GUJARAT STEEL TUBES LTD. ETC. v. STATE OF KERALA & ORS.

### ' A B GUJARAT STEEL TUBES LTD. ETC. _v._ STATE OF KERALA & ORS. MAY 5, 1989 [R.S. PATHAK CJ., SABYASACHI MUKHARJI AND S. NATARAJAN, JJ.) # _y_ _Central Sales Tax Act,_ _1956:_ _Section 14(iv)(xi)._ ## "°'· _Steel pipe-Galvanisation of-Whether changes essential charac-_ C _ter of pipe-Galvanised iron pipes and tubes-Whether steel tubes._ ~ _Kera/a General Sales Tax Act,_ _1963:_ _First Schedule-Entry 46._ _Galvanised iron pipes and tubes-Tax-levy of_ D The appellant company was manufacturing and selling black and galvanised steel tubes and pipes. In the assessment proceedings for the years 1982-83 nd 1983-84 under the Kerala General Sales Tax Act, 1963 the appellant contended that since the galvanised pipes manufactured by it were "declared goods" they were not liable to additional sales tax as well as surcharge. Rejecting the contention, the assessing authority E taxed the turnover of galvanized iron pipes at four per cent and also assessed an additional tax and surcharge treating the galvanized iron pipes as 'goods' falling under Entry 46 of the First Schedule to the Kerala Sales Tax Act. Demands were raised from the Appellant company accordingly. F The Company filed a writ petition in the High Court. The High **Court,** **held that as a result** **of** **the process** **of** **galvanisation the** galvanised iron pipes had acquired different commercial identity and therefore, could not be identified with steel tubes mentioned in Section 14(iv)(xi) of the Central Sales Tax Act. #### G In these appeals on the question: whether galvanised iron pipes -t' and tubes are a commercially different commodity from steel tubes mentioned in Section 14(iv)(xi) of the Central Sales Tax Act. H Allowing the appeals and setting aside the judgment and order of the High Court, this Court, _2_ IO GUJARAT STEEL TUBES _v._ STATE OF KERALA 211 HELD: I. Galvanised pipes are steel tubes within the meaning of Section 14(iv)(xi) of the Central Sales Tax Act. The view taken by the High Court to the contrary was erroneous. [213E] 2. Galvanisation is done on steel tubes or pipes as a protective measure only, i.e., to make it weather-proof. Merely because the steel tube has been galvanised does not mean that it ceases to be a steel tube. It still remains a steel tube and neither its structure nor function is altered. Galvanisation does not bring a new commodity into existence and as a commercial item it is not different from a steel ,_,A' tube. [212H, 213A-C] A B _Commissioner of Sales Tax_ v. _Mitra Industries,_ [1988] 69 S.T.C. C # 'r· · (Note No. 55 at p. 16) applied. _Associated Mechanical Industries_ v. _Commissioner of Commer-_ _cial Taxes, Bangalore,_ [1986] _61_ S.T.C. 225; _Commissioner_ _of_ _Sales Tax_ v. _Om_ _Engineering Works,_ [1986] U.P.T.C. 55; _State_ _of_ _Gujarat_ v. _Shah Veljibhai Motichand Lunawada,_ [1969] 23 S.T.C. 288 D and _Sales Tax Commissioner and Ors._ v. _Jammu Iron and Steel Syndi·_ _cate,_ [1980] 45 S.T.C. 99, approved. •·. __..)-.._ _Apollo_ _Tubes Limited_ v. _State_ _of Kera/a,_ [1986] 61 S.T.C. 275. overruled. _Deputy Commissioner_ _of Commercial Taxes, Tiruchirapalli_ v. _P.C._ _Mohammed Ibrahim Marakayar Sons,_ [1980] 46 S.T.C. 22, Not approved. E _)._ _Deputy Commissioner_ _of Sales Tax (Law) Board_ _of Revenue_ v. F G. _S._ _Pai_ _&_ _Co.,_ [I980J 1 S.C.R. 938, Distinguished. CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 2025-26, 2873-75, 1537 of 1986. From the Judgment and Order dated 24.3.86 and 20.3.86 of the Kerala High Court in O.P. No. 7621/85-I, 4411/85-Y, 2785/83-G, -.i- 9366/84-I and 4740/82-J respectively. Soli J. Sorabjee, Dr. Y.S. Chitale, T.S. Krishnamoorthy Iyer, Harish N. Salve, K.J. John, M.N. Jha, Mrs. A.K. Verma and D.Nc Misra for the Appellants. G H A B #### c 212 SUPREME COURT REPORTS [1989) 3 S.C.R. V.J. Francis, N.M. Popli and W.K. Jose for the Respondents. The Judgment of the Court was delivered by **PATHAK,** CJ. These appeals by certificate granted by the High Court of Kerala raise the question whether galvanised iron pipes and tubes are a commercially different. commodity from steel tubes mentioned ins. 14(iv)(xi) of the Central Sales Tax Act. The appellant is a company registered under the Companies Act, 1956. It has its registered office at Ahmedabad in Gujarat. It is engaged in the manufacture and sale of steel tubes and pipes, both black and galvanised. ~-· In