Southern States - Andhra Pradesh

SC upholds HC verdict on power sale by A.P.

By T.Padmanabha Rao

NEW DELHI APRIL 25. A Constitution Bench of the Supreme Court has unanimously affirmed a judgment of the Andhra Pradesh High Court which "declared that the levy of duty by the State of A.P. under Section 3 of the State Electricity Duty Act on the sales of electrical energy generated by the National Thermal Power Corporation (NTPC — respondent No.1) at its thermal power station set up at Ramagundam, within the State and sold to the Electricity Boards of Karnataka, Kerala, Tamil Nadu and the State of Goa in pursuance of contracts of sales occasioning inter-state movement of electricity is incompetent and outside the power of State Legislature.''

Consequently, the tax levied and collected had also been held to be without authority of law and hence liable to be refunded in accordance with law, according to the High Court verdict.

Delivering the judgment, R.C. Lahoti said the production (generation), transmission, delivery and consumption in the case `electricity' (as goods) "are simultaneous, almost instantaneous'' adding that the "electricity as goods comes into existence and is consumed simultaneously; the event of sale in the sense of transferring property in the goods merely intervenes as a step between generation and consumption.''

"In such a case when the generation takes place in one State wherefrom it is supplied and it is received in another State where it is consumed, the entire transaction is one and can be nothing else excepting an inter-State sale on account of instantaneous movement of goods from one State to another occasioned by the sale or purchase of goods, squarely covered by Section 3 of the Central Sales Tax Act,'' the Bench noted.

The Bench, which included S.P. Bharucha and N. Santhosh Hegde, Rumapal and Ariji Pasayat, at the same time in a similar case quashed a `demand' by Madhya Pradesh authorities against the NTPC.

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