1. In all the above three writ petitions learned single Judge by his order April 11, 1979, has made a reference to a larger Bench under Rule 59 of the Rajasthan High Court Rules for an authoritative decision, Learned single Judge formulated the following point:
'Whether the consumption of the electricity energy by the petitioner electricity company in its power house and other allied premises and process of equipments for the purpose of generating conversion and/or manufacturing process of electricity for being supplied to the consumers in the city of Ajmer would bring the petitioner within the definition of 'consumer' as contemplated by Sub-section (3) of Section 2 of the Rajasthan Electricity (Duty) Act, 1962.'
2. Learned single Judge further observed as it is the principal point on which all these three cases can be broadly decided, all the three writ petitions as a whole are referred to the larger Bench to avoid delay and complicacy of arguments again before this Bench.
3. In view of the above observations made by the learned single Judge, we have heard the parties at length on all the questions raised in the writ petitions and are disposing of all the above writ petitions as a whole.
4. Almost identical questions of fact and law have been raised in all these three cases except that they relate to different periods and with a slightly different controversy raised in one of the writ petitions. In writ petition No. 427/ 1971, the petitioner, the Amalgamated Electricity Company Limited (hereinafter referred to as 'the Company') has challenged the demand of electricity duty amounting to Rs. 42,190.53 p. which relates to the period from 1st April, 1962 to 30th April, 1965. In writ petition No. 1918/71 challenge has been made to the demand of electricity duty amounting to Rs. 25,316.34 for a period from 1st May, 1965 to 31st March, 1970. In writ petition No. 1374/72 challenge has been made to demand of electricity duty amounting to Rs. 2,169.00, from 1st April, 1979 to 31st July, 1971. In this writ petition challenge has also been made to a demand of Rs. 28,595.80 p an amount of electricity duty payable by the consumers to the company but was not paid to the respondents.
5. The company was a licensee under the Indian Electricity Act (Act No. 9 of 1910) for the purpose of generating and for taking energy from the Rajasthan Slate Electricity Board for supplying electricity to consumers in the city of Ajmer & some places outside municipal limits of Ajmer. According to the company its permises consisted of different blocks. Block of building used for office purposes and residential purposes were quite separate from the block used for generation purposes and for taking energy for supplying electricity to consumers. According to the company they had separate meters showing the consumption of electric energy in the aforesaid blocks. The case of the company is that they are liable to pay electricity duty on the energy consumed by them in or upon premises used by them for commercial or residential purposes. The blocks in the premises as shown in the site plan consist of 12 apartments which are as under :
1. Power house & compound lighting.
2. Office, R. E.'s, Bungalow & Guest House.
3. Exhaust Fans,
7. Meter Testing
8. Comp. Motor
9-10. Feet. B/S Aux & Rset BHA Aux
11. Fuel pump, and
12. Well water pump.
The case of the company is that so far as the guest house and office is concerned, they had paid the electricity duty on the energy consumed in such part of the premises and they are not liable to pay for the energy consumed by them for the purpose of generating electricity in other apartments and other purposes, like, power-house, exhaust fans, pumps, filters, workshop, meter testing, cotnp. motor etc. The case of the respondents, on the other hand, is that the company is covered within the definition of 'consumer' as defined under Clause (c) of Section 2 of the Rajasthan Electricity (Duty) Act, 1962 (hereinafter referred to as 'the Act of 1962') being a supplier in respect of energy consumed by him in or upon premises used by it for his commercial or; residential purposes. According to the respondents the above definition is all pervasive to include the entire block of premises used by him for generating or for taking energy from the Rajasthan State Electricity Board for supplying the same to the consumers. In order to decide the above controversy it would be necessary to refer the relevant provisions of law in this regard. Section 2 (o) of the Act defines 'consumer' as under :
' 'consumer' means a person who is supplied with energy by a supplier and includes a supplier in respect of the energy consumed by him in or upon premises used by him for his commercial or residential purposes.'
Clause (h) of Section defines 'supplier' as under :
' 'supplier' means the Board Or a licensee licensed under Chapter II of theIndian Electricity Act, 1910 (Central Act9 of 1910), to supply energy and includes any person who has obtained thesanction in that behalf of the State Government under Section 28 of the saidAct. - (i) words and expressions not defined in this Act but defined in the Indian Electricity Act, 1910 (Central Act of 1910) have the meaning assigned to them in that Act.'
