Holding

Galvanised iron pipes and tubes are steel tubes within the meaning of Section 14(iv)(xi) of the Central Sales Tax Act and are therefore taxable.

Summary

Gujarat Steel Tubes Ltd., a manufacturer of black and galvanised steel tubes, challenged the Kerala tax authorities' assessment that its galvanised pipes were taxable under Entry 46 of the Kerala General Sales Tax Act. The company argued that the galvanised pipes were "declared goods" and should not attract additional sales tax or surcharge. The Kerala High Court, relying on Apollo Tubes Ltd. v. State of Kerala, held that galvanisation gave the pipes a distinct commercial identity, exempting them from tax. On appeal, the Supreme Court examined whether galvanisation alters the essential character of steel tubes under Section 14(iv)(xi) of the Central Sales Tax Act. It concluded that galvanisation is merely a protective coating that does not change the structure or function of the steel tube, and therefore the pipes remain steel tubes for tax purposes. Consequently, the Court set aside the High Court’s decision and allowed the appeals, directing the tax officer to reassess the appellant accordingly.

Issues considered

Whether galvanised iron pipes and tubes constitute a commercially different commodity from steel tubes under Section 14(iv)(xi) of the Central Sales Tax Act, 1956.

Legislation cited

Central Sales Tax Act, 1956s. 14(iv)(xi)
Companies Act, 1956
Kerala General Sales Tax Act, 1963s. First Schedule - Entry 46

Subjects

sales taxcentral sales tax actgalvanisationcommodity classificationtaxabilitystatutory interpretationcommercial identitysteel tubesgalvanised iron pipes

Judgment

'

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

MAY 5, 1989
y
B [R.S. PATHAK CJ., SABYASACHI MUKHARJI AND
S. NATARAJAN, JJ.)

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.

Allowing the appeals and setting aside the judgment and order of
the High Court, this Court,
H

2 IO
GUJARAT STEEL TUBES v. STATE OF KERALA 211

HELD: I. Galvanised pipes are steel tubes within the meaning of A
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
B
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]

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.
E
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., [I980J 1 S.C.R. 938, Distinguished. F

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, 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.
H
212 SUPREME COURT REPORTS [1989) 3 S.C.R.

V.J. Francis, N.M. Popli and W.K. Jose for the Respondents.
A
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
B 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.
c
In the assessment proceedigs for the assessment years 1982-83
and 1983-84 under the Kerala General Sales Tax Act, 1963, the appel-
lant 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-
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.
E
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 com-
mercial identity as a result of the process of galvanisation and could ~'
F 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 prefer-
red to follow its own decision and on 24 March, 1986 held against the
G 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 weather-
proof. 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

i galvanisation is done on steel tubes or pipes as a protective measure
A
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 B
~ 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 c
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] D
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, E
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
I
} taken by the High Court is erroneous.
F
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.
G
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.
H
T.N.A. Appeals Allowed.