# INDORE v. MADHYA PRADESH ELECTRICITY BOARD, JABALPUR

- **Citation:** [1969] 2 S.C.R. 939
- **Court:** Supreme Court of India
- **Decided:** 1968-11-26
- **Case number:** Civil Cases Nos. 96 to 103 of 1967
- **Bench:** J. C. Shah, V. Ramaswami, A. N. Grover
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/indore-v-madhya-pradesh-electricity-board-jabalpur-4809
- **Pages:** 9

## Headnote

Electricity Supply Act, 1948, s. 18-Supply of Electricity underSupplier whether a 'dealer' within the meaning of s. 2(d) of C.P. &
Bearar Sales Tax Act 21 of 1947 and s. 2(d) of Madhya Pradesh General
Sales Tax Act 2 of 1959-Electricity whether 'goods'-Supply of steam
by Electricity Board-Nature of transaction-Whether works contract.
The ·assessee-Electricity Board constituted under the Electricity Supply Act, 1948, supplied and. distributed electric energy within the State
of Madhya Pradesh. In the assessment years in question the Electricity
Board sold, supplied and disfributed electric energy to various consumers.
It also supplied steam to Nepa Mills. The mill was supplying water free
and the Electricity Board was making a pro-rata charge df conversion of
water into steam. The mill had also
agreed to
re-imburse the Board
for the loss sustained> on account of the mills not taking the full
demand of steam. In proceedings under the C.P. & Bearar Sales Tax
Act, 1947 and the Madhya Pradesh General Sales Tax Act, 1959 the
question for consideration, inter
alia,
were (i) whether electricity wa~
'goods' within the meaning of the two Acts and whether the Board was
a 'dealer' within the meaning of s. 2(c) of the 1947 Act and s. 2(d)
of the 1959 Act; and (ii) whether the supply of steam amounted to
'sale' and was therefure taxable. The High Court, in reference, held
that electricity was not 'goods', that the Board was not a 'dealer' in electricity and that the supply of steam was .not taxable as it was not supplied with a profit motive.
In appeal by special leave to this Court by
the Commissioner of Sales Tax,
HELD : (i) The Electricity Boa'rd carried on the business of selling,
supplying and distributing electricity which fell within the meaning of the
expression 'goods' in the two Acts and was therefore a 'dealer'. [945 HJ
The definition of "goods" is very wide and includes all kinds
of
movable property.
The term 'movable property' when considered with reference to 'goods'
as defined for the purposes of sales tax cannot be taken in a narrow
iense and merely because electric energy is not tangible or cannot
be
moved or touched, like) for instance, a piece of wood or a book, it
cannot cease to be movable property when it has all the attributes of such
property. It is capable of abstraction, consumption and use which if
done dishonestly, would attract punishment under s. 39 of the Indian
Electricity Act, 1910. It can be transmitted,
transferred,
delivered,
stored, possessed etc. in the same way as any other movable property.
If there can be sale and purchase of electric energy like any other movable object, it must be held that electric energy was intended to be covered by the definition of 'goods' in the two Acts. If that had not betn the
case there was no necessity of specifically exempting sale of
electric
energy from the payment of sales tax by making a provision for it in the
Schedule to the two Acts. [945 E-HJ
·940
SUPREME COURT REPORTS
[1969] 2 S.C.R.
Kumbakonam Electric Supply Corporation Ltd. v. Joint Commercial
A
Tax Officer, Esplanade Division, Madras,
14 S.T.C, 600,
Malerkotla
Power Supply Company v. The Excise & Taxation Officer, Sangrur &
.Ors. 22 S.T.C. 325, Naini Tai Hotel v. Municipal Board, A.I.R.
1946
All. 502, Erie County Natural Gas & Fuel Co. Ltd. v.
Carroll, [1911]
A.C. 105, County of Durham Electrical etc. Co.
v. Inland Revenue
[1909] 2 K:B. 604, referred !<>.
Rash Behari v. Emperor, A.LR. 1936 Cal. 753 distinguished.
(ii)· On the facts of the present case the arrangement relating
to
supply of steam in return of water supplied by the mills on payment of
actual cost was not one of sale but was more in the nature of a works
contract. Where the main object of work undertaken by
the payee
.of the price is not the transfer of a chattel qua chattel, the ccmtract is
one for work and labour. [946 G-HJ
The Government of Andhra Pradesh v, Guntur Tobaccos Ltd., 16
S.T.C .. 240, and Halsbury's Laws of England, III Edn. Vol

## Text

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COMMISSIONER OF SALES TAX,
MADHYA PRADESH,
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INDORE
v.
