A.P. Textile Mills Association Vs. State of Andhra Pradesh Case Summary You Can Listen To on Caseon

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A.P. Textile Mills Association Vs. State of Andhra Pradesh

Andhra Pradesh High Court W.P.No.29672/2023

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HCJ & RRR,J

W.P.No.29672 of 2023 & batch

IN THE HIGH COURT OF ANDHRA PRADESH

***

+ WRIT PETITION NO: 29672 of 2023 & Batch

W.P.No.29672/2023

Between:

# A.P. Textile Mills Association,

Floor, Manoharam Skin Clinic,

4/2 Lakshmipuram, Guntur 522 007,

Rep. By its Vice-Chairman

Mr. Patchala Chalapathi Rao

… Petitioner / Petitioners

$ AND

$ 1. State of Andhra Pradesh, Energy Department, Secretariat,

Velagapudi, Amaravathi, Guntur District, rep. By its Principal

Secretary.

2. Southern Power Distribution Company of Andhra Pradesh Ltd.,

Tiruchanoor Road, Kesvyana Gunta, Tirupati – 517 501, rep. By its

Managing Director.

3. Central Power Distribution Company of Andhra Pradesh Ltd.,

Corporate Office, Beside Polytechnic College, ITI Road, Vijayawada,

rep. By its Managing Director.

4. Estern Power Distribution Company of Andhra Pradesh Ltd., P & T

Colony, Seethammadhara, Visakhapatnam 530 020, rep. By its

Managing Director.

…. Respondents

Date of Judgment pronounced on : 26.06.2025

HON’BLE THE CHIEF JUSTICE DHIRAJ SINGH THAKUR

HON’BLE SRI JUSTICE R RAGHUNANDAN RAO

1. Whether Reporters of Local newspapers : Yes/No

May be allowed to see the judgments?

2. Whether the copies of judgment may be marked : Yes/No

to Law Reporters/Journals:

3. Whether The Lordship wishes to see the fair copy : Yes/No

Of the Judgment?

HCJ & RRR,J

W.P.No.29672 of 2023 & batch

*IN THE HIGH COURT OF ANDHR A PRADESH AT AMARAVATI

*HON’BLE THE CHIEF JUSTICE DHIRAJ SINGH THAKUR

And

HON’BLE SRI JUSTICE R RAGHUNANDAN RAO

+ WRIT PETITION NO: 29672 of 2023 & Batch

% Dated: 26.06.2025

W.P.No.29672/2023

Between:

# A.P. Textile Mills Association,

Floor, Manoharam Skin Clinic,

4/2 Lakshmipuram, Guntur 522 007,

Rep. By its Vice-Chairman

Mr. Patchala Chalapathi Rao

… Petitioner / Petitioners

$ AND

$ 1. State of Andhra Pradesh, Energy Department, Secretariat,

Velagapudi, Amaravathi, Guntur District, rep. By its Principal

Secretary.

2. Southern Power Distribution Company of Andhra Pradesh Ltd.,

Tiruchanoor Road, Kesvyana Gunta, Tirupati – 517 501, rep. By its

Managing Director.

3. Central Power Distribution Company of Andhra Pradesh Ltd.,

Corporate Office, Beside Polytechnic College, ITI Road, Vijayawada,

rep. By its Managing Director.

4. Estern Power Distribution Company of Andhra Pradesh Ltd., P & T

Colony, Seethammadhara, Visakhapatnam 530 020, rep. By its

Managing Director.

…. Respondents

! Counsel for Petitioner : Sri K. Gopal Chowdary appearing vice

Sricharan Telaprolu;

Mr. B. Adinarayana Rao Sr. Counsel;

Mr. Alladi Ravinder, Sr. Counsel

^Counsel for Respondents : The Advocate General appearing vice

G.P. for Energy

HCJ & RRR,J

W.P.No.29672 of 2023 & batch

<GIST :

>HEAD NOTE:

? Cases referred:

1. (2004) 2 SCC 249

2. (2022) 10 SCC 700

3. (2023) 3 SCC 1

4. (1990) 4 SCC 366

5. 1985 Supp SCC 432

6. AIR 1968 SC 1232

7. (1999) 8 SCC 667

8. 1985 Supp SCC 205 : 1985 SCC (Tax) 447 : AIR 1985 SC 1041

9. (2007) 5 SCC 447 [Paras 138 and 139]

10. (1975) 2 SCC 131

11. (1954) 2 SCC 82

12. AIR 1965 SC 1107 :: (1965) 2 SCR 477

13. AIR 1967 SC 1895

14. {1973 (2) SCC 1 [Paragraphs 5, 14 to 18]

15. 1975 (1) SCC 492 [Paragraphs 9 and 18],

16. 1989 (4) SCC 187 [Paragraphs 62, 99 and 100]

17. 1989 (4) SCC 683 [paragraphs 3 and 5 to end],

18. 1997 (5) SCC 516 [Paragraphs 6,7 21 to 26]

19. AIR 1984 AP 75:: 1983 SCC Online AP 61

20. AIR 1952 SC 369

21. AIR 1960 SC 1080

HCJ & RRR,J

W.P.No.29672 of 2023 & batch

APHC010575252023

IN THE HIGH COURT OF ANDHRA PRADESH

AT AMARAVATI

(Special Original Jurisdiction)

[3446]

THURSDAY, THE TWENTY SIXTH DAY OF JUNE

TWO THOUSAND AND TWENTY FIVE

PRESENT

HONOURABLE THE CHIEF JUSTICE DHIRAJ SINGH THAKUR

THE HONOURABLE SRI JUSTICE R RAGHUNANDAN RAO

WRIT PETITION NO: 29672 of 2023

Along with W.P.Nos:29987, 30666, 30668, 30768, 31043, 31065, 31104, 31106,

31116, 31118, 31153, 31157, 31207, 31215, 32024, 32026, 32036, 32043, 32047,

32048, 32204, 32205, 32261, 32276, 32279, 32280, 32288, 32293, 32309, 32316,

32317, 32318, 32320, 32321, 32324, 32327, 32329, 32349, 32458, 32478, 32524,

32533, 32554, 32561, 32660, 32871, 32888, 32891, 32912, 32988, 32990, 32994,

32995, 32996, 33121, 33132, 33133, 33137, 33418, 33420, 33425, 33557, 33558,

33644, 33728, 33729, 33745, 33764 of 2023;

179, 180, 182, 183, 184, 185, 329, 391, 500, 586, 594, 680, 797, 798, 810, 811,

816, 818, 819, 824, 870, 877, 947, 988, 997, 1049, 1099, 1123, 1125, 1321, 1421,

1437,1448, 1490, 1491, 1505, 1524, 1532, 1612, 1623, 1625, 1680, 1682, 1776, 1781,

1782, 1783, 1784, 1786, 1791, 1793, 1800, 1813, 1818, 1819, 1865, 1873, 1874, 1908,

1910, 1919, 1921, 1981, 2002, 2006, 2071, 2087, 2158, 2165, 2183, 2200, 2204, 2205,

2207, 2209, 2210, 2211, 2213, 2214, 2215, 2216, 2225, 2264, 2272, 2281, 2326, 2361,

2365, 2366, 2368, 2369, 2379, 2382, 2383, 2388, 2400, 2401, 2433, 2440, 2476, 2479,

2481, 2530, 2551, 2552, 2553, 2554, 2556, 2557, 2559, 2560, 2562, 2563, 2565, 2568,

2569, 2571, 2572, 2573, 2626, 2644, 2674, 2676, 2677, 2682, 2686, 2697, 2699, 2700,

2702, 2720, 2721, 2724, 2727, 2729, 2731, 2733, 2736, 2741, 2748, 2749, 2752, 2755,

2757, 2763, 2764, 2812, 2820, 2837, 2852, 2896, 2943, 2959, 2993, 3022, 3024, 3026,

3027, 3034, 3035, 3045, 3093, 3096, 3101, 3102, 3104, 3106, 3125, 3135, 3144, 3155,

3163, 3170, 3172, 3178, 3191, 3223, 3334, 3348, 3385, 3388, 3435, 3486, 3525, 3591,

3595, 3606, 3641, 3656, 3695, 3728, 3739, 3795, 3804, 3808, 3809, 3810, 3811, 3814,

3833, 3952, 3961, 3977, 3990, 4001, 4003, 4175, 4190, 4208, 4212, 4214, 4221, 4250,

4253, 4256, 4276, 4328, 4350, 4351, 4352, 4363, 4373, 4406, 4414, 4422, 4465, 4477,

HCJ & RRR,J

W.P.No.29672 of 2023 & batch

4527, 4528, 4529, 4569, 4596, 4601, 4603, 4606, 4618, 4620, 4623, 4625, 4630, 4639,

4641, 4643, 4644, 4648, 4656, 4739, 4753, 4758, 4760, 4761, 4765, 4777, 4783, 4817,

4818, 4829, 4858, 4879, 4897, 4902, 4907, 4935, 4946, 4979, 4990, 4993, 5008, 5025,

5134, 5136, 5232, 5253, 5255, 5271, 5277, 5279, 5284, 5299, 5316, 5322, 5338, 5347,

5353, 5355, 5357, 5388, 5389, 5392, 5394, 5399, 5400, 5401, 5405, 5416, 5417, 5437,

5448, 5460, 5462, 5475, 5486, 5501, 5509, 5521, 5531, 5534, 5537, 5539, 5548, 5551,

5554, 5555, 5556, 5559, 5561, 5563, 5566, 5572, 5573, 5575, 5578, 5600, 5621, 5625,

5631, 5633, 5635, 5640, 5673, 5682, 5692, 5704, 5708, 5711, 5716, 5723, 5729, 5734,

5737, 5784, 5792, 5823, 5829, 5831, 5864, 5865, 5873, 5874, 5876, 5881, 5889, 5899,

5900, 5902, 5906, 5908, 5920, 5921, 5923, 5925, 5926, 5927, 5961, 5964, 5971, 5977,

5996, 6002, 6022, 6023, 6025, 6030, 6078, 6111, 6117, 6118, 6119, 6120, 6121, 6122,

6123, 6128, 6129, 6133, 6190, 6218, 6220, 6225, 6226, 6283, 6295, 6315, 6320, 6337,

6355, 6384, 6389, 6394, 6403, 6404, 6415, 6418, 6421, 6422, 6425, 6428, 6448, 6459,

6460, 6461, 6462, 6463, 6464, 6465, 6468, 6496, 6569, 6571, 6581, 6582, 6585, 6587,

6589, 6591, 6595, 6596, 6600, 6611, 6612, 6617, 6618, 6624, 6626, 6627, 6638, 6644,

6679, 6702, 6748, 6786, 6796, 6805, 6807, 6851, 6871, 6874, 6879, 6880, 6887, 6889,

6890, 6893, 6894, 6909, 6912, 6914, 6915, 6916, 6920, 6928, 6930, 6973, 6975, 7001,

7024, 7028, 7068, 7082, 7086, 7093, 7102, 7104, 7105, 7107, 7125, 7151, 7166, 7170,

7173, 7190, 7191, 7193, 7214, 7233, 7262, 7285, 7316, 7352, 7354, 7355, 7360, 7366,

7372, 7375, 7393, 7402, 7405, 7427, 7429, 7467, 7478, 7482, 7483, 7499, 7500, 7505,

7506, 7509, 7513, 7514, 7515, 7519, 7520, 7524, 7534, 7565, 7569, 7590, 7598, 7599,

7601, 7602, 7610, 7611, 7615, 7616, 7625, 7665, 7701, 7721, 7722, 7723, 7725, 7726,

7728, 7762, 7801, 7803, 7806, 7809, 7811, 7813, 7814, 7815, 7820, 7822, 7832, 7833,

7834, 7835, 7836, 7837, 7855, 7885, 7899, 7901, 7902, 7905, 7908, 7919, 7931, 7934,

7936, 7939, 7941, 7954, 7958, 7984, 8020, 8033, 8046, 8049, 8104, 8137, 8158, 8165,

8178, 8179, 8181, 8182, 8185, 8187, 8188, 8189, 8190, 8194, 8208, 8212, 8259, 8393,

8452, 8488, 8497, 8498, 8501, 8502, 8508, 8513, 8525, 8539, 8546, 8578, 8590, 8601,

8612, 8631, 8646, 8650, 8675, 8686, 8694, 8700, 8701, 8706, 8710, 8797, 8835, 8848,

8897, 8937, 8941, 8951, 8952, 9000, 9012, 9044, 9111, 9121, 9124, 9286, 9294, 9298,

9299, 9301, 9302, 9377, 9413, 9462, 9481, 9556, 9561, 9563, 9610, 9615, 9616, 9617,

9618, 9619, 9626, 9628, 9636, 9644, 9666, 9719, 9759, 9766, 9767, 9768, 9787, 9812,

9815, 9820, 9840, 9861, 9910, 9911, 9913, 9918, 9928, 10044, 10071, 10088, 10089,

