Electricity Tariff for CA office

Manager - IT Audit

Can somebody help me in clarifying the tariff conditions for a CA office in residential building. As long as I know, there was a court ruling in favour of CA that the CA office in residential building be charged at domestic tariffs instead of commercial Rates.

I tried to find the ruling in net, but couldn't. Can somebody help me getting the same. The Electricity Engineer in my area has challenged the same and has asked me to pay up the difference as well as penalty.

Please let me know the facts ASAP.

I have a small 500 sq ft office in a residential building,. The office is solely used for the CA practice.

Nagari Sultanpur U.P.Delhi

read by this link

detail as under mey be helpfull to you
TABLE ITEMS FOR COUNCIL MEETING NO. 08/2002-2003 DT. 11.10.02.
ITEM NO. 3 ( xiii )
The Council vide its Resolution No.3 (xviii) dated 23.11.2001 reviewed its policy regarding levy of misuse charges in the event of domestic electric connection in a residential premises used for non-domestic activities earlier laid down vide Resolution No.32 dated 18.4.91 read with Resolution No.31 dated 10.4.92. This was done with a view to consider the observation made by the Division Bench of Hon’ble High Court of Delhi in the case styled as Lalit Bhasin v/s NDMC (CWD No.899 of 1992) for the NDMC to consider whether a separate tariff can be charged in case of professionals. The Council decided as under: -
(i)                 The existing practice of levy of 25% misuse charges on the total consumption of electricity in a domestic premises used by professional such as Doctors, Engineers, Architects, Lawyers and Consultants etc. to the extent of 25% of the covered area or 500 square feet whichever is less, in terms of Resolution No.31 dated 10.4.1992 of the NDMC, may be stopped as the Hon’ble Supreme Court in two different judgment has ruled that the lawyer’s profession cannot be treated as commercial activity. Moreover, the building byelaws also permit use of a limited portion of the residence of a professional to the extent specified above as his/her office. Similarly, DVB in their detailed tariff schedule approved by DERC also does not treat the use of residence by the Doctors, Engineers, Lawyers, CA, architects and Consultants practicing from their residence as misuse of electric connection in the premises provided that such use does not exceed 25% of the area of the premises or 50 square meter whichever is less.
(ii)               However, in cases where a residential premises is used by the professional beyond the prescribed limits as specified above the same shall be treated as misuse of domestic electric connection in the premises as non-domestic and will attract a higher rate of tariff, which may be fixed under Section 200 of the NDMC Act as under: -

Tariff for unauthorised use of single-phase domestic connection for non-domestic activities.
Rs.14.00 per unit
Tariff for use of three phase domestic connection for non-domestic activities
Rs.16.00 per unit

