Cut or sized Shade Trees is Agricultural Produce, not Taxable under TNGST: Madras HC [Read Order]

The Division Bench of Madras High Court held that cut or sized shade trees is agricultural produce, not taxable under Tamil Nadu Goods and Services Act (TNGST), 1959.

The question before the Court was whether the sales of cut or 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 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.

The present writ petitions are filed by the petitioner, M/s. United Nilgiri Tea Estates Company Ltd against the order of the Tribunal challenging the levy of tax, on the premise that sale of shade trees cut or sized for the purpose of transportation, would still constitute “agricultural produce” and would fall outside the purview of turnover under the TNGST Act, 1959.

The Court relied on the judgments in CIT vs. Raja Benoy Kumar Sahas Roy and CIT vs. Sundara Mudaliyar, wherein it was pointed out that “irrespective of the nature of the produce or the product of the land whatever is grown on land aided by human labour and effort, whatever does not grow wild or spontaneously on soil without human labour or effort, would constitute “agricultural produce”

The Bench consisting of Justice R Mahadevan and Justice Muhammed Shaffiq observed that “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”.”

“In view of the above, it is clear that the cut/ sized shade trees would constitute “agricultural produce” and therefore, fall outside the purview of TNGST Act, 1959” the Court said.

R.L. Ramani, appeared for the petitioner and Richardson Wilson, Additional Government Pleader (Taxes) appeared for the respondents.

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