IMPORTANT POINT -
H.P. General Sales Tax Act, 1968 - Right to use the meter - Transfer of interest - Section 26 of the Indian Electricity Act, 1910 provides that in the absence of an agreement to the contrary the amount of energy supplied to the consumer shall be measured by means of a correct meter - The consumer can ask the assesse to supply a meter - This does not amount to transfer of any right in the meter to consumer. (Para 5)

(Deepak Gupta, J.) - The Sales Tax Reference has been referred to this Court under the provision of the Himachal Pradesh General Sales Tax Act, 1968 (hereinafter referred to as the Act) for determination of the following substantial question of law:-

“Whether the supply of electric meter by the appellant-Board to the consumer on payment of periodical hire charges to the Appellant-Board under a duly executed agreement for such supply a meter amounts to “sale” within the meaning of section 2(j)(iv) of the H.P.General Sales Tax Act, 1968 read with other relevant provisions thereof”, is allowed to be referred to the Hon’ble High Court as it is arising from the order of this Tribunal.”

2.Brief facts of the case are that the assessee is the H.P.State Electricity Board (hereinafter referred to as the Board). The assessee is dealing in generation and distribution of electricity. The assessee supplies electricity to the consumers. To measure the electricity supplied to the consumers, meters are installed at the site/premises of the consumer. The Board retains a security for the supply of the meter and charges hire charges from the consumers for supply of meters. The Assessing Authority held that this hire agreement amounted to a sale within Section 2 (j) (iv) of the H.P.General Sales Tax Act, 1968 and therefore, assessed the hire charged received by the Board to sales tax. Appeals were filed to the Appellate Authority, which dismissed the appeals. Thereafter, appeals were filed under Section 30 of the Act to the H.P.Sales TAx Tribunal. The learned Tribunal on an analysis of the law came to the conclusion that the renting out of the meter did not amount to a sale and accepted the appeal of the assessee. On the request of the revenue reference aforesaid has been made.

3.To appreciate the rival contention of the parties, it would be relevant to quote Section 2(j) (iv) of the Act.

“2. Definition: In this Act, unless there is anything repugnant in the subject or context”

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(j) “sale” means any transfer of property in goods for cash or for deferred payment or for any valuable consideration other than a mortgage, hypothecation, charge or pledge and includes -

(i) (ii) (iii) ...........

(iv) the 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.”

4.We have heard Shri Ram Murti Bisht, learned Deputy Advocate General for the revenue and Shri Bhupender gupta, learned Senior counsel for the assessee. On behalf of the revenue, it has been contended that by fiction of law sale has been defined to include the transfer of the right to use any goods for cash, deferred payment or other valuable consideration. It is, therefore, contended that when the assessee rents out the meter to the consumer to be used by him this amount to a sale and thereby the assessee becomes liable to pay tax on the same. On the other hand, Shri Bhupender Gupta, learned Senior counsel on behalf of the assessee has urged that the electricity meter is fixed by the Board for its own purpose i.e. to measure the electricity supply to the consumer. He further contends that the consumer has no right to in any manner interfere in the mater and therefore, there is no transfer of any right of the meter to the consumer.

5.The only question to be decided in the present case is whether right to use the meter has been transferred by the Board in favour of the consumer. Section 26 of the Indian Electricity Act, 1910 deals with meters. It provides that in the absence of an agreement to the contrary the amount of energy supplied to the consumer shall be measured by means of a correct meter. The consumer can ask the assessee to supply a meter. This section also provides that the licensee can require the consumer to give security for the cost of the meter and also to enter into an agreement for the hire thereof. The choice is with the consumer either to purc