in King vs Planters Nut and Chalklet Co Ltd also came in handy to help in interpretation: "Dealing with the meaning of the term `vegetables' it was held by the said Court that it is not botanist's conception as to what constitutes a `fruit or vegetable' which must govern the interpretation to be placed on a word but rather what would ordinarily mean in the matters of commerce in Canada be included therein. Botanically the oranges and lemons are berries but otherwise no one would consider them as such."

Vegetables appeared in a forty-year-old decision of the apex court in Ram Avatar Buddhi Prasad vs Assistant Sales Tax Officer.

One other case that assisted in figuring out the forest tangle was the Supreme Court decision of 1967 in Commissioner of Sales Tax, MP vs Jaswant Singh Charan Singh, where it was held that charcoal would be included in coalIn view of the above principles of interpretation of entries of a taxing notification it is difficult to agree with the view of the tribunal, said Justice Krishna. "The view taken by the Tribunal is neither in conformity with the dictionary meaning of word `forest' nor as it is understood in common parlance. It is also settled that the words of taxing statutes if are ambiguous, the theory of intention of legislature cannot be invoked into to fasten a tax liability," he ruled, quashing the order of the Tribunal.

"The Tribunal is not right in holding that the sale of eucalyptus trees is liable to be taxed, at the hands of the applicant, under the aforesaid notification. By no stretch of imagination, it is possible to hold that the dealer was private owner of forest," reads the verdict.

"The forest walks are wide and spacious; and many unfrequented plots there are fitted by kind for rape and villany," is a line from Titus Andronicus of Shakespeare.

Well, before we leave the forest, let us hear Orlando saying, "O Rosalind! these trees shall be my books and in their barks my thoughts I'll character; that every eye which in this forest looks shall see thy virtue witness'd every where," in As You Like It. And Rosalind philosophising, "There is no true lover in the forest; else sighing every minute and groaning every hour would detect the lazy foot of time as well as a clock." Oh, there seems to be a true taxman in the forest!

Tailpiece

"The new actor has started learning martial arts!"

"For a new movie?"

"No, to prepare himself for the taxmen."

Detaxification@TheHindu.co.in

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Opening the gates wider

Advantage, FTAs

May this not be limited only to discussion

Forest walks are wide and spacious

Appellate Tribunal `taxed'

Who are `employees based in India'?

Why bond with the bad

Driven by a need for cheap financing