Manufacture for sales tax exemption requires a new commodity; LPG bottling, eligibility certificates, and estoppel did not secure relief.

Bottling of liquefied petroleum gas was held not to amount to manufacture or production because the process did not bring into existence a new and distinct commercial commodity; the LPG retained its essential identity, so the sales tax exemption for new industrial units did not apply. Temporary or final eligibility certificates, along with administrative practice, could not enlarge the plain scope of the exemption scheme or create an enforceable right where the competent authority finally negatived eligibility. Promissory estoppel also failed because there was no specific promise to grant exemption beyond the scheme, and non-collection of tax from buyers did not bar levy or recovery.

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Issues: (i) whether bottling of liquefied petroleum gas amounted to manufacture or production so as to qualify for sales tax exemption under the industrial policy orders; (ii) whether temporary or final eligibility certificates and administrative understanding bound the sales tax authorities or created an enforceable right to exemption; (iii) whether promissory estoppel or non-collection of tax by the assessees prevented recovery of sales tax.

Issue (i): whether bottling of liquefied petroleum gas amounted to manufacture or production so as to qualify for sales tax exemption under the industrial policy orders.

Analysis: The exemption scheme was held to apply only to sales tax on products manufactured in new industrial units, and the policy orders had to be read as a whole and strictly according to their language. Applying the settled test of manufacture, the Court held that a mere change in condition or packing does not amount to manufacture unless a new and distinct commercial commodity emerges with a different name, character or use. Bottling of LPG did not alter its essential identity; the gas remained LPG and no new product came into existence.

Conclusion: The petitioners' LPG bottling activity did not amount to manufacture or production and they were not entitled to the exemption.

Issue (ii): whether temporary or final eligibility certificates and administrative understanding bound the sales tax authorities or created an enforceable right to exemption.

Analysis: The temporary eligibility certificates were only tentative and subject to final determination by the competent committee under the scheme. The Court held that administrative instructions and contemporaneous departmental practice cannot enlarge the plain scope of an exemption notification, and a mistaken departmental view cannot confer a benefit not available under the policy itself. Since the final competent decision negatived eligibility, the earlier temporary certificates and initial administrative approach did not create a binding entitlement.

Conclusion: The eligibility certificates and departmental understanding did not bind the authorities and did not confer any enforceable right to exemption.

Issue (iii): whether promissory estoppel or non-collection of tax by the assessees prevented recovery of sales tax.

Analysis: The Court held that there was no specific governmental promise to grant exemption irrespective of whether the petitioners manufactured goods within the meaning of the scheme. Promissory estoppel could not operate to extend a policy beyond its terms. The statutory liability to pay sales tax rested on the dealer, and the fact that tax had not been collected from purchasers was immaterial to the levy and recovery.

Conclusion: Neither promissory estoppel nor non-collection of tax barred recovery.

Final Conclusion: The writ petitions were liable to fail because the petitioners did not satisfy the essential condition of manufacture under the exemption scheme and no equitable or administrative principle could enlarge the fiscal concession.

Ratio Decidendi: An exemption from sales tax granted to new industrial units for manufactured products cannot be extended to a process that does not bring into existence a new and distinct commercial commodity, and neither temporary eligibility certificates nor promissory estoppel can override the plain terms of the exemption scheme.

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