Commissioner General of Inland Revenue vs Lignocell (Pvt) Ltd. – SC APPEAL 145/2023-2024

In the case between Commissioner General of Inland Revenue (CGIR), Department of Inland Revenue and Lignocell (Pvt) Ltd., with Chas. P. Hayley and Company (Private) Limited as substituted respondent, the court addressed the issue of whether “coir fibre pith” constitutes agricultural produce under Section 16(2)(b) of the Inland Revenue Act, thus qualifying for a tax exemption. The court determined that the process applied to coir fibre pith—cleaning, sorting, and dehydrating—does not amount to manufacturing and, therefore, does not alter its essential character as agricultural produce. The principle reaffirmed is that the nature of the product is preserved despite a change in form unless a manufacturing process is established. The decision relied on the statutory interpretation of Section 1