Controlled supply transactions can still constitute sales where mutual assent survives and territorial nexus is reasonably inferred.

Controlled supplies of iron and steel remained sales for sales tax purposes because statutory control over buyers and base price did not eliminate mutual assent, transfer of property, or other negotiable terms such as delivery, transport, and payment. The transactions were therefore taxable sales. The territorial levy was also sustained because the tax authority could rely on a reasonable inference from the controlled distribution scheme, purchaser class, quantities supplied, and surrounding circumstances that the goods were delivered in Madras for consumption there. The sales-tax levy was upheld on both the nature of the transactions and the territorial nexus.

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Issues: (i) Whether the supplies of iron and steel made under the control order were sales exigible to sales tax. (ii) Whether the goods were delivered in Madras for consumption in that State so as to sustain the levy.

Issue (i): Whether the supplies of iron and steel made under the control order were sales exigible to sales tax.

Analysis: A sale under the governing law required competent parties, mutual assent, transfer of property in the goods, and a price in money. The control order restricted the field of bargaining by fixing the buyers and the base price, but it did not exclude agreement on other material terms such as timing of supply, transport, and payment. The transactions were therefore not comparable to cases of compulsory acquisition, and the control order did not eliminate consensual elements in the dealings.

Conclusion: The transactions were sales and were exigible to tax.

Issue (ii): Whether the goods were delivered in Madras for consumption in that State so as to sustain the levy.

Analysis: The taxing authority was required to establish facts showing that the sales fell within the State's taxing competence. On the material before it, the final fact-finding authority drew a reasonable inference from the nature of the controlled distribution scheme, the class of purchasers, the quantities supplied, and the surrounding circumstances that the goods were intended for consumption in Madras. That inference was held to be proper and conclusive on the record.

Conclusion: The goods were delivered in Madras for consumption in that State.

Final Conclusion: The levy of sales tax was upheld on both the character of the transactions and the territorial nexus, and the appeals failed.

Ratio Decidendi: A transaction remains a sale where mutual assent survives notwithstanding statutory control over buyers, price, and distribution, and a territorial sales-tax nexus may be established by reasonable inference from the scheme and surrounding circumstances of delivery and intended consumption.

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