LexCOMMISSIONER OF SALES TAX, MADHYA PRADESH, INDORE versus MADHYA PRADESH ELECTRICITY BOARD, JABALPUR
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->< A COMMISSIONER OF SALES TAX, MADHYA PRADESH, B c D E F j -'" G H INDORE v. MADHYA PRADESH ELECTRICITY BOARD, JABALPUR November 26, 1968 [J. C. SHAH, V. RAMASWAMI AND A. N. GROVER, JJ.] Electricity Supply Act, 1948, s. 18-Supply of Electricity under- Supplier whether a 'dealer' within the meaning of s. 2(d) of C.P. & Bearar Sales Tax Act 21 of 1947 and s. 2(d) of Madhya Pradesh General Sales Tax Act 2 of 1959-Electricity whether 'goods'-Supply of steam by Electricity Board-Nature of transaction-Whether works contract. The ·assessee-Electricity Board constituted under the Electricity Sup- ply Act, 1948, supplied and. distributed electric energy within the State of Madhya Pradesh. In the assessment years in question the Electricity Board sold, supplied and disfributed electric energy to various consumers. It also supplied steam to Nepa Mills. The mill was supplying water free and the Electricity Board was making a pro-rata charge df conversion of water into steam. The mill had also agreed to re-imburse the Board for the loss sustained> on account of the mills not taking the full demand of steam. In proceedings under the C.P. & Bearar Sales Tax Act, 1947 and the Madhya Pradesh General Sales Tax Act, 1959 the question for consideration, inter alia, were (i) whether electricity wa~ 'goods' within the meaning of the two Acts and whether the Board was a 'dealer' within the meaning of s. 2(c) of the 1947 Act and s. 2(d) of the 1959 Act; and (ii) whether the supply of steam amounted to 'sale' and was therefure taxable. The High Court, in reference, held that electricity was not 'goods', that the Board was not a 'dealer' in elec- tricity and that the supply of steam was .not taxable as it was not sup- plied with a profit motive. In appeal by special leave to this Court by the Commissioner of Sales Tax, HELD : (i) The Electricity Boa'rd carried on the business of selling, supplying and distributing electricity which fell within the meaning of the expression 'goods' in the two Acts and was therefore a 'dealer'. [945 HJ The definition of "goods" is very wide and includes all kinds of movable property. The term 'movable property' when considered with reference to 'goods' as defined for the purposes of sales tax cannot be taken in a narrow iense and merely because electric energy is not tangible or cannot be moved or touched, like) for instance, a piece of wood or a book, it cannot cease to be movable property when it has all the attributes of such property. It is capable of abstraction, consumption and use which if done dishonestly, would attract punishment under s. 39 of the Indian Electricity Act, 1910. It can be transmitted, transferred, delivered, stored, possessed etc. in the same way as any other movable property. If there can be sale and purchase of electric energy like any other mov- able object, it must be held that electric energy was intended to be cover- ed by the definition of 'goods' in the two Acts. If that had not betn the case there was no necessity of specifically exempting sale of electric energy from the payment of sales tax by making a provision for it in the Schedule to the two Acts. [945 E-HJ ·940 SUPREME COURT REPORTS [1969] 2 S.C.R. Kumbakonam Electric Supply Corporation Ltd. v. Joint Commercial A Tax Officer, Esplanade Division, Madras, 14 S.T.C, 600, Malerkotla Power Supply Company v. The Excise & Taxation Officer, Sangrur & .Ors. 22 S.T.C. 325, Naini Tai Hotel v. Municipal Board, A.I.R. 1946 All. 502, Erie County Natural Gas & Fuel Co. Ltd. v. Carroll, [1911] A.C. 105, County of Durham Electrical etc. Co. v. Inland Revenue [1909] 2 K:B. 604, referred !<>. Rash Behari v. Emperor, A.LR. 1936 Cal. 753 distinguished. (ii)· On the facts of the present case the arrangement relating to supply of steam in return of water supplied by the mills on payment of actual cost was not one of sale but was more in the nature of a works contract. Where the main object of work undertaken by the payee .of the price is not the transfer of a chattel qua chattel, the ccmtract is one for work and labour. [946 G-HJ The Government of Andhra Pradesh v, Guntur Tobaccos Ltd., 16 S.T.C .. 240, and Halsbury's Laws of England, III Edn. Vol. 34 page 6, referred to. CIVIL APPELLATE JURISDICTION : Civil Appeals Nos. 1153 10 1160 and 1161 to 1168 of ·1968. B c Appeals by special leave from the judgment and order, dated D November 16, 1967
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