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Issues: Whether iron hoops made from steel strips are declared goods falling within section 14(iv)(d)(iv) of the Central Sales Tax Act, 1956, and taxable at 3 per cent under entry No. 5 of Part I of Schedule II to the Madhya Pradesh General Sales Tax Act, 1958.
Analysis: Steel strips were held to fall within the description of rolled steel sections. The decisive question was whether rivetting and painting them brought about a change in identity so as to create a new commercial commodity. Applying the test of commercial identity, the Court held that the processes adopted only made the strips fit for use and protected them from rust, and did not alter their essential character. The subsequent amendment to section 14 was treated as supporting the original legislative intent and as an aid to construction.
Conclusion: Iron hoops remain declared goods within section 14(iv)(d)(iv) of the Central Sales Tax Act, 1956 and are taxable at 3 per cent under entry No. 5 of Part I of Schedule II to the State Act.
Final Conclusion: The reference was answered in favour of the assessee by holding that iron hoops retained the character of declared goods and continued to fall within the relevant sales tax entry.
Ratio Decidendi: Goods subjected to processing remain within the same taxable category so long as they retain their commercial identity and no new commercial commodity comes into existence.
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