MADHYA PRADESH ELECTRICITY BOARD, JABALPUR
November 26, 1968
[J. C. SHAH, V. RAMASWAMI AND A. N. GROVER, JJ.]
Electricity Supply Act, 1948, s. 18-Supply of Electricity underSupplier whether a 'dealer' within the meaning of s. 2(d) of C.P. &
Bearar Sales Tax Act 21 of 1947 and s. 2(d) of Madhya Pradesh General
Sales Tax Act 2 of 1959-Electricity whether 'goods'-Supply of steam
by Electricity Board-Nature of transaction-Whether works contract.
The ·assessee-Electricity Board constituted under the Electricity Supply Act, 1948, supplied and. distributed electric energy within the State
of Madhya Pradesh. In the assessment years in question the Electricity
Board sold, supplied and disfributed electric energy to various consumers.
It also supplied steam to Nepa Mills. The mill was supplying water free
and the Electricity Board was making a pro-rata charge df conversion of
water into steam. The mill had also
agreed to
re-imburse the Board
for the loss sustained> on account of the mills not taking the full
demand of steam. In proceedings under the C.P. & Bearar Sales Tax
Act, 1947 and the Madhya Pradesh General Sales Tax Act, 1959 the
question for consideration, inter
alia,
were (i) whether electricity wa~
'goods' within the meaning of the two Acts and whether the Board was
a 'dealer' within the meaning of s. 2(c) of the 1947 Act and s. 2(d)
of the 1959 Act; and (ii) whether the supply of steam amounted to
'sale' and was therefure taxable. The High Court, in reference, held
that electricity was not 'goods', that the Board was not a 'dealer' in electricity and that the supply of steam was .not taxable as it was not supplied with a profit motive.
In appeal by special leave to this Court by
the Commissioner of Sales Tax,
HELD : (i) The Electricity Boa'rd carried on the business of selling,
supplying and distributing electricity which fell within the meaning of the
expression 'goods' in the two Acts and was therefore a 'dealer'. [945 HJ
The definition of "goods" is very wide and includes all kinds
of
movable property.
The term 'movable property' when considered with reference to 'goods'
as defined for the purposes of sales tax cannot be taken in a narrow
iense and merely because electric energy is not tangible or cannot
be
moved or touched, like) for instance, a piece of wood or a book, it
cannot cease to be movable property when it has all the attributes of such
property. It is capable of abstraction, consumption and use which if
done dishonestly, would attract punishment under s. 39 of the Indian
Electricity Act, 1910. It can be transmitted,
transferred,
delivered,
stored, possessed etc. in the same way as any other movable property.
If there can be sale and purchase of electric energy like any other movable object, it must be held that electric energy was intended to be covered by the definition of 'goods' in the two Acts. If that had not betn the
case there was no necessity of specifically exempting sale of
electric
energy from the payment of sales tax by making a provision for it in the
Schedule to the two Acts. [945 E-HJ
·940
SUPREME COURT REPORTS
[1969] 2 S.C.R.
Kumbakonam Electric Supply Corporation Ltd. v. Joint Commercial
A
Tax Officer, Esplanade Division, Madras,
14 S.T.C, 600,
Malerkotla
Power Supply Company v. The Excise & Taxation Officer, Sangrur &
.Ors. 22 S.T.C. 325, Naini Tai Hotel v. Municipal Board, A.I.R.
1946
All. 502, Erie County Natural Gas & Fuel Co. Ltd. v.
Carroll, [1911]
A.C. 105, County of Durham Electrical etc. Co.
v. Inland Revenue
[1909] 2 K:B. 604, referred !<>.
Rash Behari v. Emperor, A.LR. 1936 Cal. 753 distinguished.
(ii)· On the facts of the present case the arrangement relating
to
supply of steam in return of water supplied by the mills on payment of
actual cost was not one of sale but was more in the nature of a works
contract. Where the main object of work undertaken by
the payee
.of the price is not the transfer of a chattel qua chattel, the ccmtract is
one for work and labour. [946 G-HJ
The Government of Andhra Pradesh v, Guntur Tobaccos Ltd., 16
S.T.C .. 240, and Halsbury's Laws of England, III Edn. Vol. 34 page 6,
referred to.
CIVIL APPELLATE JURISDICTION : Civil Appeals Nos. 1153
10 1160 and 1161 to 1168 of ·1968.
