TMI Blog1995 (3) TMI 434X X X X Extracts X X X X X X X X Extracts X X X X ..... of the applicant-company is that a notice bearing Memo No. 3164 dated November 29, 1985, purportedly under section 14(1) of the 1941 Act was served by respondent No. I asking it to produce books of account in view of the facts that with effect from August 1, 1984, transfer of right to use any goods amounts to "sale" under the 1941 Act and the company was engaged in the business of letting out electric meter, a movable property on hire/rental for cash, deferred payment or other valuable consideration. A written reply dated December 9, 1985, was submitted by the company and its senior accounts officer also met respondent No. I on December 10, 1985 and discussed the matter. It was brought to the notice of respondent No. I that it was really not a case of carrying on any business of letting out any movable property, namely, electric meter on hire/rental, because installation and maintenance of meter were statutory duties and its use, treatment, operation and handling were not left to the consumers, but exclusively for the use of the company, which could connect, disconnect or remove a meter from consumer's premises. But the applicant apprehended that respondent No. I was determined to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s rent for the same. The Electricity Act provides for either purchase of a meter by a consumer or taking of a meter on hire from the supplying agency. A consumer has a right to verify his bill submitted by the applicant-company with the consumption recorded in the meter. An affidavit-in-reply was filed on behalf of the applicant-company, submitting, inter alia, that the meter is not a movable property and, therefore, not "goods", and the consumer has no such right over the meter, though installed at his residence, for which the transaction may come within the amended definition of "sale". 4. In the main application, it was stated that the attempt of the taxing authorities to impose tax on rental/hire charges of meters will amount to violation of articles 14, 19(1)(g), 245, 265, 299 and 304 of the Constitution of India. But at the time of hearing arguments, Mr. Arijit Chowdhury, learned counsel for the applicant-company, did not press this point. Similarly, Mr. Chowdhury did not submit that the meter was not a movable property. The arguments, therefore, proceeded on the basis that the electricity meters are "goods" under the 1941 Act. 5.. According to the definition of the ter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able for such offences. 6.. In view of the abovementioned statutory provisions, Mr. Arijit Chowdhury, learned counsel for the applicant, contended that there was no transfer of' the right to use the meters to the consumers within the meaning of section 2(-)(ii) of' the 1941 Act, which defines "sale" as under: "'Sale' means any transfer of property in goods for cash or deferred payment or other valuable consideration, and includes,- (i)................... (ii) any transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration." According to Mr. Chowdhury, a transfer involves a relinquishment of the licensee's right in favour of the consumer, which is not the case here. CESC Ltd. never relinquished its right to tise the meters. In fact, in his opinion, the licensee continued to use the meters for the purpose of ascertaining the quantity of energy consumed by the consumers and preparing bills which were to be paid by them. He attached no significance to the fact that the meters were affixed to the premises of the consumers who also made use of the meters for the purposes of verifyi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity of the meter and preventing pilferage of electricity. The provisions of the Electricity Act and Rules lay down certain mutual obligations as between the licensee and the consumer. He denied that the monthly rent paid by the consumer to the licensee for the meter is a maintenance charge. Although maintenance of the meter to keep it in proper order is the obligation of the licensee, Mr. Chakraborty submitted that the monthly rent is paid by the consumer against the right to use the meter. By referring to section 26(4) and proviso thereto, Mr. Chakraborty argued that the licensee cannot remove the meter from the premises of the consumer except for the purpose of inspection and testing and according to the proviso, it cannot be removed, if there is any dispute or difference of the nature described in section 26(6), namely, whether a meter is or is not correct. 8.. In course of his reply, Mr. Arijit Chowdhury, applicant's counsel, contended that there is a distinction between transfer of the meter itself and the transfer of the right to use the same. According to him, the meter installed in the premises of the consumer is not for the consumer's exclusive use, the main use being of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statutory hiring of meters by the applicant-company to its consumers. The question is whether such hiring amounts to "sale" within the meaning of section 2(g)(ii) of the 1941 Act, and, therefore, whether amounts to a transfer of the right to use the meter. Admittedly, a monthly rent is paid by the consumer to the licensee for such hiring. The duties and obligations of the licensee who supplies the meter on hire are statutory, but those are related to consumption of electricity by the consumer and payment of correct charges therefor. Therefore, in our opinion, whether or not there is an exclusive transfer of the right to use the meter to the consumer in the traditional legal sense (because the licensee can inspect, test and read the meter), there is "transfer of the right to use" the meter to the consumer in the cases under our consideration. To put it in a different way, on the facts and relevant provisions of law governing the hiring of meters, we cannot hold that there was no transfer of the right to use the meter to the consumer. Since the consumer and the licensee both have access to read the meter (incidentally, that is the only practical use to which the meter can be put), a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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