(iii)             Unauthorised extension of electric supply to any premises other than the premises for which it was sanctioned and use of domestic electric connections for non-domestic activities by consumers other than professionals as specified above shall also be billed at the rates mentioned above.
(iv)             Misuse charges shall be charged, retrospectively from three months prior to the date of detection of misuse, in the electricity bill of the consumer and the same shall be continued till such time the misuse is stopped by the consumer and orders to stop levy of misuse charges are passed by the Competent Authority after verification of the facts. In case during one year, misuse is again detected then misuse charges shall be levied again from the previous date from which it was withdrawn.
In another case styled as O.P. Vaish v/s Secretary, NDMC CWP No.2297 of 1992 the Special Bench of Hon’ble High Court has given its mind in the course of arguments that when the NDMC has itself carved out a category of professionals using domestic premises for their professional activity, then what prevents NDMC from at best levying non-domestic charges for consumption of electricity in a domestic premises beyond 25% of the area of the premises instead of misuse charges @ Rs.14/- to Rs.16/- per unit. The Court has also desired to know as to why the Respondent NDMC cannot make a separate tariff for levying electricity charges in respect of residential premises at large being used by professionals as specified in the NDMC’s own Resolution dated 23.11.2001.
The matter was discussed in a meeting held in the chamber of Chairman on 3.9.2002 at 10:30 A.M. where Secretary, FA, LA, Chief Architect, Chief Engineer (Electric), Director (Comml.), Executive Engineer (Comml.) and Sr.A.O. (Comml.) were present. After prolonged discussions following conclusions were derived : -
1.         It would not be advisable to carve out a special tariff for professionals using domestic premises for their professional activities as it would tantamount to discrimination between the consumers.
2.         That the Council has already allowed vide its Resolution No. 3 (xviii) dated 23.11.2001 use of domestic electric connection by the professionals using 25% of the area of the premises or 500 sq. ft. whichever is less (i.e. the limit prescribed in the building bye-laws) for their professional activities without paying any extra charges. No further relaxation can be granted as using the domestic premises beyond the prescribed limits amounts to change of land use, which is not permissible under the building byelaws and amendment of bye-laws to allow any further deviation is within the competence of the Central government only.
3.         That it is obligatory on the part of NDMC to implement the Delhi Master Plan and to enforce building byelaws strictly and resist change of land use. Hon’ble Supreme Court is also not appreciating misuse of residential premises for commercial purpose and is monitoring the issue in the case of Hindustan Times ‘AQFM’ Versus Central Pollution Control Board in WP (C) No. 725/1994. As such we should continue with the existing policy of levy of penal tariff approved by the Council vide resolution dated 23.11.2001 in cases where residential premises having domestic electric connection is used for professional activities beyond the prescribed limits.
4.      That the matter may be placed before the Council for consideration and decision on the subject and the court be informed accordingly. 
In another meeting held in the Chamber of Chairman on 4.10.2002 where L.A., F.A., Secretary, Advisor Revenue, Director Finance, Director (Comml.), E.E. (Comml.) & Sr. A.O. (Comml.) were present the directions of the division bench of Delhi High Court conveyed by the SC&LA, that NDMC should consider the matter in the light of decision of the Supreme Court reported in AIR 1984 SC 1700 and the decision of various other High Courts latest reported in AIR 2002 Rajasthan 109 and to take a final decision in this regard before the next date of hearing i.e. 20.11.2002, were discussed at length and it was noted that the judgement of the Supreme Court was with reference to Kerala Shops and Commercial Establishment Act 1960 in a service matter and the Judgement of Rajasthan High Court was with reference to Electricity Supply Act but the same was based on Article 14 of the Constitution of India because Rajasthan State Electricity Board/Jaipur Vidyut Nigam Limited were discriminating among the professionals and only Lawyers/Advocates office/chambers were being charged commercial tariff whereas other professionals like Chartered Accountants, Tax Consultants, Architect etc. were being charged domestic tariff. Thus in both these cases the terms of references were altogether different.
In NDMC area all categories of professionals have been allowed to use 25% of the area of their residential premises or 500 sq. ft. whichever is less, i.e. the limit prescribed in building bye-laws, for their professional activities without paying any extra charges and the penal tariff approved by the Council vide Resolution No. 3(xviii) dated 23.11.2001 is charged uniformly in all cases where the use of the residential premises for professional activities is found to be beyond the prescribed limits referred to above. Thus no violation of any law is being done by NDMC. Moreover in another case styled as Sh. A.K. Singla v/s NDMC CWP No. 2346/1991 Division Bench of Delhi High Court in the judgement dated 30.5.1997 had held the policy of levy of misuse charges on electricity consumption charged in cases where the professionals use the residential premises for professional activities beyond the prescribed limits as reasonable.
F.A. has seen the case vide their Dy. No. F.A-2710 dated 18.9.2002.
Chairman has seen the case.
                The case is accordingly laid before the Council for consideration and decision whether NDMC should continue levying penal tariff approved by the Council vide its Resolution No. 3 (xviii) dated 23.11.2001 in cases where professionals such as Doctors, Engineers, Architects, Lawyers and Consultants etc use the residential premises having domestic electric connection for their professional activities beyond the limits prescribed therein and the SC&LA be advised to defend the NDMC’s stand on the subject in the light of facts as explained above.
Manager - IT Audit

Thanks. I stay in Maharashtra. I hope the said decision can be used.

