TMI Blog1968 (7) TMI 67X X X X Extracts X X X X X X X X Extracts X X X X ..... mary products of the rolling mills which are not subjected to any process after rolling and, therefore, corrugated sheets were covered by entry 80 of Schedule B to the Act. In revision the Tribunal has however held that the corrugated sheets sold by the opponent would be "iron and steel" within the meaning of entry 15 of Schedule B to the Act. The State has, therefore, required the Tribunal to make the aforesaid reference to this Court. The relevant entry 15 at the relevant time was as under: "Iron and steel". The said entry was subsequently amended to bring it in line with section 14 of the Central Sales Tax Act which declared "iron and steel" as goods of special importance in inter-State trade or commerce. Under section 14 of the Central Sales Tax Act, 1956, the said entry is iron and steel, i.e., (a) pig iron and iron scrap. (b) iron plates sold in the same form in which they are directly produced by the rolling mills. (c) steel scrap, steel-ingots, steel billets, steel bars and rods. (d) (i) steel plates. } (ii) steel sheets. } Sold in the same form (iii) steel bars and tin bars. } in which they are directly (iv) rolled steel sections. } produced by the rolling ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rocesses of deterioration through oxidation was increased, it should be held not to be oil. Thus, though the hydrogenated oil was refined groundnut oil after this process of hydrogenation, it was held that hydrogenated oil still continued to be groundnut oil notwithstanding the processing which was merely for the purposes of rendering the oil more stable, thus improving its keeping qualities for those who desire to consume groundnut oil. On a parity of reasoning, even if iron had been corrugated or put in the form of sheets it will still continue to be iron and such corrugation or conversion into sheets to make it more acceptable to the customers would not turn it into a different manufactured product of iron so long as iron continues its essential character and the only change was one of corrugation or in shape, i.e., of sheets. In State of Gujarat v. Sakarwala Bros.[1967] 19 S.T.C. 24 at page 28., this Court had to deal with entry 47 of Schedule A to the Bombay Sales Tax Act, 1959, which was "sugar in all its forms". The Court had to deal with patasa, harda and alchidana and to determine whether these commodities fell within the definition of "sugar" in entry 47. At page 28 this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the same purpose as groundnut oil which had not undergone the process, and the mere fact that hydrogenated oil was semi-solid did not alter its character as an oil. On a parity of reasoning when iron is corrugated to make it more acceptable to the customers or is put into the form of sheets, it still continues to retain the essential character of iron and we cannot hold that it would fall under the residuary entry 80 so long as it retained its essential character of "iron". We would also refer in this connection to the decision of the Supreme Court in State of Madhya Bharat v. Hiralal[1966] 17 S.T.C. 313., where the question had arisen regarding scrap iron which was processed for convenience of sale. The raw materials were only re-rolled to give them attractive and acceptable forms. The question arose whether these bars, flats and plates sold were iron and steel exempted under the relevant notification. There was another entry, entry 39, relating to "goods prepared from any metal other than gold and silver" and it, therefore, included goods prepared from iron. At page 315 their Lordships pointed out that a comparison of the said two notifications brought out the distinction betw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... servatives, to make the paste more marketable when the snuff was intended to be used for applying to the gums. It was in terms held that the said dental creamy snuff completely retained its essential character as snuff as flavouring agents, preservatives and water were added only to change its physical condition to make it more acceptable to the customers when intended for use as paste for application to the gums and there was no reason to hold that snuff had lost its essential character and a totally different article was produced which could not claim exemption. On a parity of reasoning we must hold that "iron" does not lose its essential character when it is put merely in the form of corrugated iron sheets, as it is merely an alteration of form or shape to make it more acceptable to the customer. It may be capable of independent use but that does not change it into a totally different manufactured product or a new fabricated article in which it can be said that iron and steel has lost its essential character. The learned Advocate-General next argued that we must interpret entry 15, with the help of the amended entry in the light of section 14 of the Central Sales Tax Act, 1956 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the same form in which rolled steel sections were directly produced by rolling mills. It is, therefore, clear that on no principle of construction we can hold that this particular entry "iron and steel" would not be applicable to the case of corrugated iron sheets, when it can never be doubted that they continued to retain their essential character of iron and the only processing of corrugation was done or shape was given by turning them into iron sheets for the purpose of making the commodity in question more acceptable to the customers in the market. It would be wholly immaterial whether such corrugated iron sheets could be put to direct use or they were to be used for turning out other articles from them. The Tribunal was, therefore, right in its view that the corrugated iron sheets