Commercial identity in steel tax and promissory estoppel cannot override statutory liability for converted steel products.

Steel scrap loses its original commercial identity when converted into ingots, billets, bars or rods; those finished products are separately taxable and cannot escape levy on the ground that tax was already paid on the scrap. Promissory estoppel also cannot defeat a statutory tax liability: governmental circulars that are not statutory exemptions, and prior non-collection of tax, do not bind the State contrary to the taxing law. The court therefore sustained assessment on the converted steel products and rejected the exemption claim and estoppel plea.

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Issues: (i) Whether steel scrap, after conversion into steel ingots, billets, bars and rods, retained the same commercial identity so as to escape tax on the footing that tax had already been paid on the scrap; (ii) Whether the assessees could invoke promissory estoppel against the State on the basis of governmental circulars and prior non-collection of tax.

Issue (i): Whether steel scrap, after conversion into steel ingots, billets, bars and rods, retained the same commercial identity so as to escape tax on the footing that tax had already been paid on the scrap.

Analysis: Article 286(3) of the Constitution of India and sections 14 and 15 of the Central Sales Tax Act, 1956 impose special restrictions on declared goods, but the governing principle is that each separately enumerated item of iron and steel has its own identity as a commercial commodity. The Court applied the Supreme Court's construction of section 14 and held that the relevant categories are not to be treated as one composite commodity merely because they fall within the broader genus of iron and steel. Once steel scrap is converted into distinct products such as ingots, billets, bars or rods, the original identity is lost and the converted goods become separately taxable commodities.

Conclusion: The converted goods were not entitled to exemption on the ground that the scrap had already suffered tax. The levy on the sales of the converted items was valid and the assessees failed on this issue.

Issue (ii): Whether the assessees could invoke promissory estoppel against the State on the basis of governmental circulars and prior non-collection of tax.

Analysis: The Court held that promissory estoppel cannot compel the State to act contrary to a taxing statute. The Central Government circulars, including the 1958 explanatory letter, were not statutory exemptions and did not create any binding promise by the Tamil Nadu Government. The later circular of 1972 could not support reliance for transactions of 1966-67 and 1967-68, and mere non-collection of tax in earlier years did not extinguish statutory liability.

Conclusion: The plea of promissory estoppel failed and could not prevent assessment under the statute.

Final Conclusion: The assessees were not entitled to exemption or protection from assessment, and the State's tax levy on the converted steel products was sustained.

Ratio Decidendi: Where a statute treats distinct enumerated goods as separate commercial commodities, conversion into another commodity within the same genus destroys the earlier identity for single-point sales tax purposes, and promissory estoppel cannot override a statutory tax liability.

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