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Appeals by special leave from the judgment and order, dated
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November 16, 1967 of the Madhya Pradesh High Court in Misc.
Civil Cases Nos. 96 to 103 of 1967.
l. N. Shroff, for the appellant (ill C.As. No5. 1153 to 1160 of
1968) and the respondent (in C.As.
Nos.
1161 to 1168 of
1968).
S. T. Desai, B. L. Neema and Anjali Vanna, for the appellant (in C.As. Nos. 1161 to 1168 of 1968) and the respondent
.(in C.As. Nos. 1153 to 1160 of 1968).
N. D. Karkhanis and A. G. Ratnaparkhi, for the intervener
(in C.As. Nos. 1153 to 1160 of 1968).
The Judgment of the Court was delivered by
Grover, J.
This judgment will dispose of two sets .of cross
appeals Nos. 1153-1160 & 1161-1168/68 which are from a common judgment of the Madhya Pradesh High Court and have been
entertained by special leave.
The relevant assessment years for the purpose of levy of sales
tax are from April 1, 1957 to March 31, 1958 and April l, 1964
to March 31, 1965. For the assessment years prior to April 1,
1959 the enactment in force was the C.P. and Berar Sales Tax
Act, 1947 (No. XXI of 1947) and for the subsequent two years
it is the Madhya Pradesh General Sales Tax Act {Act No. 2 of
1959), which would be applicable.
The material facts may be
shortly
stated.
The
assessee--Madhya
Pradesh
Electricity
Board-hereinafter called the "Electricity Board" is a body constitured under s. 5 of the Electricity Supply Act, 1948. Under s.
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9·'1
18 of that Act it was the general duty of the Electricity Board to
prqmote coordinated development· of the generation, supply and
distribution of electric energy within the State of Madhya Pradesh
in· the most efficient and economical manner. In the assessment
years in question the Electricity Board sold, supplied and distri,
buted electric energy to various consumers. It also sold coal-ash
a waste product and supplied steam to Nepa Mills of Burhanpur.
It further supplied specification and tender forms on payment. to
persons desirous of submitting tenders for the works undertaken
by the Electricity Board. It purchased articles like Gitti, Murram,
sand etc. from unregistered dealers.
It is common ground that
under the provisions of Act XXI of 1947 and II of 1959 read
with the Schedule contained ·therein sale of electricity is exempt
from sales tax. For the purpose of determining the gross turnover, however, the sale of electric energy
is to be taken into
account.
The Assistant Colil!Ilissioner of Sales tax assessed the Electrictly Board to tax on its turnover of sale of coal-ash and specification and tender forms and the supply of steam to Nepa Mills.
The Board was further assessed to purchase tax on Gitti, Murram
etc. purchased from unregistered dealers. In appeal the Deputy
Commissioner, Sales Tax, upheld
the assessment orders.
On
second appeal the Sales Tax Tribunal which was the Board of
Revenue, Madhya Pradesh, held that the Electricity Board was
not a "dealer" within the meaning of that term as defined in the
two Acts and that the coal-ash was not produced for the purpose
of sale with the result that sales of coal-ash could not be subjected
to tax.
As regards the supply of steam to Nepa Mills the tribunal, oo examiQing the terms of the agreement under which the
Electricity Board supplied the steam, came to the conclusion
that such supply was an isolated transaction and that such activity which had been undertaken on no profit no loss basis could
not be assessed to sales tax. The specification and tender fonns
were held not to be marketable goods involving any profit element and for that reason could not be taxed. As regards the purchase tax the tribunal held that as the Electricity Board was not
a dealer in respect of the sale and supply of electric energy no
purchase tax could be imposed on goods purchased by it and
consumed "in furtherance of and in aid of the business activity
of generating, supplying and distributing electricity."
Both the Electricity Board and the Commissioner of Sales
Tax. Madhya Pradesh, filed applications requiring the Tribunal
to refer to the High Court certain questions of law arising out of
its common order. The tribunal drew up a common statement of
case and referred five questions of law. On. the first question the
High Court held that the Electricity Board co.aid not be held to
be "dealer" a5 defined ins. 2(c) of Act XXI of 1947 ors. 2(d)
1942
SUPREME COURT REPORTS
[ 19691 2 S.C.R.
of Act II of 1959 in respect of its activity of generation, distri~mA
tion, sale and supply of el&tric energy. On the second quest1-0n
it was held that as the Electricity Board regularly and continuously produced coal-ash as a subsidiary product and sold it regularly it was a "dealer" in regard to the sale of coal-ash and the
sale transactions relating to this product were liable to be assessed
to sales tax.