Thanks for the response anyway.

B. COM (H) CA & CS Final

Dear Mr. Ram Avtar Singh I feel like, you should specify the answer in the huge text you upload, and I request you to be specific I mean answer in your own words.


Citation :

2005(2) Suppl. SCR 958,  2005 (7) SCC 283,  2005(6) SCALE 723,  2005(7) JT 551


Appeal (civil)  1065 of 2000



Chairman, M.P. Electricity Board and Ors



Shiv Narayan and Anr.


DATE OF JUDGMENT: 24/08/2005












An interesting question is raised in this appeal i.e. whether the legal profession is a commercial activity or is it a trade or business. The Madhya Pradesh Electricity Board (hereinafter referred to as the 'Board') and its  functionaries charged the respondent No.2-Advocate for electricity consumption at the rate applicable for commercial consumers.


The demand was questioned by filing a writ petition before the Madhya Pradesh High Court which by the impugned judgment held that the legal profession does not involve a commercial activity and, therefore, the rate applicable to commercial consumers was not applicable to him. The judgment is questioned by the Board in this appeal.


            There is not much dispute on the factual aspect. Respondent no.1 was at the relevant point of time the landlord of the house where respondent No.2-G.D. Padraha, Advocate was staying as a tenant. He was occupying the tenanted premises till 1981. Thereafter, he shifted to his own house, but he maintained his office in the tenanted premises. There was an electricity service line in that house and it was in the name of the landlord who was paying at the rate applicable to domestic consumers.  In January, 1986 some officials of the Board inspected the service meter and served a notice to the landlord alleging that he is using the service connection for commercial purposes instead of domestic purposes. The landlord replied stating that he had never used the premises for commercial purposes.


However, the respondent No.2 had his office in the premises. Notice of demand was raised after considering the reply and it was held that the rate applicable to the commercial consumers was applicable, on the basis of a circular issued by the Board laying down different types of connections for domestic purposes and commercial purposes. The validity of the circular classifying office of an advocate as a commercial establishment was questioned in the writ petition. The High Court as noted above held that the office of a lawyer or a firm of lawyers is not a 'commercial establishment' and therefore rates applicable to commercial consumers cannot be charged.


            Learned counsel for the appellant-Board and its functionaries submitted that the High Court has not considered the relevant aspects.

 When a lawyer has his office-cum-residence in particular premises the domestic rate is applicable.


Where however only the chamber is functioning, clearly commercial activities are being carried out and therefore commercial rate was rightly applied.


According to him, the two categories of consumers have to be classified as domestic consumers and non domestic consumers. Those who are not domestic consumers fall to the second category and merely because for the sake of convenience the descripttion has been given as "commercial" it does not make a difference. When one is not a domestic consumer, as a natural consequence the rate applicable to the other category has to be charged.  Nobody appears on behalf of the respondents.


            The circulars on which reliance was placed by the Board clearly show that a distinction was made between  domestic consumers and commercial consumers. There is no substance in the plea that the classification was domestic and non domestic as the residual category. The Board's notification which formed the foundation for the Board's action reads as follows:



"Madhya Pradesh Electricity Board Rampur: Jabalpur No. 5 / GA /44 /126 /23256 / 356 dated 30th November,76



            The Divisional Engineer,

            M.P. Electricity Board.


            Reference is invited to this office circulars No. 5/121/5/111/49-A dated 21.7.1971 and 5/11/5/111/49-A/54/4506 dated 8.7.1975 wherein the categories of consumers which could be classified as 'Commercial' were indicated. Points have been raised in regard to the tariff which shall be applied to the consumption in the house a part of which is used for professional purpose by Advocate, Doctors, etc.


            The Board has considered the matter and has decided that the energy consumed in the residential premises of following persons, shall be treated as domestic purposes, even though these persons carry out some professional work in the residence.


                        (i)         Advocate, Vakils.