10104, 10108, 10112, 10123, 10165, 10197, 10244, 10256, 10269, 10306, 10314,

10317, 10319, 10324, 10325, 10328, 10330, 10331, 10333, 10342, 10397, 10416,

HCJ & RRR,J

W.P.No.29672 of 2023 & batch

10421, 10437, 10481, 10482, 10497, 10508, 10513, 10515, 10516, 10517, 10520,

10540, 10541, 10584, 10616, 10623, 10630, 10667, 10672, 10691, 10706, 10708,

10716, 10744, 10769, 10786, 10787, 10788, 10789, 10822, 10834, 10844, 10846,

10847, 10852, 10853, 10858, 10859, 10877, 10893, 10897, 10908, 10922, 10946,

10947, 10967, 10971, 10979, 10996, 11006, 11012, 11025, 11045, 11047, 11065,

11076, 11111, 11117, 11183, 11188, 11236, 11287, 11300, 11321, 11327, 11329,

11330, 11331, 11342, 11367, 11369, 11395, 11421, 11432, 11445, 11447, 11460,

11546, 11608, 11648, 11658, 11665, 11672, 11683, 11695, 11697, 11704, 11804,

11816, 11820, 11841, 11847, 11922, 11939, 11961, 12061, 12108, 12137, 12306,

12309, 12367, 12368, 12374, 12375, 12420, 12422, 12423, 12425, 12444, 12451,

12454, 12472, 12497, 12504, 12536, 12544, 12553, 12582, 12583, 12590, 12604,

12611, 12689, 12711, 12712, 12713, 12714, 12718, 12728, 12730, 12741, 12780,

12804, 12825, 12831, 12845, 12851, 12966, 12971, 12975, 12979, 12981, 13104,

13139, 13159, 13170, 13206, 13209, 13210, 13224, 13259, 13283, 13285, 13305,

13309, 13310, 13350, 13384, 13391, 13465, 13497, 13504, 13517, 13519, 13522,

13525, 13529, 13545, 13573, 13589, 13592, 13639, 13690, 13695, 13696, 13706,

13708, 13711, 13713, 13733, 13784, 13822, 13831, 13870, 13971, 14150, 14175,

14198, 14199, 14220, 14228, 14229, 14230, 14234, 14287, 14414, 14418, 14420,

14498, 14505, 14530, 14586, 14588, 14646, 14690, 14696, 14697, 14715, 14718,

14720, 14721, 14788, 14858, 14861, 14897, 14901, 14910, 14924, 14942, 14946,

14958, 14960, 14970, 14976, 15096, 15166, 15176, 15198, 15209, 15219, 15222,

15234, 15253, 15288, 15292, 15294, 15300, 15302, 15304, 15306, 15324, 15330,

15332, 15334, 15338, 15357, 15431, 15447, 15452, 15467, 15470, 15487, 15505,

15535, 15561, 15615, 15698, 15715, 15718, 15745, 15762, 15820, 15828, 15873,

15874, 15900, 15962, 15972, 15996, 16024, 16032, 16050, 16070, 16071, 16085,

16160, 16164, 16169, 16171, 16192, 16201, 16207, 16216, 16236, 16292, 16337,

16383, 16458, 16462, 16474, 16501, 16526, 16562, 16573, 16586, 16604, 16614,

16649, 16650, 16652, 16667, 16670, 16680, 16720, 16723, 16754, 16786, 16789,

16829, 16861, 17003, 17005, 17037, 17076, 17079, 17135, 17158, 17159, 17160,

17241, 17267, 17307, 17332, 17342, 17352, 17388, 17414, 17438, 17444, 17451,

17482, 17492, 17516, 17543, 17574, 17651, 17695, 17701, 17702, 17710, 17730,

17732, 17808, 17810, 17813, 17816, 17822, 17825, 17934, 17981, 18002, 18003,

18005, 18047, 18066, 18176, 18177, 18265, 18268, 18273, 18289, 18321, 18367,

18386, 18436, 18441, 18451, 18547, 18556, 18585, 18603, 18612, 18663, 18720,

HCJ & RRR,J

W.P.No.29672 of 2023 & batch

18774, 18776, 18852, 18854, 18888, 18890, 18930, 18943, 18950, 18955, 18956,

18990, 19013, 19014, 19031, 19035, 19038, 19080, 19117, 19161, 19175, 19252,

19298, 19345, 19354, 19384, 19388, 19404, 19410, 19421, 19428, 19493, 19508,

19514, 19592, 19667, 19765, 19768, 19813, 19890, 19906, 19909, 19931, 20006,

20117, 20169, 20206, 20229, 20256, 20260, 20354, 20361, 20379, 20413, 20432,

20475, 20482, 20491, 20610, 20630, 20689, 20718, 20720, 20723, 20748, 20791,

20831, 20835, 20953, 21035, 21127, 21262, 21267, 21294, 21318, 21334, 21337,

21339, 21341, 21350, 21402, 21417, 21459, 21482, 21498, 21519, 21526, 21542,

21550, 21551, 21557, 21565, 21566, 21575, 21577, 21580, 21593, 21636, 21653,

21657, 21708, 21761, 21801, 21820, 21878, 21900, 21998, 22007, 22205, 22224,

22272, 22299, 22330, 22379, 22408, 22416, 22478, 22480, 22500, 22519, 22534,

22583, 22774, 22793, 22817, 22823, 22844, 22855, 22867, 22912, 22993, 23006,

23036, 23037, 23053, 23065, 23134, 23212, 23243, 23281, 23315, 23369, 23373,

23391, 23393, 23440, 23445, 23447, 23452, 23464, 23502, 23558, 23560, 23587,

23593, 23600, 23613, 23668, 23701, 23793, 23827, 23852, 23906, 23938, 23946,

24051, 24080, 24091, 24104, 24152, 24154, 24265, 24266, 24279, 24303, 24353,

24414, 24423, 24450, 24488, 24572, 24586, 24678, 24718, 24721, 24722, 24726,

24727, 24731, 24732, 24740, 24742, 24744, 24748, 24752, 24756, 24772, 24782,

24821, 24828, 24840, 24889, 24952, 25039, 25129, 25143, 25144, 25246, 25309,

25400, 25424, 25426, 25452, 25493, 25498, 25538, 25553, 25579, 25710, 25782,

25792, 25818, 25823, 25854, 25900, 25923, 25999, 26081, 26084, 26097, 26156,

26157, 26222, 26223, 26259, 26447, 26460, 26504, 26505, 26508, 26517, 26584,

26615, 26711, 26729, 26793, 26817, 26830, 26859, 26869, 26887, 26906, 26978,

27019, 27094, 27100, 27102, 27107, 27124, 27136, 27182, 27196, 27234, 27325,

27372, 27376, 27377, 27378, 27382, 27385, 27503, 27583, 27640, 27701, 27704,

27707, 27739, 27740, 27836, 27848, 27866, 28005, 28055, 28088, 28105, 28149,

28207, 28255, 28277, 28382, 28525, 28530, 28533, 28576, 28736, 28835, 28836,

28876, 28953, 28983, 28984, 28988, 29044, 29052, 29053, 29070, 29103, 29184,

29264, 29294, 29296, 29372, 29488, 29552, 29558, 29592, 29641, 29674, 29685,

29711, 30010, 30015, 30041, 30052, 30064, 30133, 30206, 30255, 30267, 30330,

30342, 30363, 30369, 30395, 30396, 30436, 30487, 30505, 30580, 30608, 30698,

30699, 30929, 30965, 30970, 30996, 31036, 31069, 31139, 31157, 31168, 31226,

31243, 31403, 31413, 31429, 31430, 31511 of 2024;

HCJ & RRR,J

W.P.No.29672 of 2023 & batch

145, 221, 253, 358, 469, 512, 524, 596, 665, 690, 697, 708, 868, 931, 936, 989, 1053,

1089, 1105, 1122, 1124, 1184, 1186, 1204, 1233, 1380, 1399, 1449, 1472, 1488, 1601,

1665, 1852, 1863, 2090, 2264, 2483, 2501, 2511, 2636, 2816, 2927, 3017, 3060, 3180,

3197, 3238, 3321, 3486, 3488, 3646, 3667, 3679, 3680, 3907, 4019, 4021, 4041, 4490,

4494, 4652, 4818, 4879, 4991, 5027, 5127, 5129, 5224, 5496, 5530, 5531, 5545, 5615,

5633, 5706, 5762, 5811, 5940, 5985, 5995, 6048, 6098, 6108, 6247, 6262, 6274, 6297,

6319, 6334, 6447, 6546, 6601, 6663, 7196, 7309, 7344, 7348, 7568, 7596, 7884, 7971,

7979, 8034, 8081, 8100, 8101, 8215, 8243, 8248, 8426, 8885, 9000, 9001, 9029, 9124,

9472, 9768, 9897, 9922, 9974, 10030, 10042, 10233 of 2025;

W.A. Nos. 1043, 1062, 1069, 1071, 1077, 1084, 1085, 1086, 1087, 1088, 1089, 1090,

1091, 1092, 1093, 1094, 1095, 1096, 1097, 1098, 1099, 1100, 1101, 1102, 1103, 1104,

1105, 1106, 1107, 1108, 1109, 1110, 1111, 1112, 1113, 1114, 1115, 1116, 1117, 1118,

1119, 1120, 1121, 1122, 1123, 1124, 1125, 1126, 1135, 1136, 1145, 1146, 1147, 1154,

1156, 1235, 1236, 1237, 1238, 1239, 1242, 1243, 1244, 1245, 1246, 1247, 1248, 1275

of 2023;

16, 20, 23, 104, 202, 225, 227, 228, 244, 251, 255, 262, 267, 281, 282, 286, 297, 301,

306, 308, 322, 323, 325, 326, 327, 328, 331, 332, 333, 355, 356, 359, 361, 365, 378,

384, 389, 390, 393, 395, 397, 398, 399, 400, 401, 402, 405, 406, 412, 423, 426, 427,

428, 429, 430, 431, 434, 435, 444, 445, 447, 450, 453, 460, 461, 462, 463, 470 of 2024;

W.P.No.29672/2023

Between:

A.p. Textile Mills Association, ...PETITIONER

AND

State Of Andhra Pradesh and Others ...RESPONDENT(S)

Counsel for the Petitioner:

1. SRICHARAN TELAPROLU

Counsel for the Respondent(S):

1. VENKATA RAMA RAO KOTA SC FOR APSPDCL

2. GP FOR ENERGY

3. V V SATISH (SC for APEPDCL)

4. METTA CHENDRA SEKHAR RAO

HCJ & RRR,J

W.P.No.29672 of 2023 & batch

Court made the following Common Judgment:

(per Hon’ble Sri Justice R.Raghunandan Rao)

All these matters are being disposed of by way of this common order as

common issues are raised.

2. Heard Sri B. Adinarayana Rao, learned Senior Counsel, Sri A.

Ravinder, learned Senior Counsel, Sri K. Gopal Chowdary, Sri Sricharan

Tellaprolu, Sri P. Narasimha Rao, Sri Challa Gunaranjan, learned counsel

appearing for the petitioners, and learned Advocate General appearing for the

respondents.

3. The A.P. Electricity Duty Act, 1939 (hereinafter referred to as ―the

Duty Act‖) was enacted for levying duty on the sale of electrical energy by

―licensees‖. The term Licensee was originally defined to mean any person

licensed under the Indian Electricity Act, 1910 to supply energy or any person

who was authorized under section 28 of the same Act to supply energy. This

definition was amended to mean a person who has been granted a licence

under section 14 of the Electricity Act, 2003. Prior to the impugned

amendments, Duty, at the rate of 6 paise per unit, was levied on the

Licensees, under Section 3 of the Duty Act. Under section 7, the Government,

by way of previous sanction, could permit the licensees to pass on the Duty, to

the consumers. Section 3A, empowered the Government to exempt payment

of Duty. Section 3, prior to the amendments, which are under challenge, in the

present batch of cases, reads as follows:

HCJ & RRR,J

W.P.No.29672 of 2023 & batch

3. Levy of a duty in certain sales of electrical energy.

(1) Save as otherwise provided in sub-section (2), every

licensee in the State of Andhra Pradesh shall pay every

month to the State Government in the prescribed manner, a

duty calculated at the rate of six paise per unit of energy, on

and in respect of all sales of energy except sales to the

Government of India for consumption by that Government or

sales to the Government of India or a railway company

operating any railway for consumption in the construction,

maintenance or operation of the railway effected by the

licensee during the previous month at a price of more than

Twelve paise per unit and on and in respect to all energy

which was consumed by the licensee during the previous

months for purposes other than those connected with the

construction, maintenance and operation of his electrical

undertaking and which, if sold to a private consumer under

like conditions, would have fetched a price of more than

Twelve paise per unit.

Provided that no duty under this sub-section shall be payable

on and in respect of sale of energy effected –

(a) by the Andhra Pradesh State Electricity Board to any

other licensee;

(b) by the National Thermal Power Corporation to the Andhra

Pradesh State Electricity Board.

(2) A licensee shall be exempt from duty under sub-section

(1) in any month if in the previous month the total sales of

energy effected by him at whatever price together with the

energy consumed by him for purposes other than those

connected with the construction, maintenance and operation

of his electrical undertaking, did not exceed 16,666 units:

Provided that if at the end of any financial year, it is found

that in such year the total sales of energy effected by the

licensee at whatever price together with the energy

consumed by him for purposes other than those connected

with the construction, maintenance and operation of his

electrical undertaking, were not less than 2,00,000 units, the

licensee shall pay the duty in respect of any month or

months comprised in such year in which the total of the sales

and of the consumption as aforesaid did not exceed 16,666

units.

(3) Where a licensee holds more than one licence duty shall

be calculated and levied under this section separately in

respect of each licence.

(4) Where a licensee who is liable to pay duty under this

section sells energy to the Government of India for

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consumption by that Government or to a railway company

operating any railway for consumption, in the construction,

maintenance or operation of that railway, the price charged

on such sales shall be less by the amount of the duty than

the price charged to other consumers of a substantial

quantity of energy, provided the price last mentioned is more

than twelve paisa per unit.

In this sub-section, the expression 'price charged to other

consumers' shall include the duty, if any, recoverable from

the consumer under sub-section (1) of Section 7.

Explanation. - The expression 'railway' in this section and

in Section 9 shall have the meaning assigned to it in clause

(20) of Article 366 of the Constitution.‖

4. Sections 2 and 3 of the Duty Act were amended by Act 10/2021.

These amendments were as follows:

1. xxxx

2. In the Andhra Pradesh Electricity Duty Act, 1939 (hereinafter

referred to as the Principal Act), in Section 2, for sub-clause (i)

of clause (b), the following shall be substituted, namely,

(Amendment of Section 2. Act No.5 of 1939, Central Act No.36

of 2003).

―(i) a person who has been granted a license under Section

14 of the Electricity Act, 2003‖

3. (Amendment of Section 3)

―3. In Section 3 of the Principal Act, in sub-section (1), for

the words ―a duty calculated at the rate of six paise per unit

of energy‖, the words ―a duty calculated at the rate notified

by the State Government from time to time for different

consumer categories‖, shall be substituted.‖

5. After this amendment, the Government of A.P. issued

G.O.Ms.No.7, dated 08.04.2022, which reads as follows:

GOVERNMENT OF ANDHRA PRADESH

ABSTRACT

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Andhra Pradesh Electricity Duty Act, 1939 – Levy of duty

on certain sales of energy under Section 3(1) of the A.P.

Electricity Duty Act, 1939 – Notification – Issued.

______________________________________________

ENERGY (POWER -iii) DEPARTMENT

G.O.MS.No.7 Date:08.04.2022

1. Andhra Pradesh Electricity Duty (Amendment) Act,

2003 (A.P. Act No.14 of 2003)

2. The Electricity Act, 2003

3. Act 10 of 2021, Andhra Pradesh Electricity Duty

Amendment) Act, 2020.

****

ORDER:

Whereas State Government levied electricity duty @6

paise per unit on all the sales of electrical energy from the

year 1994, except to the exempted categories; and

whereas, sub section (1) of Section 3 of Electricity Duty

Act 1939 as amended by Act 10 of 2021, empowered the

State Government to notify the rate of electricity duty from

time to time to be paid by different consumer categories

Consumers on energy sales.

2. Whereas, in other States like Maharashtra,

Madhya Pradesh, Karnataka, Odisha, Tamil Nadu, West

Bengal, Gujarat and Kerala the electricity duty is as a

percentage of consumption charges. Precisely, in the

States of Gujarat, Karnataka, Madhya Pradesh,

Maharashtra, Himachal Pradesh, Kerala Manipur, Punjab,

West Bengal and Jammu & Kashmir the rate of duty is

from 14 paise to 180 paise per unit sale of energy,

whereas in the State of Andhra Pradesh, electricity duty is

being levied @6 paise per unit only on all the sales of

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electrical energy from the year 1994 except the exempted

categories.

3. Whereas, post bifurcation of the erstwhile State

of Andhra Pradesh, the successor State remained a

predominantly agrarian one, with the agriculture sector

contributing to 35.47% as per the advance estimates of

GVA for the financial year 2021-22. Owning to the

requirement of providing the necessary support to the

agriculture sector, the State exchequer is having to endure

a huge burden, in the form of agriculture subsidy to the

State Distribution Utilities.

4. Whereas, the gap between the ARR (Average

Revenue Realization) and COS (Average Cost of Supply)

has widened significantly over the years increasing the

subsidy requirement from Rs.2,607 crores in financial year

2014-15 to Rs.11,123 crores in financial year 2022-23.

The Average Cost of Supplying power approved by the

Andhra Pradesh Electricity Regulatory Commission, has

increased by 29.26% over the last seven years. A key

reason that has primarily contributed to this increase in

cost of service is the substantial increase in debt of the

State public sector undertakings in power sector, over the

period 2014-19. Inadequate release of subsidy during the

period 2024-19 has also resulted in the Distribution utilities

and AP GENCO availing huge working capital liabilities to

sustain operations. Cost associated with servicing of this

debt was partly allowed by APERC while determining the

tariff and this has contributed to an increase in the subsidy

component. If the disallowed portion is also taken into

consideration, the subsidy requirement from the

Government is higher.

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5. Whereas, the economic recovery from the Covid

– 19 pandemic led disruptions has resulted in a steep rise

in the demand for power and the coal production in the

Country is not adequate to meet the higher requirements

of the thermal power plants, leading to increase in cost of

power available in power exchanges. Added to this, the

geopolitical tensions have resulted in an unprecedented

surge in the costs of import coal and also the crude oil

prices, indirectly impacting the mining costs of coal. Owing

to these reasons, the subsidy burden on the Government

is likely to be higher than what is anticipated. In view of the

above, there is imperative need for the State Government

to augment revenue by tapping all available sources.

6. Whereas, due to the above compelling reasons,

State Government have felt the inevitable need to

enhance the electricity duty.

7. Now, therefore, the Government have decided to

revise electricity duty on energy sales for different

categories of Consumers in exercise of the powers

conferred by Sub-Section (1) of Section 3 of the Andhra

Pradesh Electricity Duty Act, 1939.

8. Accordingly, the following notification will be

published in the extraordinary issue of Andhra Pradesh

Gazette:

NOTIFICATION

In exercise of the powers conferred by sub-section (1)

Section 3 of the Andhra Pradesh Electricity Duty Act,

1939, the Government of Andhra Pradesh hereby levy an

electricity duty of 1 (one) rupee per kWh (unit) on energy

sales for the Commercial and Industrial Consumers as

indicated in the relevant yearly Retail Supply Tariff Order

issued by Hon’ble APERC. For Domestic Consumers, the

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existing electricity duty of 6 paise per KWh (unit) shall

continue to be levied, while Agriculture consumers shall be

exempted from levy of any such duty.

9. The notification shall come into force with

immediate effect.

(BY ORDER AND IN THE NAME OF THE GOVERNOR OF

ANDHRA PRADESH )

Sd/- B. Sreedhar Secretary to Government‖

6. By virtue of the aforesaid Amendment Act and G.O.Ms.No.7

dated 08.04.2022, the rate of electricity duty, payable by the licensee, on the

sales made to commercial and industrial consumers, had been increased from

six paise per unit to Rs.1 per unit. The rate of duty remained at six paise per

unit for domestic consumers and the sales made to agricultural consumers

were exempted from levy of any duty. It may also be noted that even earlier,

electricity sold to agricultural consumers had already been exempted from

Duty, by way of G.O.Ms.No.82 dated 08.04.2003. The licensees sought to

collect the enhanced duty from the consumers. Aggrieved by this increase of

duty, and the attempts of the licensees, to collect this enhanced duty, various

commercial and industrial category consumers filed writ petitions before this

Court (for ease of reference, the petitioners, in this batch and the various other

consumers who have subsequently joined the litigation, by way of fresh writ

petitions are hereinafter referred to, compendiously, as petitioners) All these

writ petitions came to be disposed of by a learned Single Judge of this Court,

by his order, dated 15.09.2023, in W.P.No.16619 of 2022 and batch.

