Swaroop Vegetable Products Industries
Etc, Vs. State of U. P. & Ors [1983] INSC 100 (19 August 1983)
THAKKAR, M.P. (J) THAKKAR, M.P. (J) FAZALALI,
SYED MURTAZA VARADARAJAN, A. (J)
CITATION: 1984 AIR 20 1983 SCR (3) 666 1983
SCC (4) 24 1983 SCALE (2)167
ACT:
U.P. Electricity (Duty) Act, 1952-Sec. 3(1)
(a), (b) and (c) and sec. 4(1) (a), (b) and (c)-Levy and payment of electricity
duty-Interpretation of. Person consuming electrical energy from own source and
also purchasing from another source is liable to pay duty on energy consumed
from own source.
U. P. Electricity (Duty) Act,
1952-Notification dated 17.3.1973 under see. 3(4)-Exemption from payment of
duty to persons consuming electrical energy from own source of generation
installed after 2.1.1973-Validity of.
HEADNOTE:
The appellants who had their own source of
generation of electrical energy (generating machinery having been installed and
commissioned before 2.1.1973) and were also purchasing electrical energy from
another source challenged the correctness of the decision of a Full Bench of
the High Court reversing the decision of a Division Bench and holding that a
user of electricity was liable to pay electricity duty on consumption of energy
from his own source of supply regardless of whether or not he also purchased
electricity from some other source indicated in sec. 3(1) (a) and (b).
The appellant contended that in view of the
user of the expression 'another person' in sec. 3(1) (c) and sec. 4(1) (c) only
those consumers who wholly fell outside the orbit of sec. 3(1) (a) and (b) were
exigible to electricity duty under sec. -3(1) (c). The appellant submitted that
under Notification dated March 17, 1973 exemption must be granted to all
persons having their own source of electricity regardless of the date on which
the source generation is installed to save it from challenge under Art. 14 of
the Constitution of India. In Civil Appeal 1312 the State of U.P. challenged
the correctness of the decision of the Division Bench.
Allowing the Appeal No. 1312 and dismissing
other appeals,
HELD: The duty was chargeable in respect of
energy consumed by a person from his own source of generation regardless of the
fact that he 'also' purchased electricity from other source indicated in sec.
3(1) (a) and sec. 4(1) (a). [671 G] On a plain reading of sec. 3(1) (c) it is
evident that duty has been levied on the energy consumed by a person from his
own source of generation without anything more. The fact that the user of
electricity from his own source of generation purchases electricity from some
other source as well, is an altogether irrelevant factor from the stand point
of liability imposed by the said provisions. Be it realized that duty is levied
on the consumption of energy The 667 taxing event being the consumption of
energy, the source from which the electricity is acquired would become
altogether irrelevant. Sec. 3(1) as also Sec. 4(1) has to be read as a whole
and has to be interpreted in a harmonious and meaningful manner. A person
having his own source of energy who also purchases energy from another source
indicated in sec. 3(1 j (a) will be covered by 3(1) (a) to the extent he
purchases electricity from such a source, and will be equally covered by sec.
3(1) (c), in so far as he consumes energy from his own source of generation. He
will be covered by both the provisions read conjointly. The same reasoning
applies in the context of clauses (a) (b) and (c) of sec. 4(1). There is no
rational basis for exonerating a person from payment of duty merely because he
has his own source of generation and he also purchases electricity from some
other source. In fact it will be irrational to do so and it would give rise to
an anachronism. Why make him pay 'only' if he generates his own energy and why
exempt him altogether merely because he 'also ' purchases from some other
source ? [670 D-H] As acute shortage of power was being experienced there was a
need to encourage the consumers to acquire their own source of energy with a
view to reduce or lessen the burden on the existing sources of electricity
generation. Obviously this purpose can be achieved only by granting the
exemption prospectively to those consumers who install their own source of
generation of energy pursuant to the concession being granted under the provision
for exemption. Those who already had their own source of generation of energy
need no such encouragement in respect of the source of generation, already
installed. If they wanted to further augment their own source or generation of
energy they would also be entitled to exemption in respect or the 'additional'
source of generation installed 'after' the date specified in the notification.
