Commercial identity test keeps fabricated steel bars within Schedule B and resale treatment under sales tax law.

Fabricated mild steel round and flat bars that were bent or drilled were still treated as steel bars for sales tax purposes because the limited processing did not alter their commercial identity. The Bombay High Court noted that section 2(26)(iii) covers goods sold in the same form or, for Schedule B goods, without processing that takes them outside the relevant description. It also held that entry 3(c) of Part I of Schedule B covers steel bars and rods without requiring sale in the exact form produced by the rolling mill. The goods therefore remained within Schedule B and qualified for resale treatment.

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Issues: (i) Whether fabricated mild steel round and flat bars, after bending or drilling of holes, are "resale" goods within section 2(26)(iii) of the Bombay Sales Tax Act, 1959. (ii) Whether such fabricated mild steel round and flat bars fall within entry No. 3(c) of Part I of Schedule B to the Bombay Sales Tax Act, 1959.

Issue (i): Whether fabricated mild steel round and flat bars, after bending or drilling of holes, are "resale" goods within section 2(26)(iii) of the Bombay Sales Tax Act, 1959.

Analysis: Section 2(26) treats resale, for the relevant charging provisions, as a sale of purchased goods in the same form, or without processing amounting to manufacture, or, in the case of Schedule B goods, without doing anything that takes them out of the description in the relevant entry. The goods in question remained steel bars despite bending at the ends or drilling of holes, and the processing did not convert them into a different commercial commodity. Since the provision operates disjunctively, it was sufficient that the goods continued to answer the Schedule B description.

Conclusion: Yes. The sales were resale within section 2(26)(iii).

Issue (ii): Whether such fabricated mild steel round and flat bars fall within entry No. 3(c) of Part I of Schedule B to the Bombay Sales Tax Act, 1959.

Analysis: Entry 3(c) specifically covers steel bars and rods, and unlike entry 3(d) it does not require sale in the same form in which the goods were directly produced by the rolling mill. The articles continued to be known and dealt with as steel bars in commercial understanding, and the limited fabrication did not take them out of that description. The narrower construction urged by the department was rejected.

Conclusion: Yes. The goods fell within entry 3(c) of Part I of Schedule B.

Final Conclusion: The reference was answered in favour of the assessee, and the disputed fabricated mild steel bars were held to retain their Schedule B character for the purposes of resale treatment.

Ratio Decidendi: Goods specified in Schedule B do not cease to be covered by the relevant entry merely because they undergo limited processing that does not alter their commercial identity or take them out of the description of the entry.

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