Ranganath Misra, C. J. - (1.) These are appeals by special leave and are directed against the separate decisions of the Madhya Pradesh High Court in references under the Madhya Pradesh Sales Tax Act. Civil Appeal No. 768/77 relates to the assessment period 1951-52. Civil Appeal No. 539/ 78 relates to 1950-51 and Civil Appeal No. 1038/78 to 1952-53.
(2.) The appellant is a manufacturer. of cement in the factory located at Kymore in Madhya Pradesh. Several cement manufacturing companies as also the appellant had entered into arrangement with the Cement Manufacturing Company of India Limited, whereunder the Marketing Company was appointed as the sole and exclusive sales manager for the sale of cement manufactured by the manufacturing companies and the manufacturing companies had agreed not to sell directly or indirectly any of their cement to any person save and except through the Marketing Company. The manufacturing companies were entitled to be paid a certain sum for every ton of cement supplied by them or at such other rate as might be decided upon by the Director of the Marketing Company. The Marketing Company had the authority to sell cement at such price or prices and upon such terms as it might in its sole discretion consider appropriate.
(3.) For the three periods referred to above the appellant had supplied cement manufactured by it to the Marketing Company and maintained at the assessment stage for the respective periods that these were covered by the explanation to Art. 286(1)(a) as it then stood and, therefore, the transactions were not exigible to sales tax in Madhya Pradesh. This stand was negatived by the Assessing Officer, the first appellate authority and the Board of Revenue. The Board in the statement of the case drawn up by'it held that cement became a controlled commodity from 8th of August, 1942, and notwithstanding the expiry of the Defence of India Rules with effect from 30th. of September, 1946, distribution of cement continued to be controlled even during the period. The Marketing Company had its establishment at Nagpur then within Madhya Pradesh which received the orders of authorisations and managed the supply from the factory at Kymore. The Board in its statement further stated: "The entire question in dispute hinges round the fact as to whether the sales in question are inter-State in nature or should be regarded as intra-State. It is seen that the Cement Marketing Company is an independent organisation and is carrying on business as an independent entity. It is also seen that w-hat has actually been taxed are the sales effected by the appellant to the Cement Marketing Company of India and not the sales made to the parties which obtained an authorisation from the Cement Controller. This seems to be the crux of the matter." On this basis reliance was placed on the decision of this Court in the case of Rohtas Industries Ltd. v. State of Bihar (1961) 12 STC 615 (621), where, after analysing the terms of the contract between the manufacturer (appellant before the Supreme Court) and the Marketing Company, this Court held: "On a review of these terms of the agreement, it is manifest that the manufacturing companies had no control over the terms of the contract of sales by the Marketing Company and that the price at which cement was sold by the Marketing Company could not be controlled by the manufacturing companies; that the manufacturing companies were entitled, for ordinary cement, to be paid at the rate of Rs. 24 per ton at works, or at such other rate as might be decided upon by the Directors of the Marketing Company, and in respect of special cement, at such additional rates as the Directors of the Marketing Company might determine; that sale by the Marketing Company was not for and on behalf of the manufacturing companies but for itself and the manufacturing companies had no control over the sales nor had they any concern with the persons to whom cement was sold. In fine, the goods were supplied to the orders of the Marketing Company, which had the right, under the terms of the agreement, to sell on such terms as it thought fit and that the manufacturing companies had. the right to receive only the price fixed by the Marketing Company. The relationship in such cases can be regarded only as that of a seller and buyer and not of principal and agent." ;