Gypsum sold to farmers qualifies as tax-free fertilizer under Entry 27 of Schedule B

The HC ruled that gypsum sold to farmers constitutes a fertilizer under entry No. 27 of Schedule B of the Haryana General Sales Tax Act, 1973, making it tax-free. The court determined gypsum is a mineral fertilizer containing essential plant nutrients (calcium and sulphate) that improves soil fertility and crop yield. While acknowledging gypsum's soil correction properties, the court rejected the State's argument that it serves only corrective purposes rather than fertilizer functions. The ruling clarified that only gypsum sold to farmers or agricultural cooperative societies qualifies for tax exemption under this classification.

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Issues Involved:
1. Whether gypsum is considered a fertilizer within the meaning of entry No. 27 of Schedule 'B' of the Haryana General Sales Tax Act, 1973.
2. Whether the sale of gypsum by the Corporation should be exempted from sales tax.

Issue-wise Detailed Analysis:

Issue 1: Whether gypsum is considered a fertilizer within the meaning of entry No. 27 of Schedule 'B' of the Haryana General Sales Tax Act, 1973.
The court examined whether gypsum falls under the definition of "fertilizer" as per entry No. 27 of Schedule 'B' of the Haryana General Sales Tax Act, 1973. The Act itself does not define "fertilizer" or "gypsum," necessitating reliance on dictionary meanings and expert literature. Various dictionaries, including Webster's and Oxford, define "fertilizer" as a substance that enhances soil fertility, and "gypsum" as hydrous calcium sulfate used in soil amendment. Expert literature, such as "Commercial Fertilizers" by Gilbeart H. Collings, supports the use of gypsum as a fertilizer, noting its historical and practical applications in agriculture. The Punjab Agricultural University also recommends gypsum as a fertilizer, particularly in sulphur-deficient soils.

Issue 2: Whether the sale of gypsum by the Corporation should be exempted from sales tax.
The court scrutinized whether the gypsum sold by the Corporation to farmers qualifies for tax exemption under entry No. 27 of Schedule 'B.' The Assessing Authority, appellate authority, and Sales Tax Tribunal had previously ruled that gypsum is not a fertilizer and, therefore, not exempt from sales tax. However, the court found that gypsum, when sold to farmers, is used as a fertilizer containing essential plant nutrients like calcium and sulphate. The court emphasized that gypsum improves soil fertility and is used as a direct fertilizer when other chemical fertilizers are unavailable. The court concluded that gypsum sold to farmers or cooperative societies dealing in fertilizers should be tax-free under entry No. 27 of Schedule 'B.'

Conclusion:
The court answered the referred question in the affirmative, ruling in favor of the assessee. It was determined that gypsum sold by the Corporation to farmers is indeed a fertilizer under entry No. 27 of Schedule 'B' and should be exempt from sales tax. The parties were directed to bear their own costs as the question was not free from doubt.

Reference answered in the affirmative.

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