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7. The petitioners had raised various contentions, before the learned

single judge. The primary contentions, which are relevant for the purposes of

this batch of cases, were:

A) There is hostile discrimination against commercial and industrial

consumers, as they are being singled out for additional taxation, though they

are in the same category of consumers.

B) There is no reasonable differentia to exempt domestic and

agricultural consumers, from payment of duty.

C) The fixation of tariff, by the Andhra Pradesh Electricity Regulatory

Commission, (herein after referred to as APERC), under the provisions of the

Electricity Act, 2003 takes in to account the question of subsidy and cross

subsidy. The tariff order, of 30.03.2022, passed by APERC had taken in to

account these issues and consequently the government could not have issued

G.O.Ms.No.7, on 08.04.2022, increasing the rate of duty, for the purposes of

subsidizing sale of power to agricultural consumers.

D) The Appellate Tribunal, under the Electricity Act, 2003 had

stipulated that the upper limit of cross subsidy, between different consumers,

cannot cross 120% of the cost of supply and the present increase takes the

cost of supply beyond this limit.

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E) The Licensees cannot collect the duty from the consumers,

beyond 6 paise per unit, as there is no previous sanction, under Section 7 of

the Duty Act.

8. The learned Single Judge, after hearing both sides, formulated

the following, as the issues which arise for consideration:

A. Whether G.O.Ms.No.7, Energy (Power-III) Department,

dated 08.04.2022, deserves to be quashed on the grounds

of -

(1) Colourable exercise of power;

(2) Violating Article 14 of the Constitution of India by

imposing duty on industrial and commercial

consumers of electricity, but granting exemption to

agricultural consumers as also for the rte of duty being

unreasonable and excessive;

B. Whether the licensees can recover the duty imposed on

them, from the petitioners / consumers, under Section 7 of

the APED Act?

C. Whether the petitioners / Alloy Industries have to pay the

same duty?

D. Whether the petitioners / cold storage industries are

agriculture consumers and exempted from payment of

duty?

9. The learned Single Judge, after considering these issues, had

observed that there was no challenge to Act 10 of 2021 or the amended or un-

amended provisions of Section 3 of the Duty Act and to the classification of

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electricity energy consumers, and that the challenge was only to G.O.Ms.No.7

dated 08.04.2022.

10. The learned Single Judge, after considering the submissions

made by both sides, had summarized his findings and decided the issues

formulated by him, in the following manner:

189. Accordingly, this Court holds as under:

(a) Point No.A (1) and (2):

The G.O.Ms.No.7, dated 08.04.2022, does not suffer from

vice of colourable exercise of power, nor violative of Article 14

of the Constitution of India.

(b) Point No.B:

The licencees can recover duty from the petitioners /

consumers only @ 6 paisa kWh under the sanction order

under G.O.Ms.No.277, dated 09.12.1994, and not in excess

thereof. There is no other previous sanction of the State

Government for any amount of duty now imposed on

licensees, in excess of 6 paisa kWh.

The petitioners / Alloy Industries have to pay the same duty

as in Point No.B (supra), unless they are granted exemption

under the statutory provisions.

(d) Point No.D:

The petitioners / Cold Storage industries failed to establish

that they are agricultural consumers. Consequently, they are

not exempted from payment of duty, in terms of Point B

(supra).

190. In the result,

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i. The challenge to the impugned G.O.Ms.No.7,

Energy (Power-III) Department, dated 08.04.2022,

fails. The writ petitions are dismissed to that effect.

ii. The demand notices by licensees to the petitioners

in excess of @6 paise kWh, to the extent of excess,

cannot be enforced.

iii. It is clarified that the petitioners shall have to pay

duty @6 paise kWh, subject to any other previous

sanction of State Government under Section 7 of

APED Act for the rate of duty in excess of 6 paisa

kWh.

iv. The petitioners / consumers are granted liberty to

file applications before their respective licensees for

refund or adjustment of the excess amount of the

duty, if paid by them, in excess of 6 paise kWh,

upon which, the respective licensees shall proceed

accordingly.

v. All the writ petitions are allowed in part in the

aforesaid terms.

11. The learned single judge had held that Duty to the extent of 6

paise per unit, could be passed on to the consumers on account of

G.O.Ms.No.277, dated 09.12.2024, which reads:

―2. After careful examination of the above issue and in

exercise of the powers under sub-section (1) of Section 7 of

the Andhra Pradesh Electricity Duty Act, 1939, as amended

from time to time the Government hereby accord permission

to Andhra Pradesh State Electricity Board to recover the

Electricity Duty from any consumer or class of consumers, to

whom energy is sold at a price of more than 12 paise per unit

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and who fall under the durable categories, except consumers

using Low Tension Electrical energy for agricultural

purposes, at an effective tariff rate, presently below twelve

paise per unit the duty, which falls to be paid the Board with

effect from 01.12.1993, at the rate of six paise per unit on

the energy sold, subject to the following conditions:- ….‖

12. Aggrieved by this judgment, both the petitioners as well as the

State preferred appeals before this Court. During the pendency of the writ

appeals, the government, apparently to get over the finding of the learned

single judge that, on account of absence of previous sanction, the duty of one

rupee per unit, levied on the licensees, cannot be collected, beyond 6 paise

per unit, had issued G.O.Ms.No.22, dated 23.10.2023, according permission

to the licensees to recover electricity duty, at the rates notified in

G.O.Ms.No.7, dated 08.04.2022 from the consumers / class of consumers

against whom such rates had bee n notified. This G.O., as well as

G.O.Ms.No.7 and the amendment, to Section 3(1) of the Duty Act, brought in

by Act 10 of 2021, came to be challenged by way of W.P.No.29672 of 2023

and batch.

13. The petitioners, in W.P.No.29672 of 2023 and batch, apart from

assailing G.O.Ms.No.7, Act 10 of 2021 and, G.O.Ms.No.22, dated 23.10.2023,

on various grounds, had also contended that Act 10 of 2021 had never been

notified and as such never came into effect. Consequently, G.O.Ms.No.7,

which is based on Act 10 of 2021, would also fail. The petitioners also

contended that G.O.Ms.No.22, which empowered the licensees to collect the

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duty levied on them, from the consumers, would at best, only operate

prospectively, from 23.10.2023 and there can be no collection of duty, beyond

6 paise per unit till 23.10.2023.

14. While the batch of writ appeals and W.P.No.29672 of 2023 and

batch were pending, Act 10 of 2024 was enacted to give retrospective effect to

Act 10 of 2021, to take away the complaint that Act 10 of 2021 was not

notified. The Duty Act was again amended, by way of Act No.23 of 2024, with

retrospective effect from 26.08.2021, to answer the contentions that there was

no previous sanction for collection of electricity duty up to 23.10.2023. This

Act amended Section 3(1) as well as Section 7(1) of the Electricity Duty Act.

15. As can be seen from the legislative developments, the objections

being raised by the petitioners, to each of the impugned Amendment Acts, as

well as G.Os were sought to be rectified by way of fresh amendments and

G.Os. These amendments have culminated in Act 23 of 2024, which has

effectively subsumed all the earlier amendments. Act No. 23 of 2024 has

been challenged by way of W.P.No.3017 of 2025 and batch.

16. The issues that arise, on the basis of the submissions made by

either side, for the consideration of this court, are:

1. Whether the amendment to Section 3 of the Duty Act, by Act 23 of

2024 is valid and within the limits of delegated legislation and

whether Act 10 of 2021, as validated by Act 10 of 2024 needs to be

gone into?

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2. Whether the amendments, to Section 7 of the Duty Act, by Act 23 of

2024 is valid?

3. Whether G.O.Ms.No.7, dated 08.04.2022 is valid?

4. Whether G.O.Ms.No.22, dated 23.10.2024 is valid?

ISSUE NO.1

Whether the amendment to Section 3 of the Duty Act, by Act 23 of 2024

is valid and within the limits of delegated legislation and whether the validity of

Act 10 of 2021, as validated by Act 10 of 2024 needs to be gone into?

17. The changes brought in by the two amendment Acts in Section

3(1) read as follows:

Section 3(1) (As stood

prior to its amendment)

Section 3(1) (as amended

by Act No.10 of 2021)

Section 3(1) (as amended

by Act No.23 of 2024)

Save as otherwise

provided in sub-section

(2), every licensee in the

State of Andhra Pradesh

shall pay every month to

the State Government in

the prescribed manner, a

duty calculated at the

rate of (six paise) per

unit of energy, on and in

respect of all sales of

energy except sales to the

Government of India for

consumption by that

Government or sales to

the Government of India or

a railway company

operating any railway for

consumption in the

construction, maintenance

or operation of the railway)

effected by the licensee

Save as otherwise

provided in sub-section (2)

every licensee in the State

of Andhra Pradesh shall

pay every month to the

State Government in the

prescribed manner, a duty

calculated at the rate

notified by the State

Government from time

to time for different

consumer categories, on

and in respect of all sales

of energy except sales to

the Government of India

for consumption by that

Government or sales to

the Government of India or

a railway company

operating any railway for

consumption in the

construction, maintenance

Save as otherwise provided

in sub-section (2) every

licensee in the State of

Andhra Pradesh shall pay

every month to the State

Government in the

prescribed manner, a duty

calculated at the rate

notified by the State

Government from time to

time for different

consumer categories

which shall not be less

than 6 paise (Rs.0.06) per

unit of energy and not be

more than 100 Paise,

(Rs.1.00 rupee) per unit of

energy, on and in respect of

all sales of energy except

sales to the Government of

India for consumption by

that Government or sales to

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during the previous month

at a price of more than

(Twelve paise) per unit

(and on and in respect to

all energy which was

consumed by the licensee

during the previous

months for purposes other

than those connected with

the construction,

maintenance and

operation of his electrical

undertaking and which, if

sold to a private consumer

under like conditions,

would have fetched a price

of more than (Twelve

paise) per unit.

Provided that no duty

under this sub-section

shall be payable on and in

respect of sale of energy

effected (a) by the Andhra

Pradesh State Electricity

Board to any other

licensee; (b) by the

National Thermal Power

Corporation to the Andhra

Pradesh State Electricity

Board.

or operation of the railway)

effected by the licensee

during the previous month

at a price of more than

(Twelve paise) per unit

(and on and in respect to

all energy which was

consumed by the licensee

during the previous

months for purposes other

than those connected with

the construction,

maintenance and

operation of his electrical

undertaking and which, if

sold to a private consumer

under like conditions,

would have fetched a price

of more than (Twelve

paise) per unit.

Provided that no duty

under this sub-section

shall be payable on and in

respect of sale of energy

effected (a) by the Andhra

Pradesh State Electricity

Board to any other

licensee; (b) by the

National Thermal Power

Corporation to the Andhra

Pradesh State Electricity

Board.

the Government of India or a

railway company operating

any railway for consumption

in the co nstruction,

maintenance or operation of

the railway) effected by the

licensee during the previous

month at a price of more

than (Twelve paise) per unit

(and on and in respect to all

energy which was

consumed by the licensee

during the previous months

for purposes other than

those connected with the

construction, maintenance

and operation of his

electrical undertaking and

which, if sold to a private

consumer under like

conditions, would have

fetched a price of more than

(Twelve paise) per unit.

Provided that no duty under

this sub-section shall be

payable on and in respect of

sale of energy effected (a)

by the Andhra Pradesh

State Electricity Board to

any other licensee; (b) by

the National Thermal Power

Corporation to the Andhra

Pradesh State Electricity

Board.

Provided further that in

the absence of any rate of

duty notified by the State

Government for different

consumer categories at

any given time, a

minimum duty of 6 paise

(Rs.0.06) per unit of

energy shall be levied.

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18. By virtue of Act 10 of 2021, the fixed rate of duty of 6 paise per

unit was changed to a rate of duty which would be fixed by the Government.

Further, the Government could also fix different rates of Duty for electricity

sold to different categories of consumers, with complete discretion being given

to the Government to decide the basis on which consumers are to be

categorized.

19. This amendment is challenged, by the petitioners, on the

following grounds:

A) The levy of duty on sale of electricity, which is in the nature of a

Tax, can be done only by the State legislature, under Entry 53 of List II of the

VII Schedule to the Constitution of India. It would also be open to the

legislature to delegate certain parts of this exercise, after laying down

guidelines, to the discretion of the executive. However, there are limitations on

the extent to which such discretion can be delegated. The ratio laid down by

the Hon'ble Supreme Court, in a series of judgments, is to the effect that

essential legislative functions cannot be delegated and any delegation would

have to meet the test of whether such delegation has been made after laying

down guidelines and limits. Failure to lay down such guidelines and limits

would render such delegation invalid and void.

B) The guidelines and limits have to be discernible in the Legislation

itself and such guidelines and limits cannot be imported from any other

source. There is nothing, either in the preamble or the scheme of the Duty

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Act, to discern any policy or guidelines, for exercise of discretion by the

executive.

C) The delegation of fixing the rate of tax, without prescribing a

maximum limit, and the delegation of discretion, in determining categories of

consumers, without prescribing the basis on which such categories are to be

determined, is beyond the valid limits of delegation. This would amount to

delegation of essential legislative powers. Hence, all the amendments are

invalid and have to be struck down.

D) The Amendment, to Section 3 of the Duty Act, by Amendment Act

10 of 2021, is still born as the amendment Act was not notified.

E) Section 12 (4) of the Andhra Pradesh Electricity Reforms Act,

1998, casts a duty on the Government to consult the APERC, before enacting

any law relating to the field of electricity. No such consultation was carried out,

before Act 10 of 2021 or Act 23 of 2024, were enacted. This lack of

consultation is sufficient to invalidate the Amendment Acts. Reliance is placed

on M.P. Cement Manufacturers Association vs. State of M.P.

Further, the

slight difference in the phraseology of the Madhya Pradesh Act, which was

under consideration in the above judgment, and the language of the A.P.

Reforms Act, does not make any difference for the application of the said

judgment to the present case.

(2004) 2 SCC 249

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F) The levy of additional duty, is a form of cross subsidy and has to

be set aside on the ground that such cross subsidy is violative of the

requirement of the national tariff policy of 2016, capping the tariff at 120% of

the cost of supply.

20. The learned Advocate General, appearing for the State, at the

stage of challenge to Act 10 of 2021, Act and G.O.Ms.No.7 and G.O.Ms.No.22

had sought to defend Act 10 of 2021 on the following grounds:

A) Section 3 (1) of the Duty Act, is not bereft of legislative guidelines

as it sets out the taxable event, the person who is to be taxed, the measure of

tax, that is the duty on a per unit basis and consequently there is no

excessive delegation. Reliance is placed on Union of India and another vs.

Mohit Minerals Private Limited

and Vivek Narayan Sharma and others

vs. Union of India

B) The objects and reasons in the Bill introduced for Act 10 of 2021,

set out the reason for increase of electricity duty and the same is a sufficient

guideline.

C) The circumstances which prevailed, at the time the law was

made, can be looked into for ascertaining the guidelines. The circumstances

have been set out in the objects and reasons in the Bill and they provide

sufficient guidelines. Reliance is placed in Shashikant Laxman Kale and

(2022) 10 SCC 700

(2023) 3 SCC 1

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another vs. Union of India and another

and B. Prabhakar Rao and Ors.,

vs. State of Andhra Pradesh and Ors.,

D) The judgment of the Hon'ble Supreme court, in Municipal

Corporation of Delhi vs. Birla Cotton, Spinning and Weaving Mills, Delhi

and another

, requires to be considered in view of the following tests set out,

in paragraph 97, in the subsequent judgment of the Hon'ble Supreme Court, in

Union of India and another vs. Mohit Minerals Private Limited. Once the

legislation under question meets these tests, the challenge, on the basis of

excessive delegation would fail. As set out in Ground A, there is compliance of

these tests and Act 10 of 2021 would be valid. The said tests, as set out in the

above judgment, in Union of India v. Mohit Minerals (P) Ltd., are as follows:

97. In assessing this claim, this Court is bound by a

decision of the Constitution Bench in Mathuram Agrawal

vs. State of M.P.,

which has identified three essential

elements of taxation:

(i) The subject of the tax;

(ii) The person who is liable to pay the tax; and

(iii) The rate at which the tax is to be paid.

This test has been further elaborated by a two-Judge

Bench of this Court in Govind Saran Ganga

Saran [Govind Saran Ganga Saran v. CST,

by further

requiring the designation of the measure or the value to

(1990) 4 SCC 366

1985 Supp SCC 432

AIR 1968 SC 1232

(1999) 8 SCC 667

1985 Supp SCC 205 : 1985 SCC (Tax) 447 : AIR 1985 SC 1041

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which the rate of the tax will be applied. Thus, the four

canons of taxation are as follows:

(i) The taxable event;

(ii) The person on whom the levy is imposed;

(iii) The rate at which the levy is imposed; and

(iv) The measure or the value to which the rate will

be applied.

