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The Jiyajeerao Cotton Mills Ltd. Vs. State of Madhya Pradesh - Court Judgment

LegalCrystal Citation
SubjectOther Taxes
CourtSupreme Court of India
Decided On
Judge
Reported inAIR1963SC414; [1962]Supp(1)SCR282
ActsCentral Provinces and Berar Electricity Duty Act, 1949 - Sections 3; Madhya Pradesh Taxation Laws Amendment Act, 1956; Constitution of India - Articles 133(1) and 226; ;Government of India Act, 1935; Indian Electricity Act, 1980
AppellantThe Jiyajeerao Cotton Mills Ltd.
RespondentState of Madhya Pradesh
Excerpt:
electricity - producer consuming electrical energy generation is also a consumer as he consumes electrical energy and is liable to duty - appeal dismissed - section 9: [tarun chatterjee & dalveer bhandari, jj] order of injunction validity -agreement for sale of property - plea by respondent owner that time was essence of contract and appellant-purchaser failed to perform his part of contract within specified time- status quo granted by trial court subject to condition of appellants depositing balance amount of consideration on basis of said plea held, where agreement for sale of property was executed by parties and matter was referred to arbitration wherein application for injunction was filed by appellant purchaser from transferring property to third party, the high court would not..........would not be liable to pay any duty at all. the second ground was that if the act permitted the levy of duty on electricity consumed by the producer himself it was ultra vires the constitution because in substance it would be a duty of excise which can be levied only by parliament under entry 84 of list i and that even if it was not excise duty it was beyond the competence of the madhya pradesh legislature to levy it in the absence of any appropriate entry in list ii. the petition was summarily rejected by the high court, but upon an application made by the appellant it granted to it certificate of fitness, as already stated. 4. mr. viswanatha sastri has reiterated before us the same grounds which were urged in the high court. 5. for the purpose of appreciating the first ground it.....
Judgment:

Mudholkar, J.

1. This is an appeal on a certificate of fitness granted by the High Court of Madhya Pradesh under Art. 133(1)(a) of the constitution.

2. The appellant is a textile mill at Gwalior in Madhya Pradesh. It generates electricity for the purpose of running its mills and for other purposes connected therewith. It does not sell electrical energy to any person.

3. Under the provisions of the Central Provinces and Berar Electricity Duty Act, 1949 (No. 10 of 1949) as amended by the Madhya Pradesh Taxation Laws Amendment Act, 1956 (Act No. 7 of 1956) the Government of Madhya Pradesh levied upon the appellant electricity duty amounting to Rs. 2,78,417/- for a certain period. The appellant paid it under compulsion and thereafter preferred a writ petition to the High Court of Madhya Pradesh under Art. 226 of the Constitution in which it challenged the validity of the levy on two grounds. The first ground was that upon a proper construction of s. 3 of the C.P. & Berar Electricity Duty Act, 1949 as amended by the Madhya Pradesh Taxation Laws Amendment Act, 1956 the appellant would not be liable to pay any duty at all. The second ground was that if the Act permitted the levy of duty on electricity consumed by the producer himself it was ultra vires the Constitution because in substance it would be a duty of excise which can be levied only by Parliament under Entry 84 of List I and that even if it was not excise duty it was beyond the competence of the Madhya Pradesh legislature to levy it in the absence of any appropriate entry in List II. The petition was summarily rejected by the High Court, but upon an application made by the appellant it granted to it certificate of fitness, as already stated.

4. Mr. Viswanatha Sastri has reiterated before us the same grounds which were urged in the High Court.

5. For the purpose of appreciating the first ground it would be useful to reproduce the terms of s. 3 of the Act. The section runs thus :

'Levy of duty on sale or consumption of electrical 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 or his employees during the preceding month. TableRates of Duty(i) Electrical energy suppliedfor consumption for lights,fans of any other appliancesnormally connected toa lighting circuit. 6 nP. per unit of energy.(ii) Electrical energy suppliedfor purposes other thanthose specified in item (i)above. 1 nP. per unit of energy.

6. This is the charging section. It is not disputed by Mr. Sastri that under this provision a producer of electrical energy is made liable to pay duty for the units of electrical energy consumed by himself. He, however, contends that rates of duty have been prescribed in the Table below s. 3 only with respect to electrical energy 'supplied for consumption' to others and that no rates have been prescribed with respect to electrical energy consumed by the producer himself. Section 2(a) of the Act defines 'consumer'. The definition, so far as relevant, runs thus :

''Consumer' means any person who consumes electrical energy sold or supplied by a distributor or electrical energy or a producer...'

7. 'Producer' as defined s. 2(d-1) of the Act means 'a person who generates electrical energy at a voltage exceeding hundred volts for his own consumption or for supplying to others'. If we read the two definitions together, omitting the non-essentials, 'consumer' would include 'any person who consumes electrical energy supplied by a person who generates electrical energy for his own consumption'. Under s. 3 a person who generates electrical energy over hundred volts for his own consumption is liable to pay duty on the units of electrical energy consumed by himself. A producer consuming the electrical energy generated by him is also a consumer, that is to say, he is a person who consumes electrical energy supplied by himself. The Table prescribes rates of duty payable with respect to electrical energy supplied for consumption and, therefore, the levy on the appellant falls squarely within the Table under s. 3 of the Act and M/s. Viswanatha Sastri's argument is devoid of substance.

8. It is difficult to see how the levy of duty upon consumption of electrical energy can be regarded as duty of excise falling within Entry 84 of List I. Under that Entry what is permitted to Parliament is levy of duty of excise on manufacture or production of goods (other than those excepted expressly by that entry). The taxable event with respect to a duty of excise is 'manufacture' or 'production'. Here the taxable event is not production or generation of electrical energy but its consumption. If producer generates electrical energy and stores it up, he would not be required to pay any duty under the Act. It is only when he sells it or consumes it that he would be rendered liable to pay the duty prescribed by the Act. The Central Provinces and Berar Electricity Act was enacted under Entry 48B of List II of the Government of India Act, 1935. The relevant portion of that Entry read thus :

'Taxes on the consumption or sale of electricity......' Entry 53 of List II of the Constitution is to the same effect. The argument of Mr. Sastri is that the word 'consumption' should be accorded the meaning which it had under the various Act, including the Indian Electricity Act, 1980. Under that Act and under the various Provincial and State Act, consumption of electricity mean, according to him, consumption by persons other than producers and that both in Government of India Act and under the Constituion the word 'consumption' must be deemed to have been used in the same sense. The Acts in question deal only with a certain aspect of the topic 'electricity', and not with all of them. Therefore, in those Acts the word 'consumption' may have a limited meaning, as pointed out by learned counsel. But the word 'consumption' has a wider meaning. It means also 'use up' 'spend' etc. The mere fact that a series of laws were concerned only with a certain kind of use of electricity, that is consumption of electricity by persons other than the producer cannot justify the conclusion that the British Parliament in using the word 'consumption' in Entry 48B and the Constituent Assembly in Entry 53 of List II wanted to limit the meaning of 'consumption' in the same way. The language used in the legislative entries in the Constitution must be interpreted in a broad way so as to give the widest amplitude of power to the legislature to legislate and not in a narrow and pedantic sense. We cannot, therefore, accept either of the two grounds urged by Mr. Viswanatha Sastri challenging the vires of the Act.

9. The appeal fails and is dismissed with costs.

10. Appeal dismissed.


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