The third question was answered in favour of the
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Electricity Board. It was found that steam was not being supplied to the Nepa mills with profit motive although it fell within
the definition of "goods" given in the two Acts.
As regards the
specification and tender forms the High Court was of the view
that the Electricity Board was not carrying on any business of
selling such forms and therefore no sales tax could be levied in
respect of them. The fifth question was answered by holding that
C
as the Electricity Board was not a "dealer" in respect of sale and
supply of electric energy it was not entitled to purchase any taxable goods for consumption or use for producing such energy
without paying sales tax to the selling dealer under s. 4(6) of Act
XXI of 1947 ands. 7 of Act II of 1959 and therefore there
was no liability to pay purchase tax.
o
J\!Ir. Shroff, who has argued the appeals of the Commissioner
of Sales Tax, has not quite properly and rightly pressed the matter
relating to imposition of sales tax on supply of specification and
tender forms.
Mr. S. T. Desai, who has appeared for the Electricity Board, after a certain amount of argument, has submitted
that he had nothing much to say on the question relating to coalE
ash except that it should be held to be exempt from payment of
sales tax because electric energy is exempt from such tax as
stated before. As regards the fifth question relating to the imposition of purchase tax Mr. Desai has not pressed for any decision
being given by us.
Arguments which have been addressed by ·
both sides have therefore centered on question nos. 1 and 3 which · F
are as follows :-
"(1) On the facts and circumstances
of the case
whether or not the Madhya Pradesh Electricity Board
is a dealer within the meaning of section 2(c) of the
C.P. & Berar Sales Tax Act, and section 2(d) of the
Madhya Pradesh General Sales Tax Act,
1958, in
respect of its activity of generation, distribution, sale
and supply of electrical energy ?
(2) .
(3) On the facts and circumstances
of the case,
whether or not steam is saleable goods and if they are
saleable goods is the turnover representing the supply
thereof liable to be assessed to sales tax in the hands
of the assessee ?"
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COMMR. s. T. v. ELECTY. BOARD (Grover, J.)
943
It is somewhat curious that both sides are almost agreed that the
decision of the High Court on the first question is not correct.
Since enunciation of the true position is involved we proceed to
give our opinion in the matter. The definition of a "dealer" as
given in the two Acts substantially is that any person who carries
on the business uf buying, selling, supplying or distributing the
goods is a "dealer" and "goods" are defined by s.2(d) of Act
XXI of 194 7 as meaning all kinds of movable property other
than actionable claims. . . . . . and include all materials articles
and commodities whether or not to be used in the construction,
fitting out, improvement or repair of immovable property. The
definition contained in s. 2(g) of Act II of 1959 is almost
in similar terms except that there are certain additions with
which
we are not concerned. Reference may be made,
at this stage, to the definition of "movable property" which has
not been defined in the two Acts given in s. 2(24) of the Madhya
Pradesh General Clauses Act. It has been defined to mean "property of every description, except immovable property". Section
2(18) of that Act says that "immovable property'' includes land,
benefits to arise out of land and things attached to the earth, or
permanently fastened to anything attached to the earth."
The High Court went into a discussion from the point of view
of mechanics relating to transmission of electric energy.
It was
of the view that electricity could not be regarded as an article or
matter which could be possessed or moved or delivered. It relied
on certain decisions and referred to Entries Nos. 53 and 54 in
List II of Seventh Schedule to the Constitution and held that electricity did not fall within the meaning of "goods" in the two Acts
and therefore the Electricity Board could not be held to be a
"dealer" in respect of its activity of generation, distribution, sale
and supply of electric energy.
Mr. I. N. Shroff has relied on certain decisions in which the
same point was involved as in the present case, namely, whether
electricity is "goods" for the purpose of imposition of sales tax.
In Kumbakonam Electric Supply Corporation
Ltd.
v.
Joint
Commercial Tax Officer, Esplanade Division,
Madras('),
the
Madras High Court was called upon to decide whether electricity
is "goods" for the purposes of the Madras General Sales Tax Act,
1959 and the Central Sales Tax Act, 1956. After referring to
the definition of "goods" as given in the Sale of Goods Act, 1930,
it was observed that under that definition goods must be property
and it must be movable. According to the learned Madras Judge
any kind of property which is movable would fall within the definition of ·"goods" provided it was transmissible or transferable
from hand to hand or capable of delivery which· n~-ed not necessarily be in a tangible or a physical sense. Reference was also
(I) 14 S.T.C. 600.