E) The Duty Act, enacted under Entry 53 of the State list, in the VII

Schedule of the Constitution of India, deals with levy of duty on the sale of

electricity, while the Andhra Pradesh Electricity Reforms Act, 1998 and the

Electricity Act, 2003, enacted under Entry 38 in List 3 of the VII schedule to

the Constitution of India, deal with regulation of the generation, transmission

and distribution of electricity and the tariff to be fixed for such activities. The

inclusion of cross subsidy, in the fixation of tariff, by APERC would not affect

the power of the State to levy duty under the Duty Act.

F) The lack of consultation with APERC, before passing the

Amendment Acts, would not render the Amendment acts invalid, even

according to the judgment of the Hon'ble Supreme Court in M.P. Cement

Manufacturers Association vs. State of M.P.

G) Though, the government had not issued any notification to bring

Act 10 of 2021, into force, Act 10 of 2024 came to be passed for bringing the

provisions of Act 10 of 2021 into force, with effect from 26.08.202.

Consequently, the contention, that Act 10 of 2021 is still born, is incorrect.

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21. The subsequent amendment, of section 3 of the Duty Act, by Act

23 of 24, was assailed by the petitioners, on the following grounds:

A) Though an upper limit and a lower limit, on the rate of duty that

can be fixed, by the government, has been stipulated, the same would

continue to suffer from the vice of excessive delegation. This is because the

range of six paise to one rupee per unit means that the government can fix

any rate of duty from six paise per unit to one rupee which is about sixteen

times that value. Such a large range is excessive delegation.

B) The objection, relating to the discretion granted in relation to

identification of categories, raised against Act 10 of 2021 remains and has not

been addressed.

C) Act 10 of 2021 was reserved for the assent of the Hon'ble

president of India and was brought into force after obtaining such assent.

However, no such assent of the Hon'ble President of India was obtained for

Act 23 of 2024 and as such Act 23 of 2024 is invalid.

D) The Appellate Tribunal, under the Electricity Act, 2003 had

stipulated that the upper limit of cross subsidy, between different consumers,

cannot cross 120% of the cost of supply and the outer limit of one rupee per

unit takes the cost of supply beyond this limit. No additional duty could have

been levied, once APERC had fixed the tariff after fixing the cross subsidy.

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22. The learned Advocate General, answering the challenge raised to

Act 23 of 2024, contended that:

A) The fixation of a minimum and maximum limit, by Act 23 of 2024,

on the rate of duty, is a sufficient guideline and the ground of excessive

delegation would not remain.

B) The objects and reasons, set out in Act 23 of 2024, set out the

guidelines for identification of categories and the same would suffice to meet

the challenge, of lack of guidelines, raised by the petitioners.

C) The objections relating to cross subsidy and the alleged breach of

the upper limit fixed by the Appellate tribunal do not arise as the levy of duty to

subsidize the tariff payable by agricultural consumers is outside the purview of

the regulatory commissions and the ambit of the Electricity Reforms Act, 1998

or the Electricity Act, 2003.

CONSIDERATION OF THE COURT:

23. In view of these rival submissions, Issue No.1, can be subdivided

into the following issues:

1A. Whether, lack of consultation with APERC, said to be required

under section 12 (4) of the Andhra Pradesh Electricity Act, 1998,

would invalidate Act 10 of 2021 and Act 23 of 2024?

1B. Whether, levy of additional duty, under the Duty Act, can be set

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aside on the ground that it amounts to cross subsidy which goes

beyond the limit set out in the national tariff policy and is against

the tariff fixed by APERC or the appellate commission?

1C. Whether the Amendment, to Section 3 of the Duty Act, by

Amendment Act 10 of 2021, is still born as the Amendment Act

was not notified?

1D. Whether the lack of Presidential assent would invalidate Act 10 of

2024 or Act 23 of 2024?

1E. Whether Act 10 of 2021 and Act 23 of 2024 would amount to

abdication of essential legislative functions of the legislature on

account of excessive delegation of power to the executive, in

terms of fixation of rates of duty and identification of categories

of consumers?

ISSUE 1A:

24. Section 12 (4) of the Andhra Pradesh Electricity Reforms Act,

1998, reads as follows:

12(4). The State Government shall consult the

Commission in relation to any proposed legislation or rules

concerning any policy direction and shall duly take into

account the recommendation by the Commission on all

such matters.

25. The Madhya Pradesh Vidyuth Sudhar Adhiniyam, 2000 was

enacted for the purposes of carrying out electricity reforms, in the same

manner as the Andhra Pradesh Electricity Reforms Act, 1998. Section 12 (3)

of this Act reads as follows:

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―12. (3) The State Government shall consult the

Commission in relation to any policy directive which it

proposes to issue or any legislation is proposed to be

enacted affecting the electricity industry it shall duly take

into account the recommendation if any, given by the

Commission within such reasonable time as the State

Government may specify.

26. An earlier Act, known as the Madhya Pradesh Upkar Adhiniyam

1981, was sought to be amended for the purposes of levying a cess of 20

paise per unit of power produced by captive power producers in the State of

Madhya Pradesh. This amendment was challenged on various grounds,

including the ground that, the requirement of consulting the Commission,

before enacting the amendment act, was not undertaken. The Hon’ble

Supreme Court after considering this objection, in M.P.Cement

Manufacturers Association Vs. State of M.P., held as follows:

33. The first question, therefore, is, whether Section 12(3)

does in fact impose any fetter on the power of the State to

legislate. Sub-section (3) refers to ―any policy directive

which it proposes to issue‖ or ―any legislation proposed to

be enacted affecting the electricity industry‖. It does not

stop the State from enacting the legislation but merely

states that prior to any legislation being proposed, the

Government shall ―duly take into account the

recommendation if any, given by the Commission‖. It was

and is open to the State Legislature to repeal this law. As

long as it continues to be operative, it must be assumed

that it was not a mere exercise in futility and some effect

must be given to the words of sub-section (3) of Section

12. As we read the sub-section, it is a mandate to the

policy-makers who, before proposing legislation, are

required to consult the State Regulatory Commission.

38. In our opinion, the consequence of non-consultation in

terms of Section 12(3) of the Sudhar Adhiniyam would not

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be an incompetent piece of legislation but a legislation

introduced in breach of a salutary requirement to consult

an expert statutory body. The statutory requirement for

consultation with a body of experts before proposing

legislation will serve as an inbuilt safeguard against a

challenge under Article 14 of the Constitution apart from

anything else.

39. Nevertheless, we do not propose to decide, whether

by reason only of such non-consultation, Section 3(2) of

the 1981 Adhiniyam is violative of Article 14, nor do we

propose to decide whether the cess of 20 paise is

excessive, nor the other grounds urged by the appellants

pertaining to Article 14. We have referred to the provisions

of the Sudhar Adhiniyam so that the State Government

may in future act in consonance with Section 12(3).

27. Though, the Hon'ble Supreme Court had held that it would not go

into this question, the ratio laid down in paragraph 38, of the above judgment,

would be binding on this court. There was some objection raised, by the State,

that there was some difference, in the language of section 12 (4) of the

Andhra Pradesh Electricity Reforms Act, 1998, and section 12 (3) of the

Madhya Pradesh Vidyuth Sudhar Adhiniyam, 2000. This objection need not

detain us, as the judgment of the Hon’ble Supreme Court would not in any

manner assist the case of the petitioners. This issue is held against the

petitioners.

ISSUE 1B :

28. The learned single Judge, in W.P.No.16619 of 2022 and batch,

had held that the issue of fixation of tariff and levy of duty arise out of different

Acts and no conflict arises between the two Acts. The learned single judge

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had also held that the plenary power of taxation available under Entry 53 of

the 2

list, in the VII schedule of the constitution, cannot be controlled by the

regulatory power granted under Entry 38 of the 3

list. We have not been

shown any reason to differ with this view of the learned single judge. However,

we think it would be appropriate, to add our reasons, in support of the view of

the learned single judge.

29. Entry 38 of the 3

list, (concurrent list) in the VII schedule to the

Constitution, empowers both the Central and the State government to regulate

all aspects of electricity. The Electricity Reforms Act, 1998 and the Electricity

Act, 2003, had been enacted under this entry. It may be noted that this entry

does not give power to either the state or central legislature to levy any tax or

duty on any aspect of electricity. However, Entry 53 of the 2

list (state list) in

the VII Schedule empowers a state legislature to levy duty on the sale and

consumption of electricity. The Duty Act, though it is a pre-constitutional

legislation, would draw it’s sustenance from this entry. Both Acts operate in

different and discrete zones, with no overlap. Clearly, the regulation of tariffs,

by appropriate commissions, cannot extend to a supervisory role over the

power of the State, under the provisions of the Duty Act, to levy Duty. We are

fortified, in this view, by the judgment of the Hon’ble Supreme Court, in

Southern Petrochemical Industries Company Ltd., vs. Electricity

Inspector Etio And Ors.,

(2007) 5 SCC 447 [Paras 138 and 139]

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30. Even if such a supervisory role is permissible, the contentions of

the petitioners are not made out. Part VII of the Electricity Act, 2003,

consisting of sections 61 to 66 sets out the manner and method in which tariff

is to be fixed. Section 61, empowers the appropriate regulatory commission,

subject to the guidelines set out in section 61, to frame regulations, specifying

the terms and conditions for the determination of tariff. One such guideline is

Section 61 (g), which stipulates that the Tariff should progressively reflect the

cost of supply of electricity and to reduce cross subsidies in the manner

specified by the Appropriate Commission. The petitioners contend that the

requirement of reducing cross subsidies falls squarely within the ken of the

regulatory scheme of the Electricity Act, 2003 and the regulation of Tariff by

the APERC or the appellate Commission. They contend that the levy of duty,

where it seeks to subsidize any class of consumers or even otherwise would

have to be subject to the regulation of tariff, by APERC. The petitioners

contend that, the levy of additional duty is an attempt at cross subsidy, by

indirect means. They contend that, as long as the cost of subsidy is being

recovered from them, by way of extra duty, or by increase in tariff rates, it

would remain a cross subsidy.

31. The producers of electricity and the intermediaries such as

transmission and distribution service providers, whether in the form of

monolithic state electricity boards or private entities, were entitled to the price

of electricity and the price of their services. The fixation of such price was

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done by the state governments, under the provisions of the Indian Electricity

Act, 1910 and the Electricity (Supply) Act, 1948. Initially, the state

governments fixed tariff on the basis of the cost incurred by the entities

producing, transmitting or distributing electricity. Over time, the state

governments, sought to cushion the burden of increasing tariffs on certain

categories, including agricultural consumers. This could only be done by

subsidizing such consumers. For this purpose, the tariff was fixed at a rate,

higher than the cost of supply, for some categories of consumers such as

industrial and commercial consumers and the surplus, so obtained, was

adjusted against the Tariff fixed for other consumers. This method of

subsidizing the electricity charges payable by consumers is ―cross subsidy‖. In

this method, one category of consumers subsidizes the cost of supply of

electricity to another category of consumers.

32. This method of subsidy casts a huge burden on certain

categories of consumers and skewed the system of Tariff fixation. The

Electricity Act, 2003 seeks to end this method of subsidy and bring in a

system of direct subsidy by the state. The scheme of the Act and the

guidelines, in the form of regulations or the Tariff policy is to ensure that the

tariff fixed for consumers is as close as possible, to the cost of supply of

electricity. The regulatory authorities, under the Electricity Act, 2003, are

empowered to regulate and fix the tariff for consumers. This power would be

restricted to deciding the components of the Tariff. Cross subsidy is a part of

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the Tariff and can be regulated. At this stage, it is necessary to understand

that Tariff is the cost of supply of energy and other components, including

cross subsidy, which goes to the coffers of the person generating, transmitting

or distributing electricity. Duty is the amount which is paid by such persons to

the State, over and above the Tariff, with discretion to the State to permit such

person to reimburse itself from the consumer. Electricity duty is outside the

Tariff and is additional to Tariff. Hence, levy of Duty cannot be regulated under

the provisions of the Electricity Act, 2003. In fact, the Electricity Act itself does

not speak of doing away with all forms of subsidy or regulating all forms of

subsidy. It only seeks to remove or reduce cross subsidy, while permitting

direct subsidy by the State. Section 65 of the Electricity Act, 2003, which

reads as follows, makes it clear:

65. Provision of subsidy by State Government.–

If the State Government requires the grant of any subsidy

to any consumer or class of consumers in the tariff determined

by the State Commission under section 62, the State

Government shall, notwithstanding any direction which may

be given under section 108, pay, in advance and in such

manner as may be specified, the amount to compensate the

person affected by the grant of subsidy in the manner the

State Commission may direct, as a condition for the licence or

any other person concerned to implement the subsidy

provided for by the State Government:

Provided that no such direction of the State Government

shall be operative if the payment is not made in accordance

with the provisions contained in this section and the tariff fixed

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by the State Commission shall be applicable from the date of

issue of orders by the Commission in this regard.

33. Under this provision, a fair price/tariff is to be fixed for all

categories of consumers. In the event of the State being desirous of

subsidizing the tariff for any category of consumer, an estimate would have to

be made about the quantum of such subsidy and the state government would

pay this subsidy to the licensees, who are supplying such electricity.

34. When the State pays the subsidy amount, it would be a direct

subsidy. The decision to pay such subsidy is within the purview of the State.

The appropriate commission can only insist on payment of the subsidy

amount, to the licensee, and would not have any control over how much of the

Tariff can be subsidized by the State. The language of section 65 does not

give such regulatory oversight to the appropriate commission.

35. The Central Government, in Paragraph 8.3 of the Tariff policy,

dated 28.01.2016, also took the following view:

―In terms of the Section 61(g) of the Act, the Appropriate

Commission shall be guided by the objective that the Tariff

progressively reflects the efficient and prudent cost of supply

of electricity.

36. The State Governments can give subsidy, to the extent they

consider appropriate, as per the provisions of Section 65 of the Act. Direct

subsidy is a better way to support the poorer categories of consumers than

the mechanism of cross- subsidizing the Tariff across the board. Subsidies

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should be targeted effectively and in a transparent manner. As a substitute of

cross subsidies, the State Government has the option of raising resources

through the mechanism of electricity duty and giving direct subsidies to only

needy consumers. This is a better way of targeting subsidies effectively.‖

37. To sum up, cross subsidy which is a part of the Tariff can be

regulated under the provisions of the Electricity Act. However, levy of Duty,

either for the purposes of subsidizing consumers or for any other purpose,

would be outside the scope of the regulatory process under the Electricity Act,

2003. The levy of Duty or additional Duty is the sole prerogative of the State

and cannot be regulated under the Electricity Act, 2003. This issue is held

against the petitioners.

ISSUE 1C:

38. Though this issue may not arise for consideration, it is being dealt

with as it has been raised by the petitioners. Section 1 (2) of Act 10 of 2021

stated that: "It shall come into force on such date as the State government

may, by notification, appoint".

39. There is no dispute that no notification has been issued by the

State Government. However, Section 1 (2) of Act 10 of 2021 was amended by

Act 10 of 2024, to read as follows: "It shall be deemed to have come into force

on the date of publication of the Act in the A.P. Gazette, dated 26th August

2021" By virtue of this amendment, the requirement of issuing a notification, to

bring Act 10 of 2021, into force has been dispensed with. Even if it is held that

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Act 10 of 2021 did not come into effect, till Act 10 of 2024 had been enacted,

the same would not make any difference as the amended provision of Section

1(2) had brought Act 10 of 2021 into force, with effect from 26.08.2021.

Accordingly, the contention of the Petitioners, that Act 10 of 2021 is a still born

Act which never came into force, cannot be accepted.

ISSUE 1D:

40. Act 10 of 2021 was reserved by the Governor on the 24

December, 2020 for the consideration and assent of the President and

received the assent, of the President, on 07.08.2021. The subsequent

amendment Acts 10 of 2024 and 23 of 2024, were neither reserved for the

assent of the President nor was such assent received. The petitioners contend

that since consent was not obtained, both Act 10 of 2024 and 23 of 2024 are

invalid.

41. It cannot be said that the assent of the President is required, for

the amending Act, on the sole ground that the principal Act had obtained the

assent of the President, unless it can be shown that such assent is required

under any of the provisions of the Constitution. The petitioners, except

contending that the assent of the President is needed for Act 10 of 2024 and

23 of 2024, have not explained why such assent of the President was

required. The assent of the President is required, in the circumstances

enumerated under Article 301 read with 304, Article 254 and where the

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Governor, reserves a Bill for the assent of the President, under Article 200 and

201 of the Constitution.