The classification is, therefore, rational, purposeful, as also meaningful, and
it is calculated to effectively serve the real purpose of granting exemption.
Article 14 cannot be invoked in a situation
like this to successfully assail that part of the notification whereby the date
of installation has been made the precondition for qualifying the exemption.
[672 G-673 B] State of Uttar Pradesh v. Jageshwar, [1983] SCC 305 referred to.
CIVIL APPELLATE JURISDICTION: Civil Appeals
Nos. *1312 of 1976, 519, 1146, 537 and 2639 of 1979. 773 and 2032 of 1980.
Appeals by *Certificate and Special leave
Petitions from the Judgment and order dated the 8.10.74, 9.11.78, 22.12.78, and
5th March. 1980 of the Allahabad High Court in Civil Writ Petitions Nos.
3039/74, 89/76, 760/75, 759/75, 442/76, 2630/77 and 547/75.
P. R. Mridul, G. L Sanghi, Dr. Praveen Kumar,
Praveen Kumar, and H. K Puri for the appearing Appellants.
S. C. Manchanda, Sobha Dikshit, Pradeep Misra
and Sudhir Kulshreshta for the appearing Respondents 668 The Judgment of the
Court was delivered by THAKKAR, J. The main controversy in this group of
appeals centres around the question whether Electricity Duty on the consumption
of electrical energy in Uttar Pradesh is payable by a person who has his own
source of generation and also purchases electrical energy from a licensee, or
the Board, or the State Government, or the Central Government.
The contention has been raised in the context
of Section 3(1) and 4(1) of the U. P. Electricity (Duty) Act, 1852. The view is
canvassed on behalf of the consumers of electrical energy that while under
Section 3(1) (c) read with Section 4(1) (c) of the Act Electricity Duty is
indubitably leviable and payable on electrical energy consumed by a person from
his own source of generation, such duty is not payable by him in case he
consumes energy from his own source of generation and also purchases energy
from a licensee, the Board, the State Government or the Central Government.
This question initially came up before a
Division Bench of the Allahabad High Court in Sherwani Sugar Syndicate Pvt. Ltd.
v. State of U.P. (C. M. W. P. No. 3039 of 1974). The Division Bench by its
judgment dated October 8, 1974 upheld the contention that in as much as the
petitioner company had its own source of generation of energy and was also
purchasing energy from another source indicated in Section 3 (1) (a) and 3 (1)
(b), the petitioner company was not liable for payment of duty on the energy
generated from its own source of supply. The State of Uttar Pradesh has called
into question the legality and validity of this decision by way of an appeal by
certificate of fitness granted by the High Court (C. A. No. 1312 of 1977).
Meanwhile M/s. Deoria Sugar Mills Ltd. also approached the High Court of
Allahabad by way of C.M.W.P. No. 9990 of 1975 on an identical plea. The matter
came up before another Division of the Allahabad High Court. This Division
Bench was of the opinion that the decision in Sherwani Syndicate case (supra)
required reconsideration. The matter was therefore referred to a Full Bench.
The Full Bench was of the opinion that the view taken earlier in Sherwani's
Case was not correct and dismissed the Writ Petition filed by M/s Deoria Sugar
Mills, taking the view that a user of electricity was liable to pay electricity
duty on the consumption of energy from his own source of supply regardless of
whether or not he also purchased electricity from some other source indicated
in Section 3 (1) (a) and (b). In view of this decision of the Full Bench,
petitions instituted by six other companies raising the identical question were
dismissed by the High Court of Allahabad. These companies 669 have approached
this Court by way of six separate appeals by special leave granted by this
Court.
Sections 3 (1) and Section 4(1) of the Act in
so far as material read thus;- "3. Levy of Electricity Duty-(I) Subject to
the provisions herein after contained, there shall be levied for and paid to
the State Government on the energy:
(a) Sold to a consumer by a licensee, the
Board, the State Government or the Central Government, or (b) Consumed by a
licensee or the Board in or upon premises used for commercial or residential
purposes, or in or upon any other premises except in the construction,
maintenance or operation of his or its works;
or (c) Consumed by any other person from his
own source of generation; a duty (hereinafter) referred to as 'electricity
Duty') x x x x x x x x x x
4. Payment of electricity duty and interest
thereupon:- (1) The electricity duty shall be paid, in such manner and within
such period as may be prescribed, to the State Government.
