KARNATAKA FOREST DEVELOPMENT CORPORATION LTD. ETC. ETC. versus CANTREADS PVT. LTD. AND ORS.

Citation: [1994] 3 S.C.R. 539 · Decided: 15-04-1994 · Supreme Court of India · Bench: R.M. SAHAI · Disposal: Appeal(s) allowed
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Judgment (excerpt)

KARNATAKA FOREST DEVELOPMENT 
A 
·~ 
CORPORATION LTD. ETC. ETC. 
v. 
CANTREADS PVT. LTD. AND ORS. 
APRIL 15, 1994 
B 
R.M. SAHA!, S.P. BHARUCHA AND N.VENKATACHALA, JJ.] 
; 
• 
Kamataka Forest Act, 1963 : ss.2(7), 98.4, IOIA-'Forest produce'-
'Caoutchouc'-Raw smoked rubber-Shaped in RMA sheets of grades I to 
V-Lery of Forest Development Tax on--Held, caoutchouc or latex obtained c 
from trees, treated by sulphuric acid and dried with smoke to obtain shape of 
sheets continued to be the same--RMA sheets of grades I to V were forest 
produce. 
The appellant-Corporation supplied sheets of natural rubber of 
D 
grades RMA I to V to the respondent-Company. The Chief Conservator of 
Forest issued a notification under s.lOlA of the Kamataka Forest Act, 
1963, levying Forest Development Tax on raw smoked rubber. The State 
Government informed the respondent the rate of supply of rubber in 
accordance with the order of the Chief Conservator of Forest. The respon-
dent challenged the fixation of seigniorage by filing a writ petition before E 
the High Court which held that the natural rubber in the shape of RMA 
sheets as purchased by the respondent was not forest produce. The State's 
appeal was dismissed by the Division Bench of the High Court holding that 
latex being a natural produce, hardened by chemical process in the form 
of sheets, dried with the help of smoke and graded in Grades I to V, F 
resulted in bringing out a commodity different from latex and could not 
be treated as forest prodnce and, therefore, no tax could be levied on it 
• 
In appeal to this Court, it was contended on behalf of the appellants 
that the word 'caoutchouc' enumerated as a 'forest produce' under s.2(7) 
of the Act was wide enough to include rubber sheets of varying grades G 
supplied to the respondent. 
Allowing the appeal, this Court 
HELD : 1.1. 'Caoutchouc' which is included as one of the forest 
'~ 
produce under s.2(7) of the Karnataka Forest Act, 1963, is natural rubber H 
539 
• 
540 
SUPREME COURT REPORTS 
[1994] 3 S.C.R. 
A which includes latex. Latex is the modern name for caoutchouc. It is 
nothing but natural rubber. Caoutchouc or latex means not only milky 
substance obtained from the trees but it included all milk substances 
processed, till it is made marketable. It cannot remain as such for long, 
therefore, it needs processing. Since the processing does not result in 
B 
bringing out a new commodity but it preserves the same and renders it 
fit for being marketed, it does not change its character. Caoutchouc or 
latex obtained from the trees continued to be the same when it was treated 
by sulphuric acid and even after it was dried with smoke to obtain the 
shape of sheets. [pp. 542-G-H; 543-G-H; 544-A] 
C 
1.2. The High Court, while applying the test or commercial parlance, 
erred in holding that where latex produced from the tree underwent 
processing howsoever meagre it was, the resultant produce obtained by 
addition of sulphuric acid could not be treated to be forest produce and; 
that since government rubber plantations itself treated grade rubber 
sheets as different from wet latex while selling the same in auction, it 
D could not claim that the latex after processing remained the same. The 
test of commercial parlance while considering entries in Sales Tax Act 
cannot be applied while considering the definition of forest produce. 
[543-F-H, 544-A-C) 
Random House Dictionary, Encyclopaedia Britannica, and En-
E cyclopaedia of Social Sciences, Vol. XIII-XIV, referred to. 
F 
G 
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2674 of 
1991 etc. etc. 
From the Judgment and Order dated 4.3.91 of the Karnataka High 
Court in W.P.No. 14734 of 1990. 
S.K. Kulkarni and Suryakant for the Appellants. 
K.N. Bhat, Ravi P.Wadhwani, M. Veerappa and K.H. Nohin Singh 
for the Respondents. 
The Judgment of the Court was delivered by 
R.M. SAHA!, J. The short and the only question of law that survives 
for consideration in these appeals directed against the judgment and order 
of the High Court of Karnataka is whether rubber sheets of various grades 
H supplied by the State of Karnataka or the Karnataka Forest Plantation 
, ' 
411
• 
• 
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.. 
FORESTDEVL CORPN. LTD. v. CANTREADS LTD. [SAHAJ,J.] 
541 
Corporation to the private limited companies, were Forest Produce within A 
the meaning of the Karnataka Forest Act, 1963 (hereinafter referred to as 
'the Act') and hence liable to payment of forest development tax under 
Section 98-A
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