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Produce Which Requires Human Effort And Labour To Grow Would Amount To Agricultural Produce

Gautam Badlani ,
  23 August 2022       Share Bookmark

Court :
High Court of Madras
Brief :

Citation :
W.P. Nos.46464 to 46470 of 2006

29th July, 2022

Justice R. Mahadevan and Justice Mohammed Shaffiq

M/s. United Nilgiri Tea Estates Company Ltd.
The Tamil Nadu Sales Tax Appellate Tribunal


The Madras High Court in this case dealt with the issue as to whether the sale of wood by the petitioner would constitute agricultural produce or firewood or timber. The Court noted that anything which requires human effort to grow would constitute agricultural produce. 


  • The petitioner had sold some wood of the cut/ sized Silver Oak grown in the petitioner's estate. The wood was sold in terms of cubic metres.
  • The petitioner claimed that the sale of wood would either fall under the category of agricultural produce or firewood. However his claim was denied first by the assessing authority and subsequently by the first appellate authority. The Appellate Tribunal affirmed the findings of the assessing authority and the appellate authority. 
  • Aggrieved by the order of Tamil Nadu Sales Tax Appellate Tribunal, the petitioner approached the High Court of Madras.


  • The petitioner contended that the sale of wood amounted either to agriculture produce or the sale of firewood.
  • The petitioner contended that since the wood for used for transportation they could be considered as agricultural produce.
  • The petitioner pleaded that the authorities erred in applying the nature of billing to determine the classification of wood. 


  • The respondents contended that the wood sold by the petitioner will not fall under the category of agricultural produce or firewood but would fall under the category of timber.  
  • Only timber is sold in terms of cubic metres and hence the wood/goods sold by the petitioner would be considered as timber. The respondents submitted that the user test must be applied to determine the applicable tax.
  • The petitioner was liable to pay tax on the sale of wood.


Tamil Nadu General Sales Tax Act, 1959 

  • Section 2(r): turnover 


  • Whether sales of cut / sized Silver Oak would fall under the category of agricultural produce as provided by Section 2(r) of the Tamil Nadu General Sales Tax Act, 1959


  • The court primarily noted the findings of the first appellate authority. The first appellate authority had held that the moment the tree was cut into logs, it ceased to be firewood. 
  • The authorities were of the opinion that since the wood was sold in terms of cubic metres and not weight, it could not be considered to be firewood.
  • The Court interpreted Section 2(r) of the Act and stated that agricultural/horticultural produce must be grown within the State by the assessee and the person who claims the exception must have substantial interest in the land where the produce is grown.
  • The Court noted that the Silver Oak trees are of exotic Australian origin and are used in tea estates in southern part of India. 
  • It was the case of the petitioner that these shade trees require periodic attention and human labour and thus they amount to agricultural produce.
  • The Court refered to the case of CIT vs. Sundara Mudaliyar( 18 ITR 259 ) and held that anything which does not grow in the wild and required human labour and effort to grow would be considered as agricultural produce. 


The Court interpreted the definition of turnover and agricultural produce in detail and concluded that the wood sold by the petitioner would amount to agricultural produce. 

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