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2011 (3) TMI 1398 - HC - VAT and Sales TaxSales Tax / VAT on rental of electricity meters - petitioner collects rentals on the meters installed at the place of consumers where electricity is consumed - assessing authority determined the taxable turnover which included meter rentals received from the large number of consumers availing of service connections exceeding more than Rs. 50 lakhs - petitioner s contention that as per section 5E of the Act, the petitioner has not transferred any right to use the meters to the consumers was negatived by the assessing officer holding that under section 7A - held that - the rent collected is not construed as part-payment for the cost of the meter. This only means that the Andhra Pradesh State Electricity Board continues to be the owner of the equipment and the consumer who pays the rent can never claim ownership. The ownership of the meter is retained by the Andhra Pradesh State Electricity Board and the right to use the meter is of course with the consumer, in the sense, it is the consumer who draws and avails of the electricity supplied by the Andhra Pradesh State Electricity Board, which is measured by use of the meter. the consumer and the Andhra Pradesh State Electricity Board have access to read the meter and the latter cannot disallow the consumer to make such use ; it can be said that the right to use is exclusively transferred to the consumer. As per condition 22.1.1 read with condition 12, it is the Board which installs the meters and collects rents. The rent collected is certainly taxable under section 5E of the Act. - Decided in favor of revenue.
Issues Involved:
1. Whether the transaction of supplying and installing electricity meters by the Andhra Pradesh State Electricity Board (APSEB) to consumers constitutes a "transfer of the right to use the meter" under Section 5E of the Andhra Pradesh General Sales Tax Act, 1957. 2. Whether the electricity meter is considered "movable property" and therefore "goods" within the meaning of the Act. 3. Whether the rental charges collected for the meters are subject to sales tax. Issue-wise Detailed Analysis: 1. Transfer of the Right to Use the Meter: The central issue is whether the APSEB's provision of meters to consumers for measuring electricity usage constitutes a "transfer of the right to use" under Section 5E of the Andhra Pradesh General Sales Tax Act, 1957. The court held that the transaction does indeed involve a transfer of the right to use the meter. The meter, though installed by the APSEB, is used exclusively by the consumer to measure electricity consumption. This use is essential for billing purposes, and the consumer has the right to use the meter, which satisfies the conditions of "transfer of the right to use" as per the Act. 2. Classification of the Meter as Movable Property: The court examined whether the electricity meter could be classified as "movable property" and thus "goods" under the Act. It was determined that the meter is movable property because it can be removed and re-installed at different locations. The court cited the Supreme Court's decision in Commissioner of Central Excise v. Solid and Correct Engineering Works, which clarified that attachment to the earth must be for the beneficial enjoyment of the land or building to be considered immovable property. Since the meter does not meet this criterion, it remains movable property and is thus classified as "goods." 3. Taxability of Meter Rental Charges: The court addressed whether the rental charges collected by the APSEB for the meters are subject to sales tax. It was concluded that these charges are indeed taxable under Section 5E of the Act. The APSEB collects rental charges for the meters, which are used by consumers to measure electricity consumption. This transaction involves all the elements of a "transfer of the right to use goods," making the rental charges subject to sales tax. The court emphasized that the APSEB's statutory obligation to supply and maintain the meters does not exempt these transactions from being taxed. Conclusion: The court dismissed the revision cases, affirming that the APSEB's provision of meters to consumers constitutes a taxable transfer of the right to use the meters under Section 5E of the Andhra Pradesh General Sales Tax Act, 1957. The electricity meters are classified as movable property, and the rental charges collected are subject to sales tax. The orders passed by the Sales Tax Appellate Tribunal were upheld, and the revision cases were dismissed without any order as to costs.
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