“Goods” under the Sale of Goods Act, 1930

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By Aditya Sood

Editor’s note: ‘Goods’ have been defined under § 2(7) of the Sale of Goods Act, 1930, to include every kind of movable property, including stocks, shares, crops, grass, severable objects, etc. It is supplemented by the definitions of movable and immovable property under § 3(36) and § 3(26) of the General Clauses Act, 1897.

This paper lays down certain dilemmas that have not been resolved despite the definitions and examines the case laws that may shed light on the same. It also examines the difference between English and Indian law on this issue. Primarily, it seeks to clarify whether certain commodities such as electricity, lottery tickets, software programs, money. etc can be included within the definition of “goods”.


This research paper primarily investigates the dilemma regarding the scope of definition of “goods” for the purposes of Sale of Goods Act, 1930 (hereinafter referred to as the ‘Act’). I have differentiated the position of law in England and India. However, due to the vastness of the definition I have limited the scope of my paper to three of the major commodities which have been subject of controversies, namely:

(1) Electricity,

(2) Lottery tickets, and

(3) Software programs.

Definition of “goods”

‘Goods’ is defined as per Section 2 (7) of the ‘Act’ as. “Every kind of movable property other than actionable claims and money; and includes stock and shares, growing crops, grass, and things attached to or forming part of the land which are agreed to be severed before sale or under the contract of sale.”

Definition of “Movable Property”

As per section 3(36) of the General Clauses Act 1897, “movable property” is defined as “property of every description except immovable property.” Section 3(26) of the same Act reads as, “Immovable property shall include land, benefits to arise out of land, and things attached to the earth, or permanently fastened to anything attached to the earth.”

 Hence, a conjoint reading of the two sections gives us a clear definition that anything that is attached to the land maybe termed as “movable property”, provided that there is an element of severability involved.[1] The element of severability is important while deciding on the nature of the property, and this element can be established by ascertaining the nature of the property, intention of the parties and the terms of the contract between them.[2] For instance, timber[3] falls under the ambit of “goods” as per S.2(7)[4] because timber trees are severed from the land for the purpose of sale and hence they become a commercial commodity.[5]

In the case of Tata Consultancy Services v. State of Andhra Pradesh[6] it was held that property as per Sale of Goods Act means general property over the goods and not merely a specific property.[7] The usage of the word ‘includes’ further expands the definition, as it includes in the definition not only goods of the prescribed nature but it also imports those things that are specifically provided by the interpretation clause.[8]

Difference between the English law and the Indian law

In English law as per S. 61(1) of the Sale of Goods Act 1979, “goods” include personal chattels[9] which can be further divided into “choses in possession” and “choses in action”.[10] As per the English law only the former is included in the definition of “goods” whereas the latter which include commodities like shares, debentures, bills of exchange, and other negotiable instruments are excluded from the definition as they all are actionable claims.[11] On the other hand in India, the definition as elucidated in S.2(7)[12] is much wider in scope than the English definition as it includes stocks and shares as within the scope of “goods”.

The following discussion primarily focuses on the point that whether certain types of commodities can be included within the definition of “goods” or not.

  • Electricity as “goods”: Inclusion of intangible energy within the definition of goods

Electricity does not come under the definition of “goods” as per English law.[13] There have been judicial decisions in England where electricity has been referred to as ‘thing’ and an ‘article’[14] and also as ‘tangible personal property’[15], but there has been no judicial decision which includes electricity within the definition of ‘goods’ for the purpose of Sale of Goods Act.[16] 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.[17]

In India however, the situation is quite different. In the Calcutta High Court case of Associated Power Co. v. R.T. Roy [18] it was held that electricity comes under the ambit of ‘goods’ under the article 366 (12) of the Constitution[19] as 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.[20] The 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’.[21] 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:

“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 property.[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.

  • Exclusion of Lottery tickets from the definition of “goods”

As per Black’s Law Dictionary, ‘lottery’ is defined as ‘a chance for a prize for a price’.[27] For the purposes of the ‘Act’ lottery tickets are clearly a movable property, however it has been a matter of debate that whether they are an actionable claim as defined under S.3[28] of Transfer of Property Act, 1882.

In the Supreme Court case of H. Anraj v. Government of T.N.[29] it was held that a lottery ticket primarily involved two rights: (1) the right to participate in the draw and (2) the right to win the prize, depending on chance. In that case it was held that the former right was a “transfer of a beneficial interest in movable goods” and hence was a sale within the meaning of Art 366 (29-A)(d) of the Constitution whereas the latter right was a chose in action and thus not “goods” for the purpose of levy of sales tax.[30]

However, the ruling of this decision was challenged in a later Supreme Court verdict of Sunrise Associates v. Government of NCT of Delhi.[31] It was held that sale of a lottery ticket amount to a sale of an actionable claim. The conclusion of the Court was based on the reasoning that there was no difference between right to win and right to participate in a lottery draw, as no purchaser pays the consideration for a right to participate in the draw, instead he pays it for the right to win.[32]

Thus, the classification by H. Anraj case (supra) of the right to participate as right in praesenti and the right to win as a right in futuro, was incorrect as both these rights are in futuro.[33] As a result the earlier judgment was overruled to that extent and “lottery tickets” were excluded from the definition of “goods”.