L6 Sup.C 1./69-9
944
SUPREME COURT REPORTS
[1969] 2 S.C.R.
made to the definition given in the General Clauses Act which was
quite wide and it was held that if electricity was property and it
was movable it would. be "goods". The learned Judge found little
difference between electricity and gas or water which would be._
property and could be subjected to a particular process, bottled.
up and sold for consumption.
It was observed that electricity
was capable of sale as property as it was sold, purchased and
consumed everywhere.
A "dealer" was defined by the Central
Sales Tax Act practically in the same way as in the Madras General Sales Tax Act and it meant a person who carried on business
of buying and selling goods. In the opinion of the learned Judge
the concept of dealer, goods and sale comprehended all kinds of
movable property. He further relied on certain decisions which
have been cited before and which will be presently noticed.
A
similar view was expressed by Tek Chand, J. of the Punjab &
Haryana High Court in Malerkotla Power Supply Company v.
The Excise & Taxation Officer, Sangrur, & Ors.(')
It was held
that electric energy fell within the definition of "goods" in both
the Punjab Sales Tax Act, 1948 and the Central Sales Tax Act,
1956.
According to the learned Judge electric energy has the
commonly accepted attributes of movable property.
It can be
stored and transmitted. It is also capable of theft.
It may not
be tangible in the sense that it cannot be touched without considerable danger of destruction or injury but it was perceptible
both as an illuminant and a fuel and also in other energy-giving
forms.
Electric energy may not be property in the sense of the
term "movable property" as used in the Punjab & Central General Clauses Acts in contra-distinction to "immovable property"
but it must fall within the ambit of "goods" "even if in a sense it
was intangible or invisible". As pointed out in the Madras case
the statement contained in American Jurisprudence( 2 ) recognises
that electricity is property capable of sale and it may be the subject of larceny. In Naini Tai Hotel v. Municipal Board(") it was
held that for the purpose of Art. 52 of the Indian Limitation Act
electricity was property and goods. In Erie County Natural Gas
& Fuel Co. Ltd. v. Carroll('), a question arose as to the measure
of damages for a breach of contract to supply gas. Lord Atkinson
delivering the judgment of the Privy Council applied the same
rule which is applicable where the contract is one for sale of
goods. In other words gas was treated to be "goods".
The High Court, in the present case, appears to have relied
on Rash Behari v. Emperor(") in which approval was accorded to
the statement in Pollock & Mulla's Commentary on Sale Goods
Act, 1913 that it was doubtful whether that Act was.applicable
to such "goods" as gas, water and electricity. The context iin
(I) 22 S.T.C. 325.
(2) 18 American Jurisprudence 407 (S. 2 Electy.)
(3) A.I.R. (1946) All. 502.
(4) [1911] A.C.105.
(5) A.I.R. [1936J Cal. 753.
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which this matter is discussed in the Calcutta case is altogether
),
different and distinguishable and what was being decided there
was the scope and ambit of s. 39 of the Electricity Act, 1910.
As regards the Entries in List II of the Seventh Schedule to the
Constitution, the relevant ones may be produced :
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"53. Taxes on the consumption or sale of electricity.
54. Taxes on the sale or purchase of goods other
than newspapers, subject to the provisions of entry 92A
of List I."
The reasoning which prevailed with the High Court was that
a well-defined distinction existed between the sale or purchase
of "goods" and consumption or sale of electricity; otherwise there
was no necessity of having Entry No. 53. But under Entry 53
taxes can be levied not only on sale of electricity but also on its
consumption which could not probably have been done under
Entry 54. It is difficult to derive much assistance from the aforesaid entries. What has essentially to be seen is whether electric
energy is "goods" within the meaning of the relevant provisions
of the two Acts. The definition in terms is very wide according
to which "goods" means all kinds of movable property.
Then
certain items are specifically excluded or included and electric
energy or electricity is not one of them. The term "movable property" when considered with reference to "goods" as defined for
the purposes of sales tax cannot be taken in a narrow sense and .
merely because electric energy is not tangible or cannot be moved
or touched like, for instance, a piece of wood or a book it cannot
cease to be movable property when it has all the attributes of
such property. It is needless to repeat that it is capable of abstraction, consumption and use which, if done dishonestly, would
attract punishment under s. 39 of the Indian Electricity Act, 1910.
