TMI Blog1967 (11) TMI 102X X X X Extracts X X X X X X X X Extracts X X X X ..... sale and supply of electrical energy? (2) On the facts and circumstances of the case, whether or not the turnover representing the sale of coal-ash is liable to be assessed to sales tax? (3) On the facts and circumstances of the case, whether or not steam is salable goods and if they are salable goods is the turnover representing the supply thereof liable to be assessed to sales tax in the hands of the assessee? (4) On the facts and circumstances of the case, whether or not the inclusion of the turnover arising out of the sale of specification and tender forms in the taxable turnover in the different periods was legal and proper? (5) On the facts and circumstances of the case, whether or not purchase of taxable goods from unregistered dealers for use in activities not directly concerned with the main business activity of the assessee namely generating, distributing and supplying of electricity is liable for purchase tax T' 3.. The material facts are that the assessee, the Madhya Pradesh Electricity Board, is a body constituted under section 5 of the Electricity (Supply) Act, 1948. It is charged under section 18 of that Act with the general duty of promoting the co-ordi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the assessee did not produce coal-ash for the purpose of sale; and that for this reason, and also for the reason that the assessee was not a dealer, the sales of coal-ash were not taxable. In regard to the supply of steam to Nepa Mills, the Tribunal, on examining the terms of the arrangement under which the assessee supplied steam to Nepa Mills, came to the conclusion that the supply of steam was an isolated transaction, and that this activity of the assessee-Board was undertaken on "no profit no loss" basis. The Tribunal was also inclined to hold that steam was not "salable" goods as it was not an article which could be brought to the market and could be bought and sold there. It was, therefore, held by the Tribunal that the supply of steam was not liable to be assessed to sales tax. The Tribunal further held that the specification and tender forms were not marketable goods and there was no profit element in the sale of those forms; and that, therefore, no sales tax could be levied on the sale of those forms. On the question of the liability of the Board to purchase tax, the Tribunal held that as the assessee was not a "dealer" in respect of the sale and supply of electricity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the revenues of the Board shall, after meeting its operating, maintenance and management expenses and after provision has been made for the payment of taxes on its income and profits, be distributed as far as they are available in the order stated in that provision. In regard to the balance remaining after meeting the liabilities mentioned in clauses (i) to (ix) of section 67, it is provided by clause (x) that one-half of the balance shall be applied in the reduction of tariffs or for such other purposes beneficial to electrical development in the State, as the Board may think fit, and the remaining one-half shall be made available to the Consolidated Fund of the State. The reference in section 67 to the payment of taxes on the Board's income and profits, and the tenth clause of section 67, unmistakably show that the Board carries on its operations with a view to earn profits. That the Board earns profits and makes gains is again emphasized by section 80, which says that for the purposes of the Indian Income-tax Act, 1922, the Board shall be deemed to be a company within the meaning of that Act and shall be liable to income-tax and super-tax accordingly on its income, profits and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... property" has not been defined in the Act of 1947 or the 1958 Act. In section 2(24) of the M. P. General Clauses Act, 1957, "movable property" has been defined to mean "property of every description, except immovable property". Section 2(18) of the said Act states that " 'immovable property' includes land, benefits to arise out of land and things attached to the earth, or permanently fastened to anything attached to the earth." 6.. Now, electrical energy is by no means "immovable property". It is not even any matter capable of possession, or capable of being moved in an existent state. Its real nature is not understood. One cannot see it; its presence or influence is only known by its effect. As a working hypothesis for explaining the phenomenon, it has been assumed that electricity is "a highly subtle imponderable fluid." But it is altogether erroneous to say that when electricity generated by the assessee-Board is distributed or supplied through wires, there is a flow of some fluid or liquid. When a wire carries any current of specified ampere, the electrons flow continuously in direct or alternating directions; the current is caused by the flow of electrons. Electrons are subj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... those Acts. In this connection, it would be pertinent to refer to the observations in Adams v. Rau46 C.L.R. 572 at pp. 577-578. That was a case which dealt with an assessment under the Australian Sales Tax Assessment Act (No. 1 of 1930). The observations, which deserve attention, are as follows: "It is necessarily unsafe to reason from what is expressly excluded from the operation of such a statute in order to fix the connotation of the general description by which the subjects are defined. For it must always be uncertain whether the exemption is introduced as a definite exception of something which otherwise would be included, or by way of contrast, and to ensure that the general description was not enlarged, or simply because the Legislature was as uncertain of the precise application of the description as those who are called upon to interpret and apply it. The definition should receive an operation according to 'the natural and ordinary meaning of its terms, neither widened nor narrowed by inferences sought to be drawn from special provisions, exclusions and exemptions. After all, it is a taxing Act and its ambit should not be enlarged by anything less than the clearest impl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business of selling one commodity, the price received by him by the sale of another commodity will not be included unless he carries on the business of selling that other commodity; that the question whether a person carries on the business in a particular commodity must depend upon the volume, frequency, continuity and regularity of transactions of purchase and sale in a class of goods and the transactions must ordinarily be entered into with a profit-motive; that it is not necessary that profit must in fact be earned; and that when a subsidiary product is turned out in the factory of the assessee and that product is regularly and continuously sold from time to time, an intention to carry on business in such product may be reasonably attributed to the assessee. In the case before the Supreme Court, a textile manufacturing company turned out, in the course of manufacture of cloth, kolsi and waste caustic liquor as by-products or subsidiary products and sold them regularly. It was held that the sale of such products would be incidental to the business of manufacturing and selling cloth and would, therefore, be liable to sales tax. In the statement of the case submitted by the Tribu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat when the assessee supplied steam to the mills it was not with a profit-motive. It may be taken that the water, which the Nepa Mills supplied free to the assesseeBoard, became the property of the Board. It was in return of this free supply of water that the Board agreed to give steam to the Nepa Mills at a rate based solely on the coal consumed in producing steam. The mills also agreed to reimburse the Board for any loss sustained on account of the mills not taking the full demand of steam. This reimbursement was also based on the coal consumed in the production of steam. It is thus plain that the supply of steam to the Nepa Mills by the Board was not with a profit-motive. There was no contract for the sale of steam. The contract was only for the labour and cost involved in the supply of steam to the Nepa Mills. The Sales Tax Tribunal has observed that it was not established that steam in excess of the assessee's requirements was produced with a view to undertaking the activity of selling it with a profit-motive. On this finding and on the basis of the arrangement entered into between the assessee-Board and the Nepa Mills with regard to the supply of steam, the conclusion is ine ..... X X X X Extracts X X X X X X X X Extracts X X X X
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