42. In case of Article 254 (2), If a law is made by the State

legislature, with respect to any matter enumerated in the Concurrent list and

contains any provision which is repugnant to any earlier law made by

parliament or any existing law, the State law would prevail if the assent of the

President is received. Act 10 of 2024 and Act 23 of 2024 have been enacted

in respect of matters enumerated in Entry 53 of the State list and not under

any entry in the concurrent list. The impugned Acts are not related to any

entry in the concurrent list. The question of seeking the assent of the

president, on this ground, would not arise. The Duty Act seeks to levy Duty on

the sale of electricity, within the State. This Act does not restrict any interstate

trade or commerce, to attract the provisions of Article 301 to 304 of the

Constitution. The main Duty Act, which is a pre Constitutional Act, obviously

did not receive the assent of the President. However, Act 10 of 2021, which

amended section 3 of the Duty Act, received the assent of the President, after

it had been reserved, for such assent, by the Governor. However, the reasons

for such a course of action have not been explained, either by the petitioners

or the State. The Hon’ble Supreme Court, when faced with a similar situation,

had held in Syed Ahmed Aga And Ors., vs. State Of Mysore And Ors .,

that reservation of a Bill, for the assent of the President, is not necessary for

(1975) 2 SCC 131

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an Act seeking to amend a principal Act, which has obtained such assent, if

the amendment is within the purview of the principal Act. In the present case

the amendments to section 3 and 7 of the Duty Act, are within the purview of

the main Duty Act and as such no further assent would be required. This issue

is held against the petitioners.

ISSUE 1E:

43. The delegation of the functions of (1) fixation of rate of duty and

(2) identification of categories of consumers is challenged on the ground of

excessive delegation. It would be necessary to consider this twin challenge,

separately.

44. The limits of legislative delegation came to be considered by, a 7

member Bench of, the Hon'ble Supreme Court, while answering a reference,

by the President, under Article 143 of the Constitution, in Delhi Laws Act, 1912,

In Re, 1951 SCC 568 : 1951 SCC OnLine SC 45 at page 606. Separate opinions

were given by the Bench. The summary of these opinions has been set out, in

a subsequent judgment, by the Hon'ble Supreme Court in Rajnarain Singh

vs. Patna Administration Committee

, in the following manner:

26. The Court had before it the following problems. In

each case, the Central Legislature had empowered an

executive authority under its legislative control to apply, at

its discretion, laws to an area which was also under the

legislative sway of the Centre. The variations occur in the

(1954) 2 SCC 82

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type of laws which the executive authority was authorised

to select and in the modifications which it was empowered

to make in them. The variations were as follows:

1) Where the executive authority was permitted, at its

discretion, to apply without modification (save incidental

changes such as name and place), the whole of any Central

Act already in existence in any part of India under the

legislative sway of the Centre to the new area:

This was upheld by a majority of six to one.

2) Where the executive authority was allowed to select and

apply a Provincial Act in similar circumstances:

This was also upheld, but this time by a majority of five to

two.

3) Where the executive authority was permitted to select

future Central laws and apply them in a similar way:

This was upheld by five to two.

4) Where the authorization was to select future Provincial

laws and apply them as above:

This was also upheld by five to two.

5) Where the authorization was to repeal laws already in

force in the area and either substitute nothing in their

places or substitute other laws, Central or Provincial, with or

without modification:

This was held to be ultra vires by a majority of four to

three.

(6) Where the authorization was to apply existing laws,

either Central or Provincial, with alterations and

modifications; and

(7) Where the authorisation was to apply future laws under

the same conditions:

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The views of the various members of the Bench were not

as clear cut here as in the first five cases, so it will be

necessary to analyse what each Judge said.

32. In our opinion, the majority view was that an executive

authority can be authorised to modify either existing or future

laws but not in any essential feature. Exactly what

constitutes an essential feature cannot be enunciated in

general terms, and there was some divergence of view about

this in the former case, but this much is clear from the

opinions set out above; it cannot include a change of policy.

45. The issue again came up in Calcutta Corporation vs. Liberty

Cinema

. In this case, section 548 of the Calcutta Corporation Act, granted

absolute discretion to the Corporation to fix the license fee that can be

collected from cinema theatres. A change in the method of calculating the said

fees resulted in the fee being increased from Rs. 400 per annum to Rs. 6000

per annum approximately. The scope of delegation came to be challenged, on

the ground of unguided delegation amounting to abdication of the essential

legislative functions. The Hon'ble Supreme Court, in its majority decision held

that fixation of rate of tax was not an essential legislative function and even

otherwise such delegation was permissible if guidelines are given. In that

case, the Hon'ble Supreme court also held that such guidance could be found

in the financial needs of the corporation and the purposes for which the funds

would be used, under the Corporation Act.

AIR 1965 SC 1107 :: (1965) 2 SCR 477

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46. The aforesaid view, of the Hon'ble Supreme Court, came up for

consideration in Devi Dass Gopalkrishnan and Others vs. The State of

Punjab and Others

. In this case, Section 5 of the East Punjab General

Sales Tax Act which had provided for levy of sales tax on the turnover of the

dealer at such rates as the provincial Government notified, was declared to be

void by the High Court of Punjab. It was declared to be void on the ground that

it gave unlimited power to the Government to levy a tax at any rate it thought

fit. Thereafter, Section 5 was amended to include and be deemed to have

always included the words "not exceeding two paise in a rupee". The High

Court held that the amendment cured the defect and gave new life to section

5. This view was challenged before the Hon'ble Supreme Court. The State, in

its defense, relied upon the judgment of the Hon'ble Supreme Court in

Calcutta Corporation vs. Liberty Cinema. The Hon'ble Supreme court held

as follows:

The law on the subject is fairly well settled though

difficulties are met in its application to each case. In

Corporation of Calcutta v. Liberty Cinema (1), on which

Mr. Ganapathy Iyer relied, relates to a levy imposed on

cinema houses under the Calcutta Municipal Act (33 of

1951). There, the majority held that the levy therein was a

tax, that the fixing of a rate of tax was not of the essence

of legislative power, that the fixing of rates might be left to

a non-legislative body and that when it was so left to such

a body, the Legislature must provide guidance for such

AIR 1967 SC 1895

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fixation. The majority held in that case that such a

guidance was found in the monetary needs of the

municipality for discharging the functions entrusted to it

under the Act. Sarkar, J., speaking for the majority, said

thus:

"It (the Municipal Corporation) has to perform various

statutory functions. It is often given power to decide when

and in what manner the functions are to be performed. For

all this it needs money and its needs will vary from time to

time with the prevailing exigencies. Its power to collect tax,

however, is necessarily limited by the expenses required

to discharge those functions. It has, therefore, where rates

have not been specified in the statute, to fix such rates as

may be necessary to meet its needs. That, we think,

would be sufficient guidance to make the exercise of its

power to fix the rates valid."

If this decision is an authority for the position that the

Legislature can delegate its power to a statutory authority

to levy taxes and fix the rates in regard thereto, it is

equally an authority for the position that the said statute to

be valid must give a guidance to the said authority for

fixing the said rates and that guidance cannot be judged

by stereotyped rules but would depend upon the

provisions of a particular Act. To that extent his judgment

is binding on us. But we cannot go further and hold, as the

learned counsel for the respondents asked us to do, that

whenever a statute defines the purpose or purposes for

which a statutory authority is constituted and empowers it

to levy a tax that statute necessarily contains a guidance

to fix the rates; it depends upon the provisions of each

statute.

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Learned counsel for the State argued that under Article

162 of the Constitution the executive power of the State

shall extend to matters with respect to which the

Legislature of a State has power to make laws: that is to

say, the executive power of a State extends to matters

mentioned in List II of the Seventh Schedule to the

Constitution; that under Article 266(1) of the Constitution

all the taxes collected will go to the Consolidated Funds of

the State, that the State has an unlimited power to raise

funds by taxation to discharge its vast constitutional duties

and that necessarily the amount of tax required would

depend upon its needs which can only be known to it. In

the said circumstances, the argument proceeds, the

doctrine of constitutional and statutory needs would afford

reasonable guidelines for the Government to fix the rate

and that the principle laid down by this Court in the

aforesaid decision would equally apply to this case. If this

argument be accepted, it would mean that every statute

conferring a naked power on the Government to impose

taxes would be good, for in every case the discharge of

the constitutional duties by the Government would be

deemed to be a sufficient guide for fixing the rate. We

cannot accept this argument for three reasons, namely,

(1) the decision of this Court in Calcutta Corporation v.

Liberty Cinema(1) should be confined only to the

provisions of the Calcutta Municipal Act wherein this Court

found a guidance; (2) the provisions of the Sales Tax Act,

including the preamble, do not disclose any policy or

guidance to the State for fixing the rates; and (3) the

general constitutional power to impose taxes has no

relevance for discovering a statutory policy under a

particular Act.

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47. The next case of importance, was Muncipal Corporation of

Delhi Vs. Birla Cotton Spinning and Weaving Mills. In this case, another

7 judge bench, of the Hon’ble Supreme Court, was again called upon to

consider the limits of delegation of legislative power. The Hon’ble Supreme

Court reviewed the law and held as follows:

20. The last case to which reference may be made

is Devi Das Gopal Krishnan v. State of Punjab [AIR (1967)

SC 1895]. There the law on the subject of excessive

delegation on was summarized thus at p. 1901:

―The Constitution confers a power and imposes a duty

on the legislature to make laws. The essential legislative

function is the determination of the legislative policy and

its formulation as a rule of conduct. Obviously it cannot

abdicate its functions in favour of another. But in view of

the multifarious activities of a welfare State, it cannot

presumably work out all the details to suit the varying

aspects of a complex situation. It must necessarily

delegate the working out of details to the executive or any

other agency. But there is danger inherent in such a

process of delegation. An over-burdened legislature or

one controlled by a powerful executive may unduly

overstep the limits of delegation. It may not lay down any

policy at all; it may declare its policy in vague and general

terms; it may not set down any standard for the guidance

of the executive; it may confer an arbitrary power on the

executive to change or modify the policy laid down by it

without reserving for itself any control over subordinate

legislation. This self effacement of legislative power in

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favour of another agency either in whole or in part is

beyond the permissible limits of delegation. It is for a court

to hold on a fair, generous and liberal construction of an

impugned statute whether the legislature exceeded such

limits. But the said liberal construction should not be

carried by the courts to the extent of always trying to

discover a dormant or latent legislative policy to sustain an

arbitrary power conferred on executive authorities. It is the

duty of the court to strike down without any hesitation any

arbitrary power conferred on the executive by the

legislature.‖

It may be added that Devi Dass case [AIR (1967) SC

1895] did not differ from the Liberty Cinema case [(1965) 2

SCR 477] . What was held there was that there can be no

general principle that merely the needs of the delegate

can necessarily and always be a guideline. It was further

held that each statute has to be examined to find out

whether there are guidelines therein which prevent

delegation from being excessive.

28. A review of these authorities therefore leads to the

conclusion that so far as this Court is concerned the

principle is well established that essential legislative

function consists of the determination of the legislative

policy and its formulation as a binding rule of conduct and

cannot be delegated by the legislature. Nor is there any

unlimited right of delegation inherent in the legislative

power itself. This is not warranted by the provisions of the

Constitution. The legislature must retain in its own hands

the essential legislative functions and what can be

delegated is the task of subordinate legislation necessary

for implementing the purposes and objects of the Act.

Where the legislative policy is enunciated with sufficient

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clearness or a standard is laid down, the courts should not

interfere. What guidance should be given and to what

extent and whether guidance has been given in a

particular case at all depends on a consideration of the

provisions of the particular Act with which the Court has to

deal including its preamble. Further it appears to us that

the nature of the body to which delegation is made is also

a factor to be taken into consideration in determining

whether there is sufficient guidance in the matter of

delegation.

29. What form the guidance should take is again a

matter which cannot be stated in general terms. It will

depend upon the circumstances of each statute under

consideration; in some cases guidance in broad general

terms may be enough; in other cases more detailed

guidance may be necessary. As we are concerned in the

present case with the field of taxation, let us look at the

nature of guidance necessary in this field. The guidance

may take the form of providing maximum rates of tax upto

which a local body may be given the discretion to make its

choice, or it may take the form of providing for consultation

with the people of the local area and then fixing the rates

after such consultation. It may also take the form of

subjecting the rate to be fixed by the local body to the

approval of the Government which acts as a watch-dog on

the actions of the local body in this matter on behalf of the

legislature. There may be other ways in which guidance

may be provided. But the purpose of guidance,

whatsoever may be the manner thereof, is to see that the

local body fixes a reasonable rate of taxation for the local

area concerned. So long as the legislature has made

provision to achieve that reasonable rates of taxation are

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fixed by local bodies, whatever may be the method

employed for this purpose — provided it is effective — it

may be said that there is guidance for the purpose of

fixation of rates of taxation. The reasonableness of rates

may be ensured by fixing a maximum beyond which the

local bodies may not go. It may be ensured by providing

safeguards laying down the procedure for consulting the

wishes of the local inhabitants. It may consist in the

supervision by Government of the rate of taxation by local

bodies. So long as the law has provided a method by

which the local body can be controlled and there is

provision to see that reasonable rates are fixed, it can be

said that there is guidance in the matter of fixing rates for

local taxation. As we have already said there is pre-

eminently a case for delegating the fixation of rates of tax

to the local body and so long as the legislature has

provided a method for seeing that rates fixed are

reasonable, be it in one form or another, it may be said

that there is guidance for fixing rates of taxation and the

power assigned to the local body for fixing the rates is not

uncontrolled and uncanalised. It is on the basis of these

principles that we have to consider the Act with which we

are concerned.

27. The last case to which reference may be made

is Devi Das Gopal Krishnan [AIR (1967) SC 1895]. This

was not a case of municipal taxation. In this case the

legislature gave power to the State Government to fix

sales tax at such rates as the State Government thought

fit. The case of Liberty Cinema [(1965) 2 SCR 477] was

distinguished in this case and it was pointed out that the

needs of the State and the purposes of the Act could not

give sufficient guidance for the purpose of fixing rate of

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sales tax by the State Government. There is in our opinion

a clear distinction between delegation of fixing the rate of

tax like sales tax to the State Government and delegation

of fixing rates of certain taxes for purposes of local

taxation. The needs of the State are unlimited and the

purposes for which the State exists are also unlimited. The

result of making delegation of a tax like sales tax to the

State Government means a power to fix the tax without

any limit even if the needs and purposes of the State are

to be taken into account. On the other hand, in the case of

a municipality, however large may be the amount required

by it for its purposes it cannot be unlimited, for the amount

that a municipality can spend is limited by the purposes for

which it is created. A municipality cannot spend anything

for any purposes other than those specified in the Act

which creates it. Therefore, in the case of a municipal

body, however large may be its needs, there is a limit to

those needs in view of the provisions of the Act creating it.

In such circumstances there is a clear distinction between

delegating a power to fix rates of tax, like the sales tax, to

the State Government and delegating a power to fix

certain local taxes for local needs to a municipal body.

48. The learned Counsel, appearing on both sides, cited subsequent

judgments, to buttress their point of view. These judgments, which are

discussed below have, with some variations, adhered to the above principles.

{V. Nagappa vs. Iron Ore Mines Cess Commissioner and Anr.,

, M.K.

Papaiah & Sons vs. Excise Commissioner and Anr.,

, Supreme Court

{1973 (2) SCC 1 [Paragraphs 5, 14 to 18]

1975 (1) SCC 492 [Paragraphs 9 and 18],

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Employees’ Welfare Association vs. Union of India and Anr.,

A.N.

Parasuraman and Ors., vs. State of Tamil Nadu,

, Agricultural Market

Committee vs. Shalimar Chemical Works Ltd.,

and Union of India and

Anr., vs. Mohit Minerals Private Limited}.

49. In V. Nagappa vs. Iron Ore Mines Cess Commissioner and

Anr, the Hon’ble Supreme Court was faced with a challenge to the Iron Ore

Mines Labour Welfare Cess Act (Central Act 58 of 1961), on the ground of

excessive delegation of legislative power as the power to fix the rate of cess

has been delegated to the government without any guidelines. This contention

was negatived by the Hon’ble Supreme Court on the ground that the Act itself

gave guidelines in the following manner:

18. The policy of the Act has been clearly stated; the

purposes for which the tax collected should be expended

have been enumerated and the purposes are such that it

is reasonably possible for the delegate to calculate the

amount necessary to meet them. In these circumstances,

we think that the necessary guidance for fixing the rate

can be found in the amount of expenditure necessary for

carrying out the purposes of the Act. Quite apart from

these circumstances, the fact that Section 2 has fixed the

maximum rate would indicate that the delegate is not

given an uncontrolled discretion in the matter of fixing the

rate. The area within which the discretion has to be

exercised having been clearly demarcated, it cannot be

1989 (4) SCC 187 [Paragraphs 62, 99 and 100]

1989 (4) SCC 683 [paragraphs 3 and 5 to end],

1997 (5) SCC 516 [Paragraphs 6,7 21 to 26]

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said that a blanket power to fix the rate has been

delegated to Government.

This judgment would not be applicable to the present

case, as the Duty Act does not set out the purposes for

which the Duty, collected under the Duty Act, is to be

expended. In the absence of such purposes being

enumerated, no estimate of the quantum of Duty, required

for such purposes can be calculated.

