{"id":152500,"date":"1994-04-15T00:00:00","date_gmt":"1994-04-14T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/karnataka-forest-devlp-corpn-vs-cantreads-pvt-ltd-on-15-april-1994"},"modified":"2016-04-14T00:26:36","modified_gmt":"2016-04-13T18:56:36","slug":"karnataka-forest-devlp-corpn-vs-cantreads-pvt-ltd-on-15-april-1994","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/karnataka-forest-devlp-corpn-vs-cantreads-pvt-ltd-on-15-april-1994","title":{"rendered":"Karnataka Forest Devlp. Corpn. &#8230; vs Cantreads Pvt. Ltd on 15 April, 1994"},"content":{"rendered":"<div class=\"docsource_main\">Supreme Court of India<\/div>\n<div class=\"doc_title\">Karnataka Forest Devlp. Corpn. &#8230; vs Cantreads Pvt. Ltd on 15 April, 1994<\/div>\n<div class=\"doc_citations\">Equivalent citations: 1994 AIR 2218, \t\t  1994 SCC  (4) 455<\/div>\n<div class=\"doc_author\">Author: R Sahai<\/div>\n<div class=\"doc_bench\">Bench: Sahai, R.M. (J)<\/div>\n<pre>           PETITIONER:\nKARNATAKA FOREST DEVLP. CORPN. LTD.\n\n\tVs.\n\nRESPONDENT:\nCANTREADS PVT. LTD.\n\nDATE OF JUDGMENT15\/04\/1994\n\nBENCH:\nSAHAI, R.M. (J)\nBENCH:\nSAHAI, R.M. (J)\nBHARUCHA S.P. (J)\nVENKATACHALA N. (J)\n\nCITATION:\n 1994 AIR 2218\t\t  1994 SCC  (4) 455\n JT 1994 (3)   357\t  1994 SCALE  (2)594\n\n\nACT:\n\n\n\nHEADNOTE:\n\n\n\nJUDGMENT:\n<\/pre>\n<p>The Judgment of the Court was delivered by<br \/>\nR.M. SAHAI, J.- The short and the only question of law\tthat<br \/>\nsurvives for consideration in these appeals directed against<br \/>\nthe  judgment  and order of the High Court of  Karnataka  is<br \/>\nwhether\t rubber\t sheets of various grades  supplied  by\t the<br \/>\nState  of  Karnataka  or  the  Karnataka  Forest  Plantation<br \/>\nCorporation  to the private limited companies,\twere  Forest<br \/>\nProduce within the meaning of the Karnataka Forest Act, 1963<br \/>\n(hereinafter referred to as, &#8216;the Act&#8217;) and hence liable  to<br \/>\npayment\t of  forest  development  tax  under  Section\t98-A<br \/>\nthereof.\n<\/p>\n<p>2.Even though validity of sub-section (1) of Section  101-A,<br \/>\nwhich enabled the State Government to grant or supply forest<br \/>\nproduce to any person on payment of seigniorage value as may<br \/>\nbe   fixed  by\tthe  Chief  Conservator\t of   Forests,\t was<br \/>\nchallenged,  it does not appear to have been pressed in\t the<br \/>\nHigh  Court  either before the learned Single Judge  or\t the<br \/>\nDivision  Bench\t nor was it pressed even in  this  Court  to<br \/>\nsupport\t the  order of the High Court.\tThe  dispute,  thus,<br \/>\ncentres\t round the question whether rubber sheets  could  be<br \/>\nregarded as &#8216;forest produce&#8217;.  It may further not be out  of<br \/>\nplace to mention that the definition of &#8216;Forest Produce&#8217;  in<br \/>\nthe  Act was amended in 1989 and rubber latex was  added  as<br \/>\none  of\t the items in it.  But the learned counsel  for\t the<br \/>\nState\tdid   not  rely\t on  the   amended   definition\t  as<br \/>\nclarificatory  of what was included earlier.  He  based\t his<br \/>\nsubmission,  rather on claim that the word &#8216;caoutchouc&#8217;\t was<br \/>\nwide enough to include rubber sheets.\n<\/p>\n<p><span class=\"hidden_text\">457<\/span><\/p>\n<p>3.The respondent, a private limited company, negotiated with<br \/>\nthe  State of Karnataka in 1979 for supply of 60  tonnes  of<br \/>\nnatural\t rubber of grades RMA 1 to V per month for a  period<br \/>\nof  five years.