COMMISSIONER OF SALES TAX Vs. INDIA GYPSUM LTD

JUDGEMENT

(1.) Admit on the following question:

(2.) The respondent herein vide letter dated July 14, 2005, had sought clarification from the appellant about the rate of tax on gypsum board covered by invoice No. 5190356 dated April 21, 2005. According to the respondents gypsum board is a versatile building material which lends itself to application in the interior spaces of commercial and residential premises. The respondents manufacture and market gypsum-based products which are "gypsum board and gypsum plaster". The basic ingredients of these products are industrial gypsum or synthetic gypsum which constitutes more than 97 per cent of the final product. The respondent therefore, made an application for determination of rate of tax on gypsum board. The appellant by order dated November 14, 2005 determined that gypsum board covered by invoice No. 5190356 dated April 21, 2005 falls under entry No. El taxable at 12.5 per cent. Aggrieved by that order, the respondent herein preferred an appeal before the Maharashtra Sales Tax Tribunal. The Tribunal by its order dated October 30, 2007 set aside the order of the appellant dated November 14, 2005 and held that the gypsum board covered by invoice earlier referred to will be liable to sales tax at the rate of four per cent under entry 41 of Schedule C of the Maharashtra Value Added Tax Act, 2002. This appeal is preferred against the said order.

(3.) At the hearing of this appeal, on behalf of the appellant, the learned Counsel submits that the expression "forms of gypsum" is not extensive enough to cover the products manufactured out of gypsum. The forms of gypsum it is submitted would cover hydrated or dehydrated forms of gypsum and not the further articles which are produced out of hydrated and dehydrated gypsum. In the process of manufacturing gypsum board, paper is added to both surfaces for giving appearance of board. The gypsum board is commercially understood as a different product from gypsum and its uses are different. One is raw material and the other is finished product for altogether different uses. In manufacture, different processes are applied at different stages to prepare the board and the end-product does not remain gypsum powder. The board, therefore, cannot be called a form of gypsum as the term "form" does not cover the products manufactured out of it. The percentage of content of gypsum used in end-product is not a determinative factor for classification. The meaning of the word "form" only means its natural existence or manifested forms without altering its meaning in common trade parlance and common use. The words "form" and "description" do not include in their ambit the articles and products of a commodity. The end-product of gypsum board contains various ingredients to give it a character of board for altogether different use than that of gypsum. It is therefore, submitted that the Tribunal erred in holding that the product gypsum board is a form of gypsum within the meaning of entry 41 of Schedule C of the MVAT Act and thus liable for tax.