(a) Where the energy is supplied or consumed
by a licensee, by the licensee:
(b) Where the energy is supplied by the State
Government or the Central Government or is supplied or consumed by the Board,
by the appointed authority;
and (c) Where the energy is consumed by any
other person from his own source of generation by the person generating such
energy." 670 The original writ Petitioners who canvass the view that
electricity duty is not leviable or payable by a person consuming energy from
his own source of generation under section 3 (1) (c) read with Section 4 (l)
(c) of the Act lay great stress on the expression 'another person' occuring in
Section 3 (l) (c) and Section 4 (1) (c) of the Act. It is contended that in
view of the user of this expression only those consumers who wholly fall
outside the orbit of Sections 3 (1) (a) or 3 (l) (b) are eligible to
electricity duty under section 3(1) (c). In case a consumer fails 'both' under
Sections 3 (1) (a) and 3 (1) (c) or sections 3 (1) (b) and 3 (1) (c) (it is so
argued such a person would not be exigible to electricity duty. The same
argument is urged protanto in the context of clauses (a), (b) and (c) of
Section 4(1). In our opinion this submission is altogether untenable and has
been rightly repelled by the Pull Bench of the Allahabad High Court in its well
considered judgment. On a plain reading of Section 3 (1) (c) it is evident that
duty has been levied on the energy consumed by a person from his own source of
generation without anything more. There is no rider or qualification engrafted
in Section 3 (1) (c) or Section 4 (1) (c?. The fact that the user of
electricity from his own source of generation purchases electricity from some
other source as well, is an altogether irrelevant factor from the stand point
of the liability imposed by the said provisions. Be it realized that duty is
levied on the consumption of energy. The taxing event is the consumption of
energy The source from which the electricity is acquired is altogether
irrelevant. . A person having his own source of energy who also purchases
energy from another source indicated in Section 3 (1) (a) will be covered by 3
(1) (a) to the extent he purchases electricity from such a source, and will be
equally covered by Section 3 (1) (c), insofar as he consumes energy from his
own source of generation. He will be covered by both the provisions read
conjointly. The same reasoning applies in the context of clauses (a) (b) and
(c) of Section 4 (1). There is no rational basis for exonerating a person from
payment of duty merely because he has his own source of generation and he also
purchases electricity from some other source. In fact it will be irrational to
do so and it would give rise to an anachronism. Why make him pay 'only if he
generates his own energy and why exempt him altogether merely because he 'also'
purchases from some other source ? Duty is levied as a measure of taxation in
order to raise additional revenue as is made abundantly clear by the pre-factory
note and the extract from the statement of objects and reasons published in U.
P. Gazette Extraordinary dated September 1, 1952 which reads as under:
671 "The minimum programme of
development which this State must carry out within the next three or four years
for the attainment of the objective of a welfare State is set out in the Five
Year Plan drawn up by the Planning Commission. This plan provides for an
expenditure of 13.58 crores of rupees on power development projects. Such a
huge expenditure cannot be met from our present resources. It is, however
essential for the welfare of the people that the expenditure should be incurred
and that noting should be allowed to stand in the way of the progress of the
plan. Additional resources have therefore to be found, the bulk of which can be
raised only by means of fresh taxation.
A tax on the consumption of electrical energy
will impose a negligible burden on the consumer and is a fruitful source of
additional revenue. The bill has been so prepared as to ensure that the tax
payable by a person will be related to the quantity of electricity consumed by
him. The bill is being introduced with the above object. Vide Statement of
Objects and Reasons published in U. P. Gazette. Extra. dt. September 1,
1952." How would this object be promoted or served by adopting such an irrational
course ? The taxing event being the consumption of energy, the source from
which the electricity is acquired would become altogether irrelevant. Section 3
(1) as also Section 4 (1) has to be read as a whole and has to be interpreted
in a harmonious and meaningful manner. To do otherwise would be to defeat the
legislative intent which is abundantly clear, whilst at the same time exposing
the provision to the charge of being irrational and arbitrary, by placing such
an unwarranted construction thereon. The Full Bench of the Allahabad High
Court, was, therefore, perfectly justified in taking the view that duty was
chargeable in respect of energy consumed by a person from his own source of
generation regardless of the fact that he 'also' purchased electricity from
some other source indicated in Section 3 (1) (a) and Section 4 (1) (a). The
appeal preferred by the State, being Appeal No. 1312/77 will therefore have to
be allowed and the appeals preferred by the consumers of electricity
challenging the correctness of the decision rendered by the Full Bench must
therefore be dismissed.
