Damodar Valley Corporation Vs. State of
Bihar & Ors [1976] INSC 170 (5 August 1976)
KHANNA, HANS RAJ KHANNA, HANS RAJ UNTWALIA,
N.L.
SINGH, JASWANT
CITATION: 1976 AIR 1956 1977 SCR (1) 118 1976
SCC (3) 710
ACT:
Constitution of India, 1950---Art. 288(2)--Scope
of.
Bihar Electricity Duty Act, 1948 (as amended)
S. 3(2)(e)--Scope of
HEADNOTE:
The proviso (v) to s. 3(1) of the Bihar
Electricity Duty Act, 1948 provided that no duty shall be leviable on units of
energy consumed by, or in respect of, or sold for consumption in any mine or
industrial undertaking except to the extent specified in the Second Schedule.
In 1963 s. 3 of the Act was amended and a new s. 3 was. substituted for the old
s. 3. Sub-section (2)(e) of the new section states that no duty shall be
leviable on units of energy consumed by the Damodar Valley Corporation for the
generation, transmission or distribution of electricity by that Corporation.
Item A of the First Schedule, as amended in
1963 states that for a mine or an industrial undertaking the duty leviable
shall be at such rate or rates not exceeding 2 naya paise per unit of energy
fixed by the State Government with, the previous consent of the president. The
Amending Act received the assent of the President.
In response to notices issued by the
Superintendent of Commercial Taxes calling upon the appellant to pay electricity
duty under the Act as amended, the appellant contended that it enjoyed immunity
from payment of tax under cl. (1) of Art. 288 of the Constitution, no law
satisfying the requirement of cl. (2) of Art. 288. having been made.
warranting the levy of such duty.
The High Court dismissed the appellant's writ
petition.
Dismissing the appeal to this Court,
HELD: (1) What is required by cl. (2) of Art.
288 is that the law made by the State legislature for imposing, or authorising
the imposition of tax mentioned in cl. (1) shall have effect only if (i) after
having been reserved for the consideration of the President, it receives his
assent, and (ii) that if such law provides for the fixation of the rates and
other incidents of such tax by means of rules or orders to be made under the
law by any authority, the law shall provide for ,the previous consent of the,
President being obtained to the making of any such rule or order. It is,
however, not the effect of that clause that even if these two requirements are
satisfied, the provisions which merely deal with the mode and manner of the
payment of the tax should also receive the assent of the President and that in the
absence of such, assent, the provisions dealing with the incidence of tax,
which have received the assent of the President, would remain unenforceable.
[123 H; 124 A-B] (2) The contention of the appellant that the amending Act did
not contemplate or contain any indication regarding the, imposition of
electricity duty upon the appellant is plainly, untenable, for it would have
the effect of rendering s. 3(2)(e) to be wholly redundant. Under proviso (v) to
s. 3(1) of the Principal Act, mines and industrial undertakings were exempt
from levy of duty. This exemption stood withdrawn as a result of substitution
of new s. 3 for the old section by the amending Act. The new charging s. 3(1)
roped in all industrial undertakings, including the Damodar Valley Corporation,
for the purpose of levy of duty. Section 3(2)(e), introduced by the Amending
Act of 1963, expressly granted exemption from levy of electricity duty on units
of energy consumed by the appellant for the, generation, transmission or
distribution of electricity by that Corporation. This provision, containing
express reference to the appellant Corporation, dearly warrants the inference
that in respect of units of energy not covered by s. 3(2)(e) the exemption
would not be available to the appellant. [123 AB] 119 (3) There is no substance
in the contention that unless s. 4 of the principal Act was also re-enacted
with the assent of the President, the liability for payment of duty cannot be
fastened upon the appellant. Section 3 of the Amending Act which deals with the
incidence of duty makes it clear that such duty has to, be paid on the units of
energy consumed or sold and at the rate or rates specified in the schedule. As
the duty is to be levied on the units of energy consumed or sold, it would follow
that the duty would have to be paid by the consumer or seller as the case may
be. Section 4 of them. principal Act merely provides for the manner and mode of
payment of the duty. [123 F-G]
CIVIL APPELLATE JURISDICTION: Civil Appeal
No. 104 of 1970.
