LexINDIAN STEEL & WIRE PRODUCTS LTD. versus STATE OF MADRAS
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INDIAN STEEL & WIRE PRODUCTS L'(D.
v.
STATE OF MADRAS
September 11, 1967.
[K. N. WANCHOO, C.J., R. S. BACHAWAT, V. RAMASWAYll,
47!}
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G. K. MITTER AND K. S. HEGDE, JJ.J
Madras Genera! Sales Tax Act (9 of 1939)-Iron and Steel {Con-.
trol of Production and Distribution) Order, 1941-Snpp!ies effected
on orders of Steel Controller whether 'sales'-TribunaL's finding that
sales were for consumption in Madras State-To be treated as con-
clu.sive.
·At the instance of the steel controller exercising powers under
c the Iron and Steel (Control of Production and Distribution) Order,
1941, the appellant supplied certain steel products to various persons
in Madras State during the financial years 1953-54, 1954-55 and part
of the financial year 1955-56. The State of Madras assessed the turn-
over of the appellant relating to those transactions to sales tax under
the Madras General Sales Tax Act, the Jaw in force at that time.
The appellant contended before the authorities under the Sales Tax
Act as well as the High Court that the transactions were not sales.
D and therefore could not be taxed. The further contention was that
there was no material to sho\v that the deliveries \Vere for consump-
tion within the State of Madras so as oo become taxable within the·
State. From the adverse decision of the High Court the appellant, by
special leave, came to this Court. rn support of the contention that
the transactions were not sales it was urged that they were effected
under the directions of the Iron and Steel Controller given under cl.
E IOB of the Order and that being so there was no mutual assent bet-
\veen the parties to the transactions.
HELD: The authority of the controller to pass the orders in ques-
tion came from cl. 5 of the order and not cl. lOB. The orders were in
respect of goods not yet manufactured whereas under cl. lOB direc-
tions could be given only in respect of goods already in stock. So far
as cl. 5 is concerned admittedly it does not require the controller to
regulate or control every facet of a transaction bct;veen a producer
F and the person to whom he supplies iron and steel products. [488H:
489C-H]
In modern times the doctrine of laisser faire can have only a
limited application. That does not mean that there is no freedom
of contract. So long as mutual assent is not excluded in any deaHng,
in la\v it is a contract. On the facts of the present case it "''as not
possible to accept the contention that nothing was left to be decided
G bv mutual assent On the other hand the controller's directions were
c6nfined to narro\v limits and there \Vere several matters \\!hich the
parties could decide b,· mutual consent. [490B: 491B-C]
Kirkness v. John Hudson & Co. Ltd. [1955] A.C. 696; M/s. New
India Sugar Mills Ltd. v. Commissioner of Scites-tax, Bihar. [1963]
Supp. 2 S.CR 459: Calcutta Electric Supply Corporation Ltd. v. Com-
missioner of Income-tax, West Bengal. 19 I.T.R 406: M./s. Cement
Ltd . .v. State of Orissa, 12 S.T.C. 205: State of Madras v. Gannon Dun-
H kerley, [1959] S.C.R. 379: North Adjai Coal Company (P) Ltd. Y.
Commercial Tax Officer & Ors. 17 S.T.C. 514 nnd S. K. Roy v. Addi-
tional Member, Board of Revenue. West Benqal. 18 S.T.C 379. refer-
red to.
(ii) From the facts and circumstances the Tribunal rightly found
that the supplies were made to stockists in the State of Madras for
480
SOPREl\IE COUR'l' REPORTS
[1968] 1 s,c.n.
consumption in that State. It may be that a small portion of the sup-
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plies had gone out of the State. But that was not a relevant circum-
stance. Wha• had to be seen was whether the supplies in question
were made for consumption in the Madras State. On that question the
finding of the Tribunal was conclusive. [496B-CJ
CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 1968-
1970 of 1966.
Appeals by special leave from the judgment and order dated
July 16. 1962 of the Madras High Court in Tax Cases Nos. 117,
118 and 119of1959.
S. B. Banerjee and S. N. Mukerjee, for the appellant (in all
the appeals).
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K. M. Mudaliyar. Advocate-Genernl for the State of Madras C
and A. v. Rangam, for the respondent (in all the appeals).
M. C. Setalvad, B. Sen, G. S. Challerjee and P. K. Bose, for
the Intervener (in C. A. No. 1968 of 1966).
The Judgment of the Court was delivered by
Hegde, J. These appeals by special leave arise from the com- D
mon order made by the Madras High Court in T. C. Nos. 117 to
119 (revisions Nos. Excerpt shown. Read the full judgment & AI analysis in Lexace.