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COMMISSIONER OF SALES TAX, M.P. V. M.P. ELECTRICITY BOARD, JABALPUR (1969) 1 SCC 200

COMMISSIONER OF SALES TAX, M.P. V. M.P. ELECTRICITY BOARD, JABALPUR (1969) 1 SCC 200

 

FACTS

  • The case involves the Madhya Pradesh Electricity Board and its activities related to the generation, distribution, sale, and supply of electrical energy.
  • There is a dispute over whether the Madhya Pradesh Electricity Board qualifies as a "dealer" under the relevant provisions of the C.P. and Berar Sales Tax Act and the Madhya Pradesh General Sales Tax Act.
  • Another issue revolves around whether steam is considered "saleable goods" and if the turnover representing the supply of steam is liable to be assessed for sales tax.

ISSUE

  • Whether the Madhya Pradesh Electricity Board qualifies as a "dealer" under the relevant tax acts due to its activities related to electrical energy.
  • Whether steam is considered "saleable goods" and if its turnover is liable to be assessed for sales tax.

JUDGEMENT

  • On the issue of steam, the court analysed the arrangement between the Electricity Board and Nepa Mills, concluding that it resembles more of a works contract than a sale contract.
  • Based on the findings of the tribunal and the High Court, the Supreme Court held that the Electricity Board qualified as a "dealer" in respect of its activities related to electric energy, but the turnover in respect of steam was not taxable as it was more akin to a works contract.

LEGAL ANALYSIS

  • Court analysed the language used in these statutes to define a "dealer" as any person engaged in the business of buying, selling, supplying, or distributing goods. Similarly, "goods" were defined as all kinds of movable property, except actionable claims.
  • The court considered previous judicial decisions, such as those from the Madras High Court and the Punjab and Haryana High Court, which had addressed similar issues regarding the classification of electric energy as "goods" for sales tax purposes.
  • Referred cases generally held that electric energy fell within the definition of "goods" due to its transmissibility, commercial usage, and similarity to other tangible commodity
  • The court conducted a detailed analysis of the nature and characteristics of electric energy, considering its intangible yet commercially valuable properties.
  • It held that the Electricity Board was indeed a "dealer" for its activities related to electric energy but that the turnover in respect of steam was not taxable under the sales tax statutes.