                        (ii)        Doctors.

                        (iii) Writers, poets and artists.



            However, consumption in the premises which are away from the residential premises and are exclusively used for the professional purposes even by the Advocate, Vakils, Doctors, Writers, Poets and Artists and shall be billed at Board L.T. Tariff applicable.


                                    Director, Commercial

                                    M.P. Electricity Board



            List of consumers who are treated as belonging to the commercial category clearly shows that there is an element of commerce involved in them as would be evident from the Notification dated 8th July, 1975.


            The word 'commerce' is a derivative of the word 'commercial'. The word commercial' originates from the word 'commerce' which has been defined in Black's Law Dictionary- Sixth Edition as under:




The exchange of goods, productions, or property of any kind, the buying, selling, and exchanging of articles. Anderson v. Humble Oil and Refining Co.226 Ga.252, 174 S.E.2d 415, 417.


The transportation of persons and property by land, water and air. Union Pacific R.Co. v. State Tax Commissioner, 19 Utah 2d 236, 429 p.2d 983, 984.


Intercourse by way of trade and traffic between different people or States and the citizens or inhabitants thereof, including not only the purchase, sale, and exchange of commodities, but also the instrumentalities and agencies by which it is promoted and the means and appliances by which it is carried on, and transportation of persons as well as of goods, both by land and sea. Brennan v. Titusville, 153 U.S. 289, 14 S.Ct.829, 38 L.Ed.719; Railroad Co. v. Fuller, 84 U.S. (17 Wall.) 568, 21 L.Ed. 710; Hoke vs. United States, 227 U.S. 308, 33 S.Ct 281, 57 L.Ed.523.


Also interchange of ideas, sentiments, etc. as between man and man.


The term 'commerce' means trade, traffic, commerce, transportation or communication among the several States, or between the District of Columbia or

any Territory of the United States and any State or other Territory, or between any foreign country and any State, Territory, or the District of Columbia, or within the District of Columbia or any territory, or between points in the same State but through any other State or any Territory or the District of Columbia or any foreign country. National Labour Relations Act 2......"




The word 'commercial has been defined to mean:


"Commercial. Relates to or is connected with trade and traffic or commerce in general; is occupied with business and commerce. Anderson vs. Humble Oil & Refining Co. 226 Ga.252, 174 S.E. 2d 415, 416. Generic term for most all aspects of buying and selling."


The expression 'commerce' or 'commercial' necessarily has a concept of a trading activity. Trading activity may involve any kind of activity, be it a transport or supply of goods. Generic term for most all aspects is buying and selling.


But in legal profession, there is no such kind of buying or selling nor any trading of any kind whatsoever. Therefore, to compare legal profession with that of trade and business is far from correct approach and it will totally be misplaced.


Similarly, in the Advanced Law Lexicon 3rd Edition 2005, Volume 1 at page 878 by P. Ramanatha Aiyar, word 'commerce' has been defined as under:


'Commerce' is a term of the largest import. It comprehends intercourse for the purposes of trade in any and all its forms, including transportation, purchase, sale, and exchange of commodities between the citizens of one country and the citizens or subjects of other countries, and between the citizens of different provinces in the same State or country. Walton v. Missoury, 91 US 275; 23 L Ed.347.


Buying and selling together, exchange of merchandise especially on a large scale between different countries or districts; intercourse for the purpose of trade in any and all its forms (S.2 (13), Income Tax Act).'    


The word 'profession' has been defined in Black's Law Dictionary- Sixth Ed. as under:


'Profession- A vocation or occupation requiring special, usually advanced education, knowledge, and skill; e.g. law or medical professions. Also refers to whole body of such profession.


The labour and skill involved in a profession in predominantly mental or intellectual, rather than physical or manual.


The term originally contemplated only technology, law and medicine, but as applications of science and learning are extended to other departments of affairs, other vocations also receive the name, which implies professed attainments in special knowledge as distinguished from mere skill.


Act of professing; a public declaration respecting something. Profession of faith in a religion."


