http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 3  

PETITIONER: GUJARAT STEEL TUBES LTD. ETC.

       Vs.

RESPONDENT: STATE OF KERALA & ORS.

DATE OF JUDGMENT05/05/1989

BENCH: PATHAK, R.S. (CJ) BENCH: PATHAK, R.S. (CJ) MUKHARJI, SABYASACHI (J) NATRAJAN, S. (J)

CITATION:  1990 AIR 1779            1989 SCR  (3) 210  1989 SCC  (3) 127        JT 1989 (2)   474  1989 SCALE  (1)1483

ACT: Central Sales Tax Act, 1956: Section 14(iv)(xi).     Steel pipe--Galvanisation of--Whether changes  essential character of pipe--Galvanised iron pipes and  tubes--Whether steel tubes. Kerala  General Sales Tax Act, 1963:  First  Schedule--Entry 46. Galvanised iron pipes and tubes--Tax-levy of.

HEADNOTE:     The  appellant  company was  manufacturing  and  selling black  and galvanised steel tubes and pipes. In the  assess- ment proceedings for the years 1982-83 and 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 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 compa- ny accordingly.     The Company filed a writ petition in the High Court. The High Court, held that as a result of the process of galvani- sation  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.     In  these  appeals on the question:  whether  galvanised iron pipes and tubes are a commercially different  commodity from  steel  tubes mentioned in Section  14(iv)(xi)  of  the Central Sales Tax Act.     Allowing the appeals and setting aside the judgment  and order of the High Court, this Court, 211     HELD:  1.  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 errone- ous. [213E]

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 3  

   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  al- tered.  Galvanisation  does not bring a new  commodity  into existence and as a commercial item it is not different  from a steel tube. [212H, 213A-C]     Commissioner of Sales Tax v. Mitra Industries, [1988] 69 S.T.C. (Note No. 55 at p. 16) applied.     Associated  Mechanical  Industries  v.  Commissioner  of Commercial Taxes, Bangalore,  [1986] 61 S.T.C. 225;  Commis- sioner 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 and Sales Tax Commissioner and Ors.  v. Jammu  Iron  and Steel Syndicate, [1980] 45 S.T.C.  99,  ap- proved. Apollo  Tubes Limited v. State of Kerala, [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.     Deputy Commissioner of Sales Tax (Law) Board of  Revenue v. G.S. Pai & Co., [1980] 1 S.C.R. 938, Distinguished.

JUDGMENT:     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.  7621/85-1,  4411/85-Y, 2785/83-G, 9366/84-1 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.N. Misra for the Appellants. 212 V.J. Francis, N.M. PopIi 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 in s. 14(iv)(xi) of the  Central Sales Tax Act.     The  appellant is a company registered under the  Compa- nies 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 proceedings 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 surcharge.  The  appel- lant’s contention was not accepted by the assessing authori- ty, 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 accordingly.     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  Kerala, [1986]  61 STC 275 that the category of goods called  galva- nised iron pipes had acquired a different commercial identi- ty as a result of the process of galvanisation and could not

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 3  

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] 61 STC 225 and  Commis- sioner 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.     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 altered. As a commercial  item it is not different from a steel tube. That 213 galvanisation  is done on steel tubes or pipes as a  protec- tive  measure  only  was the basis of the  decision  of  the Karnataka  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 in 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  corruga- tion  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  Jammu  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  exist- ence.  The respondents rely on Deputy Commissioner 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  under- stood 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) of 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 judgment  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. 214