50. In M.K. Papaiah & Sons vs. Excise Commissioner and Anr.,

Section 22 of the Mysore Excise Act, which gave power to the government to

fix rates of excise duty on the arrack purchased by excise contractors from

government depots was challenged on the ground of excessive delegation.

This plea was negatived by the Hon’ble Supreme Court on the basis of the

following ratio:

18. That laying of rules before the Legislature is control

over delegated legislation is implied in the speech of Lord

Thankerton in the House of Lords in Minister of

Health v. King [1931 AC 524] where he said:

―In this case, as in similar cases that have come before

the courts, Parliament has delegated its legislative

function to a Minister of the Crown, but in this case

Parliament has retained no specific control over the

exercise of the function by the Minister, such as a

condition that the order should be before Parliament and

might be annulled by a resolution of either House within a

limited period.‖

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51. In the present case, the fixation of rates and categorization of

consumers is by executive order and not by way of rules issued under the

Duty Act. In such a situation, the principle laid down in the above judgment

would not be applicable to the present case.

52. The judgment in Supreme Court Employees Welfare

Association vs. Union Of India And Anr., , has been cited for the purposes

of contending that the validity of subordinate legislation has to be considered

on the basis of the nature, objects and scheme of the parent Act and the

purpose for which the power has been delegated. There can be no quarrel

with this proposition of law.

53. In A.N. Parasuraman and Ors., vs. State of Tamil Nadu ,

certain provisions of The Tamil Nadu Private Educational Institutions

(Regulation) Act, 1966, came to be challenged on the ground that the

government has been vested with unrestricted discretion amounting to

abdication of legislative power. The Hon’ble Supreme Court, upheld this

challenge, by observing:

8. The provisions of the Act indicate that the State

Government has been vested with unrestricted discretion in the

matter of the choice of the competent authority under Section

2(c) as also in picking and choosing the institutions for

exemption from the Act under Section 22. Such an unguided

power bestowed on the State Government was struck down as

offending Article 14 in the case of the State of W.B. v. Anwar Ali

Sarkar [(1952) 1 SCC 1 : AIR 1952 SC 75 : 1952 SCR 284 :

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1952 Cri LJ 510] . A similar situation arose in K.T. Moopil

Nair v. State of Kerala [AIR 1961 SC 552 : (1961) 3 SCR 77]

where, under Section 4 of the Travancore-Cochin Land Tax Act,

1955, all lands were subjected to the burden of a tax and

Section 7 gave power to the Government to grant exemption

from the operation of the Act. The section was declared ultra

vires on the ground that it gave un-canalized, unlimited and

arbitrary power, as the Act did not lay down any principle or

policy for the guidance of exercise of the discretion in respect of

the selection contemplated by Section 7.

9. Similar is the position under Sections 6 and 7 of the

present Act. The learned counsel for the respondent State

contended that by reference in Section 4 to the particulars to be

supplied in the application for permission, it can be easily

imagined that the competent authority has to take into account

all that may be validly relevant for the grant or refusal of

permission. We are afraid, the section cannot be saved by

recourse to this argument in absence of any helpful guidance

from the Act. The position in this case cannot be said to be on a

better footing than that of the Gold (Control) Act, 1968, which

was challenged in Harakchand Ratanchand Banthia v. Union of

India [(1969) 2 SCC 166 : (1970) 1 SCR 479] . As is indicated

by the judgment, the Gold (Control) Act had to be passed as

gold was finding its way into the country through illegal

channels, affecting the national economy and hampering the

country's economic stability and progress, and the customs

department was found unable to effectively combat the

smuggling. Section 27(6)(a) of the said Act stated that in the

matter of issue or renewal of licences the ―Administrator shall

have regard to the number of dealers existing in the region in

which the applicant intends to carry on business as a dealer‖.

The expression ―region‖ was not defined in the Act and Section

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27(6)(b) required the Administrator to have regard to ―the

anticipated demand, as estimated by him, of ornaments in the

region‖. The argument in support of the validity of the Act was

that these provisions provided adequate guidance to the

Administrator, which the Court rejected, holding that the

expression ―anticipated demand‖ was vague and not capable of

objective assessment and, therefore, was bound to lead to a

great deal of uncertainty. The other provisions mentioning

―suitability of the applicant‖ in Section 27(6)(e) and ―public

interest‖ in Section 27(6)(g) were also held to have failed in

laying down any objective standard or norm so as to save the

Act. The provisions of the Act, with which we are dealing in the

present cases, are far less helpful for the purpose of upholding

its validity.

54. In Agricultural Market Committee vs. Shalimar Chemical

Works Ltd., the question that came up before the Hon’ble Supreme Court

was whether a rule which created a legal fiction of sale within the area of

market committee if the agricultural product was weighed within the market

area, was beyond the legislative policy. The Hon’ble Supreme court, after

noticing that the provisions of the Act did not provide for such a legal fiction

had held as follows:

26. The principle which, therefore, emerges out is that

the essential legislative function consists of the

determination of the legislative policy and the legislature

cannot abdicate essential legislative function in favour of

another. Power to make subsidiary legislation may be

entrusted by the legislature to another body of its choice

but the legislature should, before delegating, enunciate

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either expressly or by implication, the policy and the

principles for the guidance of the delegates. These

principles also apply to taxing statutes. The effect of these

principles is that the delegate which has been authorized

to make subsidiary rules and regulations has to work

within the scope of its authority and cannot widen or

constrict the scope of the Act or the policy laid down

thereunder. It cannot, in the garb of making rules, legislate

on the field covered by the Act and has to restrict itself to

the mode of implementation of the policy and purpose of

the Act.

27. Applying the above principles to the instant case, it

will be seen that the market fee can be levied under the

Act only on the sales and purchase of notified agricultural

produce within the notified area. Explanation I to Section

12 creates a legal fiction and provides that if any notified

agricultural produce is taken out of a notified market area,

it shall be presumed to have been purchased or sold

within such area. The presumption is a rebuttable

presumption and can be shown to be not correct. The

policy in enacting this provision is only to cover such

transactions of sale and purchase for which direct

evidence may not be available. Since a notified

agricultural produce can be sold only within the notified

market area, and, that too, by a trader having a licence

issued to him by the committee, it is obvious that if such

commodity is moved out of the notified area, it would

mean either that it has been sold or purchased. Otherwise,

there would be no occasion to move such commodity out

of the notified market area. The legal fiction was thus

limited to the ―moving‖ of the commodity from within the

market area to a place outside the market area.

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28. The Government to whom the power to make rules

was given under Section 33 and the committee to whom

power to make bye-laws was given under Section 34

widened the scope of ―presumption‖ by providing further

that if a notified agricultural produce is weighed, measured

or counted within the notified area, it shall be deemed to

have been sold or purchased in that area. The creation of

legal fiction is thus beyond the legislative policy. Such

legal fiction could be created only by the legislature and

not by a delegate in exercise of the rule-making power.

We are, therefore, in full agreement with the High Court

that Rule 74(2) and Bye-law 24(5) are beyond the scope

of the Act and, therefore, ultra vires. The reliance placed

by the assessing authority as also by the appellate and

revisional authority on these provisions was wholly

misplaced and they are not justified in holding, merely on

the basis of weighment of ―copra‖ within the notified area

committee that the transaction of sale took place in that

market area.

55. In Union of India and Anr., vs. Mohit Minerals Private Limited,

two notifications, issued under the GST regime, were under challenge. In the

course of the challenge, certain provisions of law were also challenged on the

ground of excessive delegation. The Hon’ble Supreme Court, while

considering such contentions, had held as follows:

92. The contention of the respondents is that Section

5(3) of the IGST Act only delegates the power to identify

the categories of goods or services on which the tax shall

be paid on reverse charge basis. It is contended that since

Notification No. 10 of 2017 identifies an importer as a

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service recipient for the purposes of Section 5(3), it is ultra

vires the parent Act on the ground of excessive

delegation.

93. The legislature is required to perform its essential

legislative functions. Once the skeletal structure of the

policy is framed by the legislature, the details can emerge

through delegated legislations. [MCD v. Birla Cotton Spg.

& Wvg. Mills, AIR 1968 SC 1232; Avinder Singh v. State of

Punjab, (1979) 1 SCC 137.] It is a settled position that the

legislature cannot delegate its ―essential legislative

functions‖. [Delhi Laws Act, 1912, In re, 1951 SCC

568; Edward Mills Co. Ltd. v. State of Ajmer, AIR 1955 SC

25; A.N. Parasuraman v. State of T.N., (1989) 4 SCC

683.] The essential legislative functions with respect to the

GST law are the levy of tax, subject-matter of tax, taxable

person, rate of taxation and value for the purpose of

taxation. The principles governing these essential aspects

of taxation find place in the IGST Act : Section 5(1)

identifies the subject-matter of taxation as inter-State

supplies of goods, services or both; Section 2(107) of the

CGST Act identifies a taxable person; Section 5(1)

provides a maximum cap of 40% as the rate of taxation;

and Section 5(1) stipulates that the value of taxation be

determined under Section 15 of the CGST Act.

96. In determining the vires of the impugned

notifications, a few preliminary contentions raised by the

respondents would have to be addressed. The

respondents have argued that no charge has been

created for the ocean freight transaction to be taxed in the

hands of the importer. It has been alleged that only

Section 5(1) is a charging provision and Sections 5(3) and

5(4) cannot independently create a charge.

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97. In assessing this claim, this Court is bound by a

decision of the Constitution Bench in Mathuram

Agrawal [Mathuram Agrawal v. State of M.P., (1999) 8

SCC 667] which has identified three essential elements of

taxation:

(i) The subject of the tax;

(ii) The person who is liable to pay the tax; and

(iii) The rate at which the tax is to be paid.

This test has been further elaborated by a two-Judge

Bench of this Court in Govind Saran Ganga Saran [Govind

Saran Ganga Saran v. CST, 1985 Supp SCC 205 : 1985

SCC (Tax) 447 : AIR 1985 SC 1041] by further requiring

the designation of the measure or the value to which the

rate of the tax will be applied. Thus, the four canons of

taxation are as follows:

(i) The taxable event;

(ii) The person on whom the levy is imposed;

(iii) The rate at which the levy is imposed; and

(iv) The measure or the value to which the rate will be

applied.

98. Section 5(1) of the IGST Act specificies the four

canons of taxation : (i) the inter-State supply of goods and

services as the taxable event; (ii) the ―taxable person‖ as

the person on whom the levy is imposed; (iii) the taxable

rate as such a rate notified by the Union Government on

the recommendation of the GST Council, capped at forty

per cent; and (iv) the taxable value as the value

determined under Section 15 of the CGST Act.

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56. In Vivek Narayan Sharma and Ors., vs. Union Of India , a

Constitution Bench of, the Hon’ble Supreme Court, had reviewed the law, in

this regard, in the following manner:

135. It is thus necessary to cull out the legislative policy

from various factors like the words in the statute, the

Preamble to the Act, the Statement of Objects and

Reasons, and in a given case, even the attendant

circumstances. After the legislative policy is found, then the

words used in the statute must be so interpreted such that it

advances the purpose of the statute and does not defeat it.

179. K.N. Wanchoo, C.J., speaking for himself and J.M.

Shelat, J. held in Birla Cotton, Spinning and Weaving

Mills [MCD v. Birla Cotton, Spg. & Wvg. Mills, (1968) 3 SCR

251 : AIR 1968 SC 1232] that where the legislative policy is

enunciated with sufficient clarity or a standard is laid down,

the courts should not interfere. What guidance should be

given and to what extent and whether guidance has been

given in a particular case at all depends on a consideration

of the provisions of the particular Act with which the Court

has to deal, including its Preamble. They further held that

the nature of the body to which delegation is made is also a

factor to be taken into consideration in determining whether

there is sufficient guidance in the matter of delegation. The

Court further held that what form the guidance should take

is again a matter which cannot be stated in general terms. It

will depend upon the circumstances of each statute under

consideration. It further held that in some cases guidance in

broad general terms may be enough, in other cases more

detailed guidance may be necessary.

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190. It has been held in Gwalior Rayon [Gwalior Rayon

Silk Mfg. (Wvg.) Co. Ltd. v. CST, (1974) 4 SCC 98 : 1974

SCC (Tax) 226] that the essential legislative function is the

determination of the legislative policy and its formulation as

a rule of conduct. The legislature cannot abdicate its

functions in favour of another. However, in view of the

multifarious activities of a welfare State, it cannot

presumably work out all the details to suit the varying

aspects of a complex situation. It must, therefore,

necessarily delegate the working out of details to the

executive or any other agency. The Court also cautions

about the danger inherent in the process of delegation. It

observed that an overburdened legislature or one controlled

by a powerful executive may unduly overstep the limits of

delegation. It may not lay down any policy at all; it may

declare its policy in vague and general terms; it may not set

down any standard for the guidance of the executive; it may

confer an arbitrary power on the executive to change or

modify the policy laid down by it without reserving for itself

any control over subordinate legislation. It has been held

that it is for the court to hold on a fair, generous and liberal

construction of an impugned statute to examine whether the

legislature exceeded such limits.

191. We may gainfully refer to the following

observations in the concurring judgment of K.K. Mathew, J.

: (Gwalior Rayon Silk case [Gwalior Rayon Silk Mfg. (Wvg.)

Co. Ltd. v. CST, (1974) 4 SCC 98 : 1974 SCC (Tax) 226] ,

SCC pp. 121-22, para 57)

―57. Delegation of ―law-making‖ power, it has been said,

is the dynamo of modern Government. Delegation by the

legislature is necessary in order that the exertion of

legislative power does not become a futility. Today, while

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theory still affirms legislative supremacy, we see power

flowing back increasingly to the executive. Departure from

the traditional rationalisation of the status quo arouses

distrust. The legislature comprises a broader cross-section

of interests than any one administrative organ; it is less

likely to be captured by particular interests. We must not,

therefore, lightly say that there can be a transfer of

legislative power under the guise of delegation which would

tantamount to abdication. At the same time, we must be

aware of the practical reality, and that is, that Parliament

cannot go into the details of all legislative matters. The

doctrine of abdication expresses a fundamental democratic

concept but at the same time we should not insist that law-

making as such is the exclusive province of the legislature.

The aim of Government is to gain acceptance for objectives

demonstrated as desirable and to realise them as fully as

possible. The making of law is only a means to achieve a

purpose. It is not an end in itself. That end can be attained

by the legislature making the law. But many topics or

subjects of legislation are such that they require expertise,

technical knowledge and a degree of adaptability to

changing situations which Parliament might not possess

and, therefore, this end is better secured by extensive

delegation of legislative power. The legislative process

would frequently bog down if a legislature were required to

appraise beforehand the myriad situations to which it

wishes a particular policy to be applied and to formulate

specific rules for each situation. The presence of Henry VIII

clause in many of the statutes is a pointer to the necessity

of extensive delegation. The hunt by Court for legislative

policy or guidance in the crevices of a statute or the nook

and cranny of its Preamble is not an edifying spectacle. It is

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not clear what difference does it make in principle by saying

that since the delegation is to a representative body, that

would be a guarantee that the delegate will not exercise the

power unreasonably, for, if ex hypothesi the legislature

must perform the essential legislative function, it is certainly

no consolation that the body to which the function has been

delegated has a representative character. In other words, if,

no guidance is provided or policy laid down, the fact that the

delegate has a representative character could make no

difference in principle.‖

(emphasis supplied)

192. Though the learned Judge in Gwalior

Rayon [Gwalior Rayon Silk Mfg. (Wvg.) Co. Ltd. v. CST,

(1974) 4 SCC 98 : 1974 SCC (Tax) 226] cautions against

abdication under the guise of delegation, he also

emphasises a necessity to be aware about the practical

reality i.e. Parliament cannot go into the details of all

legislative matters. The learned Judge observed that the

aim of the Government is to gain acceptance for objectives

demonstrated as desirable and to realize them as fully as

possible. The learned Judge observed that there are many

topics or subjects of legislation which are such that they

may require expertise, technical knowledge and a degree of

adaptability to changing situations which Parliament might

not possess and, therefore, this end is better secured by

extensive delegation of legislative power. It has been held

that the legislative process would frequently bog down if a

legislature were required to appraise beforehand the myriad

situations to which it wishes a particular policy to be applied

and to formulate specific rules for each situation. The Court

further emphasised for guidance for the delegate to

exercise the delegated power.

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208. For considering the question as to whether the RBI

Act provides guidance to the delegatee or not, the entire

scheme, object and the purpose of the Act has to be taken

into consideration. The guidance could be sought from the

express provision empowering delegation or the other

provisions of the statute, the Preamble, the scheme or even

the very subject-matter of the statute. If the guidance could

be found in whatever part of the Act, the delegation has to

be held to be valid. A great amount of latitude has to be

given in such matters. It has been consistently held that

Parliament and the State Legislatures are not bodies of

experts or specialists. They are skilled in the art of

discovering the aspirations, the expectations and the needs

of the people whom they represent. It has been held that

they function best when they concern themselves with

general principles, broad objectives and fundamental issues

instead of technical and situational intricacies which are

better left to better equipped full-time expert executive

bodies and specialist public servants.