the assessment proceedigs for the assessment years 1982-83 and 1983-84 under the Kerala General Sales Tax Act, 1963, the appellant contended that the galvanised iron pipes manufactured by it are "declared goods" and are not liable to additional sales tax as well as D surcharge. The appellant's contention was not accepted by the asses E F G sing authority, who taxed the turnover of galvanised iron pipes at four per cent and also assessed and additional tax and surcharge treating the galvanised iron pipes as goods falling under Entry 46 of the First ##### Schedule to the Kerala Sales Tax Act. Demands were raised accord- ~ ingly. It appears that the matter was brought to the High Court by writ petition, and the High Court held on the basis of its decision in _Apollo_ _Tubes Limited_ v. _State of Kera/a,_ [1986) 61 STC 275 that the category of goods called galvanised iron pipes had acquired a different commercial identity as a result of the process of galvanisation and could ~' not be identified with steel tubes mentioned in s. 14(iv)(xi) of the Central Sales Tax Act. Cases on the other side of the line are _Associated Mechanical Industries_ v. _Commissioner_ _of_ _Commercial_ _Taxes, Bangalore,_ [1986] 61STC225 and _Commissioner of Sales_ _Tax_ v. _Om_ _Engineering Works,_ [1986] U.P.T.C. 55. The High Court preferred to follow its own decision and on 24 March, 1986 held against the appellant. A certificate having been granted by the High Court these # appeals are now before us. -t The purpose of galvanising a pipe is merely to make it weatherproof. It remains a steel tube. By being put through the process of galvanising it is made rust-proof. Neither its structure nor function is H altered. As a commercial item it is not different from a steel tube. That GUJARAT STEEL TUBES _v._ STATE OF KER.ALA (PATHAK, CJ.] 213 galvanisation is done on steel tubes or pipes as a protective measure only was the basis of the decision of the Kamataka High Court in _Associated Mechanical Industries,_ (supra). Merely because the steel tube has been galvanised does not mean that it ceases to be a steel #### tube. The Gujarat High Court iii State of Gujarat v. Shah Veljibhai _Motichand, Lunawada,_ (1969] 23 S.T.C. 288 held that merely because iron is given the shape of a sheet and is subjected to corrugation does not take it out of the description of "iron and steel". So also in _Sales_ _Tax Commissioner and Others_ v. _Jammu Iron and Steel Syndicate,_ (1980] 45 S.T.C 99 the High Court of Jannnu and Kashmir held that galvanisation and corrugation do not change the essential character of iron sheets, and they remain iron sheets . We are unable to agree with the view taken by the Madras High Court in _Deputy Commissioner of Commercial Taxes, Tiruchirapalli_ v. _P.C. Mohammed Ibrahim Marakayar Sons,_ (1980] 46 S.T.C. 22. The limited purpose of galvanisation does not, it seems to us, bring a new commodity into existence. The respondents rely on _Deputy Commis-_ _sioner of Sales Tax (Law) Board of Revenue_ v. G.S. _Pai_ & _Co.,_ (1980] 1 S.C.R. 938 but in that case this Court held that Bullion as understood popularly does not include. ornaments or other articles of gold. It was pointed out that Bullion was commonly .treated as a commodity distinct and separate from ornaments ·and articles of gold. Gold ornaments and articles were manufactured or finished products of gold. A number of other cases were cited on behalf of the respondents, but we do not find any of them to be of assistance to the respondents. We are of the _view that galvanised pipes are steel tubes within the meaning of s. 14(iv)(xi) ol the Central Sales Tax Act. The view taken by the High Court is erroneous. We may not that shortly after judgment was reserved in the present appeals, an identical point arose before a Bench of this Court on 28 April, 1988 in S.L.P. (Civil) No. 3549 of _1988-Commissioner of_ _Sales Tax_ v. _Mitra Industries,_ (1988) 69 S.T.C. Note No. 55 at p. 16 and the learned Judges took the same view which finds favour with us here. In the result, the appeals are allowed, the impugned judgmen~ and order of the High Court and the orders of the tax authorities in each case are set aside. The Sales Tax Officer will now proceed to re-assess the appellant in accordance with law and the observations contained in this judgment. T.N.A. Appeals Allowed. A B #### c D E F G H ~ ~ ### i _"'"'(_ \ ~ ## .. ., ,,.. . ,.>--. I ##### _}_