TaxTMI 
TaxTMI 
2011 (3) TMI 1398
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.... from Tax Revision Case No. 227 of 2010 relating to assessment year 1988-89 may be noticed for appreciation of the issues involved in these cases. The petitioner is a dealer under the Andhra Pradesh General Sales Tax Act, 1957 ("the Act", for brevity) on the rolls of the Commercial Tax Officer (CTO), Khairatabad Circle. The petitioner which is a licencee under the Indian Electricity Act, 1910 is engaged in the business of supplying/selling electricity to various consumers. The consumers are allowed to use the meters to know the electricity consumption every month. The petitioner indisputably collects rentals on the meters installed at the place of consumers where electricity is consumed. For the relevant assessment years, the 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. In so far as high tension (HT) consumers are concerned, the petitioner collected rental charges of Rs. 300 per month where the HT consumers contracted demand is 1500 KVA and below Rs. 500, where it is between 1500 KVA and 5000 KVA and Rs. 1,000 for contracted demand exceed....
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....sales tax was not discharged by the petitioner and that the assessing authority and appellate authority acted in accordance with the earlier order of the Sales Tax Appellate Tribunal. As observed by the learned Tribunal, the petitioner expressed inability to furnish the information as directed by the Tribunal before the Appellate Deputy Commissioner. The counsel for the petitioners made the following submissions. The petitioner is required to fix the meter for measuring electricity used by the consumer under the law. Unless and until the meter is supplied and fixed electricity cannot be used and, therefore, the meter is a medium through which electricity supplied. There is no transfer of the right to use the meter involved as contemplated under section 5E of the Act. When the petitioner discharges its statutory obligations under section 26 of the Electricity Act, the same does not amount to the transfer of the right to use the meter. Even as per paragraph 261 of Andhra Pradesh State Electricity Board Departmental Manual, rental is not treated as part of the cost of the meter not depreciation can be claimed by the consumer. and lastly, meter is immovable property and it is not mo....
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....ods used in any form in the construction or erection of a thing attached to the land. In a recent decision in Commissioner of Central Excise v. Solid and Correct Engineering Works [2010] 2 GSTR 481 (SC) ; [2010] 5 SCC 122, the Supreme Court considered the question whether asphalt drum/hot mix plants installed with concrete foundation at the site of the construction by an assessee can be said to be 'attached to earth' to be exempted from excise duty ? After considering the English and Indian precedents, the apex court observed as under (para 30 in SCC ; para 23 of 2 GSTR 481):- "The courts in this country have applied the test whether the annexation is with the object of permanent beneficial enjoyment of the land or building. Machinery for metal-shaping and electro-plating which was attached by bolts to special concrete bases and could not be easily removed, was not treated to be a part of structure or the soil beneath it, as the attachment was not for more beneficial enjoyment of either the soil or concrete. Attachment in order to qualify the expression 'attached to the earth', must be for the beneficial attachment of that to which it is attached....
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.... The next aspect is in relation to the statutory obligations/rights of the petitioner vis-a-vis the consumer which arise under the agreement for supply of electricity as well as the Electricity Act, Electricity Supply Act and Indian Electricity Rules, 1956 and APSEB Conditions of Supply. It is urged by the petitioner that, being a medium through which electricity is supplied, it cannot come within the ambit of "sale" for the purpose of the Electricity Act. This submission is devoid of any merit. Section 26 of the Electricity Act as amended by Amendment Act, 1959, reads as under:- "26. Meters:- (1) In the absence of an agreement to the contrary, the amount of energy supplied to a consumer or the electrical quantity contained in the supply shall be ascertained by means of a correct meter, and the licensee shall, if required by the consumer, cause the consumer to be supplied with such a meter:- Provided that the licensee may require the consumer to -give him security for the price of a meter and enter into an agreement for the hire thereof, unless the consumer elects to purchase a meter. (2) Where the consumer so enters into an agreement for the....
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....r or person, have been correct; and where the matter has been decided by any person other than the Electrical inspector, an appeal shall lie to the Inspector, whose decision shall in every case be final; but save as aforesaid, the register of the meter shall, in the absence of fraud, be conclusive proof of such amount or quantity. (7) In addition to any meter which may be placed upon the premises of a consumer in pursuance of the provisions of sub-section (1) the licensee may place upon such premises such meter, maximum demand indicator or other apparatus as he may think fit for the purpose of ascertaining or regulating either the amount of energy supplied to the consumer, of the number of hours during which the supply is given, or the rate per unit of time at which energy is supplied to the consumer, or any other quantity or time connected with the supply:- Provided that the meter, indicator or apparatus shall not, in the absence of an agreement to the contrary, be placed otherwise than between the distributing mains of the licensee and any meter referred to in sub-section (1):- Provided, also, that where the charges for the supply of energy depend wh....
