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PETITIONER:

1. THE STATE OF MADHYA PRADESH2. THE ELECTRICAL ADVISER TO G

Vs.

RESPONDENT:

M/S. BIRLA JUTE MANUFACTURING CO. LTD.

DATE OF JUDGMENT10/05/1995

BENCH:

VENKATACHALA N. (J)

BENCH:

VENKATACHALA N. (J)

KULDIP SINGH (J)

CITATION:

1996 AIR 167 1995 SCC (4) 603

JT 1995 (4) 572 1995 SCALE (3)729

ACT:

HEADNOTE:

JUDGMENT:

WITH

WRIT PETITION NO. 2739 OF 1985

1. M/s. Birla Jute Manufacturing Co. Ltd.

2. Shri M.M. Gadodia

Versus

1. The State of Madhya Pradesh

2. The Electrical Adviser to Government of Madhya Pradesh

3. The Regional Accounts Officer, Madhya Pradesh Electricity

Board

J U D G M E N T

VENKATACHALA, J.

Soecial leave sought for in S.O.F. No. 3870 of 1982 is

granted.

The State of Madhya Pradesh, its Electrical Adviser and

Regional Accounts Officer of the Madhya Pradesh Electricity

Board, have filed the above Civil Appeal under Article 136

of the Constitution of India, impugning a Division Bench

judgment and order dated May 1, 1982 of the High Court of

Madhya Pradesh in Misc. writ Petition No. 320/80 wherein it

has been held that the rate of duty payable on consumption

of the electrical energy under the Madhya Pradesh

Electricity Duty Act, 1949 - "the 1949 Act" in premises of

M/s. Birla Jute Manufacturing Company Limited - "M/s. Birla

Ltd." to which the Mines Act, 1952 - "the Mines Act"

applied, was required to be calculated under item (2) and

not item (1) of Table to section 3 of the 1949 Act.

M/s. Birla Ltd. and its Director, Shri M.M. Gadodia,

have filed the above writ Petition under Article 32 of the

Constitution of India, impugning the constitutionality of

the Madhya Pradesh Electricity Duty (Amendment and

Validation) Act, 1984 - "the Validation Act" which amended

certain provisions of the 1949 Act, validating duty levied

on consumption of electrical energy imposed under the 1949

Act in respect of premises to which the Mines Act apolied.

Since questions arising for our consideration and decision

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in the Civil Appeal and the writ petition relate to

sustainability of levy imposed under the 1949 Act on

electrical energy consumed in a premises to which the Mines

Act applied, they could be disposed of together.

Facts which are material for a proper consideration of

the questions arising for our pecision in the said appeal

and writ petition, could be stated thus:

M/s. Birla Ltd. has set up several industries all over

the country for the manufacture and sale of consumable

goods. One of such industries set up by M/s. Birla Ltd. is

M/s. Satna Cement works with lime-stons mines at one place

and a cement factory at another place, in the State of

Madhya Pradesh. Huge lime-stone boulders extracted from the

mines known as dnokas are broken into small sized lime-

stones known as gittis for being used as raw-material for

manufacture of cement in the cement factory by a lime-stone

crusher erected in a premises located at the mines-head of

lime-stone mines to which the Mines Act applies. For the

electrical energy consumed by the lime-stone crusher in that

premises at mines-head during the year 1979-1980, the

Government of Madhya Pradesh levied duty under section 3 of

the 1949 Act at a rate calculated under Item (1) of Table

below that section and raised demands thereon, against M/s.

Birla Ltd. Such levies and demands were refuted by M/s.

Birla Ltd. by contending that it was liable for levy of duty

on electrical energy consumed for preaking dhokas into

gittis by the lime-stone crusher in the premises at mines-

head only at a rate calculated in item (2) of Table to

section 3 of the 1949 Act, notwithstanding the applicability

of the Mines Act to the said premises, in that that premises

had to be regarded as a factory for fixing the rate of duty

payable on electrical energy consumed therein because of

inclusive meaning of factory given in Explanation (c) to

section 3 of the 1949 Act itself. Since the Government of

Madhya Pradesh persistet in its demands made against M/s.

Birla Ltd., the latter filed a writ Petition, Misc. W.P. No.