\t A year later State Forest  Corporation\t was<br \/>\nconstituted.\tThe   State,  therefore,   transferred\t the<br \/>\nliability   of\tsupply\tof  the\t quota\tof  rubber  to\t the<br \/>\nCorporation.   In  the\tmeantime the  Chief  Conservator  of<br \/>\nForest issued notification fixing seigniorage on raw  smoked<br \/>\nrubber.\t The State Government informed the company, that the<br \/>\nsupply of rubber from 9-1-1981 onwards would be at the\trate<br \/>\nmentioned  in  the orders made by the Chief  Conservator  of<br \/>\nForests\t under\tSection\t 101-A\tof  the\t Act.\tThe  company<br \/>\nchallenged  that  fixation of the seigniorage by  the  Chief<br \/>\nConservator of Forests by a writ petition filed in the\tHigh<br \/>\nCourt.\tThe writ petition was allowed by the learned  Single<br \/>\nJudge  and  it was held that the natural rubber,  which\t has<br \/>\nbeen  agreed  to  be  purchased\t by  the  Company  from\t the<br \/>\nCorporation or the State, being in the shape of RMA  sheets,<br \/>\nwas  not  forest  produce.  While  the\tState  filed  appeal<br \/>\nagainst\t that order of the Single Judge, the  Company  filed<br \/>\nwrit  petition for refund of the amount paid by\t it.   Since<br \/>\nthe controversy in the appeal and the writ petition was\t the<br \/>\nsame, the Division Bench decided both, the writ petition and<br \/>\nappeal, by a common order, agreeing with the learned  Single<br \/>\nJudge that latex, which is the natural produce, hardened  by<br \/>\napplication  of\t the sulphuric acid and given the  shape  or<br \/>\nform  of sheets and thereafter dried with the help of  smoke<br \/>\nand  graded  into grades of I to V could not be\t treated  as<br \/>\nforest produce, for the process applied resulted in bringing<br \/>\nout  a\tcommodity  which  was  different  from\tlatex,\t and<br \/>\ntherefore, no tax could be levied on it.\n<\/p>\n<p>4.&#8217;Caoutchouc&#8217;\tis  included as one of\tthe  forest  produce<br \/>\nunder  subsection (7) of Section 2 of the  Karnataka  Forest<br \/>\nAct.   In  Chambers  English  Dictionary,  &#8216;caoutchouc&#8217;\t  is<br \/>\ndefined\t as &#8216;India-rubber, gum-elastic; the latex of  rubber<br \/>\ntrees&#8217;.\t In Random House Dictionary, &#8216;rubber&#8217; is defined  as<br \/>\n&#8216;India\trubber, natural rubber, gum-elastic caoutchouc\t&#8211;  a<br \/>\nhighly\telastic, light cream or dark amber  coloured,  solid<br \/>\nsubstance  polymerized by the drying and coagulation of\t the<br \/>\nlatex\tor  milky  juice  of  rubber  trees   and   plants&#8217;.<br \/>\n&#8216;Caoutchouc&#8217;  is  described in Encyclopedia  Britannica\t as,<br \/>\n&#8216;the  principal constituent of natural rubber and  therefore<br \/>\nsometimes called pure rubber.  It occurs as a vegetable gum,<br \/>\nmixed  with  1\/20  to  8  times\t its  own  weight  of  other<br \/>\nsubstances.  Caoutchouc is a white resilient solid; at\t0-10<br \/>\ndegree\tCelsius it is hard and opaque, but it  becomes\tsoft<br \/>\nand translucent above 20 degree Celsius&#8217;.  In the same\tbook<br \/>\n&#8216;Rubber&#8217;  is described as, &#8216;an organic substance &#8211;  obtained<br \/>\nfrom  natural sources or synthesized artificially which\t has<br \/>\nthe  desirable properties of extensibility,  stretchability,<br \/>\nand toughness.