Section 3 of the Act empowers the State Government to levy the electricity dirty en energy supplied to consumers and the State Government under the above section is empowered to fix the rate not exceeding 6 NP per unit as published from lime to time by notification in the official gazette. Under Sub-section (3) of Section 3 of the Act, the State Government is empowered to reduce or remit such duty, if in the opinion of the State Government it is necessary or expedient in the public interest to do so by issuing a notification in the official gazette.
6. The main controversy which callsfor determination is whether the Company falls within the definition of 'consumer' as defined under Clause (c) ofSection 2 of the Act and whether theblock of premises used by the companyfor the purpose of generation and fortaking energy from the Rajasthan StateElectricity Board for supplying electricity to consumers can be considered aspermises used by company for its commercial purpose.
7. Mr. Jindal, learned Counsel for the Company vehemently contended that the process of transforming electrical energy from a high to a low potential and the process of transmitting the energy through supply lines are both manufacturing process. It is contended that such process, if utilised in part of the premises of the company cannot come within the purview of premises used for commercial purposes. It is further contended that the company is not resorting to any commercial purpose, but is merely generating or taking energy from the Electricity Board for its further transmission to the consumers. Reliance is placed on Nagpur Electric Light and Power Co. Ltd. v. Regional Director, Employees' State Insurance Corporation, AIR 1967 SC 1364.
8. Mr. Joshi, learned counsel appearing for the respondents, on the other hand, contended that the aforesaid Supreme Court authority was concerned with the definition of manufacturing process under Section 2 (k) of the Factories Act and the said definition is limited to the purpose and objects of the Factories Act only. It is further contended that commercial purpose is a purpose where the object is to make profit by such undertaking. Any premises used for doing any business in order to make profit and loss will be deemed to be used for commercial purpose. Mr. Joshi placed reliance on the meaning of words 'commercial purpose' as given under the Law Laxicon by Mukherjee at page 342, which runs as under:
'The word 'commercial' according to the Oxford Dictionary, means viewed as a matter of profit and loss. The word 'purpose' means 'object which is in view or for which is made'. The words 'commercial purpose' would, therefore, cover an undertaking the object of which is to make a profit out of the undertaking. The Municipal Board Unnao v. State of U. P. 1957 All LJ 496 at page 498.'
Mr. Joshi also placed reliance on themeaning of words 'commercial premisesas given in Oxford Dictionary and alsoplaced reliance on Palghat Electric Corporation Ltd. v. T. N. Veeraraghava-Ayyar, AIR 1941 Mad 439; and JiyajeerapCotton Mills Ltd. Birlanagar, Gwaliorv. State of Madhya Pradesh, AIR 1963SC 414.
9. We have given our careful consideration to the submissions made by learned counsel for both the parties. There is no direct case law or authority to determine the controversy raised before me in these cases. In Jiyajeerao Cotton Mills' case (AIR 1963 SC 414) (supra) it was held as under:
'Reading the definitions of 'consumer' and 'producer' given in Section 2 (a) and (d1) and 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 Section 3 a person who generates electrical energy over hundred volts for his own consumption is liable to pay dirty 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 producer consumer falls squarely within the table under Section 3 of the Act'.
In the above case it was held that a consumer would include 'any person, who consumes electrical energy supplied by a person who generates electrical energy for his own consumption. A producer thus consuming the electricity generated by him is also a consumer i.e., to say he is a person who consumes electrical energy supplied by himself. It was thus held that the levy on the producer consumer fell squarely within the table under Section 3 of the Central Provinces and Berar Electricity Duty Act, 1949. In this Central Provinces and Berar Electricity Duty Act, the definition of 'consumer' under Section 2 (a) was given as under :
' 'consumer' means any person who consumes electrical energy sold Or supplied by a distributor of electrical energy or a producer.........'
Producer in the above Act was defined as :
'a, person, who generates electricalenergy at a voltage exceeding 100 voltsfor his own consumption or for supplying to others.'
