STATE OF A.P. versus NATIONAL THERMAL POWER CORPORATION LTD. AND ORS.

Citation: [2002] 3 S.C.R. 278 · Decided: 22-04-2002 · Supreme Court of India · Bench: S.P. BHARUCHA · Disposal: Case Partly allowed

Cited by 4 judgment(s) · cites 1 · see the full citation network in Lexace

Judgment (excerpt)

A 
B 
c 
ST A TE OF A.P. 
v. 
NATIONAL THERMAL POWER CORPORATION LTD. AND ORS. 
APRIL 22, 2002 
[S.P. BHARUCHA CJ., R.C. LAHOTI, N. SANTOSH HEGDE, 
RUMA PAL AND ARIJIT PASAYAT, JJ.] 
Constitution of India, 1950: 
Article 245, 248, 269(l)(g) and (3), 286, 287, 288, Seventh Schedule 
List I Entry 92A, List II Entries 53 and 54-Sale of electricity occasioning 
inter-State movement of electricity-Levy of tax on-Competence of State 
Legi:;/ature to enact law to levy tax-Held, electricity being goods shall be 
subject to provisions of Entry 92A of List I-Such sale would amount to inter-
D State sale-Jn view of prohibition by Articles 269 and 286 such Legislation is 
beyond legislative competence of State-Legislation having extra territorial 
operation can be enacted only by Parliament and not by S.'ate Legislature-
Articles 287 and 288 do not exclude applicability of other Articles where in 
electricity has been dealt with as goods-Central Sales Tax Act, 1956-Section 
53-Andhra Pradesh Electricity Duty Act, 1939-Section 3-MP. Electricity 
E Duty Act, 1949-Section 2(b)-MP. Upkaar Andhiniyam, 1981-Section 3(1)-
Constitution (Sixth Amendment) Act, 1956. 
7th Schedule-A piece of legislation need not necessarily fall within the 
scope of one entry alone-More than one entry may overlap to cover the 
F subject matter of a single piece of legislation. 
G 
H 
7th Schedule-List I, Entry 92A, List II Entries 53 and 54-Entries 
should be read together-But to the extent of sale of electricity for consumption 
outside the State, the electricity being goods, shall be subject to provisions of 
Entry 92A of List I. 
Central Sales Tax Act, 1956-Section 3-Electricity-Sale of-Generation 
of in one State-Consumption of in another State-Held, such sale on account 
of instantaneous movement from one State to another would amount to inter-
State sale-Hence, would be inter-State trade squarely covered by the Act. 
M.P. Electricity Duty Act, 1949-Section 2(a) 'Consumer'-Definition 
278 
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STATE v. N.T.P.C. LTD. 
279 
of-Held, the definition has to be read down as including within it only such A 
persons who receive the electricity for consumption or distribution for 
consumption within the State-Otherwise the definition would be rendered 
ultra vires Articles 286 and 269 of the Constitution read with Section 3 of 
Central Sales Tax Act, 1956-MP. Upkaar Adhiniyam, 1981. 
Doctrine: 
B 
Doctrine of Reading Down-Applicability of 
The question for consideration in the present appeal was whether sales 
of energy, by respondent-National Thermal Power Corporation Limited 
(NTPq generated within the State of Andhra Pradesh and sold to several C 
Electricity Boards situated outside the State pursuant to contracts of sales 
oceasioning inter-State movement of electricity, attracted the incidence of 
taxation under Section 3 of Andhra Pradesh Electricity Duty Act, 1939; and 
whether the sale can be construed an inter-State sale or intra state sale. 
The connected transferred petition wherein tax and cess was levied D 
under M.P. Electricity Duty Act, 1949 and under Madhya Pradesh Upkar 
Adhiniyam, 1981, also raised similar questions. 
States contended that so far as sale of electricity is concerned, even if 
such sale takes place in the course of inter-State trade or commerce, the State E 
can legislate to tax such sale ifthat sale can be held to have taken place within 
the territory of that State or if adequate territorial nexus is established between 
the transaction and State Legislation; that omission to amend Entry 53 in 
List II of 7th Schedule of the Constitution by not making it subject to the 
provisions of Entry 92A of List I of 7th Schedule by Constitution's Sixth 
Amendment was deliberate and, therefore, the restriction placed only in Entry F 
54 by making it subject to the provisions of Entry 92A of List 3 should not 
be read in Entry 53; and the subject of electricity since has been specifically 
dealt with by Article 287 and 288 of the Constitution, therefore, by implieation 
articles other than 287 and 288 should not be read as dealing with electricity. 
Dismissing the appeal and allowing the transferred petition, the Court G 
HELD: l.l. Where sale of electricity takes place in the courses of inter-
state trade or commerce, the State cannot legislate to tax such sale. [302-B) 
1.2. Electricity is dealt as goods, the property whereof, is that. the 
production (generation), transmission, delivery and consumption are H 
280 
SUPREM

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