V.P. Tyagi, J.
1. Messrs. Shree Sadul Textiles Ltd., (hereinafter called the Mills) have filed this writ application under Article 226 of the Constitution praying for a writ of certiorari or any other appropriate writ, order or direction to quash the order of the Deputy Commissioner Taxation (Appeals), Bikaner dated 26th March, 1969 asking the Mills to deposit the amount of duty on the electricity consumed for the street and factory lighting in the premises of the Mills at the rate of 5 paisa per unit.
2. The facts giving rise to this writ application are as follows:--
The Rajasthan Electricity Board is the supplier of electricity to the Mills for manufacturing textiles in the town of Sri Ganganagar. Two separate meters were installed in the Mills by the respondents to measure the consumption of electricity viz., one for the residential and commercial purposes and the other for the power consumed in the factory. Two separate bills were prepared by the respondents for the energy consumed as recorded by the two meters and separate bills were prepared at two different rates agreed between the parties. It is said that the Mills regularly paid the amounts of the bills within time as specified in the bills. It is further averred that a sub-meter was installed to separately measure the energy consumed by the Mills for the purposes of lighting in the factory building and on the streets in the premises of the Mills. The purpose for installing a sub-meter was that in case the energy consumed for bona fide factory lighting did not exceed 10% of the total power consumed in the factory, it would be charged at the same rate fixed for the supply of power energy as per the tariff, but if the energy consumed for the purposes of lighting exceeded 10% of the total power consumed for running the machines then in that case the excess energy consumed for lighting purposes was charged under the head 'factory lighting' as given in the tariff.
The case of the Mills is that the energy consumed for factory lighting included the energy utilised by the Mills in the office, in the main factory building, stores, time-keeper's office, canteen, library, dispensary, staff welfare centres and factory yard lighting and therefore, the energy consumed in all these places was considered as 'factory lighting consumption.' In the year 1962. The Rajasthan Electricity (Duty) Act, 1962 (Act No. 12 of 1962) (hereinafter called the Act) came into force. A notification under Section 3 of the said Act was issued by the Government of Rajasthan on 26th March, 1962 whereby the Electricity Duty on electric energy supply to certain consumers was exempted. This notification was, however, subsequently suspended and substituted by another notification No. 9 (2) E & T/62/II dated March 26. 1962 (Document No. 2) whereby the State Government was pleased to fix 3 N. P. per unit as the rate at which the electricity duty shall be computed.
Another notification No. F. 9 (6) F. D. (E & T)/63 dated March 2, 1963 was issued by the Government superseding the first notification referred to above and modifiying the second notification dated 26th March, 1962 whereby the electricity duty chargeable from the consumers mentioned therein was notified at 1 naya paisa per unit in place of 3 naya paisa. In 1965 the Government of Rajasthan again issued a notification No. F. 16 (15) F. D. RT/64-Pt. dated 1-11-65 (Document No. 4) whereby the remission in the electricity duty was allowed in the following terms:--
'In exercise of the powers conferred by Section 3 of the Rajasthan Electricity (Duty) Act, 1962 (Rajasthan Act 12 of 1962) and in supersession of Government Notification No F. 9 (2) E & T/62-II dated the 26th March, 1962, and No. F. 9 (6) FD/RT/63 dated 2nd March, 1963, the State Government being of the opinion that it is expedient in public interest to do so, hereby fixes, with immediate effect, five paise per unit as the rate at which the electricity duty shall be computed and subject to the conditions laid down in the third proviso to the said section.-
(a) remits, with immediate effect, the electricity duty on the energy consumed (i) in electro-chemical industries and (it) in electro-furnaces of electro-thermal industries;
(b) remits with effect on and from the 1st November, 1964, the electricity duty on energy consumed by or in respect of any municipal Board or Council or Panchayat or Panchayat Samiti or other local authority for the purpose of, or in respect of public street lighting, and
(c) reduces with immediate effect such duty on the energy consumed in industries, other than those mentioned in (a) above, in the manufacture, production, proceeding or repair of goods, to one paisa per unit.'
3. The case of the Mills is that in accordance with the aforementioned notification, the respondents charged electricity duty from the petitioner from March 26, 1962 to March 2, 1963 at the rate of 3 paise per unit, whereas after March 2,1963 upto September 30, 1967 the electricity duty was charged from the Mills at 1 paisa per unit in respect of the energy consumed in the factory premises. It i9 however not disputed that the electricity duty was charged at 5 paisa per unit in respect of the energy consumed by the petitioner for residential and commercial purposes. The petitioner paid all the bills in full as and when they were presented to the Mills from March 26, 1962 to September 30, 1967. The grievance of the petitioner Mills is that on 7-3-68 the Mills were served with a bill showing arrear of Rs. 41,923.2 P. and the Mills were directed to deposit this amount on or before 23rd March, 1968 failing which a threat was given that the supply of electricity to the Mills would be discontinued under Section 24(1) of the Indian Electricity Act, 1910.
