1989 (5) TMI 62 - SC - VAT / Sales Tax

Galvanised iron pipes remain steel tubes under Section 14(iv)(xi), eligible for concessional Central Sales Tax treatment

SC held that galvanised iron pipes and tubes are not a distinct commercial commodity from steel tubes specified in S.14(iv)(xi) of the Central Sales Tax ... Manufacture and sale of steel tubes and pipes, both black and galvanised - 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? Held that:- The purpose of galvanising a pipe is merely to make it weather-proof. It remains a steel tube. By being put through the process of galvanising it is made rustproof. Neither its structure nor function is altered. As a commercial item it is not different from a steel tube. That galvanisation is done on steel tubes or pipes as a protective measure only was the basis of the decision of the Karnataka High Court in Associated Mechanical Industries [1986 (1) TMI 369 - KARNATAKA HIGH COURT]. Merely because the steel tube has been galvanised does not mean that it ceases to be a steel tube. 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 is erroneous. In favour of assessee. Issues:Interpretation of whether galvanised iron pipes are a different commodity from steel tubes under the Central Sales Tax Act.Analysis:The case involved an appeal regarding the classification of galvanised iron pipes and tubes under the Central Sales Tax Act. The appellant, a company engaged in manufacturing and selling steel tubes and pipes, contended that galvanised iron pipes should be considered as 'declared goods' and not subject to additional sales tax or surcharge. However, the assessing authority disagreed and taxed the turnover of galvanised iron pipes at four percent, treating them as falling under a specific entry of the Kerala Sales Tax Act.The High Court, relying on a previous decision, held that galvanised iron pipes had acquired a different commercial identity due to the galvanisation process and could not be equated with steel tubes mentioned in the Central Sales Tax Act. The appellant challenged this decision, citing cases where courts held that processes like galvanisation do not change the essential character of the base material. The Supreme Court disagreed with the High Court's interpretation, emphasizing that galvanisation is primarily a protective measure to make the steel tubes rustproof without altering their structure or function. The Court referred to various judgments supporting the view that processes like galvanisation do not create a new commodity.The Supreme Court concluded that galvanised pipes are indeed steel tubes within the meaning of the Central Sales Tax Act, overturning the High Court's decision. The Court also mentioned a similar case where a bench had taken a consistent view on the matter. As a result, the appeals were allowed, and the High Court's judgment, along with the tax authorities' orders, were set aside. The Sales Tax Officer was directed to re-assess the appellant in accordance with the law and the observations made in the Supreme Court's judgment.