520 of 1980 in the Madhya Pradesh High Court challenging the

said levies and demands. A Division Bench of the High Court

taking the aid of Explanation (c) to section 3 of the 1949

Act, duashed the levies and demands challenged by M/s. Birla

Ltd., by upholding the contention that its liability to pay

duty was only at the rate calculated under clause (2) of

Table to section 3 of the 1949 Act, by its judgment and

order dated May 1, 1982 rendered in that writ petition, it

is the correctness of that judgment and order which has been

under challenge in the present appeal filed by the State of

Madhya Pradesh, its Electrical Adviser and Regional Accounts

Officer of the Madhya Pradesh Electricity Board.

While, the correctness of the said judgment and order

of the High Court in the present appeal was pending

consideration and decision by this Court, the State of

Madhya Pradesh enacted and brought into force the aforesaid

validation Act. What has been impughed in the present writ

petition by M/s. Birla Ltd. is the constitutional validity

of that Validation Act.

We have heard learned counsel for the contesting

parties in the appeal as well as the writ petition. We have

been taken through the judgment of the High Court under

appeal and the relevant provisions of the 1949 Act and the

Validation Act. Whether the duty leviable on consumption of

electrical energy by M/s. Birla Ltd. under section 3 of the

1949 Act in their premises to which the Mines Act applies is

at the rate specified in Item (1) or Item (2) of the Table

given below that section being the main question which needs

to be answered by us in deciding the present appeal and the

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writ petition, we shall proceed to find the answer therefor,

at the first instance.

Since the answer to the said question has necessarily

to depend on a proper construction to be placed by us on

section 3 of the 1949 Act, as a whole, as to its ambit and

application, it could be reproduced for the sake of easy

reference and proper examination, thus:

"3. Levy of duty on sale of

consumption of electric energy - Subject

to the exceptions specified in section

3-A every distributor of electrical

energy and every producer shall pay

every month to the State Government at

the prescribed time and in the

prescribed manner a duty calculated at

the rates specified in the Table below

on the units of electrical energy sold

or supplied to a consumer or consumed

by himself for his own purposes or for

purposes of his township or colony,

during the preceding month:

TABLE

Rate of Duty

(1) Electrical energy sold or

supplied for consumption

in premises used -

(a) for business trade or 8 paise per unit of

commercial purposes or energy upto 80 units

for purposes of profe- of energy sold or

ssional persuits other supplied in a month.

than for flour mills.

10 paise per unit for

each additional unit

sold or supplied in a

month in excess of

units but not in exce-

ss of 100 units of

energy

12 paise per unit for

each additional unit

sold or supplied in a

month in excess of 100

units of energy.

(b) for flour mills 2 paise per unit of

energy.

(2) Electrical energy sold 2 paise per unit of

supplied for consumption energy.

in in premises of a fact-

ory excluding energy sup-

plied for consumption for

domestic or non-factory

purposes where the conn-

ected load

(a) does not exceed 100 H.P. 1.5 paise per unit of

energy.

(b) exceeds 100 H.P. 3 paise per unit of

energy.

(3) Electrical energy sold or 65 paise per unit of

supplied for purposes of energy upto 50 units

ellumination on the occa- of energy sold or sup-

sion of marriages or other plied on any one occa-

social functions. sion.

Rest per unit for each

additional unit sold

or supplied on any one

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occasion in excess of

100 units of energy.

(4) Electrical energy sold or

supplied for energy cons-

umption in :-

(a) a township or colony

attached to a factory,

mine, or institution or

(b) a premises getting supply

at high voltage or extra

high voltage but not cov-

ered under Items (1) and

(2) in above.

(5) Electrical energy sold or 6.5 paise per unit of

supplied for consumption in energy upto 50 units

premises and for purposes of energy sold or sup-

not covered under (1) to (4) plied in a month.

above.

7 paise per unit for

each additional unit

sold or supplied in a

month in excess of 50

units but not in exc-

ess of 150 units of

energy.

12 paise per unit for

each additional unit

sold or supplied in a

month in excess of 150

units of energy.

Provided that if the electrical

energy sold or supplied for consumption

for any one purpose is used either

wholly or partly, without the consent of

the distributor of energy or producer or

electricity, as the case may be, for

consumption for any other purpose for

which a higher rate of duty is

chargeable the entire energy sold or

supplied shall be charged at the highest

rate applicable.