10. Taking into consideration the above two definitions of 'consumer' and 'producer' together and omitting the non-essential their Lordships held that under Section 3 a person who generates electrical energy over 160 volts for his own consumption is liable to pay duty on units of electrical energy consumed by himself. Thus, the above authority was based upon the definition of word 'consumer' and 'producer' as given under the Central Provinces and Berar Electricity Duty Act, 1949 and renders no assistance to the controversy raised before us.
11. In the Nagpur Electric Light and Power Co. Ltd.'s, case (AIR 1967 SC 1364) (supra), the controversy was whether certain employees of the Nagpur Electric Light and Power Company Limited were employees within the meaning of Section 2(9) of the Employees' State Insurance Act, 1948. The Employees' State Insurance Act, 1948 applied in the first instance to all factories other than seasonal factories. Section 2(12) defined a factory. According to the Supreme Court the expressions 'manufacturing process' and 'power' used in the above Section 2(12) shall have the meanings respectively assigned to them in the Factories Act, 1948. Their Lordships then considered Section 2(g) and 2(k) of the Factories Act, 1948, to find out the definition of 'power' and 'manufacturing process'. Section 2(k) defined 'manufacturing process' and in view of Section 2(k)(iii) it was held that the process of transforming electrical energy from a high to low potential and the process of transmitting the energy through supply lines were both manufacturing process. It was further held that in a part of the premises occupied by the company, the two processes were carried on with the aid of power by means of electrical gadgets and other devices, and on the premises more than 20 person's were working and no part of the premises was used for purposes unconnected with the manufacturing processes and thus was a factory within the meaning of Section 2(12) of the Employees' State Insurance Act, 1948. Mr. Jindal, learned, counsel for the Company had laid great emphasis on this authority to hold that the Amalgamated Electricity Company, who is the petitioner in these writ petitions was also doing a manufacturing process and as such it should not be taken as a commercial purpose. We do not find any force in the contention of Mr. Jindal. Firstly, the above authority is based on the interpretation of the word 'manufacturing process' as contained in , the Factories Act and secondly even if it may be admitted that the petitioner company before us was doing a process of manufacturing, still the question remains whether the premises were used for commercial purposes or not. We cannot agree with submissions of Mr. Jindal that if the petitioner company was doing process of manufacturing in the premises, it is not a commercial purpose,
12. In our view, premises used for commercial purpose means premises used for the purpose of business which entails the element of profit and loss to a person. If certain premises are used for doing a business, the object of which is to make a profit, it would certainly amount to the use of such premises for commercial purpose. It is undisputed that the petitioner company was running a business or activity in the premises in question for taking energy from the Rajasthan State Electricity Board and to transmit the same for its being used by the consumers. The object of the company is dearly to make profit out of this venture and in our opinion there can be no manner of doubt in holding that the premises were used for commercial purpose. It would be immaterial whether such process is called a manufacturing process or called by any other name. The petitioner company is admittedly a licensee under the Indian Electricity Act. 1310 and falls within the definition of supplier under Clause (h) of Section 2 of the Rajasthan Electricity (Duty) Act. 1962, The definition of 'consumer' is given under Clause (c) of Section 2 of the Act of 1962 which clearly includes a supplier in respect of the energy consumed by it. The only restriction is that such energy must be consumed in or upon premises used by it for his commercial or residential purpose. As regards the residential purpose there is no controversy before us as the petitioner company has itself paid electricity duty on the energy consumed by it. The controversy was with regard to the block of the premises in which the petitioner company was having a licence for generating the energy and for taking energy from the Rajasthan State Electricity Board for supplying it further to consumers in the city of Ajmer. In Commissioner of Sales Tax, Madhya Pradesh, Indare v. Madhya Pradesh Electricity Board : (1970) 25 STC 188 : (AIR 1970 SC (32), their Lordships of the Supreme Court held that :
'Electricity is capable of abstraction, consumption and use and it can be transmitted, transferred, delivered, stored possessed, etc. in the same way as in other movable property.'
It was further observed that if there could be sale and purchase of electric energy like any other movable object there was no difficulty in holding that electric energy was intended to be covered by the definition of 'goods' in the two Sales Tax Acts which were in consideration before their Lordships. Thus, we are clearly of the opinion that the activity of the company in premises in question dealing with the electrical energy is not other than a commercial activity and the premises are used for commercial purposes.
