TMI Blog2011 (3) TMI 1398X X X X Extracts X X X X X X X X Extracts X X X X ..... lied by the Andhra Pradesh State Electricity Board, which is measured by use of the meter. the consumer and the Andhra Pradesh State Electricity Board have access to read the meter and the latter cannot disallow the consumer to make such use ; it can be said that the right to use is exclusively transferred to the consumer. As per condition 22.1.1 read with condition 12, it is the Board which installs the meters and collects rents. The rent collected is certainly taxable under section 5E of the Act. - Decided in favor of revenue. - Tax Revision Case Nos. 24, 31, 129, 204 and 206 of 2002 and 45, 55, 93, 227 and 246 of 2010 - - - Dated:- 1-3-2011 - V. V. S. Rao, Ramesh Ranganathan, JJ. A.K. Jaiswal and S. Krishna Murthy for the Petitioner A V. Krishna Kaundinya for the Respondent ORDER V. V. S. Rao, J:- The Andhra Pradesh State Electricity Board (now Andhra Pradesh Transmission Corporation), Hyderabad, is the petitioner, in these revision cases. Tax Revision Case Nos. 24, 31, 129, 204 and 206 of 2002 are filed against the common order dated June 20, 2000 of the Sales Tax Appellate Tribunal (STAT) and the Tax Revision Case Nos. 45, 55, 93, 227 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the meter is damaged or is not showing the correct reading, it is only the meters of the petitioner that have to remove the seal, repair and re-install it, and therefore, the levy of tax under section 5E of the Act is not permissible. By order, dated November 25, 1998, the appellate order was however revised by the Deputy Commissioner under section 20(2) of the Act. The revisional authority relied on the decision of the West Bengal Taxation Tribunal (WBTT) in CESC Limited v. Commercial Tax Officer [1995] 99 STC 446 (WBTT), which explained the operation of sections 20, 23 and 26 of the Electricity Act. Being aggrieved, the petitioner preferred second appeals before the Sales Tax Appellate Tribunal being T. A. Nos. 608, 1032 and 1033 of 1996 and T. A. Nos. 96 and 97 of 2000. While holding that the rentals received by the petitioner are liable to be taxed under section 5E of the Act, the learned Tribunal remanded the matter to the original assessing authority to reconsider the issue as to whether the meters that were leased out for realizing the rent were already subjected to tax under the Act. The first five tax revision cases are filed against this order. After remand, the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use the meter which is taxable under section 5E of the Act. He would urge that the electricity meter is not a permanent fixture to the immovable property like wall or earth. It can always be removed or re-installed and, therefore, there is a sale of goods involved as contemplated under section 5E of the Act. He placed reliance on Bharat Sanchar Nigam Ltd. v. Union of India [2006] 3 VST 95 (SC) ; [2006] 145 STC 91 (SC) ; [2006] 3 SCC 1. The background facts and submissions made across the Bar would throw up the only issue for consideration : whether there is a transfer of the right to use the meter when the Electricity Board supplies and installs the meter for recording the quantity of electricity used by the consumer, for the purpose of billing and collecting charges. We will take up the issue whether the electricity meter ceased to be movable property and, therefore, it is not goods within the meaning of the term. Indisputably sale means the transfer of the property in the course of trade or business for cash or valuable consideration (section 2(n) of the APGST Act). Goods means all kinds of movable property including goods involved in execution of works contract ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g anything attached to earth to secure property do not amount to attaching to earth. Electricity is a basic necessity and it is not luxury. Under the provisions of the Indian Electricity Act, 1910 (hereafter the Electricity Act ) and Electricity (Supply) Act, 1948 (hereafter the Electricity Supply Act ), the APSEB (at the relevant time) indisputably is a licencee to manufacture, transmit and supply electricity for domestic and non-domestic purposes. The electricity is goods, which cannot be stored and has to be used as it is supplied, for the purpose of collecting the costs of the electricity. For that purpose, the quantity of electricity is to be measured by using a meter. The meter has to be fixed in the premises of the consumer at the point where the electricity supply is released from either underground supply lines or surface transmission towers/lines. The mere placing of a meter to measure quantity of electricity for the purpose of billing cannot be said to be attached to earth. Indeed, as we shall presently consider infra, the meter either purchased by the consumer, or rented out by the APSEB, can be removed and placed at any place of the consumers' choice subject ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsumer; and, where any difference or dispute arises as to the amount of such reasonable expenses, the matter shall be referred to an Electrical Inspector, and the decision of such Inspector shall be final:- Provided that the licensee shall not be at liberty to take off or remove any such meter if any difference or dispute of the nature described in sub-section (6) has arisen until the matter has been determined as therein provided. (5) A consumer shall not connect any meter referred to in subsection (1) with any electric supply line through which energy is supplied by a licensee, or disconnect the same from any such electric supply line, without giving to the licensee not less than forty eight hours' notice in writing of his intention. (6) Where any difference or disputes arises as to whether any meter referred to in sub-section (1) is or is not correct, the matter shall be decided upon the application of either party, by an Electrical Inspector, or a competent person specially appointed by the State Government in this behalf; and, where the meter has, in the opinion of such Inspector or person, ceased to be correct, such Inspector or person shall