sold by the assesseefirm were "iron and steel" and they did not fall within the residuary entry 80. With great respect to my learned brother, I beg to differ and I, therefore, record my opinion as under: In the result this reference should be answered, in my opinion, by holding that the corrugated iron sheets sold by the opponent-firm were covered by entry 15 of Schedule B of the Act of 1953, pri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d power, the Tribunal condoned the delay and thereafter granted the application for reference to this High Court. At one stage of the hearing before us, Mr. S.L. Mody, on behalf of the assessee, wanted to argue before us that the reference was not competent inasmuch as the Sales Tax Tribunal had no power to condone the delay and hence the entire reference was incompetent. However, he subsequently gave up the point regarding limitation and the matter has been argued on merits before us. Entry 15 in Schedule B to the Act read as follows: S.T. G.S.T. P.T. "15. Iron and steel Nil. Six pies. Three pies." This entry remained on the Statute Book during the period from 1st April, 1954, to 7th April, 1957. Since the period of assessment with which we are concerned in the instant case is the period from 1st April, 1956, to 31st March, 1957, it is this entry which would be applicable. We may point out that by an amendment the above entry No. 15 was substituted by the following entry: S.T. G.S.T. P.T. Nil. Two naye Two naye "15. Iron and steel, that is to saypaise. paise. (a) pig iron and iron scrap. (b) iron plates sold in the same form in which they are directly produced by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clear that if they did not fall within the entry of iron and steel, they would be falling within the residuary entry 80 covering all goods other than those specified from time to time in any of the preceding entries in Schedule B. Under entry 80 of Schedule B, the articles would attract sales tax of 2 nP., general sales tax of 3 nP., and purchase tax of 2 nP.; whereas under entry 15, as it originally stood, there was no sales tax but there was general sales tax of six pies in the rupee and purchase tax of three pies in the rupee. Since the principle of subsequent legislation is not applicable to the facts of this case, we cannot say merely from the amended entry as was in force from 8th April, 1957, to 30th September, 1958, that iron and steel as it originally stood during the period 1st April, 1954, to 7th April, 1957, included merely basic raw material and not any iron and steel in its manufactured form or for production or consumption. The rival contentions regarding the merits of the case can be stated in this form. It is contended on behalf of the assessee-firm that corrugated iron sheets are nothing else but iron or steel sheets which are wrinkled by hydraulic pressure o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xt of this sub-rule (2) of rule 18, that the question was considered by the Supreme Court; and the Supreme Court came to the conclusion, after considering the hydrogenating process, that hydrogenated groundnut oil was a form of groundnut oil and they held that the assessee-company was entitled to the benefit of the deduction of the purchase price of kernel or groundnut, which went into the manufacture of hydrogenated groundnut oil, from the sale turnover of such oil. At page 835 of the report, Rajagopala Ayyangar, J., delivering the judgment of the Supreme Court, observed: "Both the Tribunal as well as the High Court have pointed out that except for its keeping quality without rancidity and ease of packing and transport without leakage, hydrogenated oil serves the same purpose as a cooking medium and has identical food value as refined groundnut oil. There is no use to which the groundnut oil can be put for which the hydrogenated oil could not be used, nor is there any use to which the hydrogenated oil could be put for which the raw oil could not be used. Similarly we consider that hydrogenated oil still continues to be 'groundnut oil' notwithstanding the processing which is me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tobacco, i.e., any form of snuff would be covered by the definition of tobacco; and that was the conclusion which we arrived at in that particular case depending upon the particular entry. Ultimately the instant case will turn upon our decision whether corrugated iron sheets can be said to be a form of iron and steel or can be said to be an article of iron and steel. In support of his argument, the learned Advocate-General relied upon the decision of the Punjab High Court in Devgun Iron and Steel Rolling Mills v. State of Punjab[1961] 12 S.T.C. 590. There the Punjab High Court was dealing with the entry relating to iron and steel and the provisions of the Central Sales Tax Act, 1956, had to be considered by the Punjab High Court. The petitioners before the Punjab High Court contended that they had purchased iron scrap or steel scrap and then rolled the same into rolled steel sections; and the Punjab High Court held that when the raw material, iron or steel, that was purchased by the petitioners was rolled into rolled steel sections, the outcome is a different and a new commodity and when it is sold, there is a sale of a different commodity and not a sale of steel over again. Thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... corrugated iron sheet can be used for the purposes for which flat sheets cannot be used because the flat sheet has not got the advantage of stiffness and rigidity and strength which corrugated iron sheet has got. Thus a flat sheet cannot be used for the purposes for which a corrugated iron sheet can be used. Contrariwise, it is common sense that a corrugated iron sheet cannot be used when for example boxes of flat iron sheets etc. are