Explanation - For the purpose of

this section -

(a) `Month means such period as may be

prescribed and till such period is

prescribed, the filing month :

(b) Premises used for business, trade

commercial purposes or for purpose

of professional persuits shall

include the premises used -

(1) for the purposes of mines to

which Mines Act, 1952 (No. 35 of 1952)

applies :

(2) for the purposes of industries

which do not require raw materials for

carrying on the industries but which are

carried on for rendering services such

as flour mill, repains workshop and the

like and are not registered as factories

under the Factories Act, 1945 (No. 63 of

1948) :

(c) Factory means a factory

registered under the Factories Act 1945

(No. 67 of 1946) : and includes premises

used for the purposes of Industries

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which require raw materials for carrying

on the manufacturing process and prepare

finished goods for sale."

As seen from section 3 above, duty leviacle thereunder

and payable to the State Government every month on

electrical energy sold or supplied or consumed during the

preceding month is required to be calculated at the rate per

unit specified in the Table given below that section. As per

the Table, duty payable for the electrical energy sold or

supplied for consumption varies from item to item, depending

upon the purpose for which it is consumed. when item (1) of

the Table is seen, the rate of duty payable for electrical

energy sold or supplied for consumption in a premises covers

premises used for business, trade or commercial purposes or

for purposes of professional persuits other than for flour

mills. Because of the explanation (b) to the section which

says that for the purpose of the section premises used for

business, trade, commercial purposes or for purpose of

professional persuite shall include the premises used for

the purpose of mines to which the Mines Act, 1952 applies,

any premises in or a mine which is used for processing the

mines extracted from the mine, becomes the premises covers

under Item (1) of the Table. When Item (2) of the Table is

seen, the rate of duty payable for electrical energy sold or

supplied for consumption in a premises covers a factory,

because of explanation (c) which says that for the purpose

of the section factory not only means a factory

registered under the Factories Act, 1948, but also includes

a premises used for the purpose of industries which require

raw materials for carrying on the manufacturing process and

prepare finished goods for sale. When Item (3) of the Table

is seen. It refers to the rate of duty payable on electrical

energy sold or supplied for purposes of illumination on the

occasion of marriage or other social functions when Item (4)

of the Table is seen, it refers to the rate of duty payable

for electrical energy sold or supplied for consumption in a

township or colony attached to a factory, mine, or

institution or a premises getting supply at high voltage or

extra high voltage but not covered under Items (1) and (2)

of the Table. The rates fixed in respect of electrical

energy sold or supplied for consumption in a premises

covered by Item (4) cannot be reparded as a premises covered

by Item (1) or Item (2) of the Table because of the specific

exclusion of those items, as mentioned in Item (4) itself.

As seen from Item (5) of the Table, the rate of duty payable

for electrical energy sold or supplied for premises or

purposes covered thereunder cannot apply to premises or

purposes covered in Items (1) to (4) of the Table because of

their specific exclusion as mentioned thereunder. When the

rates of duty leviable under various items in the Table are

seen, each of them applies, according to the purpose for

which electrical energy is sold or consumed. Then, comes the

proviso to the Table which declares that the electrical

energy sold or supplied for consumption for any one purpose

is used either wholly or partly, without the consent of the

distributor of energy or producer of electricity, as the

case may be, for consumption for any other purpose for which

a higher rate of duty is chargeable, the entire energy sold

or supplied shall be charged at the highest rate applicable.

This, praviso, therefore, expressly states that the rates of

duty leviable for electrical energy consumed by premises or

purpose covered by more than one item. It is the highest

rate fixed under them which is laviable where the consumer

of electrical energy does not obtain the consent from the

distributor of electrical energy or producer of electricity

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for change in such user, Hence, according to the proviso if

consent is otained by the consumer of electrical energy from

the distributor of energy or producer of electricity for

using electrical energy in a cremises of a factory covered

by Item (2) it cannot be used for premises covered under

Item (1) and if such thing is done without obtaining such

consent, instead of lower duty payable for a premises

covered under Item (2), higher duty for a premises covered

under Item (1) becomes payable. In other words, proviso to

the Table requires that a consumer of electrical energy must

declare before such consumption as to the purpose for which

it would be consumed in the sense whether it would be

consumed for the purpose covered under Item (1) or Item (2)

or Item (3) or Item (4) or Item (5) of the Table. The

requirement of the proviso when is understood in the context

of the provisions under different items, the purpose for

which electrical energy is consumed, if falls under more

than one item, the rate at which duty becomes leviable would

be of the item for which highest rate of duty is fixed.

