ASSOCIATED CEMENT COMPANIES LIMITED, KYMORE versus COMMISSIONER OF SALES-TAX, INDORE, ETC. ETC

Citation: [1991] 2 S.C.R. 250 · Decided: 09-04-1991 · Supreme Court of India · Bench: RANGANATH MISRA, M.H. KANIA, KULDIP SINGH · Disposal: Dismissed

Judgment (excerpt)

A 
ASSOCIATED CEMENT COMPANIES LIMITED, KYMORE 
v. 
COMMISSIONER OF SALES-TAX, INDORE, ETC. ETC. 
APRIL 9, 1991 
>-" 
B 
[RANGANATH MISRA, CJI, M.H. KANIA AND 
KULDIP SINGH, JJ.) 
Constitution of lndia, 1950: Article 286( J)(a) Explanation-Sale 
of cement under a contract by manufacturer to marketing company 
within Madhya Pradesh-Non existence of Central Sales Tax Act-
Explanation not applicable. 
~ 
c 
""' 
The appellant, a manufacturer of cement, entered into an agree-
ment with the Cement Manufacturing Company of India Limited, for 
sale of cement. Under the agreement, the appellant was to sell its 
cement only through the marketing company, and certain sums would 
D 
be paid for the cement supplied by the marketing company, which bad 
the discretion to fJX the sale price. 
For the 1950.51, 1951-52 and 1952-53 periods when the appellant 
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was assessed to sales tax for the supply of cement, it maintained at the 
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assessment stage that the transactions were not exigible to sales tax as 
E 
they were covered under the Explanation to Article 286(l)(a). 
The First Appellate Authority and the Board of Revenue did not 
accept the stand of the appellant. 
The Board of Revenue held that cement being a controlled com-
). 
F 
modity, distribution of cement continued to be controlled during the 
period, notwithstanding the expiry of the Defence of India Rules. Rely-
ing on the decision of this Court in the case of Rohtas Industries Limited 
v. State of Bihar, 12 STC 621 the Board of Revenue held that the 
Cement Marketing Company was an independent organisation and was 
carrying on business as an independent entity and that what bad actu-
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ally been taxed were the sales effected by the appellant to the Cement 
Marketing Company and not the sales made to the parties which 
_,, 
obtained authorisation from the Cement Controller. 
"l 
After analysing the terms of the contract between the manufac-
turer and the Marketing Company, this Court held in Rohtas Industries 
H 
case that there was sale between the manufacturer and the Marketing 
Company. 
250 
I 
I-
ASSOCIATED CEMENT v. C.S.T. [RANGANATH MISRA, O.J. 
251 
Following its view taken in Rohias Industries' case as the present 
case bad the same terms, which bad been considered in the earlier case, 
and examining the question whether the· sale that took place between 
the manufacturer and the Marketing Company could be taken to be 
covered by the Explanation to Article 286(1)(a), this Court, dismissing 
the appeais, 
A 
B 
HELD: 1. There was preceding local sales complete in every 
respect within Madhya Pradesh by which title to the cement bad passed 
from the appellant to the Marketing Company. The concept of inter-
State sale as brought in by the Sixth Amendment or in the subsequent 
statute known as the Central Sales Tax Act was not in existence for 
the relevant period now under consideration. The finding recorded 
by the authorities was that the delivery of the cement was not the-direct 
C 
result of such sale or purchase of the cement outside the State. In the 
absence of such privily the Explanation is not attracted to the transac-
tions. [254E-G) 
_ 2. In view of the finding recorded by the authorities that the cement D 
in this case actually bad not been delivered as a direct result of such sale 
or purchase for the purpose of consumption outside the State, the only 
conclusion that can follow is that the Explanation does not apply and 
the assessments are justified. [254H-255A] 
Rohtas Industries Limited v. State of Bihar, 12 STC 621,. E 
followed • 
.i.... 
Mohd. Serajuddin v. State of Orissa, [1975) Suppl. SCR 169, 
distinguished. 
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 768 F 
(NT) of 1977 etc. etc. 
' 
From the Judgment Order dated 9.10.1975 of the Madhya 
Pradesh High Court in M.C.C. No. 144 of 1966. 
V.A. Bobde, B.R. Aggarwala and U .A. Rana for the Appellant. 
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S. V. Deshpande and S.K. Agnihotri for the Respondents. 
The Judgment of the Court was delivered by 
RANGANATH MISRA, CJ. These are appeals by special leave H 
252 
SUPREME COURT REPORTS 
[1991] 2 S.C.R. 
A 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 539/78 relates to 1950-51 and Civil Appeal 1038/78 to 1952-53. 
The appellant is a manufacturer of cement in the factory located 
B at K ymore in Madhya Pradesh. Several 

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