ADDITIONAL COMMISSIONER (LEGAL) Vs. LOHIYA AGENCIES

JUDGEMENT

(1.) Leave granted.

(2.) 'Gypsum' (calcium sulphate dihydrate - CaSO 4.2H2O) is a natural mineral which is used in a variety of activities and products like pesticides, as a soil additive, as a water additive, as a food additive, for plant treatment,but, more importantly, in the present context, for construction purposes.Under the Rajasthan Value Added Tax Act, 2003 (hereinafter referred to as 'RVAT'), Entry 56 of Schedule IV specified 'Gypsum' as a taxable entity, at 4%. This Entry was, however, amended and substituted vide Notification No. F.12(63)FD/Tax/2005-19, dated 19.4.2006, notified, inter alia, to expand the meaning of Entry 56 of Schedule IV of the RVAT by changing it to 'Gypsum in all its forms'. The short question which arises for consideration in the present appeal is whether 'gypsum board' would fall within this Entry 56, and be taxed at 4%, for the relevant assessment years, or whether it would fall in the then residuary Entry 1 of Schedule V, to be taxed at 12.5%.

(3.) The brief facts which have given rise to the present dispute are as follows. M/s. Indian Gypsum Ltd. (hereinafter referred to as 'IGL'), a manufacturer of what is commonly known as drywall or 'gypsum board', moved an application under Section 36 of RVAT before the Additional Commissioner, Commercial Tax Department, Rajasthan, Jaipur for ascertaining whether gypsum board would fall within the category of the amended Entry 56 of Schedule IV of the RVAT, with 4% rate of tax applicable, or under the residuary Entry referred to aforesaid. The Additional Commissioner, vide order dated 27.9.2007, opined that 'gypsum board', being commercially a different product would not fall under Entry 56 of Schedule IV of the RVAT but would fall under the residuary Entry, making it subject to the 12.5% slab of taxation. The gravamen of reasoning of the Additional Commissioner, as found from the order, is that 'gypsum board' is a separate commercial product using a different name and thus the factum of 95% of the 'gypsum board' being constituted of gypsum is not relevant, as supported by the fact that a long manufacturing process is involved in preparing 'gypsum board', wherein in addition to the calcination process, additives, paper, foam, water etc., are used, resulting in the formation of a product having uses, quite dissimilar to gypsum.