(From the Judgment and Order dated 23-10-1967
of the Patna High Court in Civil Writ Jurisdiction Case No. 299/66).
L.M. Singhvi, U.P. Singh and S.N. Jha, for
the Appellant.
Sarjoo Prasad and U.S. Prasad, for the
Respondent.
The Judgment of the Court was delivered by
KHANNA, J. The short question which arises for determination in this appeal on
certificate by Damodar Valley Corporation against the judgment of Patna High
Court dismissing the writ petition filed by the appellant is whether the
appellant is liable to pay electricity duty under Bihar Electricity Duty Act,,
1948 as amended by Bihar Electricity Duty (Amendment) Act, 1963. The High Court
answered the question in the affirmative against the appellant.
The appellant is a corporation established
under the Damodar Valley Corporation Act, 1948 for the development of the
Damodar Valley in the States of Bihar and West Bengal.
One of the functions of the appellant is the
promotion and operation of schemes for the generation, transmission and
distribution of hydroelectric and thermal electrical energy.
Bihar Electricity Duty Act, 1948 (Bihar Act
36 of 1948) (hereinafter referred to as the principal Act) was published in the
Bihar gazette; on October 1, 1948. It was an Act for the levy of duty on the
sales and consumption of electrical energy in the province of Bihar. Material
part of sections. 3 and 4,. as they stood before the amendment made in 1963,
read as under:
"3. Incidence of duty.---(1) There shall
be levied and paid to the: State Government on the units of energy consumed or
sold, excluding losses of energy in the transmission and transformation, a duty
at the rates specified in the First Schedule:
Provided that no duty shall be leviable on
units of energy :-(i) ........
(ii) ....
(iii) ......
(iv) .....
120 (v) consumed by, or in respect of, or
sold for consumption in any(a) mine, as defined in the Indian Mines Act, 1923:
(b) industrial undertaking;
except to the extent specified in the Second
Schedule:
(vi)......
(2) ....
4. Payment of duty.--( I ) Every licensee
shall pay every month to the State Government at the time and in the manner
prescribed the proper duty payable under section 3 on the units of energy
consumed by him or sold by him to the consumer.
(2) Every licensee may recover from the
amount which falls to be paid by the licensee as duty in respect of energy sold
to the consumer.
(3).......
(4) ....
(4a) ....
(5) ....
The principal Act was amended by Bihar
Electricity Duty (Amendment) Act, 1963 (Bihar Act 20. of 1963) (hereafter
referred to as the amending Act). The amending Act received the assent of the
President on December 4, 1963 and was published on December 17, 1963. By
section 2 of the amending Act, new section 3 was substituted for the old
section 3.
Material part of new section 3 read as under:
"3. Incidence of duty.(1) Subject to the
provision of sub-section (2), there shall be levied and paid to the State
Government on the units of energy consumed or sold, excluding losses of energy
in transmission and transformation, a duty at the rate or rates specified in
the Schedule.
(2) No duty shall be leviable on units of
energy(a) ....
(b) ....
(c) ....
(d) ....
(e) consumed by the Damodar Valley
Corporation for the generation, transmission or distribution of electricity by
that Corporation;
(f) ....
(3) ....
121 Amendment was also made in the First
Schedule of the principal Act. The relevant part of the schedule read as 'under
:
THE SCHEDULE (See section 3.) RATES OF DUTY
A. For a mine or an industrial under Such rate or rates taking, save in respect
of its not exceeding 2 naya premises used for residential or paisa per unit of
office purpose energy as may, from time to time, be fixed by the State Government
with the previous consent of the President, by order in this behalf".
