1963 (9) TMI 43 - HC - VAT and Sales Tax

Summary

Issues:
1. Whether electricity is considered "goods" for the purpose of the Madras General Sales Tax Act, 1959, and the Central Sales Tax Act, 1956.

Analysis:
The judgment dealt with the question of whether electricity qualifies as "goods" under the relevant tax acts. The petitioner, a limited company distributing electricity, faced cancellation of its registration certificate under the Central Sales Tax Act on the grounds that electricity was not considered "goods." The court delved into the definition of "goods" under the Sale of Goods Act, emphasizing that goods must be movable property, tangible, and capable of possession and transfer. The court opined that if electricity is movable property, it falls within the definition of "goods." The judgment cited American jurisprudence and the Indian Electricity Act, which treat electricity as property capable of sale and theft, supporting the argument that electricity qualifies as goods. The court disagreed with previous views that electricity is not goods, aligning with a Division Bench of the Allahabad High Court that held electric energy as movable property and goods under the Indian Limitation Act.

The judgment also discussed precedents from other cases that touched on the classification of electricity as goods. It highlighted that the Madras General Sales Tax Act, 1939, excluded electrical energy from taxable turnover, indicating recognition of electricity as property. The court examined provisions of the Central Sales Tax Act, particularly section 8(3), which extends concessional tax benefits to distributors of electricity. The court interpreted that a distributor of electricity is considered a dealer under the Acts, as the definition of goods encompasses all kinds of movable property. By analyzing the statutory provisions and the general law, the court concluded that electricity qualifies as "goods." The judgment allowed the petitions, emphasizing that the petitioner's electricity distribution activities fell within the scope of a dealer under the Acts, and upheld the classification of electricity as goods.