TaxTMI 
TaxTMI 
2019 (1) TMI 364
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....ises 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 pr....
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....orms'. This certainly signified that something more than basic gypsum was sought to be included in the Entry by referring to 'gypsum in all its forms'. The sequitur would be whether 'gypsum board' would fall in the expanded definition of 'gypsum in all its forms' or whether it is completely a different product. 7. Secondly (it is really in order to appreciate the first), what is the original composition of gypsum, and how does the processing convert it into gypsum board, would have to be examined. 8. Gypsum wallboard is a cellulosic composite material, also known as drywall, used as an interior wall in many building applications and also in limited external applications. This composite material consists of a flat board comprising of a gypsum core with the external surfaces covered with paperboard. The result is a three-layer composite composed of paper/gypsum/paper. The primary raw material continues to be gypsum mineral [Calcium Sulphate Dihydrate (CaSO4.2H2O)] and cellulose. 9. A perusal of the material available in public domain on manufacture of gypsum board shows a common thread insofar as methodology is concerned. It will be useful to extract the process from one such mate....
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....wood fibre, for greater strength. The gypsum boards are used as thinner plasterboards for paneling stud walls. The aforesaid material itself gives rise to the conclusion that there are no major chemical changes in gypsum which are carried out other than dehydration and mixing of additives, so that the paper sheets can be used on both sides, to be made capable of being used as a board. 12. Keeping in mind the aforesaid factual findings, let us turn to the judicial views dealing with the subject in question, whether relating to gypsum board or in respect of other products, where there is derivation of some other end product. (1) Commissioner of Sales Tax, Mumbai v. India Gypsum Ltd. (supra) The Division Bench of the Bombay High Court was concerned with a similar legal conundrum as to whether 'gypsum board' would fall under the Entry C-41 of the Maharashtra Value Added Tax Act which reads as 'gypsum of all forms and descriptions'. The court opined that the legislature having used the phraseology, some meaning would have to be assigned to the words by which there would be an explanation of the terminology. The Division Bench, relying on the case of State of Gujarat v. Sakarwala Broth....
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....e. The Bench noted with approval that in a similar lis Tungabhadra Industries Ltd v. Commercial Tax Officer, Kurnool (1961) 2 SCR 14. pertaining to the question of whether hydrogenated groundnut oil continued to be groundnut oil, notwithstanding the processing carried out for the purpose of rendering the oil more stable, it was opined that two conditions have to be satisfied - firstly, it must be from groundnut oil and secondly, it must be oil. Since hydrogenated oil was from groundnut and, in its essential nature it remained an oil and continued to be used for the same purpose as groundnut oil, the hydrogenated oil did not alter its character as oil despite being semisolid. (4) State of Jharkhand and Ors v. LA Opala R.G. Ltd. (2014) 15 SCC 136. This court examined whether glassware manufactured by the assessee could be understood to be a 'type of glass or glass sheet' so as to be taxable at the rate of 3% vide notification S.O No. 25, dated 25.06.2001, issued by the government of Jharkhand. It was observed as under: '22. It is a settled law that in taxing statutes the terms and expressions must be seen in their common and popular parlance and not be attributed their scientific....
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....semi-finished goods which have to undergo further processes of production before they can be transformed into consumers' goods. At every such intermediate stage of production, some utility or value is added to goods which are used as raw materials and at every such stage the raw materials are consumed. Take the case of bread. It passes through the first stage of production when wheat is grown by the farmer, the second stage of production when wheat is converted into flour by the miller and the third stage of production when flour is utilized by the baker to manufacture bread out of it. The miller and the baker have consumed wheat and flour respectively in the course of their business. We have to understand the word 'consumes' in Section 6(i) of the Act in this economic sense. ... At every stage of production, it is obvious there is consumption of goods even though at the end of it there may not be final consumption of goods but only production of goods with higher utility which may be used in further productive processes. ... Applying the above test, it has to be held that the assessees had consumed the paddy purchased by them when they converted it into rice which is commercially ....
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.... gives the characteristic appearance as well as the semi-solid condition which it attains. In the language of the Chemist, an intermolecular or configurational chemical change takes place which results in the hardening of the oil. Though it continues to be the same edible fat that it was before the hardening, and its nutritional properties continue to be the same, it has acquired new properties in that the tendency to rancidity is greatly removed, is easier to keep and to transport." (emphasis supplied) The aforesaid observations are important as inter-molecular or configurational chemical changes that resulted in the hardening of the oil was held not to exclude it from the Entry. Our view 13. On giving consideration to the matter in issue, we find that the amended Entry 56 of Schedule IV of the RVAT, read as 'gypsum in all its forms', would include 'gypsum board' under the term 'all its forms'. 14. We are persuaded to come to the aforesaid conclusion on the basis that, it can hardly be doubted that a meaning has to be given to the Entry made by the legislature, expanding the original Entry from 'gypsum' to 'gypsum in all its forms'. If the object was to include only 'gy....
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....does not appear to be any doubt that such 'stucco' would form part of the Entry 'in all its forms'. The unique characteristic of stucco, when mixed with water, is that the smooth plastic mass so formed can be molded into the desired shape, which obtains its rock-like state on hardening. This very characteristic is stated to be used in the development and production of gypsum board. In the second step of the manufacturing process, stucco is mixed with a number of additives in an excess amount of water to prepare a slurry, to be ultimately converted back into a dehydrated form, before being cut into desired sizes. Not only that, 'gypsum board' is defined as real gypsum between two paper sheets. Will that take away from the description of gypsum? We think not. Even if the sheets are added, the wide description 'in all its forms' would certainly include 'gypsum board'. 18. In the case of Sakarwala Brothers (supra), the factum of there being the same chemical composition of patasa, harda and alchidana and the ability to convert them back into sugar on being dissolved in water and on being subjected to other 'appropriate processes', resulted in a finding that they would be included as '....