In the writ petition the appellant prayed for
quashing three notices dated February 10, 1965 issued by the Superintendent of
Commercial Taxes Giridih as also his orders dated March 24 and 29, 1966. By the
impugned notices the Superintendent of Commercial Taxes called upon the
appellant to show cause as to why penal action under the principal Act as
amended,, should not be taken against the appellant for having failed to get
itself registered under that Act. The appellant was also called upon to apply
for registration. By the impugned orders the Superintendent of Commercial Taxes
directed. the appellant to pay electricity duty under the: Act as amended. The
case of the appellant was that it enjoyed immunity from payment of tax under
clause (1) of article 288 of the Constitution. No law satisfying the
requirement of clause (2) of article 288, it was contended, had been made
warranting the levy of such a duty. The High Court repelled this contention,
and we find no sufficient ground to take a different view.
Article 288 of the Constitution reads as
under:
"288(1) Save in so far as the President
may by order otherwise provide, no law of a State in force immediately before
the commencement of this Constitution shall impose, or authorise the imposition
of, a tax in respect of any water or electricity stored, generated, consumed,
distributed or sold by any authority established by any existing law made by
Parliament for regulating or developing any inter-State river or river-valley.
Explanation.--The expression 'law of a State
in force' in this clause shall include a law of a State passed or made before
the commencement of this Constitution and not previously repealed,,
notwithstanding that it or parts of it may not be, then in operation either at
all or in particular areas.
(2) The Legislature of a State may by law
impose or authorise the imposition of, any such tax as is mentioned in clause (
1 ), but no such law shall have any effect unless it has, after having been
reserved for the consideration of the President, received his assent; and if
any such law provides for the fixation of the rates and other incidents of such
tax by means of rules or orders to be made under the law by any authority, the
law shall provide for the previous consent of the President being obtained to
the making of any such rule or order." 10--1003 SCI/76 122 Article 288
grants exemption from tax under any law of a State in respect of any water or
electricity stored, generated, consumed, distributed or sold by any authority
established by any existing law or any law made by Parliament for regulating or
developing any inter-State river or rivervalley, except in certain cases.
According to clause (1) of the article, this exemption would not be available
in respect of such tax imposed under any law of a State in force immediately
before the commencement of the Constitution if the: President by order so
provides. Although the principal Act is a pre-Constitution law, being an Act of
1948, no order was admittedly made by the President withdrawing the exemption
in respect of the appellant from levy of such, tax under the principal Act.
Indeed, there was no question of issue of any such order because the principal
Act did not provide for the imposition of electricity duty upon a corporation
like the appellant. Clause (v) of the proviso. to sub-section (1 ) of section 3
of the principal Act expressly stated that no duty shall be leviable on units
of energy consumed by, or in respect of, or. sold for consumption in any mine,
as defined in the Indian Mines Act, or industrial undertakings, except to the
extent specified in the Second Schedule. The appellant is admittedly an industrial
undertaking, and as such, was not liable. to pay electricity duty under the principal
Act.
The case of the respondents is that the bar
to the levy of the said duty was removed and the levy of the duty on the
appellant was, put on a sound legal basis as a result of the amendment made. in
the principal Act by the amending Act of 1963. The amending Act, we find,
satisfies the requirements of clause (2) of article 288. According to that
clause, the legislature of a State may by law impose, or authorise the
imposition of, any tax mentioned in clause (1) of that article, but no such law
shall have any effect unless it has, after having been reserved for the
consideration of the President, received his assent; and if any such law
provides for the fixation of the rates and other incidents of such tax by means
of rules or orders to. be made under the law by any authority,, the law shall
provide for the previous consent of the President being obtained to the making
of any such rule or order. The amending Act of 1963, as already mentioned,
received the assent of the President before its publication. The exemption
which was granted to mines and industrial undertakings from payment of electricity
duty under the principal Act was withdrawn under the amending Act, except to
some extent with which we are not concerned. The new schedule, substituted for
the old schedule by the amending Act, prescribed the rates of duty for mines
and industrial undertakings, and it was provided that the rate of duty shall be
such rate or rates not exceeding 2 naya paise per unit of energy as may, from
time to time, be fixed by the State Government with the previous consent of the
President, by order in this behalf.