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.... taking the readings as regards consumers of electrical energy registered therein in terms of subsection (4) a licensee or any person duly authorised is empowered to enter at any reasonable time and upon informing the consumer of his inspection, the premises for the purpose of testing and inspecting the meter and is also empowered to take it out for the said purpose." A reading of various sub-sections in section 26 with rule 57 together would show that the meter may be hired by the consumer or sold to him. In either case, it shall be the duty of the Electricity Board to keep the meter correct and if it is not done so the consumer would not be bound to pay the meter rent within the meaning of section 24 of the Electricity Act. The purpose of obliging the Electricity Board to supply and maintain the meter correctly and rectify the defect, if any, is in fulfilment of statutory obligations, and it is nothing to do with the transaction which is certainly a transfer of the right to use the meter for the purpose of availing of electricity. Indeed, we may mention that under section 55 of the Electricity Act, 2003, no transmission company or distribution company can supply electri....
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..... The science and technology till this day have not been able to evolve any methodology by which electric energy can be preserved or stored." We may also refer to the "terms and conditions and the method of availing of electrical supply" notified by the Andhra Pradesh Electricity Board vide Board proceedings No. 690, dated September 17, 1975. A consumer means any person who is supplied with electrical energy by the Board and includes any person whose premises are, for the time being, connected for the purpose of receiving electrical energy (condition 2.5). So as to avail of supply of the electrical energy, a person has to apply in the prescribed form (condition 3.1). As per condition 5, the Board shall not be bound to supply energy to the consumer unless such supply is remunerative on the basis of the standards prescribed by the Board from time to time. The exercise of discretion, in this regard, is, howeyer, subject to the provisions of the Electricity Act and the Electricity Supply Act. Condition 22 deals with installation and maintenance of meters and the procedure for arriving at the consumption of electricity. As per condition 22.1.1 the Board shall provide the meter....
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....h other suitable place as the Board's engineer shall decide and the consumer shall run his wiring from such point of the supply and also be responsible for the safety of the meter from theft or damage. Further when the meter is defective it shall be the duty of the Board to replace the same with a new meter. The conspectus of the provisions of the Electricity Act, and the relevant conditions of supply referred to supra make it clear that the meters installed in the premises of the consumer are owned by the Board ; the Board collects rentals on the same ; and the Board delivers the meter to the consumer for exclusive use for the purpose of measuring electricity availed of without which electricity cannot be used and, therefore, there are certainly all the ingredients of the transaction of the transfer of right to use the goods. After the amendment by the Constitution (Forty Sixth) Amendment Act, 1982, clause (29A) was introduced in article 366 of the Constitution of India constitutionalising certain transactions as deemed sales. Various aspects thereof were considered by the Supreme Court in Builders Association of India v. Union of India [1989] 73 STC 370 (SC) ; [1....
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....d) is not on the use of goods. It is on the transfer of the right to use goods which accrues only on account of the transfer of the right. In other words, the right to use goods arises only on the transfer of such right to use goods. (g) The transfer of right is the sine qua non for the right to use any goods, and such transfer takes place when the contract is executed under which the right is vested in the lessee. (h) The agreement or the contract between the parties would determine the nature of the contract. Such agreement has to be read as a whole to determine the nature of the transaction. If the consensus ad idem as to identity of the goods is shown the transaction is exigible to tax. (i) The locus of the deemed sale, by transfer of the right to use goods, is the place where the relevant right to use goods is transferred. The place where the goods are situated or where the goods are delivered or used is not relevant. The supply of meters to consumers for exclusive use is certainly a transfer of the right to use meters. The purpose of the meter is to measure electricity to enable the Board to levy charges for the electrical energy consum....
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....ling, reconnection fee is not leviable as disconnection and reconnection are incidental to the shifting of the meters. In cases where the remodelling does not entail shifting of the meter board or other works, except disconnection and reconnection, the usual fee for disconnection and reconnection should be levied. When the shifting of meter and disconnection and reconnection thereby is due to default in addition to remodelling of buildings, both reconnection fee and shifting charges should be paid. A bare perusal of the manual would show that the Andhra Pradesh State Electricity Board installs the meter or maximum demand indicator and collects rent. The note appended under paragraph 261 is to the effect 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 sup....