It can be transmitted, transferred, delivered, stored, possessed etc.
in the same way as any other movable property. Even in Banjamin on Sale, 8th Edn., reference has been made at page 171 to
County of Durham Electrical, etc., Co. v. Inland Revenue(') in
which electric energy was assumed to be "goods". If there can
be sale and purchase of electric energy like any other movable
object we see no difficulty in holding that electric energy was
intended to be covered by the definition of "goods" in the two
Acts. If that had not been the case there was no necessity of
specifically exempting sale of electric energy from the payment of
sales tax by making a provision for it in the Schedules to the
two Acts. It cannot be denied that the Electricity Board carried
on principally the business of selling,
supplying or distributing
electric energy. It would therefore clearly fall within the meaning of the expression "dealer" in the two Acts.
(I) [1909] 2 K.B. 604.
9 46
SUPREME COURT REPORTS
[1969} 2 S.C.R.
As regards steam there has been a good d~al of argument on
the question whether it is liable to be assessed to sales tax in the
hands of the Electricity Board.
According to Mr. Shroff the
Electricity Board carried on the business of selling steam to the
Nepa Mills and that this has lasted for a number of years. It
has been submitted that simply because the Electricity Board does
not have any profit motive in supplying steam it cannot escape
payment of sales tax because the steam is nevt:rtheless being sold
as "goods". The High Court was of the view that the water which
the Nepa Mills supplied free to the Electricity Board became the
property of the Board and in return for this free supply the Board
agreed to give steam to Nepa Mills at a rate based solely on the
coal consumed in producing steam.
The mills had also agreed
to reimburse the Electricity Board for the loss sustained on account
of the mills not taking the "full demand of steam". According
to the High Court there was no contract for the sale of steam as
such and it was only for the labour and cost involved in its supply
to the mills.
The High Court relied on the findings of the Tribunal on this point and held that the turnover in respect of steam
was not taxable.
The tribunal in its order dated June 16, 1966
referred to certain conditions of working arrangement which was
reduced to writing but which had not been properly executed as
a contract which showed that the mills was supplying water free
and the Electricity Board was making a pro rata charge of conversion of water into steam. It seems to us that the High Court
was right in coming to the conclusion, on the finding of the tribunal, that the real arrangement
was for supplying steam on
actual cost basis and in that sense it was more akin to a labour
contract than to sale.
Mr. Shroff has argued that the document which was relied
upon by the tribunal could not be looked at as it was neither admissible in evidence nor had it been properly executed as a contract between the Electricity Board and the mills and it happened
to be a mere draft of an agreement which was proposed to be
entered into. It is too late for Mr. Shroff to take these objections
because these should have been raised before the Tribunal and
the High Court.
It is stated in Halsbury's Laws of England, ill Edn. Vol. 34,
page 6 that "a contract of sale of goods" must be distinguished
from a contract for work and labour. The distinction is often a
fine one. A contract of sale is a contract whose main object is the
transfer of the property in, and the delivery of possession of, a
chattel as a chattel to the buyer. Where the main object of work
undertaken by the payee of the price is not the transfer of a chattel qua chattel, the contract is one for work and labour. It has
been laid down by this Court in The Government of Andhra
fradesh.v. Guntur Tobaccos Ltd.(') that in business transactions
fl) l~ S.T.C. 240.
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the works contracts are frequently not recorded in writing setting
out all the covenants and conditions thereof, and the terms and
incidents of the contracts have to be gathered from the evidence
and attendant circumstances.
The question in each case is one
about the true agreement between the parties and the terms of
the agreement must be deduced from a review of all the attendant circumstances. On the findings of the tribunal and the High
Court we are of the opinion that the arrangement relating to
supply of steam in return for the water supplied by the mills on
payment of actual cost was not one of sale but was more in .the
nature of a works contract.
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In the result the answer of the High Court to the first question is discharged and it is held that the Electricity Board is a
"deaJer" within the meaning of the relevant provisions of the two
Acts in respect of its activities of generation, distribution, sale
and supply of electric energy. The answers to the second, third
and fourth questions ~re affirmed. The answer given by the High
Court to the fifth question is discharged. It is unnecessary to
express any opinion on that question because Mr. Desai has not
pressed for any decision being given by us and has accepted the
liability in respect of the purchase tax as determined by the assessing authorities for the assessment orders in question. The appeals
are allowed to the extent indicated above.
In view of all the
circumstances the parties are left to bear their own costs.
Y.P.
Appeals allowed in part.