It has been argued by Dr. Singhvi on behalf
of the appellant that the scheme of article 288 is to grant general exemption
from the levy of tax in respect of any water or electricity stored, generated,
consumed, distributed or sold' by any authority established by any, existing
123 law or any law made by Parliament for regulating or developing any
inter-State river or river-valley. If any law made by a State legislature,
according to the submission, seeks the imposition of any such tax, such law
should contain clear indication to that effect before it receives the assent of
the President. The amending Act of 1963, :according to the learned counsel, did
not contain any such indication. This contention, in our opinion, is wholly
devoid of force. Under proviso (v) to section 3(1) of the principal Act, mines
and industrial undertakings were exempt from levy of duty. This exemption stood
withdrawn as a result of, substitution of new section 3 for the old section by
the amending Act. The new charging section 3 (1 ) roped in all industrial
undertakings, including the Damodar Valley Corporation, for the purpose of levy
of duty. Clause (e) of sub-section (2) of new section 3 which was introduced by
the amending Act of 1963. expressly granted exemption from levy of electricity
duty on units of energy consumed by the appellant corporation for the
generation, transmission or distribution of electricity by that corporation.
This provision. containing express reference to the appellant corporation,
clearly warrants the inference that in respect of units of energy not covered
by clause (e) of sub-section (2) of section 3 the exemption would not be
available to the appellant. The contention advanced on behalf of the appellant
that the amending Act did not contemplate or contain indication regarding the
imposition of electricity duty upon the appellant is plainly untenable, for it
would have the effect of Tendering clause (e) of sub-section (2) of section 3
to be wholly redundant. The courts, it is wellsettled, should be loath to
accept an argument which would have the effect of rendering redundant the
provision of a statute.
Lastly, it has been argued that though there
has been an amendment of section 3 of the principal Act by its substitution by
a new section under the amending Act of 196.3, there has been no amendment of
section 4 with the assent of the President. As such, no liability to pay
electricity duty can be fastened upon the appellant. This submission too is
bereft of force. Section 3, as inserted by the 'amending Act of 19'63, is the
charging section. According to clause (1) of that section, subject to the
provision of sub-section (2), there shall be: levied and paid to the State
Government on the: 'units of energy consumed or sold, excluding losses of
energy in transmission and transformation, a duty at the rate or rates
specified in the Schedule. The section thus deals with the incidence of duty,
and makes it clear that such duty has. to be paid on the units of energy
consumed or sold and at the rate or rates specified in the schedule.
It is further made clear by the section that
the duty is to be levied and -paid to the State Government. As the duty is to.
be levied on the units of energy consumed or sold, it would follow that the
duty would have to be paid by the consumer or seller,, as the case may be.
Section 4of the principal Act merely provides for the manner and mode of
payment of the duty, and we find no substance in the contention that unless
section 4 of the principal Act was also re-enacted with the assent of the
President, the liability for payment of duty cannot be fastened upon the
appellant.
124 What is required by clause (2) of article
288 is that the law made by the State legislature for imposing or authorising
the imposition of tax mentioned in clause (1) shall have effect only if after
having been reserved for the consideration of the President, it receives his
assent.
Another requirement of that clause is that if
such law provides for the fixation of the rates and other incidents of such tax
by means of rules or orders to be made under the law by any authority, the law
shall provide for the previous consent of the President being obtained to the
making of any such rule or order. It is, however, not the effect of that Clause
that even if the above mentioned two requirements are satisfied, the provisions
which merely deal with the mode and manner of the payment of the aforesaid tax
should also receive the assent of the President and that in the absence of such
assent, the provisions dealing with the incidence of tax, which have received
the assent of the President, would remain unenforceable.
Some other aspects were also dealt with by
the High Court, but in the light of the view we have taken in the matter, it is
not necessary to deal with those aspects.
The appeal consequently fails and is dismissed
but in the circumstances without costs.
P.B.R. Appeal dismissed.
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