210. We are of the considered view that there is

sufficient guidance in the Preamble as well as the scheme

and the object of the RBI Act. As already discussed

hereinabove, there cannot be a straitjacket formula, and the

question whether excessive delegation has been conferred

or not has to be decided on the basis of the scheme, the

object and the purpose of the statute under consideration.

57. The principles that can be extracted, from these judgments, are:

1. The function of the legislature is to formulate legislative policy and to

enact it into binding Law.

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2. After such formulation, the legislature may fill in the details of

implementation or delegate the same to the executive or any other

agency. However, such delegation, for the purposes of implementing

the enactment, has to be within the guidelines and limits set out in the

enactment itself. Any delegation beyond that would amount to

excessive delegation and would be invalid.

3. The guidelines or limits can be explicit or should be discernible from the

scheme and objects of the enactment.

4. The extent of guidance necessary and the form of guidance would

differ, on a case to case basis, and would also be dependent upon the

nature of the authority, to whom, legislation has been delegated.

58. Applying these principles, the delegation of fixing the rate of duty,

without any minimum or maximum limit, by way of Act 10 of 2021, prima facie,

appears to be excessive delegation. The State has contended that this prima

facie view would not stand further scrutiny, once the attendant circumstances

and scheme of the Act are taken into account. However, the law which needs

to be tested is the Duty Act, as amended by Act 23 of 2024, as it had

effectively subsumed the amendment put in place by Act 10 of 2021. The

impugned part of Section 3 (1) of the Duty Act, as it stands today, is:

A duty calculated at the rate notified by the State

Government from time to time for different consumer

categories which shall not be less than 6 paise

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(Rs.0.06) per unit of energy and not be more than 100

Paise, (Rs.1.00 rupee) per unit of energy,

59. The executive is delegated the power to fix the rate of duty

between 6 paise and 1 rupee, per unit of electricity. The Hon'ble Supreme

Court, in Municipal Corporation of Delhi Vs. Birla Cotton Spinning and

Weaving Mills, had held that stipulation of the outer limit would be a sufficient

guideline, in the following passage:

29. What form the guidance should take is again a

matter which cannot be stated in general terms. It will

depend upon the circumstances of each statute under

consideration; in some cases guidance in broad general

terms may be enough; in other cases more detailed

guidance may be necessary. As we are concerned in the

present case with the field of taxation, let us look at the

nature of guidance necessary in this field. The guidance

may take the form of providing maximum rates of tax upto

which a local body may be given the discretion to make its

choice, or it may take the form of providing for consultation

with the people of the local area and then fixing the rates

after such consultation. It may also take the form of

subjecting the rate to be fixed by the local body to the

approval of the Government which acts as a watch-dog on

the actions of the local body in this matter on behalf of the

legislature. There may be other ways in which guidance

may be provided. But the purpose of guidance,

whatsoever may be the manner thereof, is to see that the

local body fixes a reasonable rate of taxation for the local

area concerned. So long as the legislature has made

provision to achieve that reasonable rates of taxation are

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fixed by local bodies, whatever may be the method

employed for this purpose — provided it is effective — it

may be said that there is guidance for the purpose of

fixation of rates of taxation. The reasonableness of rates

may be ensured by fixing a maximum beyond which the

local bodies may not go. It may be ensured by providing

safeguards laying down the procedure for consulting the

wishes of the local inhabitants. It may consist in the

supervision by the Government of the rate of taxation by

local bodies. So long as the law has provided a method by

which the local body can be controlled and there is

provision to see that reasonable rates are fixed, it can be

said that there is guidance in the matter of fixing rates for

local taxation. As we have already said there is pre-

eminently a case for delegating the fixation of rates of tax

to the local body and so long as the legislature has

provided a method for seeing that rates fixed are

reasonable, be it in one form or another, it may be said

that there is guidance for fixing rates of taxation and the

power assigned to the local body for fixing the rates is not

uncontrolled and uncanalized. It is on the basis of these

principles that we have to consider the Act with which we

are concerned.

60. One of the guidelines that can be given, as per the above

passage, would be the fixation of a maximum rate of tax or Duty. Though, this

passage arises in a case of municipal taxation, the principle, of guidance

being given by fixing the maximum rate, would be applicable even to taxes

imposed by the State. The petitioners had further contended that, the range

of six paise to one rupee, which is approximately 16 times the minimum rate,

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is too wide a gap and amounts to unbridled discretion being given to the

executive. However, this gap is not so large, if the value of money, in absolute

terms, is taken into account. Further, the rate of Duty, at 6 paise per unit had

not been touched for 28 years. Keeping in view the fall, in the value of money,

the range of 6 paise to one rupee per unit cannot be termed to be too

excessive. For these reasons, it must be held that the amendment to Section

3 of the Duty Act, by Act 23 of 2024, to the extent of giving discretion, to the

executive, to fix the rate of Duty between six paise and one rupee per unit, is

valid.

61. The learned Advocate General also sought to rely upon the

judgment of the Hon’ble Supreme Court, in Govind Saran Ganga Saran vs.

CST., to contend that delegation of the power to fix the rate of duty, after fixing

various other parameters would not amount to excessive delegation. This

court is not going into this question in view of the opinion of this court that the

fixation of a maximum rate is a sufficient guideline to save it from the vice of

excessive delegation.

62. The question of identification of categories of consumers remains.

The case of the petitioners is that the Duty Act, is a taxing statute, enacted for

the purpose of raising funds, which can be used for any purpose, by the

Government. Apart from this, no other object can be gleaned from the

provisions of the Duty Act. The object of raising funds does not give out any

guideline or policy for fixing the basis of categorization. In the absence of any

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such guidance, the identification of categories of customers could not have

been delegated.

63. The learned Advocate General, contends that, under

G.O.Ms.No.7, different rates of duty are levied on sale of electricity, based on

the categories of consumers mentioned in the yearly retail supply tariff orders

that would be passed by APERC. He submits that G.O.Ms.No.7 is mentioned

in the objects and reasons of Act 23 of 2024 and as such the categorization of

consumers, by APERC, in the yearly retail supply orders, is the guidance that

would be followed by the Government, while identifying different categories of

consumers. He would also contend that, in similar circumstances, the

erstwhile High Court of Andhra Pradesh, in D.K.V.Prasada Rao and Ors., vs.

The Government Of Andhra Pradesh

, had upheld similar delegation to fix

rates of admission to various classes, within cinema theatres.

64. The petitioners contend that Objects and Reasons cannot be

looked into, for interpreting the provision of an Act. Reliance is placed upon

Aswini Kumar Ghose and Anr., vs. Arabinda Bose and Anr.,

and

Kavalappara Kottarathil Kochuni @ Moopil Nayar and Ors., vs. States of

Madras and Kerala and Ors.,

. Further, the petitioners also contend that, the

provisions of G.O.Ms.No.7 cannot be read into the provisions of the Duty Act,

as Act 23 of 2024, mentions G.O.Ms.No.7, in passing and there is nothing in

AIR 1984 AP 75:: 1983 SCC Online AP 61

AIR 1952 SC 369

AIR 1960 SC 1080

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the language of the Objects and Reasons of Act 23 of 2024 to make out a

case for reading such guidelines as part and parcel of the Duty Act. The

petitioners also dispute the applicability of the judgment in D D.K.V.Prasada

Rao and Ors., vs. The Government Of Andhra Pradesh . The learned

Advocate General contends that the Objects and Reasons of an Act, on the

basis of Vivek Narayan Sharma and Ors., vs. Union Of India and Dharani

Sugars and Chemicals Limited vs. Union of India and Ors., , can be

looked into for obtaining guidance.

65. It is necessary to first go into the question of whether the Objects

and Reasons of an Act can be looked into for obtaining guidance. The Hon’ble

Supreme Court, which was considering the question of whether an Advocate

enrolled with the Hon’ble Supreme Court was entitled to act before the

Hon’ble High Court of Calcutta, in the case of Aswini Kumar Ghose v.

Arabinda Bose, at page 266, refused to take the aid of the statement in the

Objects and Reasons, for interpreting the Act, for the following reason:

32. As regards the propriety of the reference to the

Statement of Objects and Reasons, it must be

remembered that it seeks only to explain what reasons

induced the mover to introduce the Bill in the House and

what objects he sought to achieve. But those Objects and

Reasons may or may not correspond to the objective

which the majority of members had in view when they

passed it into law. The Bill may have undergone radical

changes during its passage through the House or Houses,

and there is no guarantee that the reasons which led to its

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introduction and the objects thereby sought to be achieved

have remained the same throughout till the Bill emerges

from the House as an Act of the Legislature for they do not

form part of the Bill and are not voted upon by the

members. We, therefore, consider that the Statement of

Objects and Reasons appended to the Bill should be ruled

out as an aid to the construction of a statute.

66. This principle was followed, by a Constitution bench of the

Hon’ble Supreme Court, in Kavalappara Kottarathil Kochuni @ Moopil

Nayar and Ors., vs. States of Madras and Kerala and Ors.

67. In Dharani Sugars and Chemicals Limited vs. Union of India

and Ors., the Hon’ble Supreme Court, while considering the question of lack

of guidance, in the course of delegation of legislative functions, had held:

28. When it comes to lack of any guidelines by which

the power given to RBI is to be exercised, it is clear from a

catena of judgments that such guidance can be obtained

not only from the Statement of Objects and Reasons and

the Preamble to the Act, but also from its provisions. Thus,

in Harishankar Bagla v. State of M.P. [Harishankar

Bagla v. State of M.P., (1955) 1 SCR 380 : AIR 1954 SC

465 : 1954 Cri LJ 1322] , this Court held: (SCR pp. 388-89

: AIR p. 468, para 9)

―9. The next contention of Mr Umrigar that Section 3 of

the Essential Supplies (Temporary Powers) Act, 1946,

amounts to delegation of legislative power outside the

permissible limits is again without any merit. It was settled

by the majority judgment in Delhi Laws Act case [Delhi

Laws Act, 1912, In re, 1951 SCC 568 : 1951 SCR 747 :

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AIR 1951 SC 332] that essential powers of legislature

cannot be delegated. In other words, the legislature

cannot delegate its function of laying down legislative

policy in respect of a measure and its formulation as a rule

of conduct. The legislature must declare the policy of the

law and the legal principles which are to control any given

cases and must provide a standard to guide the officials or

the body in power to execute the law. The essential

legislative function consists in the determination or choice

of the legislative policy and of formally enacting that policy

into a binding rule of conduct.

In the present case the legislature has laid down such

a principle and that principle is the maintenance or

increase in supply of essential commodities and of

securing equitable distribution and availability at fair

prices. The principle is clear and offers sufficient guidance

to the Central Government in exercising its powers under

Section 3. Delegation of the kind mentioned in Section 3

was upheld before the Constitution in a number of

decisions of their Lordships of the Privy Council,

vide Russell v. R. [Russell v. R., (1882) LR 7 AC 829 (PC)]

, Hodge v. R. [Hodge v. R., (1883) LR 9 AC 117 (PC)]

and Shannon v. Lower Mainland Dairy Products

Board [Shannon v. Lower Mainland Dairy Products Board,

1938 AC 708 (PC)] and since the coming into force of the

Constitution delegation of this character has been upheld

in a number of decisions of this Court on principles

enunciated by the majority in Delhi Laws Act case [Delhi

Laws Act, 1912, In re, 1951 SCC 568 : 1951 SCR 747 :

AIR 1951 SC 332] . As already pointed out, the Preamble

and the body of the sections sufficiently formulate the

legislative policy and the ambit and character of the Act is

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such that the details of that policy can only be worked out

by delegating them to a subordinate authority within the

framework of that policy. Mr Umrigar could not very

seriously press the question of the invalidity of Section 3 of

the Act and it is unnecessary therefore to consider this

question in greater detail.‖

68. At first blush, there does appear to be a contradiction between

these two judgments. However, a closer look would reveal that there is no

such contradiction. In Aswini Kumar Ghose v. Arabinda Bose, the Hon’ble

Supreme Court had held that the statement in the Objects and Reasons,

cannot be used to interpret a provision of the Statute. In Dharani Sugars and

Chemicals Limited vs. Union of India and Ors., the Hon’ble Supreme Court

was not looking at an interpretation of the Statute. The Hon’ble Supreme

Court, after considering whether any guidelines, for exercise of discretion by

the executive, can be extracted from the statement in the Objects and

Reasons of that Statute, had held that such an exercise was permissible. In

such circumstances, it would be open to this court to see if any such

guidelines can be made out from the statement of Objects and Reasons, set

out in Act 23 of 2024.

69. The law, as laid down by the Hon’ble Supreme Court, in the

judgments cited above, is that the function of the legislature is to formulate the

policy and purpose for which a Statute is sought to be enacted, leaving the

details of the implementation to the executive. This latitude has to be given to

the executive due to the complexity of present day economic activity and the

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multifarious requirements of the regulatory and taxation framework. However,

this latitude is, explicitly or implicitly, controlled by the requirement of adhering

to the purposes of the Statute. Therefore, this Court is required to see what

the purpose and object of the Act is, and consider whether such an inherent

control, over the discretion given to the executive, can be found and

formulated.

70. The Duty Act has been enacted to levy Duty on the sale and

consumption of electricity in the State of Andhra Pradesh. It is a taxation

statute, brought into existence to create revenue for the State. The Duty,

collected under the Duty Act, is not a cess, which is to be used for a specific

purpose. It would go into the general revenue stream of the State. No

guidance can be gleaned from the structure of the Duty Act or from any of the

attendant circumstances. The Learned Advocate General also does not

contend that there is guidance, in the Duty Act, relating to categorization of

consumers, even prior to Act 23 of 2024. It is his case that such guidelines

have been introduced, by mention of G.O.Ms.No.7, in the objects and reasons

given in Act 23 of 2024. For this purpose it is necessary to take a closer look

at G.O.Ms.No.7 and the objects and reasons of Act 23 of 2024.

71. The relevant part of G.O.Ms. No.7, reads as follows:

In exercise of the powers conferred by sub-section (1)

Section 3 of the Andhra Pradesh Electricity Duty Act,

1939, the Government of Andhra Pradesh hereby levy an

electricity duty of 1 (one) rupee per kWh (unit) on energy

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sales for the Commercial and Industrial Consumers as

indicated in the relevant yearly Retail Supply Tariff Order

issued by Hon’ble APERC. For Domestic Consumers, the

existing electricity duty of 6 paise per KWh (unit) shall

continue to be levied, while Agriculture consumers shall be

exempted from levy of any such duty.

72. The Retail Supply Tariff Order, dated 30.03.2022, for 2022-23,

which has been placed before this court, is the relevant Tariff Order. In this

order, consumers have been categorized, for purposes of fixing Tariff, at the

retail level, into two broad categories, namely LT category and HT category,

with further sub division in the following manner:

LOW TENSION

(I) Domestic, (II) Commercial, (III) Industry, (IV)

Institutional, (V) Agriculture & related.

Each sub category is further categorized, on the

basis of consumption of electricity or on the basis of

the nature of the consumer.

HIGH TENSION

(I) HT at 11 KV

A. Townships, Colonies, Gated Communities and

Villas, B. Commercial & others, C. Industry D.

Institutional and E. Agriculture and Related.

(II) HT at 33 KV,

A. Townships, Colonies, Gated Communities and

Villas, B. Commercial & others, C. Industry D.

Institutional and E. Agriculture and Related.

(III) HT at 132 KV.

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A. Townships, Colonies, Gated Communities and

Villas, B. Commercial & others, C. Industry D.

Institutional and E. Agriculture and Related.

73. In G.O.Ms.No.7, the Government, while fixing the rates of Duty,

appears to have relied upon this categorization. However, there are certain

significant variations. The Tariff order speaks of two categories of Low

Tension (LT) and High Tension (HT) consumers which are, sub-divided into

5 sub-categories. G.O. Ms. No. 7, does not differentiate between LT and HT

consumers and only refers to Domestic, Commercial, Industrial and

Agricultural categories. There is no mention of the sub categories, within the

categories relating to Low Tension consumers. There is no mention of

Institutional consumers, in LT or HT categories or of ―Townships, Colonies,

Gated Communities and Villas‖, in the HT category. There is neither levy of

Duty or exemption from Duty, on these two classes of consumers. In such a

situation, it can only be said that the classification, in G.O.Ms.No.7, is an

adaptation and not an unequivocal adoption of the categories in the Tariff

order.

