A three-judge bench of the Supreme Court has held that the lower tax rate of 4 percent is applicable to Gypsum Board under the Rajasthan Value Added Tax Act, 2003.
The question before the bench comprising Chief Justice Ranjan Gogoi, Justices Sanjay Kishan Kaul and K M Joseph was that whether ‘gypsum board’ would be taxable at 4 percent or under the residuary tax rate of 12.5 percent under the Rajasthan Value Added Tax Act.
Under the Act, Entry 56 of Schedule IV specified ‘Gypsum’ as a taxable entity, taxable at 4%. Later, an amendment was done to the said Entry 56 to expand the meaning of Entry 56 of Schedule IV of the RVAT by changing it to ‘Gypsum in all its forms’.
In an application filed by M/s. Indian Gypsum Ltd, the Additional Commissioner had clarified 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. Later, the department took a similar view while passing orders against the respondent, Lohiya Agencies and Others. Both the Deputy Commissioner (Appeals) and Rajasthan Tax Board upheld the orders.
However, the Rajasthan High Court granted relief to the assessee by reversing the orders and held that the product is taxable at 4%.
While dismissing the departmental appeal, the bench noted that 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.
The bench held 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’.
“it can hardly be doubted that 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 ‘gypsum’, then why would the Entry be changed to ‘gypsum in all its forms’? The corollary would also be as to what is meant by ‘in all its forms’, as it is not, as if mere geometrical alteration of shape would form part of the Entry. In such a situation, the original Entry itself was comprehensive enough to have included it,” the bench said.
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