The word 'profession' has also been defined in the Advanced Law Lexicon Volume-3 at page 3764 which reads as under: 


"Profession- A 'profession' involves the idea of an occupation requiring either purely intellectual skill or any manual skill, as in painting and sculpture or surgery, skill controlled by the intellectual skill of the operator, as distinguished from an occupation which is substantially the production or sale or arrangements for the production of sale of commodities. C.I.T. v. Manmohan Das (1966) 59 ITR 699, 710 (SC) Income Tax Act, 1961. Sec.28."





At page 3765 it has been further stated as follows :


"One definition of a profession is an employment, especially an employment requiring a learned education, as those of law and physics (Worcest Dict.).


In the Century Dictionary the definition of profession is given, among others, as a vocation in which a professional knowledge of some department of science or learning is used by its practical application to the affairs of others, either in advising, guiding, or teaching them, or in serving, their interest or welfare in the practice of an art founded on it."


"The word implies professional attainment in special knowledge as distinguished from mere skill; a practical dealing with affairs as distinguished from mere study or investigation; and an application of such knowledge to use for others as a vocation as distinguished from its pursuits for its own purposes."


"The term is applied to an occupation or calling which requires learned and special preparation in the acquirement of scientific knowledge and skill.


1.         The occupation which one professes to be skilled in and to follow; any calling or occupation by which a person habitually earns his living (S.2(36), Income Tax Act and S.150, Indian Evidence Act); 2. S.7, North Eastern Hill University Act."


"An activity to be a profession must be one carried on by an individual by his personal skill, intelligence and dependent on individual characteristics. Sakharam Narayan Kherdekar v. City of Nagpur Corporation, (AIR 1964 Bom 200, 210 (Bombay Shops and Establishment Act (79 of 1948, S. 2 (4)).


The multifarious functions call for the exercise of integrity; intelligence and personal skill by the Chartered Accountant in the service of his client and so the preamble of the Chartered Accountant Act, 1949 describes the avocation of a chartered accountant as a profession. N.E. Merchant v. State. (AIR 1968 Bom 283, 287. Bombay Shops and Commercial Establishment Act (76 of 1048)"


"A profession or occupation is carried on for the purpose of earning a livelihood and a profit motive does not underline such carrying of profession or occupation. L.M. Chitala vs. Commissioner of Labour. (AIR 1964 Mad.131, 133 (Constitution of India, Art. 19(6)"


"Profession as distinguished with 'commercial' means a person who enters into a profession. It involves certain amount of skill as against commercial activity where it is more of a matter of things or business activity.


In profession, it is purely use of skill activity. Therefore, two are distinct concepts in commercial activity one works for gain or profit and as against this, in profession, one works for his livelihood."


This Court in V. Sasidharan v. M/s Peter and Karunakar (AIR 1984 SC 1700) held as under:


".........It does not require any strong argument to justify the conclusion that the office of a lawyer or a firm of lawyers is not a 'shop' within the meaning of Section 2(15). Whatever may be the popular conception or misconception regarding the role of today's lawyers and the alleged narrowing of the gap between a profession on one hand and a trade or business on the other, it is trite that, traditionally, lawyers do not carry on a trade or business nor do they render services to 'customers'. The context as well as the phraseology of the definition in Section 2(15) is inapposite in the case of a lawyer's office or the office of a firm of lawyers."


In Harendra H. Mehta  & Ors. v. Mukesh H. Mehta & Ors. (1999 (5) SCC 108) it was noted as follows:


"1. Of, engaged in, or concerned with, commerce. 2. Having profit as a primary aim rather than artistic etc. value; philistine". (The Concise Oxford Dictionary).


In the Black's Law Dictionary, "commercial" is defined as: "Relates to or is connected with trade and traffic or commerce in general; is occupied with business and commerce. Anderson v. Humble Oil 7 Refining Co., (226 Ga 252: 174 SE 2d 415), "A broad and not a restricted construction should be given to the word "commercial" appearing in Section 2 of the Foreign Awards Act.