\tPreviously known as caoutchouc, a term\tthat<br \/>\nhas  become  limited  to the chemically\t pure  form  of\t the<br \/>\nsubstance&#8217;.  In Encyclopedia of Social Sciences, Vol.  XIII-<br \/>\nXIV it is described thus,<br \/>\n\t      &#8220;Latex, which is not the sap of the tree but a<br \/>\n\t      milky fluid contained in the bark, is obtained<br \/>\n\t      by  narrow incisions in the bark.\t During\t the<br \/>\n\t      period  of high prices trees were tapped\tonce<br \/>\n\t      or even twice a day.  With lower<br \/>\n<span class=\"hidden_text\">\t      458<\/span><br \/>\n\t      prices  it  has become customary to  tap\tless<br \/>\n\t      frequently, but over a wider circumference  of<br \/>\n\t      the tree.\t The trees are ordinarily rested for<br \/>\n\t      two months or more each year.  After the latex<br \/>\n\t      has  been\t gathered  it  is  brought  to\t the<br \/>\n\t      plantation warehouses and coagulated by acetic<br \/>\n\t      acid  or some other chemical.   The  resulting<br \/>\n\t      rubber  comes on the market as &#8216;crepe&#8217;  rubber<br \/>\n\t      or, if\t it  has  gone\tthrough\t a   smoking<br \/>\n\t      process, as &#8216;smoked sheet&#8217;.&#8221;\n<\/p>\n<p>5.   &#8216;Caoutchouc&#8217;  is,\tthus natural rubber  which  includes<br \/>\nlatex.\tThe natural rubber or latex is milky fluid  obtained<br \/>\nby  incisions, in the bark of trees.  It can not  remain  as<br \/>\nsuch for long therefore it needs processing.\n<\/p>\n<p>6.   In\t the Rubber Grower&#8217;s Companion 1991 it is  mentioned<br \/>\nthat  the  main crop for the rubber tree is latex,  a  milky<br \/>\nwhite  dispersion of rubber in water which is  harvested  by<br \/>\nthe  process of tapping.  The latex that flows out from\t the<br \/>\nrubber\ttrees  on  tapping is  channeled  into\ta  container<br \/>\nattached  to them.  The latex gets dried up on\tthe  tapping<br \/>\npanel (tree lace) and the collection cups (shell scrap) form<br \/>\npart  of  the  crop and are collected by  the  tapper.\t The<br \/>\ndifferent  kinds of crops harvested from rubber\t plantations<br \/>\nare   highly   susceptible  to\tbacterial  action   due\t  to<br \/>\ncontamination  on  keeping.  Therefore, it is  essential  to<br \/>\nprocess\t them  into forms that will allow safe\tstorage\t and<br \/>\nmarketing.   One  of the marketable items  is  ribbed  sheet<br \/>\nrubber.\t  It  further discusses how the latex  is  converted<br \/>\ninto  ribbed  sheets.\tLatex  is  coagulated  in   suitable<br \/>\ncontainers into thin slabs of a coagulum and sheet through a<br \/>\nset of smooth rollers followed by a grooved set and dried to<br \/>\nobtain\tribbed\tsheet  rubbers; depending  upon\t the  drying<br \/>\nmethod\tsheets\trubbers\t are classified into  two  &#8211;  ribbed<br \/>\nsmoked\tsheets\tand  the air dried sheets.   It\t is  further<br \/>\nmentioned that the ribbed sheets after 2 or 3 hours are\t put<br \/>\nin  the smoke-house where the certain degree of\t temperature<br \/>\nis  maintained.\t The completely dried sheets are removed  to<br \/>\nthe  packing sheets where they are carefully  inspected\t and<br \/>\nclassified  according to standards published by\t the  Rubber<br \/>\nManufacturers&#8217; Association.