estimate the am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wever, be a situation where the electricity can be supplied even without a meter if there is ah agreement. The measure of electricity is for the purpose of levying charges under any of the methods provided by subsection (3). Sub-section (1) of section 26 casts an obligation on the Electricity Board not only to supply a meter but also to provide correct meter and, sub-section (7), creates a fiction as regards the correctness of the meter. The meter can either be purchased by the consumer, or the Electricity Board may require the consumer to take the meter supplied by them and enter into an agreement for hire. This is made clear by the proviso to rule 26(1). It is not for the consumer to rectify the meter on his own in case of defect and it is only the officials of the Electricity Board who can enter the premises at all reasonable times and rectify the meter. This is made clear under rule 57 of the Electricity Rules, which reads as under:- The meter may be hired (by the consumer or sold to him. Subsection (2) of section 26 of the 1910 Act requires that the licensee shall keep the meter correct. If it does not do so, the consumer would not be bound to pay the meter rent. 'Me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ide according to which 'goods' means all kinds of moveable property. The term 'moveable property' when considered with reference to 'goods' as defined for the purpose of sales tax cannot be taken in a narrow sense and merely because electrical 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 moveable property when it has all the attributes of such property. It is capable of abstraction, consumption and use which if done dishonestly is punishable under section 39 of the Indian Electricity Act, 1910. If there can be sale and purchase of electrical energy like any other moveable object, this court held that there was no difficulty in holding that electric energy was intended to be covered by the definition of 'goods'. However, A. N. Grover, J. speaking for three-Judge Bench of this court went on to observe that electric energy 'can be transmitted, transferred, delivered, stored, possessed, etc., in the same way as any other moveable property'. In this observation we agree with Grover, J. on all other characteristics of electric energy except that it can be 'stored' a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nstalled in the premises of the consumer, shall be and continue to be at all times the property of the Board notwithstanding that such meters and other equipments or any part thereof may be fixed or fastened to or embedded, in any part of the consumer's premises including land belonging to the consumers. Such equipment shall not be disturbed or dealt with in any manner except by the engineers of the Board. 22. Meters:- 22.1. Installation of:- 22.1.1. The Board shall provide the meters required for measuring the consumption of electricity and shall charge monthly rental for the same in accordance with the charge as laid down in the scale of miscellaneous and general charges. The consumer shall not be entitled to have his own meter, except as a check meter during the period of agreement and the consumer shall pay the rental charges every month. Notwithstanding that a check meter is provided the electricity recorded by the Board shall be taken as the electricity actually supplied by the Board. Meters will ordinarily be installed at the point of entry to building, and shall be fixed and installed according to the convenience of the Board on the consumer's premise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lause (29A) of article 366. The works contracts, hire-purchase contracts, supply of food for human consumption, supply of goods by association and clubs, contract for transfer of the right to use any goods are some such economic activities. (b) The transfer of the right to use goods, as distinct from the transfer of goods, is yet another economic activity intended to be exigible to State tax. (c) There are clear distinguishing features between ordinary sales and deemed sales. (d) Article 366(29A)(d) of the Constitution implies tax not on the delivery of the goods for use, but implies tax on the transfer of the right to use goods. The transfer of the right to use goods contemplated in sub-clause (d) of clause (29A) cannot be equated with that category of bailment where goods are left with the bailee to be used by him for hire. (e) In the case of article 366(29A)(d) the goods are not required to be left with the transferee. All that is required is that there is a transfer of the right to use goods. In such a case taxable event occurs regardless of when or whether the goods are delivered for use. What is required is that the goods should be in existence so that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the three meters should not be greater than that for polyphase meter. Note:- (1) Meter rent collected is not to be construed as part payment for the cost of the meter and it represents interest, depreciation, maintenance and testing charges. (2) Meter rent for the first month of service shall be proportionate to the number of days in the month. (3) Single-phase meter rent:- The reduced meter rent of 4 annas per single phase meter per month apply to both hydro-electric and thermal distributions and also to all Municipalities in those areas either (a) or (b) class managed by the Department. 262. Meters during reconstruction of buildings:- If during reconstruction of a building, the meter is removed at the request of the consumer and the usual charges for changing or moving a meter board are paid by him, neither meter rent nor minimum charges need be recovered for the disconnected period if it exceeds two months. Note:- No fees for reconnection should also be charged if the consumer has paid the cost of shifting the meter board during remodelling of his premises. Even if the disconnection was made at requisition account of remodelling, reconnectio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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