  • Conundrum surrounding Software programs

    In the case of TCS v. State of Andhra Pradesh[34] the Supreme Court held that a software program on a CD or a floppy drive would be a “good” for the purposes of levy of sales tax.[35] A software program is a collection of instructions or commands that are given to a computer to perform a given task.[36] The main area of debate is that “Do software programs – being intellectual creations of human mind – be treated as “goods” for the purposes of the ‘Act’ or not?”

    One of the landmark cases in this regard was the case of St Albans City and District Council v. International Computers Ltd[37] where Sir Iain Glidewell observed that a hardware device has no use of its own unless it is supplemented with a software and it was only because of necessity that software was contained in a physical medium like a disk or a floppy furthermore, in case the disk is sold and there is a defect with the program, then there would be a prima facie liability against the disk manufacturer as well. Thus, he held that the tangible disk and the software program both will be included within the definition of “goods”.

    In the TCS case (supra) a special mention was given to ‘canned software’[38], where it was held by the learned judge that once a software is uploaded on a medium like a CD or a floppy drive, it ceases to be a work of intellectual creation. This is primarily because each of these mediums becomes a marketable commodity in itself.[39] “Marketability” of a commodity was the determining factor whether it is a “good” or not. It has also been held that “operational software” which was uploaded on a hard-disk does not lose its character as a tangible good.[40]

    It has also been a matter of debate as to inclusion of computer software within the definition of “goods” as defined in section 2[41] of the Uniform Commercial Code, 1952. It is argued that since “custom designed” computer software is a product of a labor intensive process and it must be considered as a service rather than a good. However, sale of most of the software programs resemble sales of any other consumer product available for consumption, and it is usually sold through separate pre-existing packages.[42] On the other hand contracts for providing data processing services have been held to be contracts for services rather than contracts for “goods”.[43]

    With the help of the above discussion it is clear that despite of being an intangible commodity, “computer software” can be included in the definition of “goods” for the purposes of the ‘Act’.

  • Exclusion of ‘Money’ from the definition

    Money is specifically excluded from the definition of “goods” under S.2(7) of the ‘Act’, because it is the medium of exchange used at the time of sale of goods.[44] Hence, money is not regarded as a “chattel but as something ‘sui generis’”.[45] However, a coin which was intended to be sold as an item of curiosity will be said to be a “good”, as it was passed on as a commodity and not as a currency.[46]


Through the course of this research paper I have tried to identify some of the major controversies surrounding certain commodities and their inclusion in the definition of “goods” as per S.2(7) of the ‘Act’. The discussion helped to prove that “electricity” (even being an intangible good) comes under the ambit of goods, while on the same hand lottery tickets (being movable goods per se) are excluded because they are “actionable claims”. This helps us to show that being a movable property in itself is not a conclusive proof of being a “good”. Also, the debate on software programs elucidated the importance on “marketability” aspect of “goods”.

Hence, it evident that due to rapid developments in science and technology, the definition of goods cannot be compartmentalized into straight jacket distinctions and the scope of this section will expand over time.

Edited by Neerja Gurnani

[1] Pollock & Mulla, The Sale of Goods Act, 33 (Satish J Shah ed., 8th ed., 2011).

[2] Id.

[3] Id. (defining timber as wood fit for building and repairing houses).

[4] Sale of Goods Act, 1930.

[5] Kanakapalam Estate v. State of Kerela, (1989) 73 STC 336.

[6] (2005) 1 SCC 308.

[7] Id. (discussing the definition of ‘goods’ as prescribed under the Sale of Goods Act, “’goods’ would comprehend tangible and intangible properties, materials, commodities and articles and also corporeal and incorporeal materials, articles and commodities.”)

[8] Scientific Engg. House (P) Ltd. v. CIT, (1986) 1 SCC 11.

[9] See Benjamin’s Sale  of Goods, 64 (M. Bridge et al. eds., 8th ed. 2010) (elucidating that “goods” as per the English definition covers all “those tangible, movable items that we call things in possession.).

[10] Benjamin’s Sale  of Goods, 68 (M. Bridge et al. eds., 8th ed. 2010).

[11] Id.

[12] Sale of Goods Act, 1930.

[13]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 Indian Sale of Goods Act 1930 is much wider as it includes all ‘movable property’).

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

[15] Re Social Services tax Act, (1970) 74 W.W.R. 246.

[16] Benjamin’s Sale  of Goods, 71 (M. Bridge et al. eds., 8th ed. 2010).

[17] Id.

[18] AIR 1970 Cal 75.

[19] 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] 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]Supra note 13.

[23] Commissioner of Sales Tax, Madhya Pradesh v. Madhya Pradesh Electricity Board, AIR 1970 SC 732.

