1979 Supreme(Raj) 78

(JAIPUR BENCH)
Dwarka Prasad, Mahendra Bhushan Sharma JJ.
THE RAJASTHAN STATE ELECTRICITY BOARD
Versus
THE STATE OF RAJASTHAN (AND ANOTHER CASE).
D.B. Civil Sales Tax References Nos. 1 of 1967 and 29 of 1970
Decided On: Decided On : 30-04-1979

The goods mentioned in the three questions referred to the High Court fell within the dictum of the Supreme Court's decision in the Indian Copper Corporation's case [[1965] 16 S.T.C. 259 (S.C.)].

Headnote:

CENTRAL SALES TAX ACT, 1956 - SECTION 8(1)(B), 8(3)(B), 13 - RAJASTHAN SALES TAX ACT, 1954 - SECTION 15 - ELECTRICITY BOARD - PURCHASE OF GOODS - CONCESSIONAL RATE OF TAX - REGISTRATION CERTIFICATE - AMENDMENT - GOODS USED IN THE GENERATION AND DISTRIBUTION OF ELECTRICITY - INTERPRETATION.

Fact of the Case:

The Rajasthan State Electricity Board (the Electricity Board) was a corporation engaged in the generation and distribution of electrical energy in the State of Rajasthan. It was registered as a dealer under the Central Sales Tax Act, 1956 (the Central Act) and the Rajasthan Sales Tax Act, 1954 (the Act). The Electricity Board imported certain goods against C forms in the State of Rajasthan on payment of concessional rate of tax under the Central Act. However, the Sales Tax Officer objected to the purchase of tyres and tubes of motor vehicles, battery cells, varnish and paints, soaps, raincoats and iron safes against C forms by the Electricity Board and held that the aforesaid goods were not used for the generation and distribution of electricity and, as such, tax to the full extent payable under the Central Act should have been paid by the Electricity Board. The Electricity Board preferred an appeal to the Deputy Commissioner, Excise and Taxation (Appeals), Ajmer and Kota Division, Jaipur, who was of the opinion that the import of soaps to the extent of half of the quantity may be considered as of utility in the maintenance, etc., of the machines and half may be considered as irregular import on C forms, while the purchase of varnish and paints was considered to be for the generation of electricity as the same were required for the cleaning and painting of the machines and boilers. Similarly, tyres and tubes were also held to be essential for the transmission of electricity, but the remaining articles, i.e., iron safes, raincoats and battery cells were considered to be commodities which had no direct utility in the generation and distribution of electricity. The Electricity Board, thereupon, applied to the Board of Revenue for making a reference to the High Court, but the reference application was rejected by the learned Member of the Board of Revenue. Then, an application was preferred to the High Court under section 15(2)(b) of the Act and by order dated 27th September, 1966, the High Court directed the Board of Revenue to refer the following two questions for decision by the High Court along with the statement of the case: (1) Whether, on the facts and in the circumstances of the case, the application is entitled to purchase the goods, tyres, tubes, raincoats, soaps, etc., against C forms and no case of misuse of C forms is made out against the applicant? (2) Whether, on the facts and in the circumstances of the case, tyres, tubes, raincoats and soaps, etc., are covered in the list given in the Central registration certificate, exhibit 1, and the applicant has rightly used the C forms for the purchase of the said goods?

Finding of the Court:

The High Court held that the goods mentioned in the three questions referred to it fell within the dictum of the Supreme Court's decision in the Indian Copper Corporation's case [[1965] 16 S.T.C. 259 (S.C.)]. The High Court held that the Electricity Board was engaged in the business not only of manufacturing and generating electrical energy but it also discharges the function of supply, distribution and transmission of such electrical energy and, as such, the principles laid down by the Supreme Court in the Indian Copper Corporation's case [[1965] 16 S.T.C. 259 (S.C.)] were applicable to the facts of there reference cases. The High Court also held that the same principles were applied by the Bombay High Court in the Kolhapur Electric Supply Co.'s case [[1976] 37 S.T.C. 587], while holding that electric meters used for the measurement of electricity were used in the manufacture or processing of goods, namely, electrical energy, without which there could be no supply or sale of electricity to the consumers. The High Court further held that in the Madhya Pradesh Electricity Board's case [[1970] 25 S.T.C. 188 (S.C.)], which is equally applicable to the facts of the present case, the Supreme Court held that the Electricity Board was a "dealer" in respect of its activities of generation, distribution, sale and supply of electrical energy and that electrical energy can be stored and transmitted and, thought it may not be moved or touched, yet it has all the attributes of movable property.

Issues: Whether the articles or goods mentioned in the three questions referred to us fall within the dictum of their Lordships' decision in the Indian Copper Corporation's case [[1965] 16 S.T.C. 259 (S.C.)].

Ratio Decidendi: The High Court held that the goods mentioned in the three questions referred to it fell within the dictum of the Supreme Court's decision in the Indian Copper Corporation's case [[1965] 16 S.T.C. 259 (S.C.)]. The High Court held that the Electricity Board was engaged in the business not only of manufacturing and generating electrical energy but it also discharges the function of supply, distribution and transmission of such electrical energy and, as such, the principles laid down by the Supreme Court in the Indian Copper Corporation's case [[1965] 16 S.T.C. 259 (S.C.)] were applicable to the facts of there reference cases. The High Court also held that the same principles were applied by the Bombay High Court in the Kolhapur Electric Supply Co.'s case [[1976] 37 S.T.C. 587], while holding that electric meters used for the measurement of electricity were used in the manufacture or processing of goods, namely, electrical energy, without which there could be no supply or sale of electricity to the consumers. The High Court further held that in the Madhya Pradesh Electricity Board's case [[1970] 25 S.T.C. 188 (S.C.)], which is equally applicable to the facts of the present case, the Supreme Court held that the Electricity Board was a "dealer" in respect of its activities of generation, distribution, sale and supply of electrical energy and that electrical energy can be stored and transmitted and, thought it may not be moved or touched, yet it has all the attributes of movable property.

Final Decision: The High Court answered the two reference cases accordingly.