TMI Blog1968 (11) TMI 85X X X X Extracts X X X X X X X X Extracts X X X X ..... of the two Acts in respect of its activities of generation, distribution, sale and supply of electric energy. - Civil Appeal No. 1153 To 1168 of 1968, - - - Dated:- 26-11-1968 - SHAH J.C. AND RAMASWAMI V. AND GROVER A.N. JJ. I.N. Shroff, Advocate, for the appellant in C.As. Nos. 1153 to 1160 and the respondent in C.As. Nos. 1161 to 1168 of 1968. S.T. Desai, Senior Advocate (B.L. Neema, Advocate, and Mrs. Anjali K. Varma, Advocate, and J.B. Dadachanji and Co., with him), for the respondent in C. As. Nos. 1153 to 1160 and the appellant in C.As. Nos. 1161 to 1168 of 1968. N.D. Karkhanis, Senior Advocate (A.G. Ratnaparkhi, Advocate, with him), for the intervener. -------------------------------------------------- The judgment of the court was delivered by GROVER, J. -This judgment will dispose of two sets of cross appeals Nos. 1153 to 1160 and 1161 to 1168 of 1968 which are from a common judgment of the Madhya Pradesh High Court and have been entertained by special leave. The relevant assessment years for the purpose of levy of sales tax are from April 1, 1957, to March 31, 1958, and April 1, 1964, to March 31, 1965. For the assessment years p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... undertaken on no profit no loss basis could not be assessed to sales tax. The specification and tender forms were held not to be marketable goods involving any profit element and for that reason could not be taxed. As regards the purchase tax the Tribunal held that as the Electricity Board was not a dealer in respect of the sale and supply of electric energy no purchase tax could be imposed on goods purchased by it and consumed "in furtherance of and in aid of the business activity of generating, supplying and distributing electricity." Both the Electricity Board and the Commissioner of Sales Tax, Madhya Pradesh, filed applications requiring the Tribunal to refer to the High Court certain questions of law arising out of its common order. The Tribunal drew up a common statement of case and referred five questions of law. On the first question the High Court held that the Electricity Board could not be held to be a "dealer" as defined in section 2(c) of Act 21 of 1947 or section 2(d) of Act 2 of 1959 in respect of its activity of generation, distribution, sale and supply of electric energy. On the second question it was held that as the Electricity Board regularly and continuously ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax in the hands of the assessee." It is somewhat curious that both sides are almost agreed that the decision of the High Court on the first question is not correct. Since enunciation of the true position is involved we proceed to give our opinion in the matter. The definition of "dealer" as given in the two Acts substantially is that any person who carries on the business of buying, selling, supplying or distributing the goods is a "dealer" and "goods" are defined by section 2(d) by Act 21 of 1947 as meaning all kinds of movable property other than actionable claims and including all materials, articles and commodities whether or not to be used in the construction, fitting out, improvement or repair of immovable property. The definition contained in section 2(g) of Act 2 of 1959 is almost in similar terms except that certain additions are there with which we are not concerned. Reference may be made, at this stage, to the definition of "movable property", which has not been defined in the two Acts, given in section 2(24) of the Madhya Pradesh General Clauses Act. It has been defined to mean "property of every description, except immovable property". Section 2(18) of that Act says ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... who carried on the business of buying and selling goods. In the opinion of the learned Judge the concept of "dealer", "goods" and "sale" comprehended all kinds of movable property, He further relied on certain decisions which have been cited before and which will be presently noticed. A similar view was expressed by Tek Chand, J., of the Punjab and Haryana High Court in Malerkotla Power Supply Co. v. Excise and Taxation Officer, Sangrur [1968] 22 S.T.C. 325. It was held that electric energy fell within the definition of "goods" in both the Punjab Sales Tax Act, 1948, and the Central Sales Tax Act, 1956. According to the learned judge electric energy has the commonly accepted attributes of movable property. It can be stored and transmitted. It is also capable of theft. It may not be tangible in the sense that it cannot be touched without considerable danger of destruction or injury but it is perceptible both as an illuminant and a fuel and also in other energy-giving forms. Electric energy may not be property in the sense of the term "movable property" as used in the Punjab and Central General Clauses Acts in contradistinction to "immovable property" but it must fall within the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... electricity is not one of them. The term "movable property" when considered with reference to "goods" as defined for the purposes of sales tax cannot be taken in a narrow sense 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 needless to repeat that it is capable of abstraction, consumption and use which, if done dishonestly, would attract punishment under section 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. Even in Benjamin on Sale, 8th Edition, reference has been made at page 171 to County of Durham Electrical etc., Co. v. Inland Revenue [1909] 2 K.B. 604. in which electric energy was assumed to be "goods". If there can be sale and purchase of electric energy like any other movable object we see no difficulty in holding that electric energy was intended to be covered by the definition of "goods" in the two Acts. If that had not been the case there was no necessity of specifically exempting sale of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... happened to be a mere draft of an agreement which was proposed to be entered into. It is too late for Mr. Shroff to take these objections because these should have been raised before the Tribunal and the High Court. It is stated in Halsbury's Laws of England (Third Edition), Volume 34, page 6 that "a contract of sale of goods must be distinguished from a contract for work and labour. The distinction is often a fine one. A contract of sale is a contract whose main object is the transfer of the property in, and the delivery of possession of, a chattel as a chattel to the buyer. Where the main object of work undertaken by the payee of the price is not the transfer of a chattel qua chattel, the contract is one for work and labour". It has been laid down by this court in Government of Andhra Pradesh v. Guntur Tobaccos Ltd. [1965] 16 S.T.C. 240. that in business transactions the works contracts are frequently not recorded in writing setting out all the covenants and conditions thereof, and the terms and incidents of the contracts have to be gathered from the evidence and attendant circumstances. The question in each case is one about the true agreement between the parties and the te ..... X X X X Extracts X X X X X X X X Extracts X X X X
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