Sabyasachi Mukharji, J. - (1.) The petitioner in this case is the Damodar Valley Corporation, a statutory Corporation established by the Damodar Valley Corporation Act, 1948. The Corporation was established, inter alia, for the purpose of generating electric power for distribution, control of flood in Damodar and to provide water for irrigation. The Corporation supplies power in the statutory area of the Valley and certain areas outside the Valley with the permission of the State Government. In order to fulfil the statutory obligation, the Corporation has set up a power generation and transmission system in the area. Part of the area falls in the State of Bihar and the other part falls within the State of West Bengal. Power system consists of a 132 KV Grid or a ring of 132 KV transmission lines astride the boundary of the two States. The Corporation operates generating stations, two of which are in West Bengal and four of which in the State of Bihar. feeding power and energy into the said 132 KV Grid. There are a number of sub-stations in both the States connecting to the main 132 KV lines for supplying power to the consumers either at 33 KV or 132 KV. It is the case of the petitioner that the agreements are executed by the Corporation with individual consumers for supply at the sub-stations which are located either in Bihar or in West Bengal. The petitioner states that the said agreements provide for supply of certain amount of power upto a stipulated maximum demand expressed in KW at a specified voltage, frequency, and number of phases. The petitioner emphasises that the agreements do not stipulate from which generating station the supply would be available. A copy of the standard agreement form usually entered into with the consumers has been annexed to the present petition. According to the petitioner the demand of power and energy of a consumer on any individual sub-station would actually vary continuously and certain amount of power and energy would flow into the point of supply from the generating station located in West Bengal and Bihar depending on the electrical conditions of the whole system. The petitioner states that there is no stipulation that supply to a sub-station, say for instance, Kharagpur would have to come from a power station in West Bengal or Bihar at a particular point of time.
(2.) The petitioner further states that in order to develop a wider regional power service, the Corporation has taken on rent a double circuit 132 KV transmission line from the Corporation's Sonenagar sub-station to Pipri Sub-Station of Rihand system in Uttar Pradesh. The transmission line from Sonenagar to Pipri is owned by the Bihar State Electricity Board, but the Corporation has been using it exclusively on payment of hire charges. This rented line also forms part of the DVC KV Grid system, which makes it possible for the Uttar Pradesh system to operate in parallel with the system of the Corporation. In this case also power and energy flows from Rihand Hydro Electric Station to the Corporation Power Grid or from the Corporation Power Grid to the Rihand Power System of Uttar Pradesh depending on the electrical conditions and total load on the respective systems. According to the petitioner, in this case also there is no stipulation from which generating station the supply would flow into the Uttar Pradesh system. The petitioner states that neither is there any stipulation at which points the power and energy received from Uttar Pradesh would be supplied. The supply to Uttar Pradesh, according to the petitioner, could very well be from the generating station in West Bengal. Similarly, power received from Uttar Pradesh could either be supplied in Bihar or West Bengal depending on the power demand at different locations at a particular moment,
(3.) It is the case of the petitioner that electricity unlike other goods cannot be stored in a yard, tank, godown, warehouse, depot or dump. Hence, it is pumped into a grid which spreads over miles and miles, crossing the boundaries of different States, end actual sales take place from sub-stations at the delivery points. According to the petitioner the grid itself is, therefore, in a way, only a store house for electricity. The sale points are the delivery points which lie within the spheres of the State in which the sale takes place. The petitioner states that all the sale points for West Bengal are in West Bengal and for Rihand it is at Pipri, which is in Uttar Pradesh. Therefore, the petitioner's case is that there is no inter-State sale involved in the transaction and the sales are local sales. The Supreme Court in the case of Commr. of Sales Tax, Madh. Pra. v. Madhya Pradesh Electricity Board, has held that electricity is goods within the meaning of the definition of Madhya Pradesh General Sales Tax Act of 1959. In the premises the sale of the said goods became exigible to the levy of sales tax under the Central Sales Tax Act, 1956 if the other conditions were fulfilled. Since 1973. however, electricity has been exempted from the levy of the Central Sales Tax Act. For the period 1962-63 to 1S68-69, that is to say, from 1st April, 1962 to 31st December, 1969 the respondent No. 1 namely Superintendent of Commercial Taxes, Giridih acting under the Bihar Sales Tax Act issued notice upon the petitioner on the 24th of January, 1970. The said notice stated as follows:-- "Damodar Valley Corporation have units in Bihar, e. g. Bokaro Thermal Power Station, Chandrapura Thermal Station, etc. for senerating electricity. The electricity so generated is sold (i) to parties in Bihar and (ii) to parties in other States. 2. The sales of electricity to parties in other States are made against agreement between the parties concerned and Damodar Valley Corporation. Therefore, such sales of electricity take place in the course of 'Inter-State trade' and as such will attract the Central Sales Tax (Amendment) Act, 1959. 3. In their judgment dated November 26, 1968 in the case of Commr. of Sales Tax, Madhya Pradesh v. Madhya Pradesh Electricity Board, the Supreme Court of India have held that "Electricity" is "goods".;