[24] Supra note 13.

[25] Id.

[26] Id.

[27]Black’s Law Dictionary 947 (6th ed. 1991) (stating the essential elements of a lottery as “consideration, prize and chance”).

[28] The Transfer of Property Act, 1882, § 3 (defining actionable claim, “’actionable claim’ means a claim to any debt, other than a debt secured by mortgage of immoveable property or by hypothecation or pledge of moveable property, or to any beneficial interest in moveable property not in the possession, either actual or constructive, of the claimant, which the Civil Courts recognize as affording grounds for relief, whether such debt or beneficial interest be existent, accruing, conditional or contingent.”).

[29] (1986) 1 SCC 414.

[30] Id. (quoting Sabyasachi Mukherjee, J, “the right to participate in the draw under a lottery ticket remains a valuable right till the draw takes place and it is for this reason that licensed agents or wholesalers or dealers of such tickets are enabled to effect sales thereof till the draw actually takes place and therefore lottery tickets, not as physical articles but as slips of paper or memoranda evidencing the right to participate in the draw can be regarded as dealer’s merchandise and therefore goods which are capable of being bought or sold in the market.”).

[31] (2006) 5 SCC 603.

[32] Id.

[33] Pollock & Mulla, The Sale of Goods Act, 38 (Satish J Shah ed., 8th Ed., 2011).

[34] (2005) 1 SCC 308.

[35] Id. (quoting S.B. Sinha, J, “definition of ‘goods’, as under the Sale of Goods Act 1930, is of a wide import and it includes both tangible as well as intangible properties. It would become goods provided it has the attributes thereof having regard to (a) its utility; (b) capable of being bought and sold; and (c) capable of transmitted, transferred, delivered, stored and possessed. If a software whether customized or non-customized satisfies these attributes, the same would be goods.”).

[36] Pollock & Mulla, The Sale of Goods Act, 43 (Satish J Shah ed., 8th ed., 2011).

[37] [1995] FSR 686.

[38] Supra note 31. (“Canned “software” means that is not specifically created for a particular consumer. The sale or lease of, or granting a license to use, canned software is not automatic data processing and computer services, but is the sale of tangible personal property. When a vendor, in a single transaction, sells canned software that has been modified or customized for that particular consumer, the transaction will be considered the sale of tangible personal property if the charge for the modification constitutes no more than half of the price of the sale.”).

[39]See Advent Systems Ltd. v. Unisys Corpn, 925 F. 2d 670. (drawing an analogy to a “compact disc recording of an orchestral rendition. The music is produced by the artistry of musicians and in itself is not a “good,” but when transferred to a laser-readable disc becomes a readily merchantable commodity. Similarly, when a professor delivers a lecture, it is not a good, but, when transcribed as a book, it becomes a good.”)

[40] Commnr. of Central Excise, Pondicherry v. ACER India Ltd., 2004 (8) SCALE 169.

[41] U.C.C. Law §.2-103 (k) : “”Goods” means all things that are movable at the time of identification to a contract for sale. The term includes future goods, specially manufactured goods, the unborn young of animals, growing crops, and other identified things attached to realty as described in Section 2-107. The term does not include information, the money in which the price is to be paid, investment securities under Article 8, the subject matter of foreign exchange transactions, or choses in action.”

[42]Bonna Lynn Horovitz, Computer Software as a Good under the Uniform Commercial Code: Taking a Bite Out of the Intangibility Myth [notes], 69 B. U. L. Rev. 129, 153 (1985),|software&type=matchall (last visited Feb. 19, 2014) (stating that majority of sales of software programs are “off the shelf” transactions which are analogous to any other commercially consumed “good”. The mere fact that it was designed because of the intellectual abilities of an individual does not change the basic characteristic of the commodity as a “good”.)

[43] Id. (arguing that data processing transactions are based on the skill and ability of the person handling these programs rather than the computer software itself. Thus, these contracts cannot be regarded as sale of “goods”).

[44] Pollock & Mulla, The Sale of Goods Act, 40 (Satish J Shah ed., 8th ed., 2011).

[45] Id.

[46] Moss v. Hancock, [1899] 2 Q.B. 111.

5 thoughts on ““Goods” under the Sale of Goods Act, 1930”

  1. Please inform where the driving license is categorized: a movable property under TPA;
    ii. under thew Sale of Goods as goods;
    iii. non of above because it is issued by an authority of the Govt. for a fixed price for a limited period, for a particular person with his name, date of birth, address, photograph, address and signature. Moreover it is not transferable?

  2. In this days of e-commerce I believe a lottery ticket should and can be classified as a “good” under sec.60(1) of the Sale of Goods Act 1895 as applicable in Nigeria, going by usage of the phrase “includes”
    Again when one considers the consideration that a lottery ticket fits into the definition of “mobile goods” as defined Blacks law dictionary 8th edition p.715 having regard to the UCC .
    I therefore believe that lottery ticket is an item of merchandise and therefore a goods.


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