In the course of trade, the rules for trade in goods and services are quite different. The WTO agreements also have different commitments for trade in goods and services. Since, electricity is being traded by supply from neighbouring countries, a question arises whether it a good or a service?
Electric current is an integral part of electricity and it is the movement or flow of electrically charged particles. So, a view can be taken that electrically charged particles are the constituent "goods" of electricity. One of the reasonings given by Courts is that it is movable and hence a good, though it gets consumed instantaneously and cannot be stored or even touched, things which are the characteristics of services. Electricity is moved through the power lines and the amounts are metered and therefore
identifiable.
Another argument is that electricity is manufactured and then transferred and sold, a characteristic of goods. But this can be said also about software. It is manufactured, transferred through the internet/storage device and then sold.Is software a good or a service?
Some courts have given the opposite viewpoint and they are summarised below:
Electricity is the flow of electrically charged particles along a conductor. The utility does not ‘manufacture’ electrically charged particles, ‘but rather, sets in motion the necessary elements that allow the flow of electricity.’ The consumer pays for electricity by kilowatt hour, that is, the length of time electricity flows through the system. There is no individual product. Instead, the consumer pays for use of the electricity.
You can also read the Indian Supreme Court judgment in the "Commissioner Of Sales Tax, Madhya Pradesh vs Madhya Pradesh Electricity" case for a legal viewpoint.
Electric current is an integral part of electricity and it is the movement or flow of electrically charged particles. So, a view can be taken that electrically charged particles are the constituent "goods" of electricity. One of the reasonings given by Courts is that it is movable and hence a good, though it gets consumed instantaneously and cannot be stored or even touched, things which are the characteristics of services. Electricity is moved through the power lines and the amounts are metered and therefore
identifiable.
Another argument is that electricity is manufactured and then transferred and sold, a characteristic of goods. But this can be said also about software. It is manufactured, transferred through the internet/storage device and then sold.Is software a good or a service?
Some courts have given the opposite viewpoint and they are summarised below:
Electricity is the flow of electrically charged particles along a conductor. The utility does not ‘manufacture’ electrically charged particles, ‘but rather, sets in motion the necessary elements that allow the flow of electricity.’ The consumer pays for electricity by kilowatt hour, that is, the length of time electricity flows through the system. There is no individual product. Instead, the consumer pays for use of the electricity.
You can also read the Indian Supreme Court judgment in the "Commissioner Of Sales Tax, Madhya Pradesh vs Madhya Pradesh Electricity" case for a legal viewpoint.
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