13. A case of Allahabad High CourC Renusagar Power Co. Ltd., v. State of U. P., AIR 1973 All 33 was cited during the course of arguments. In the above case the question came up for consideration was whether the petitioner Renusagar Power Company Limited in that case which was generating electrical energy and supplying it to the Hindustan Aluminium Corporation Ltd., which was using it in its premises for commercial purpose, It is no doubt true that in that case the petitioner Renusagar Power Company Limited was also to generate, develop and supply electrical power at place or places at which licence may be obtained and to transmit, distribute, and supply such power throughout the area of supply named therein and without prejudice to the generality of the above to transmit, distribute and supplv such power to and for the purpose of feeding the plant of Hindustan Aluminium Corporation Ltd. the point in question which came up for consideration was whether the energy consumed by the petitioner in testing and start up of the Renusagar Power Plant before it went into production of electrical energy, can be said to have been consumed by the petitioner in or upon premises used by it for its commercial purpose. It was held that the energy consumed by the petitioner in testing and start up of the Ranusagar Power Plant before it went info production of electricity, was not consumed by the petitioner in or upon premises used by it for its commercial purpose. In the facts of the above case, the question was about the energy consumed by the petitioner in testing and starting up of the Renusagar Power Plant before it went into production of electrical energy and there is no such question before us. The electricity duty is being demanded from the petitioner company with regard to the period when it had started supplying electrical energy to the consumers.
14. We find support in the above view taken by us from the case reported in the Palghat Electric Corporation Ltd.'s case (AIR 1941 Mad 439) (supra). Fatanjali Sastri J., in the above case observed that :
'The adjective 'commercial' is commonly used in a wide sense, without any exclusive reference to large scale international operations of export or import. I think, therefore, that 'commercial premises' means in the context of the classification rules nothing more than the premises used for the purpose of business.'
15. Mr. Jindal, learned counsel for the the petitioner company also cited Ram Saroop v. Janki Dass Jai Kumar, AIR 1976 Delhi 219. In our view the above case renders no assistance to the controversy to be decided by us. The above case was a case of ejectment of a tenant. In that connection it was held that 'the element of trade is contained in the term Commerce' and 'industry' yet their essential features namely exchange or buying and selling in the form and manufacture in the other are different and therefore, they are not synonymous. Whether an activity or enterprise is commercial or industrial will depend upon its nature. The activity of setting up of a flour mill is partly commercial and partly industrial. Where, therefore, a shop was leased for a commercial purpose and was used for carrying on business of food-grains its user for setting up a flour mill would be for a purpose other than that for which it was leased-.'
16. The above authority is totally distinguishable and it does not decide any point in favour of the contention raised by Mr. Jindal.
17. The word 'commercial' according to the Oxford Dictionary means viewed as a matter of profit and loss. The word 'purpose' means object which is in view or for which it is made. The word 'commercial purpose', therefore, means an undertaking the object of which is to make a profit out of such undertaking. Random House Dictionary of the English Language, College Edition, Page 270, also states as one of the meaning of the term 'commerce' as 'business'.
