2005 (8) TMI 673 - SC - Indian Laws

Whether the legal profession is a commercial activity or is it a trade or business? Whether the legal profession does not involve a commercial activity and therefore the rate applicable to commercial consumers was not applicable to respondent No.2-Advocate?

Summary

Issues Involved:
1. Whether the legal profession constitutes a commercial activity.
2. Applicability of commercial electricity rates to the office of an advocate.
3. Interpretation of "domestic" and "commercial" usage in the context of electricity consumption.

Detailed Analysis:

1. Whether the legal profession constitutes a commercial activity:
The primary issue raised in the appeal was whether the legal profession is a commercial activity or a trade or business. The Madhya Pradesh Electricity Board (the 'Board') charged the respondent advocate for electricity consumption at commercial rates, which was challenged and overturned by the High Court. The High Court held that the legal profession does not involve a commercial activity, and therefore, the commercial rate was not applicable.

2. Applicability of commercial electricity rates to the office of an advocate:
The Board argued that when a lawyer has an office-cum-residence, the domestic rate is applicable. However, if the premises are used solely as a chamber, commercial activities are being carried out, justifying the commercial rate. The circulars issued by the Board distinguished between domestic and commercial consumers. The circular dated 30th November 1976, clarified that energy consumed in residential premises for professional work by advocates, doctors, etc., should be treated as domestic. Conversely, premises used exclusively for professional purposes should be billed at commercial rates.

3. Interpretation of "domestic" and "commercial" usage in the context of electricity consumption:
The Supreme Court examined definitions of 'commerce' and 'commercial' from Black's Law Dictionary and Advanced Law Lexicon, noting that commerce involves trading activities such as buying and selling, which are absent in the legal profession. The legal profession requires intellectual skill and knowledge, distinguishing it from commercial activities. The Court referred to several precedents, including V. Sasidharan v. M/s Peter and Karunakar and Dr. Devendra M. Surti v. The State of Gujarat, which held that professional activities are not commercial establishments.

The Court disagreed with the observations in New Delhi Municipal Council v. Sohan Lal Sachdev, which suggested that non-domestic use automatically implies commercial use. The Court clarified that non-domestic and commercial are not interchangeable terms, and merely because a use is non-domestic does not make it commercial.

Conclusion:
The Supreme Court concluded that the legal profession does not constitute a commercial activity. Therefore, the electricity consumption for an advocate's office cannot be charged at commercial rates unless the premises are used exclusively for professional purposes. The matter was referred to a larger Bench for further consideration, noting that the interpretation in New Delhi Municipal Council v. Sohan Lal Sachdev required re-evaluation.