"A ventilator is made, a cord is hung, and a lady who sleeps in the bed dies. Does not that strike you?"
"I cannot as yet see any connection."
"Did you observe anything very peculiar about that bed?"
"It was clamped to the floor. Did you ever see a bed fastened like that before?"
"I cannot say that I have."
Thus proceeds the conversation between Dr Watson and Sherlock Holmes in The Adventure of the Speckled Band. You can read the full story on www.readbookonline.net. For tax professionals, though, what should be more interesting is a recent apex court judgment that referred to `the fixed bed' in The Speckled Band story: Craft Interiors Pvt Ltd vs Commissioner of Central Excise, Bangalore.
"On glancing over my notes of the seventy-odd cases in which I have during the last eight years studied the methods of my friend Sherlock Holmes, I find many tragic, some comic, a large number merely strange, but none commonplace; for, working as he did rather for the love of his art than for the acquirement of wealth, he refused to associate himself with any investigation which did not tend towards the unusual, and even the fantastic."
That's how Sir Arthur Conan Doyle begins the `adventure'. The verdict on hand begins by narrating what Craft does. It is a company that carries out activities such as: "Civil works, painting, ceiling work, electrical work, laying of vinyl flooring, tables, chairs, sofa sets, erection of immovable items viz., partitions (wooden/ glass/aluminium/gypsum board), storages, workstations, laying of wooden flooring, column cladding, skirting, mirror panelling, window sill, wooden steps, doors, huge conference tables and huge reception tables depending on the customer's requirements."
The orders that Craft gets are `on a turnkey basis for the entire activity'. Starting with customers' `bare open floor, which has an exterior wall and internal columns', Craft goes about executing the contract, in the course of which it also manufactures furniture. This is how:
First, markings are made on the floor or the wall, based on drawings approved by the architect.
Various materials such as wood and plywood are procured from the open market; frames of the wood are cut to size and fixed to the wall or floor; plywood required is cut to size and fixed to the wall using screws and nails.
Skeletal boxes are then made and fixed on the wall on marked position; interior partitions and shelves are then made in the case of storage units, running counters, rear unit, etc; and the whole unit is laminated or veneered which would cover the screws and nails.
After these activities, `storage units, kitchen counters or conference tables/reception tables' cannot be removed as such, nor moved from one place to another. These cannot be dismantled and removed in complete or semi-knocked condition from one place to another, but can only be cannibalised, using `broken pieces of wood, laminates and so on.'
Fine, what was the dispute? The taxman said that the items created by Craft were furniture, but the company said these were fixtures. According to the Central Excise authorities, Craft had manufactured and assembled excisable goods, i.e., furniture and furniture parts, in the premises of various customers. Craft contended that activities undertaken by the company, i.e., erection of storage units, kitchen counters, reception tables and conference tables, resulted in the emergence of immovable property, which could not be considered as excisable goods.
The Commissioner of Central Excise held the items in question to be furniture. The Tribunal's view too concurred with the Commissioner's that although these items emerge on a piece by piece fabrication, the commodity is known in the market by name of table, storage counters and so forth, and as such are classifiable as furniture. Thus, when appeals at successive levels resulted in orders favouring the `furniture' line of thinking, Craft knocked the doors of the apex court.
There, V. Lakshmikumaran and A. R. Madhav Rao argued for Craft, while K. Radhakrishnan spoke for the Department. The word `furniture' means objects that are movable and are complete before being placed either on the floor or the ground, said Craft's counsel. `Furniture' does not cover items that emerge either as part of an immoveable property or are erected stage by stage in its completion, he said. "These, he submitted, were fixtures and not furniture. He submitted that several of the items in question were erected piece-by-piece and fixed to the wall or ground and as such are not moveable property. In other words, the same cannot be removed without cannibalising, i.e., without reducing them into broken piece of wood, laminates, etc."
Justices Ashok Bhan and Markandey Katju of the Supreme Court referred to the definition of `furniture' in various dictionaries. For instance, in the Concise Oxford English Dictionary, `furniture' means "the movable articles that are used to make a room or building suitable for living or working in, such as tables, chairs, or desks." Chambers English Dictionary defines `furniture' as "movables, either for use or ornament, with which a house is equipped." And New Webster's Dictionary defines `furniture' as "movable articles, such as tables, chairs, desks, required for use or ornament in a house or office."
Therefore, ordinarily furniture is not something immovable, or something which is fixed in a position which can be removed only by cannibalising, said the judges. "We agree with learned counsel for the appellants that the latter are fixtures and not furniture. Several of the items in question in the present case, e.g. kitchen overhead and below counters, and storage units are, in our opinion, clearly not `furniture' and hence not excisable under Subheading 9403 as furniture," they stated. Chapter Sub-heading 9403 of the Central Excise Tariff Act, 1985 reads, "Other furniture and parts thereof."
An interesting paragraph in the text of the October 31 decision is on interpretation of words. "When we interpret a word we should not only see the dictionary meaning but even more the popular meaning which the word has acquired in common parlance," observed the judges. "The popular meaning overpowers the etymological meaning," they said, citing K. L. Sarkar's book Mimansa Rules of Interpretation. Sometimes chairs, beds, tables, and desks are affixed to the ground, but nevertheless they will still be called furniture, noted the judges, recalling the fixed bed in The Speckled Band.
Another example that finds mention in the verdict is the word pankaja, which literally means born in mud. "The word panka means `mud' and the word ja means `which is born in'," explains the judgment. Etymologically, pankaja can mean many things born in mud, such as insects, vegetation, and water flowers. "However, by popular usage the word pankaja has acquired a particular meaning in common parlance, i.e., lotus. This meaning will, therefore, prevail over the etymological meanings."
So too, the word `furniture' has a meaning in common parlance, which every layman understands, reasoned the judges. "It commonly refers to chairs, desks, tables, beds, and so on. Hence we should give it this popular meaning."
Idiomatically, however, furniture can be something non-moving, or a fixture. "If someone or something is part of the furniture in a place, they have been there for so long that they seem to be a natural part of that place," educates Cambridge International Dictionary of Idioms.