18. The next controversy arising in one of these cases is with regard to the demand of Rs. 28,595.80 which is subject matter of Writ Petition No. 1374/1972. This relates to an amount of electricity duly not realised by the petitioner company from t.he consumers but is demanded by the respondents from the petitioner company-supplier. During the course of arguments. Mr. Jindal, learned counsel for the company, brought to our notice that out of the aforesaid amount a sum of Rs. 27,074.12 p. which was due against the Municipal Corporation has already been realised and paid to the respondents. The controversy as such out of the aforesaid amount of Rupees 28,595.80 remains with regard to an amount of Rs. 1,521.68 only, which has not been recovered by the petitioner company from the consumers and is still demanded, by the respondents. The contention of Mr. Jindal in this regard is that the liability of the petitioner company to pay such an amount only arises when such amount is actually realised from the consumers. It is contended that the petitioner company has already but all the connections of such consumers and now the company itself no longer functioning and the Rajasthan Slate Electricity Board itself has taken the work of supplying electrical energy to the consumers. Mr. Joshi, learned counsel for the respondents, on the other hand, contended that irrespective of the fact whether the amount of electricity duty has been realised from the consumers or not, there is legal obligation on the petitioner company to pay such amount. Attention is invited to Section 8 of the Act of 1962 under which it is provided that any sum due on account of electricity duty and interest, if any, if not paid within the prescribed manner shall be recoverable by the Slate Government as an arrear of land revenue at the discretion of the State Government either from the consumer or from 'he supplier. II is also submitted that under Sub-section (1) of Section 5 of the Act it has been provided that the electricity duty shall be collected from- the consumer and paid to the State Government by the supplier. In our view, Sub-section (1) of Section 5 only enjoins a duty on the supplier to collect the electricity duty from the consumer and to pay to the State Government. Sub-section (3) of Section 5 lays down that where any consumer fails or neglects to pay, the amount of electricity duty due from him, the supplier may, without prejudice to the right of the State Government to recover the amount under Section 8 and after giving not less than 7 days clear notice in writing to such consumer cut all the supply of energy to such consumer. It is not disputed by the respondents that the petitioner company discharged its duty to resort to the provisions of Sub-section (3) of Section 5 of the Act of 1962. The petitioner company has performed its duty by cutting all the supply of energy to the defaulting consumers. The State Government has been authorised to recover the amount from the consumer also. In our view, such an amount can only be due against the supplier when the same has been realised by him from the consumer and not paid to the State Government. The duty of the supplier is only to collect the same from the consumer and Pay it to the State Government. In the facts of this case the petitioner company cannot be considered to have failed in its duty and as such no liability of paying the amount of Rupees 1521.68 can be fastened on the petitioner company when the same has not been realised from the consumers. It may also be mentioned that under Section 8 of the Act, the amount becomes recoverable by the State Government, if not paid within the prescribed manner. Under Subclause (b) of Sub-section (2) of Section 10 the State Government may make rules with regard to the manner of collection and payment to the State Government of the electricity duty by the supplier. The State Government has made the Rajas-than Electricity (Duty) Rules, 1970 in exercise of its powers conferred by Section 10 of the Act of 1962 but a perusal of such Rules shows that no manner has been laid down in these Rules for the collection and payment to the State Government of the electricity duty by the supplier. In this view of the matter we are of the opinion that the respondents are not entitled to claim the amount of electricity duty not collected by the petitioner company from the consumers.
19. Mr. Jindal, learned counsel for the petitioner company, in the alternative contended that even if the petitioner company is held liable to pay the electricity duty, being a consumer in respect of the energy consumed by it upon premises used by it for its commercial purpose, the petitioner company is entitled to the benefit of reduction and remission in the rate of electricity duty under the notifications issued in the official gazette from time to time by the State Government under Clause (iii) of Section 3 of the Act. It is contended that such benefit in the rates have been granted for the energy consumed by a consumer in any industry in the manufacturing, production, processing or repair of goods. It is thus argued that even if the petitioner company is considered as a consumer of energy in the manufacture or production of goods, the company is entitled to the benefit of the remission or reduction in rates. Mr. Jindal also pointed out that in similar circumstances M/s. Maharana Bhupal Electric Supply Company Limited has been granted benefit of the aforesaid notifications and there is no valid justification for giving a hostile discrimination to the petitioner company. Mr. Joshi, learned counsel for the respondents, in this regard submitted that the case of the petitioner company does not come within the purview of the notifications as it uses the term 'energy consumed' by a consumer in any industry in the manufacture, production, processing or repair of goods. According to Mr. Joshi, if any industry is not dealing with the repair of goods then it is not entitled to any exemption. The argument of Mr. Joshi is absolutely devoid of any force. The words 'manufacture, production, processing or repair of goods' are all independent. There is clear absurdity in the interpretation sought to be given by Mr. Joshi. There cannot be any manufacture or production in respect of repair of goods. Thus, in our view, irrespective of repair of goods, if any industry is consuming the energy in the manufacture or production of any goods then it is certainly entitled to the benefit: of the notifications issued from time to time by the State Government in pursuance of Sub-clause (iii) of Section 3 of the Act. The respondents would, therefore, give the benefit of the notifications to the petitioner company as given in this regard to other industries.
20. All the three writ petitions are, therefore, partly allowed in the manner indicated above. The parties shall bear their own costs.