Full Judgment Text
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PETITIONER:
SWAROOP VEGETABLE PRODUCTS INDUSTRIES ETC,
Vs.
RESPONDENT:
STATE OF U. P. AND OTHERS ETC.
DATE OF JUDGMENT19/08/1983
BENCH:
THAKKAR, M.P. (J)
BENCH:
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
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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.
JUDGMENT:
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
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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
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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
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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 tho
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
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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
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(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 prefactory 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:
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"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
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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
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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 judgement
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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