It regard is had to the aforesaid analysis of section

3, its Table and explanation, as to their ampit and

applicapility, can it be held that the rate of out payable

for electrical energy consumed in premises covered by Item

(2) of Table to section 3 of the 1947 Act is the rate

provided for thereunder, even where for such premises

(factory), the Mines Act is made applicable, is the

question.

No doubt, as we have already pointed out a factory

under clause (c) to the explanation to section 3 since

includes premises used for purposes of industries which

require raw materials for carrying on the manufacturing

process and prepare finished goods for sale, the premises of

M/s. Birla Ltd. at the mines near of their lime-stone mines

of the State of Madhya Pradesh where lime-stone bouloers-

dhokas extracted from the mines are broken into small

pieces, i.e., gittis for being used in their cement factory

or factory requiring raw-material for carrying on the

manufacturing process and prepare finished goods of cement

for sale, falls within the description of premises covered

by Item (2) of the Table to section 3 of the 1949 Act. But

the question is when such premises also falls within the

description of premises covered by Item (1) because of

clause (b) (1) to the Explanation whether the duty payable

for electrical energy used therein could only be what is

payable for premises under Item (2) of Table to section 3.

Since a premises for which mines Act is made applicable

becomes a premises covered by Item (1) of Table to section 3

of the 1949 Act which provides for highest rate of duty

leviable for electrical energy consumed in such premises

question of leviability of lower duty for such consumption

merely because of that premises answering the description of

premises in other Item of the Table respecting which lower

duty is leviable can never arise, for as we have pointes out

already, when once highest rate under an Item is leviable.

lower rate leviable under other item is excluded. It is,

therefore, our considerec view trem premises covered by Item

(1) to the Table to which Mines Act is made applicable being

the premises of M/s. Birla Ltd. at their mines-site gets

covered by Item (1) of Table and hence the duty payable for

consumption of electrical energy in that premises shall be

at the rate payable for the premises covered under Item (1)

of the Table to section 3 of the 1949 Act.

Hence, the view taken by the High Court in the judgment

and order under appeal that the premises of M/s. Birla Ltd.

at the mines site being a factory premises covered by Item

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(2) of the Table to section 3 of the 1949 Act the payment of

duty leviable in respect of electrical energy consumed in

that premises is covered by Item (2) of the Table, becomes

unsustainable and calls to be interfered with.

The next question which arises for our consideration is

as to sustainability of the provisions in the Validation Act

which validate the levy of duty imposed under Item (1) to

the Table to section 3 of the 1949 Act in respect of

electrical energy consumed in the premises of M/s. Birla

Ltd. at their mines site to which Mines Act is applicable

under the 1949 Act and in respect of similar premises of

other persons or companies to which Mines Act is applicable.

Although learned counsel for the petitioners for the

writ petitions sought to question the provisions of the

validation Act which purport to retrospective validate levy

of duty on electrical energy consumed in their premises

under the 1949 Act because of the view taken of section 3 of

the 1945 Act by the High Court in its judgment and order

under the present appeal, the learned counsel for the State

of Madhya Pradesh sought to support the sustainability of

the validation Act olacing reliance on the cecision of this

Court in Govt. of A.P. v. H.M.T. [1975] Suppl. S.C.R. 394,

where this Court had upheld the provisions of a Validation

Act by which duty made payable in respect of a building

premises retrospectively. Prima facie, the cecision of this

Court appears to support the stand of learned counsel for

the State. But, when the judgment and order of the High

Court under the present appeal, which is sought to be made

ineffective by the Validation Act, is held to be

unsustainable by us in the present appeal, we find it

unnecessary, to examine the constitutionality of the

Validation Act.

In the result, we not merely allow this civil appeal,

set aside the judgment and order of the High Court in W.P.

No. 520 of 1980 (reported in AIR 1982 m.p. 225) appealed

against and dismiss that writ petition, but also dismiss the

writ petition filed in this Court. No costs.