672 The next question agitated in five out of
the seven appeals comprised in the group (it does not arise in C.A. 1312/77 and
C.A. 1146/79) arises thus:- The State of U.P.
issued a notification dated March 17, 1973
whereby in exercise of powers under sub-section (4) of Section 3 of the Act a
person consuming energy from his own source of generation installed 'after'
January 2, 1973 was exempted from payment of electricity duty. The appellants
in the appeals before us are persons who have their own source of generation of
electricity. The generating machinery was however installed and commissioned by
them 'before' January 2, 1973. It is their contention that exemption could not
have been lawfully granted to a person installing his own source of generation
'after' January 2, 1973 unless exemption was also granted to the persons
consuming electricity from their own source of generation installed 'prior' to
January 2, 1973. In other words the argument is that exemption must be granted
to all persons having their own source of electricity regardless of the date on
which the source of generation is installed, in order to be able to
successfully face the challenge from the platform of Article 14 of the
Constitution of India. Exemption, (it is argued in effect), must be granted to
all or to none irrespective of the date of installation of the equipment for
generation of electricity to save the provision from the peril of being held as
unconstitutional by reason of its being discriminatory and violative of Article
14 of the Constitution. This argument has been rightly negatived by the High
Court for the very good reason that the Notification ex-facie made it
abundantly clear that exemption was being granted "having regard to the
need to promote industrial production generally and to the prevailing acute
power shortage in the State." It is evident that in view of the felt-need
for augmenting the sources of supply of electrical energy an incentive needed
to be provided by way of granting exemption to those who installed their own
source of generation of energy. As acute shortage of power was being
experienced there was a need to encourage the consumers to acquire their own
source of energy with a view to reduce or lessen the burden on the existing
sources of electricity generation. Obviously this purpose can be achieved only
by granting the exemption prospectively to those consumers who install their
own source of generation of energy pursuant to the concession being granted
under the provision for exemption. Those who already had their own source of
generation of energy need no such encouragement in respect of the source of
generation already installed. If they wanted to further augment their own source
of generation of energy they would also be entitled to 673 exemption in respect
of the 'additional' source of generation installed 'after' the date specified
in the notification. The classification is, therefore, rational, purposeful, as
also meaningful, and it is calculated to effectively serve the real purpose of
granting exemption.
Article 14 cannot be invoked in a situation
like this to successfully assail that part of the notification where by the
date of installation has been made the precondition for qualifying for
exemption.
State of Uttar Pradesh v. Jageshwar (1) on
which reliance is placed cannot buttress the view canvassed by the writ
petitioners having regard to the fact that exemption was granted with a view to
encouraging consumers of electricity to become self-sufficient hence-forth and
with the end in view to lessen the burden on the other source of generation
prospectively. As against this those who had already acquired their own source
for generating electricity were in need of no retroactive encouragement by way
of concession or exemption for doing what they had already done. There would
have been no augmentation of the existing resources by extending the exemption
to them. Under the circumstances we are of the opinion that the High Court was
fully justified in repelling the plea urged by the writ petitioners in this
behalf.
In the result the appeal preferred by the
State of Uttar Pradesh (C.A. 1312 of 1977) is allowed, the judgment and order
of the High Court are set aside, and the writ petition giving rise to the said
appeal is dismissed with costs throughout.
The rest of the appeals are dismissed with
costs.
All interim orders will stand vacated.
H.S.K Civil Appeal No. 1312/72 allowed and
all other Appeals dismissed.
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