\n<\/p>\n<p>7.   The  High Court found that since what was sold  by\t the<br \/>\nappellant was not rubber obtained from the trees but  sheets<br \/>\nor  blocks of rubber which were chemically and\tmechanically<br \/>\nprocessed  it could not be held to be forest  produce.\t The<br \/>\nHigh Court applied the test of commercial parlance and\theld<br \/>\nthat where latex produced from the tree underwent processing<br \/>\nhowsoever  meager it was the resultant produce\tobtained  by<br \/>\naddition of sulphuric acid could not be treated to be forest<br \/>\nproduce.  It was further found that since Government  rubber<br \/>\nplantations itself treated grade rubber sheets as  different<br \/>\nfrom  wet latex while selling the same in auction  it  could<br \/>\nnot claim that the latex after processing remained the same.<br \/>\nNeither\t reasoning appears to be well founded.\tThe  meaning<br \/>\nof  the word &#8216;caoutchouc&#8217; has been discussed.  Latex is\t the<br \/>\nmodem  name  for  caoutchouc.  It  is  nothing\tbut  natural<br \/>\nrubber.\t Caoutchouc or latex means not only milky  substance<br \/>\nobtained from the trees but it included all milky  substance<br \/>\nprocessed, till it is made marketable.\tSince the processing<br \/>\ndoes  not  result  in bringing out a new  commodity  but  it<br \/>\npreserves the same and renders it fit for being marketed, it<br \/>\ndoes  not change its character.\t It was caoutchouc or  latex<br \/>\nwhen it was obtained from the trees,<br \/>\n<span class=\"hidden_text\">459<\/span><br \/>\nit  continued to be caoutchouc or latex when it was  treated<br \/>\nby  sulphuric acid and continued to be so even after  it  is<br \/>\ndried with smoke to obtain the shape of sheets.\n<\/p>\n<p>8.   The  test\tof  commercial\tparlance  while\t considering<br \/>\nentries\t in Sales Tax Act was evolved as the tax  under\t the<br \/>\nSales Tax enactments is normally either on sale or  purchase<br \/>\nor  on\tmanufacture  or import etc.  Therefore,\t it  is\t the<br \/>\nunderstanding or the knowledge of the item by the common man<br \/>\nor  persons  dealing  in it in the market  and\tnot  in\t the<br \/>\ntechnical  or  botanical sense which was  accepted  by\tthis<br \/>\nCourt  as  the\tdeciding factor.  But that  test  cannot  be<br \/>\napplied while considering the definition of forest produce.\n<\/p>\n<p>9.   In\t the result, these appeals succeed and are  allowed.<br \/>\nThe order passed by the High Court is set aside and the writ<br \/>\npetitions filed by the respondents shall stand dismissed.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Supreme Court of India Karnataka Forest Devlp. Corpn. &#8230; vs Cantreads Pvt. Ltd on 15 April, 1994 Equivalent citations: 1994 AIR 2218, 1994 SCC (4) 455 Author: R Sahai Bench: Sahai, R.M. (J) PETITIONER: KARNATAKA FOREST DEVLP. CORPN. LTD. Vs. RESPONDENT: CANTREADS PVT. LTD. DATE OF JUDGMENT15\/04\/1994 BENCH: SAHAI, R.M. (J) BENCH: SAHAI, R.M. (J) [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[30],"tags":[],"class_list":["post-152500","post","type-post","status-publish","format-standard","hentry","category-supreme-court-of-india"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Karnataka Forest Devlp. Corpn. ... vs Cantreads Pvt. 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