required to be made, because what is required is a flat surface inside and outside and not a corrugated surface in cases of that kind. Thus the test which was applied by the Supreme Court in Tungabhadra Industries' case[1960] 11 S.T.C. 827., viz., the possibility of substituting one commodity for the other, viz., hydrogenated groundnut oil for groundnut oil and groundnut oil for hydrogenated groundnut oil so far as the consumers are concerned, is not applicable when we go to flat iron sheets and corrugated iron sheets. That test, from the standard works of reference, cannot apply, since a flat iron sheet cannot be substituted for use where a corrugated iron sheet is required to be used, particularly looking to the fact that corrugated iron sheet wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , and would, therefore, not fall within entry 15 of Schedule B but would fall within the residuary entry 80 of Schedule B to the Act. I would, therefore, answer the question referred to us by stating that the sale of corrugated iron sheets in question was covered by entry 80 of Schedule B to the Act and I would direct the assessee-firm to pay the costs of this reference to the State of Gujarat. P.C. In view of the difference of opinion on the points which clearly emerge from our respective judgments, the case should now be placed under clause 36 of the Letters Patent of this High Court before one or more of the other Judges and the points should be got decided as laid down in that clause. In pursuance of the abovesaid order, the reference came on for hearing before Bhagwati, C.J., and the learned Chief Justice delivered the following judgment on November 11/12, 1968: BHAGWATI, C.J.-The short question which arises for determination in this reference is whether corrugated iron sheets fall within entry 15 or entry 80 of Schedule B to the Bombay Sales Tax Act, 1953, prior to its amendment by Bombay Act 16 of 1957. Entry 15 reads "iron and steel" while entry 80 is a residuary entr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... requently subjected to a process of coating with zinc to protect from oxidation, and is then known as galvanized corrugated iron. It is used widely for roofing and walling barns, sheds, warehouses and other buildings". Encyclopaedia Britannica, Fourteenth Edition, Volume 6, at page 471, also points out that corrugating process enables much lighter gauges of sheets to be used because it makes them very rigid and portable. Corrugated iron sheets are thus nothing but iron sheets-sheets of iron-corrugated, that is, wrinkled for the purpose of making them more rigid and giving them increased stiffness so that they become more suitable for roofing and walling than they would otherwise be as flat iron sheets. They are iron sheets with their shape altered to make them more adaptable and useful for being used as iron sheets for roofing and walling. Now flat iron sheets would certainly be covered by the entry "iron and steel". That indeed was not disputed by the learned Advocate-General on behalf of the revenue and indeed it could not be disputed in view of the decision of the Supreme Court in The State of Madhya Bharat v. Hiralal[1966] 17 S.T.C. 313., where iron and steel bars, flats and pl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roundnut oil was groundnut oil since it was from groundnut and in its essential nature it remained "oil". The Supreme Court pointed out that the physical state did not determine the identity of the commodity and merely because hydrogenated groundnut oil assumed semi-solid form it did not cease to be groundnut oil. Hydrogenated groundnut oil, said the Supreme Court, still continued to be groundnut oil notwithstanding the processing which was merely for the purpose of rendering the oil more stable thus improving its keeping qualities for those who desired to consume groundnut oil. On the analogy of this decision, it may be said that even if iron is put in the form of sheet and subjected to corrugation for the purpose of making it more useful in the form of iron sheet by improving its rigidity and stiffness, it would not become a different article or product of iron but would continue to retain its essential character of iron notwithstanding the corrugation. There is also a decision of the Assam High Court in Kapildeoram Baijnath Prosad v. J.K. Das[1954] 5 S.T.C. 365., where the same approach has been adopted. There the question was whether chira and muri could be said to be covered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Madhya Bharat v. Hiralal[1966] 17 S.T.C. 313. to which I have already made a reference earlier, but I do not think this decision in any way supports the contention of the revenue. The assessee in this case purchased scrap iron locally and imported iron plates from outside and after converting them into bars, flats and plates in his rolling mills, sold them in the market. The question arose whether the iron bars, flats and plates, re-rolled and sold by the assessee, were exempt from sales tax by virtue of a notification which inter alia exempted "iron and steel" from liability to sales tax, or they were taxable under another notification which imposed tax at a particular rate on "goods prepared from any metal other than gold and silver". The Supreme Court held that iron bars, flats and plates sold by the assessee were covered by the expression "iron and steel" and were exempted under the first notification. Subba Rao, J., speaking on behalf of the Supreme Court said: "Scrap iron purchased by the respondent was merely re-rolled into bars, flats and plates. They were processed for convenience of sale. The raw materials were only re-rolled to give them attractive and acceptable forms ..... X X X X Extracts X X X X X X X X Extracts X X X X
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