Electricity as “Goods”

Electricity does not come under the definition of “goods” as per English law." There have been judicial decisions in England where
electricity has been referred to as ‘thing’ and an ‘article" 4and also as ‘tangible personal property’ '5, but there has been no
judicial decision which includes electricity within the definition of goods’ for the purpose of Sale of Goods Act.' 6 Moreover,
the legal possession of electrical energy is a challenging proposition as “it is capable of being kept or stored only by changing the
physical or chemical state of other property

which is itself the subject of possession. i7

In India however, the situation is quite different. In the Calcutta High Court case of Associated Power Co. v. R.T. Roy 1 it was held
that electricity comes under the ambit of ‘goods’ under the article 366 (12) of the Constitution l9as well as S. 2 (7) of the ‘Act’. This
proposition was affirmed in a Madras High Court case where the learned judge held that electricity was under the definition of
‘goods’ since it is capable of delivery, and it does not matter whether it is a tangible or intangible form of energy. 20The Law
Commission of India in its 8th report proposed that electricity and water should be included in the definition of ‘goods’ under S.
2(7) of the ‘Act’.2' Meanwhile, the Supreme Court while discussing about the definition of ‘goods’ as mentioned in the Madhya
Pradesh Sales Tax Act (2 of 1959), found that the definition included all kinds of movable property. 22 The court further held that:

i3 Pollock & Mulla, The Sale of Goods Act, 44 (Satish J Shah ed., 8th ed., 2011). (Discussing that S.61 (1) of

Ennlish f G ds Ac 1979 escrib wwheerreeaag the definition under S.2 (7) of

Sai
iheRndian 19 is property ).

14 Bentley Bros. v. Metcalfe & Co., [1906] 2 K.B. 548, 552-553

i s Re Social Services tax Act, (1970) 74 W.W.R. 246

i 6 See Benjamin’s Sale of Goods, 64 (M. Bridge et al. eds., 8th ed. 2010)

17 Id.
1
' AIR 1970 Cal 75.
1
’ Constitution of India, art. 366 (12) (defining goods as, “goods includes all materials, commodities, and articles.” Hence, going by
this definition it can be argued that since electrical energy is capable of being brought and sold, it will come under the ambit of a
‘commodity’ or an ‘article’).
20
Kumbakonam Electric Supply Corp Ltd. v. Joint Commercial Tax Officer, AIR 1964 Mad 477.
21
[21] Law Commission of India, Eighth Report on the Sale of Goods Act, 1930 (1958) (stating that, firstly under

S.39 of the Indian Electricity Act, ‘electricity’ can be subject matter of theft. Secondly, Art. 287 of the Constitution prohibits the State
Legislatures to impose a tax on the ‘consumption or sale of electricity’ which implies that electricity can be sold just like any other
commodity. ) [22]

22 Pollock & Mulla, The Sale of Goods Act, 44 (Satish J Shah ed., 8th ed., 2011). (discussing that S.61 (1) of English Sale of Goods Act
1979 prescribes only personal chattels as “goods” whereas the definition under S.2 (7) of the
“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 can be

transmitted, transferred, delivered, stored, possessed etc., in the same way as any other movable

properyt 23

However, Pollock & Mulla, in their commentaries, have expressed their concerns over the
applicability of the ‘Act’ for electricity because, there is no contractual obligation on part of the
public authority to supply ‘electricity’, rather it is a statutory obligation on part of the authority
providing these ‘goods’.24 The supply of such commodities would not amount to a ‘sale’ for the
purposes of the ‘Act’.25 As a result, any breach or failure on part of the public body to supply
electricity would be dependent upon the terms of the statute governing the public body. 26

Thus, on one hand it can be said that ‘electricity’ comes under the definition of ‘goods’ however the
applicability of the ‘Act’ in case of sale of electricity is a dubious proposition.