74. Another aspect that needs to be gone into is the relevance and

effect, of the mention of G.O.Ms.No.7, in the Objects and Reasons of Act 23

of 2024. The Objects and Reasons, given for enacting Act 23 of 2024, are as

follows:

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i. The rate of Duty, at 6 paise per unit, which was fixed on 01.12.1993,

had remained unchanged for the past 28 years and there was a

need to increase it, especially because other states had increased

the rate of Duty substantially. Since, the attempt to increase this rate

of Duty, by way of Act 10 of 2021, was found to be burdened by

some defects, it was necessary to bring in a fresh legislation to

rectify these defects;

ii. to provide legislative guidance for the range of Duty rates, in the Act

itself;

iii. to protect all Duty recovery actions, by the licensees, from various

persons (iv) to protect the collection of Duty, between 26.08.2021,

when Act 10 of 2021 was brought into force, by Act 10 of 2024 and

the notification of Duty, by G.O.Ms.No.7, dated 08.04.2022.

75. The relevant extract of the Objects and Reasons, where G.O. Ms.

No. 7 is mentioned is:

To achieve the above objectives, the State Legislature

has passed the Act No.10 of 2021 i.e., Andhra Pradesh

Electricity Duty (Amendment) Act, 2020. As the said Act

was published, pursuant to securing all the mandatory

assents, by way of Gazette Notification on 26th August

2021, the same date was intended for the purposes of

bringing the Act No. 10 of 2021 into force. However, the

terms ―appoint‖ / ―appointed date‖ could not be defined

under section 1 (2) of the said Amendment Act, which

provides that ―it shall come into force on such date as the

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State Government may, by notification, appoint,‖ and a

separate ―notification‖ could not be issued due to an

inadvertent omission. To avoid potential legal

complications, the State Legislature passed Act No. 10 of

2024 i.e., Andhra Pradesh Electricity Duty (Amendment)

Act, 2024 on March 6th, 2024, which amended the

A.P.E.D. Amendment Act of 2020. This 2024 amendment

brought the APED; Amendment Act of 2020 into force

from the date of its publication in the A.P. Gazette on 26th

August, 2021.

Further, due to the imminent need to 1) protect all duty

recovery actions of the licensees from various persons or

classes of persons for the entire extent of the electricity

duty collected by the State Government from the

licensees, 2) to protect the collection of electricity duty

during the period between the date of A.P.E.D.

Amendment Act 2020 coming into force, i.e., 26.08.2021,

and the duty rates notified vide G.O.Ms.No.7, dated

08.04.2022, and 3) to provide appropriate legislative

guidance on the range of duty by way of validating

amendments and substitutions to the fiscal statute with

retrospective effect, it has been felt necessary to propose

amendments to sections 3(1) and 7(1) of the Andhra

Pradesh Electricity Duty Act, 1939 (as amended by Act

No.10 of 2021 and Act No.10 of 2024) (hereinafter

referred to as ―the Act‖).

In order to provide legislative guidance for the range of

duty rates in the Act itself, a rate of duty between 0.06

rupees (6 paise) per unit (KWH) of energy and 1.00

rupees (100 paise) per unit (KWH) of energy is being

provided in Section 3 (1) of the Act. Within the range of

duty provided, the State Government may decide on the

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rate to be levied, considering the increase in cost of supply

and current consumption year by year, the costs and

obligations of developing physical infrastructure, and a

variety of dynamic factors with a bearing on the subject

which vary from time to time.

76. None of the Objects and Reasons relate to the question of

categorization. They are either relating to fixation of rate of Duty or the need to

rectify the legal defects, in the earlier legislative attempts, to increase the rate

of Duty and the recovery of such Duty, by the licensees. Even the part relating

to fixation of Duty, is on the question of the range within which such discretion

is to be given, and not on categorization. G.O.Ms.No.7 is a solitary executive

order, adapting the classification, adopted by the APERC, in its Tariff order.

Neither the Text nor the Context, of G.O.Ms.No.7, indicates that this

adaptation of the classification, in the Tariff order, is a long term or permanent

feature of classification by the executive. The adaptation or adoption of the

nomenclature, used in the Tariff Order, in G.O.Ms.No.7, does not make out

any case of giving future guidance, in relation to the method or basis of

identifying categories of consumers. There is every possibility of the

Government coming up with a new and different basis for classification of

consumers and the classification, mentioned in G.O.Ms.No.7, does not bind

the Government to adhere only to this classification.

77. The Objects and Reasons, of Act 23 of 2024, state that the Act is

being enacted for protecting the collection and recovery of Duty levied under

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G.O.Ms.No.7. In view of the context, in which it has been mentioned, the mere

mention of G.O.Ms.No.7, in the Objects and Reasons, would not mean that

guidance is being provided to the executive.

78. The stand of the State is that, guidance has to be elicited on the

basis of the Objects and Reasons, of Act 23 of 2024. As discussed above, no

guidance can be obtained from these Objects and Reasons. Consequently,

the delegation of power, to the executive, to identify categories without any

guideline or policy, would amount to excessive delegation, which is not

permissible.

79. The learned Advocate General, had contended, in the alternative,

that the ratio in D.K.V. Prasada Rao and Ors., vs. The Government of

Andhra Pradesh, would be applicable to the facts of the present case. In the

above case, the delegation of the power to fix rates of admission, to various

classes, in cinema theatres, was challenged before the erstwhile High Court of

Andhra Pradesh. The challenge was negatived on the ground that fixation of

rates, in that case, had sufficient guidance. The said judgment would not be of

assistance to the State, as there was no challenge to the classification of the

different classes of admission into the theatres and this case only dealt with

fixation of rates and not with the issue of classification or categorization.

80. Accordingly, it is held that the delegation of the power, to

categorize, is not accompanied by any guidance, either in the Duty Act or

otherwise and consequently, the amendment to section 3, by Act 23 of 2024,

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as well as Act 10 of 2021, to the extent of giving discretion to the government

to categorize consumers as per its discretion is invalid. This invalidity is on

account of excessive delegation. The other amendments to section 3 do not

suffer from any infirmity and are upheld.

ISSUE NO. 2

Whether the amendment to Section 7 of the Duty Act, by Act 23 of 2024

is valid?

81. The changes made in section 7, of the Duty Act are as follows:

Section 7(1) (As stood prior to its

amendment

Section 7(1) (as amended by Act

No.23 of 2024)

Any licensee may with the previous

sanction of the State Government and

subject to such conditions as they may

impose, recover from any person or class

of persons to whom energy, is sold at a

price of more than twelve paise per unit,

the duty which falls to be paid by the

licensee in respect of energy so sold or

any part of it, as may be determined by

the State Government.

Any Licensee may, with the sanction of

the state government, whether granted

prior or post facto and subject to such

condition as may be imposed at any

time, recover from any person or class of

persons to whom energy, is sold at a

price of more than twelve paise per unit,

the duty which falls to be paid by the

licensee in respect of energy so sold or

any part of it, as may be determined by

the State Government.

Provided that the duty recovered or

to be recovered by the licensee from

any person or class of persons, for

the full amount of duty paid/falls to be

paid by the licensee to the state

government, shall always be deemed

to have been recovered with the

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sanction of the State Government,

which sanction can be granted either

before or after any action for recovery.

82. The petitioners contend that, under section 7 of the un-amended

Duty Act, prior sanction was necessary for recovery of duty, by the Licensees

from the consumers, whereas the amendment removes this safeguard and

gives unbridled and unguided power to the executive to grant sanction post or

pre facto, for collection of Duty from the consumers. They would point out to a

situation where, the licensee recovers Duty, without sanction and is permitted

to utilize the same, for any length of time, on the pretext that the Government

had not taken a decision to sanction such recovery or not. The petitioners

contend that in such a situation, there would be collection of Duty without

authority of Law. Further, such power is given, to the licensees, without any

guidelines and would be bad for excessive delegation of power.

83. The learned Advocate General would contend that the plenary

power of the legislature would include the power to legislate retrospectively.

He would also contend that the State is the ultimate beneficiary of the

collection of Duty and as such, pre or post facto sanction would not make any

difference. It is further contended that this amendment had been carried out

for the purposes of saving the collection of the Duty from 26.08.2021 till

19.12.2024, when Act 23 of 2024 had been brought into force.

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84. The scheme of the Duty Act, prior to the impugned amendment of

Section 7 of the Duty Act, needs to be considered. The Duty, under the Duty

Act is levied and collected, by the State, from the licensee. However, the

State, under Section 7, can permit the licensee to reimburse itself, by

collecting the said Duty from its consumers. This permission was to be

obtained before any Duty could be collected from the consumers. At this stage

another facet needs to be considered. Taxation statutes are broadly

categorized into direct taxes and indirect taxes. Direct taxation statutes are

Acts where the levy and collection is on the taxpayer under that Act, without

any opportunity to pass on the liability. Indirect Taxation statutes are Acts

where the person who is liable to pay the tax, is permitted to pass on the

burden. Normally, passing on the burden is again a matter of contract

between the person liable to pay the tax and the person to whom such liability

is being passed on. In short, the person to whom the liability is sought to be

passed on has a say in the matter and can decline to bear the burden. This

does not appear to be the case, under the Duty Act. The language of Section

7 makes it clear that this permission is a sanction to collect, without reference

to consent of the consumers. The consumer has no say in the matter and the

licensee is entitled to pass on the Duty. Effectively, wherever such prior

sanction is given, the levy and collection of Duty is shifted to the consumer.

This can also be seen in the language in which G.O.Ms.No.277, dated

09.12.1994, has been couched. In this G.O., sanction is granted to collect

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Duty from the consumers subject to certain conditions contained therein. None

of the conditions require the consent of the consumers for collection of Duty

from them. On the contrary, it is stipulated, in condition (d) that the licensee

can exercise powers under section 24 (1) of the Indian Electricity Act, 1910 to

recover the Duty. Condition (e) directs that interest at the rate of 24% per

annum can be collected as interest, on unpaid Duty, from the consumer.

85. Under the above scheme, the Duty Act is neither a classical direct

tax nor indirect tax system. It is a statute where a direct tax regime could be

changed into an indirect tax regime, of sorts, by the government giving prior

sanction. The option of making such a switch was delegated to the

government alone. This scheme is now modified to permit the licensees to

collect the Duty, levied on them, without any prior sanction. The sanction can

be pre or post facto. The collection of Duty, from the consumers, is at the sole

discretion of the licensees. In effect, the burden and liability of payment of

Duty, on the consumers, can be decided by the licensees, who are non state

entities, without reference to the government and the situation can be rectified

only if the government intervenes, subsequently. This kind of delegation is not

delegation to the government, but delegation to private/public entities, with

oversight given to the government. Such a delegation, by any stretch of

imagination, would not be permissible.

86. The Hon’ble Supreme Court in M.P.Cement Manufacturers

Association vs. State of M.P., had held that electricity Duty is a tax. Under

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the amended Section 7, a licensee, without prior approval, can collect Duty

from its consumers. This collection, as observed above, is not a matter of

contract between the licensee and the consumers. It is collection of tax, by the

licensee, under authority of Law, acting as an agent of the State. The

government which does not interfere in such collection can at a later stage

refuse post facto sanction. This would mean that a tax has been collected,

from the consumers, without authority of Law. Such a recovery of tax would be

violative of Article 265 of the Constitution of India. A provision of law, which

enables such a situation, would also be violative of Article 265 of the

Constitution.

87. It was open to the legislature to have shifted to an indirect tax

regime, by simply stipulating that Duty can always be collected, by a licensee,

from its consumers, subject to an exemption being given by the government,

from such collection. Instead, the legislature chose to amend section 7, in the

manner set out above. It would have to be construed that, the legislature was

not proposing to change the system, except to the extent of giving discretion

to the licensees to collect Duty from the consumers. The learned Advocate

General contends that this amendment is for the purposes of protecting the

collection of Duty between 21.08.2021 and 19.12.2024. Such a contention

could have been considered, if the amendments had restricted itself to this

period, by treating the same as a onetime ratification of the collection of Duty.

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However, the open ended provision, permitting such collection in the future

also, militates against any such consideration.

88. In the circumstances, the amendment to section 7, including the

proviso would have to be declared to be invalid and violative of Article 265 of

the Constitution of India apart from amounting to excessive delegation.

ISSUE – 3

Whether G.O.Ms.No.7, dated 08.04.2022 is valid?

89. G.O.Ms.No.7 has been issued on the basis of the amended

section 3 of the Duty Act, empowering the government to fix different rates of

Duty to different categories of consumers. The power to fix any rate of Duty,

between six paise to one rupee per unit, has been upheld by this court. The

power to categorize consumers has been struck down. Consequently, the

fixation of different rates of Duty, for different categories identified by the

government would have to be set aside. In view of the above, this court is not

going into the other contentions raised by either side. Accordingly,

G.O.Ms.No.7 is struck down.

90. However, it would also have to be observed that the proviso to

Section 3, fixing the minimum rate of Duty at 6 paise per unit is valid.

Consequently, levy of Duty, irrespective of the category of the consumer,

subject to such exemptions that may have been given, under section 3A of the

Duty Act, would be valid.

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ISSUE – 4

Whether G.O.Ms.No.22, dated 23.10.2024 is valid?

91. Clause 3 (a) of G.O.Ms.No.22 reads as follows:

3. Without prejudice to the Government’s stand that the

levy as undertaken pursuant to the G.OMs.No.7, date

08.04.2022 is strictly in accordance with law and in

accordance with the sanction as obtained in

G.O.Ms.No.277 (Energy & Forests (Pr.III) Department),

date 09.12.1994. However, as an abundant precaution,

Government after careful examination of the above issue

and in exercise of the powers under sub-section (1) of

Section 7 of the Andhra Pradesh Electricity Duty Act, 1939

(as amended from time to time)

a. Accords permission to the Licenses / DISCOMSs

(APCPDCL, APSPDCL and APEPDCL) to recover the

Electricity Duty at the rate(s) and from the consumers /

class of consumers as notified in the G.O.Ms.No.7,

Energy (Power.III) Department, dated 08.04.2022, to

whom energy is sold at a price of more than 12 paise

per unit, subject to the following conditions.

i) The electricity duty recoverable from such consumer

or class of consumers shall not be a part of the price

charged for the energy sold by the Licensees /

DISCOMs.

ii) The duty recoverable from a consumer or class of

consumers shall be a first charge on the amounts

recoverable by the Licensees / DISCOMs for the

energy supplied by the Licensees / DISCOMSs and

shall be a debt due by the Licensees / DISCOMSs to

the State Government.

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92. As can be seen from the above extract, this G.O. has been

issued for permitting licensees to collect, from consumers, the Duty fixed

under G.O.Ms.No.7. Since G.O.Ms.No.7, has been struck down, the question

of granting sanction to collect Duty, fixed under G.O.Ms.No.7, would not arise.

Accordingly, G.O.Ms.No.22 is also struck down. As this G.O. has been struck

down, on this ground, this court is not going into the other contentions raised

against this G.O.

93. The Government, while issuing G.O.Ms.No.22, had stated, in

clause 3, that earlier sanction, for licensees, to collect Duty from consumers,

was already available, under G.O.Ms.No.277, dated 09.12.1994. This G.O.

has not been challenged. Therefore, sanction, to collect Duty, at the rate of six

paise per unit, from the consumers would continue to be in effect.

94. For the aforesaid reasons, all the cases are disposed of in terms

of the following order:

1. The amendment to Section 3, by Act 23 of 2024, to the extent of

granting power to the government to fix the rate of Duty between six

paise to one rupee per unit is upheld.

2. The amendment to Section 3, by Act 10 of 2021 and Act 23 of 2024, to

the extent of granting power to the government to identify categories of

consumers, for purposes of fixing the rate of tariff is set aside.

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3. The proviso, to Section 3, stipulating that, in the absence of the rate of

duty notified by the state government for different consumer categories

at any given time, a minimum duty of 6 paise (Rs. 0.06) per unit of

energy shall be levied, shall remain unaffected.

4. The amendments to Section 7, by Act 23 of 2024, are struck down.

5. G.O.Ms.No.7, dated 08.04.2022 is struck down. However, the

government is entitled to collect Duty at the rate of 6 paise per unit,

throughout the period from the date when Act 10 of 2021 was published

in the Gazette till such time as the rate of duty is modified, in

accordance with law. Further, the exemption granted to agricultural

consumers under G.O.Ms.No.82, dated 07.07.2003, remains in force.

6. G.O.Ms.No.22, dated 23.10.2024, is struck down. However,

G.O.Ms.No.277, dated 09.12.1994, remains in force throughout the

disputed period and the Licensees are permitted to recover Duty, at the

rate of 6 paise per unit, from the consumers, subject to any exemption

that may have been granted, or would be granted, under section 3A of

the Duty Act.

There shall be no order as to costs.

As a sequel, pending miscellaneous applications, if any, shall stand

closed.

DHIRAJ SINGH THAKUR , CJ R. RAGHUNANDAN RAO, J

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Js.

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HON’BLE MR. JUSTICE DHIRAJ SINGH THAKUR, CHIEF JUSTICE

HON’BLE MR. JUSTICE R. RAGHUNANDAN RAO

W.P.No.29672 of 2023 & batch

(per Hon’ble Sri Justice R.Raghunandan Rao)

June, 2025

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