In R.M. Investment and Trading Co. (P) Ltd. (1994 (4) SCC 541), the terms of the agreement required the petitioner to play an active role in promoting the sale and to provide "commercial and managerial assistance and information" which may be helpful in the respondents sales efforts. It was held that the relationship between the appellant and the respondents was of a commercial nature. The Court said that the word "commercial" under Section 2 of the Foreign Awards Act should be liberally construed."


In Stroud's Judicial Dictionary (5th Edition) the term "commercial" is defined as "traffic, trade or merchandise in buying and selling of goods".


A professional activity must be an activity carried on by an individual by his personal skill and intelligence. There is a fundamental distinction, therefore, between a professional activity and an activity of a commercial character.


Considering a similar question in the background of Section 2(4) of the Bombay Shops and Establishments Act (79 of 1948), it was held by this Court in Dr. Devendra M. Surti v. The State of Gujarat (AIR 1969 Sc 63) that a doctor's establishment is not covered by the expression "Commercial establishment".

In the above background, we would have dismissed the appeal. But we notice that in New Delhi Municipal Council v. Sohan Lal Sachdev  (2000(2) SCC 494) certain observations are made, with which we do not agree.  In para 12 it was observed as follows :-


"The two terms "domestic" and 'commercial" are not defined in the Act or the Rules.  Therefore, the expressions are to be given the common parlance meaning and must be understood in  their natural, ordinary and popular sense.  In interpreting the phrases the context in which they are used is also to be kept in mind. 


In Stroud's Judicial Dictionary (5th Edn.) the term "commercial" is defined as "traffic, trade or merchandise in buying and selling of goods".  In the said dictionary the phrase "domestic purpose" is stated to mean use for personal residential purposes. 


In essence the question is, what the character of the purpose of user of the premises by the owner or landlord is and not the character of the place of user. 


For example, running a boarding house is a business, but persons in a boarding house may use water for "domestic" purposes.  As noted earlier the  classification made for the purpose of charging electricity duty by NDMC sets out the categories "domestic" user as contradistinguished from "commercial" user or to put it differently "non-domestic user". The intent and purpose of the classifications as we see residential purpose" as against "commercial  purpose".  In the case of a "guest house", the building is used for providing accommodation to "guests" who may be travellers, passengers, or such persons who may use the premises temporarily for the purpose of their stay on payment of the charges.  The use for which the building is put by the keeper of the guest house, in the context cannot be said to be for purely residential purpose.  Then the question is, can the use of the premises be said to be for "commercial purpose"?  Keeping in mind the context in which the phrases are used and the purpose for which the classification is made, it is our considered view that the question must be answered in the affirmative.  It is the user of the premises by the owner (not necessarily absolute owner) which is relevant for determination of the question and not the purpose of which the guest or occupant of the guest house uses electric energy. 


In the broad classification as is made in the Rules, different types of user which can reasonably be grouped together for the purpose of understanding the two phrases "domestic" and "commercial"  is to be made.  To a certain degree there might be overlapping, but that has to be accepted in the context of things."                     



Even if it is accepted that the user was not domestic, it may be non-domestic.  But it does not automatically become "commercial".  The words "non-domestic" and "commercial" are not inter-changeable.  The entry is "commercial".  It is not a residual entry, unless the user is commercial the rate applicable to be commercial user cannot be charged merely because it is not considered to be domestic user, as has been held in New Delhi Municipal Corporations' case (supra).

                        The     view expressed in the said case does not appear to be correct.  We, therefore, refer the matter to a larger Bench.  Place the records before the Hon'ble Chief Justice of India for necessary orders.           



Mr. Popat

The case of M.P. Electricity Board was reffered  to larger Bench in the year 2005 ... im also searching what the larger bench has held in this case...


Can someone please tell me in short whether a CA can pay the eletricity tarifff as per residential rates in Maharashtra ? 

I am facing exactly the same situation that Mr. Preetam has mentioned. 



Shaunak Deshpande



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