The details as given in the bills showed that the Rajasthan Electricity Board claimed the aforesaid amount as being in arrears for the period, specified therein on account of the electricity duty on factory lighting, which was erroneously charged at 1 naya paisa per unit but should have been billed at the rate of 5 naya paisa per unit and 3 naya paisa per unit. This bill was issued by the Assistant Engineer, respondent No. 3 tinder a covering letter No. AIN/SGNR/ IX/D3912/F (Document No. 8).
4. The contention of the Mills is that on a proper interpretation and construction of the terms of notification and Section 3 of the Act, the Rajasthan State Electricity Board could not have charged the electricity duty for the total energy consumed by the petitioner on the basis of the meters installed in the factory premises either for running the machinery or for lighting or for any other purposes other than residential and commercial purposes at a rate exceeding 3 naya paisa upto 26-3-62, and at a rate not exceeding 1 naya paisa per unit from 2-3-63, upto date and the bills of demand dated 7-3-1968 under the guise of arrears were absolutely illegal and based on calculated misreading and misinterpretation of sub-section (3) of Section 3 of the Act and the relevant portion of the notification issued by the Government of Rajasthan from time to time. The Mills having felt aggrieved by this demand lodged a protest with the Commercial Taxes Officer, Sri Ganganagar under Rule 13 of the Rajasthan State Electricity Rules, 1962 and characterised this demand as illegal and arbitrary.
The Commercial Taxes Officer, Sri Ganganagar, however, rejected the petitioner's representation on the basis that he could not interfere with the order of his predecessor dated 23rd September, 1967. The petitioner then went in appeal to Deputy Commissioner Taxation (Appeals), Bikaner who accepted the appeal of the Mills and remanded the case to the Commercial Taxes Officer, Ganganagar to dispose of the representation of the Mills after hearing it. The learned Commercial Taxes Officer gave a hearing to the Mills but rejected their representation. The petitioner again preferred an appeal before the Deputy Commissioner Taxation (Appeals), Bikaner who by his order dated 26th March, 1969 rejected the appeal and held that the demand of arrears made by the State Electricity Board from the petitioner was quite in order and in consonance with the letter and spirit of the Act and the notification issued thereunder by the State Government.
After the petitioner's appeal was rejected by the Deputy Commissioner Taxation (Appeals'), Bikaner, another demand notice was issued to the petitioner whereby the respondent called upon the petitioner to pay Rs. 90156.26 nP. towards the payment of electricity duty within 7 days from the receipt of the said notice. This notice also contained a threat of action under Section 24(1) of the Indian Electricity Act, 1910. It is against the judgment of the Deputy Commissioner Taxation (Appeals) Bikaner dated 26th March, 1969 upholding the demand issued on 9-4-69 (Document No. 13) to pay Rs. 90156.26 paise that the petitioner has filed this writ application challenging the demand raised by the respondents inter alia on the ground that in view of Section 3 of the Act and the notification issued from time to time by the State Government, the Rajasthan State .Electricity Board cannot make a demand from the Mills for the payment of the electricity duty on the energy consumed by the Mills for the purposes other than the energy consumed for commercial and residential purposes at the rate of 5 paise per unit.
5. A reply has been filed by the Rajasthan State Electricity Board, Jaipur, respondent No. 2 and State of Rajasthan respondent No. 1 wherein this claim of the petitioner that the Electricity duty cannot be charged from the petitioner on the energy consumed for lighting purposes at the rate of 5 paise per unit is emphatically denied and it is averred that the main meter to measure consumption of energy in the factory is connected with a sub-meter to record the consumption for the factory lighting to charge it at the normal rate prescribed in the tariff for lighting except 10% of the total energy consumed for the factory which is charged at the industrial rate. In other words, the case of the respondent is that if the total energy consumed for lighting the factory is only 10% of the power consumed in the factory, then in that event the energy consumed for lighting is charged at the industrial rate, but ifthe consumption for lighting exceeds 110% of the total consumption in the factory, then the excess energy consumed in lighting is charged at the normal rate prescribed by the tariff for that purpose.
The case of the respondents further Is that by mistake no electricity duty was charged from the Mills for a period covering April 1962 to January 1963 which ought to have been charged at the rate of 3 nP. per unit, thereafter till October, 1965 the electricity duty was properly charged from the Mills, but from 1st November, 1965 the officials of the Electricity Board under mistaken view of the law did the under billing for the charge of the electricity duty and in place of 5 paise per unit they billed the Mills at the rate of 1 paisa per unit on the energy consumed for lighting purposes. It was, however, admitted that the petitioner paid the bills in time. But it is submitted that when the mistake was brought to the notice of the respondent that the petitioner was not properly billed in respect of the electricity duty chargeable under the Act and the various notifications issued from time to time by the State Government, the respondents raised a demand of the difference which the petitioner ought to have paid as electricity duty and it was therefore a bill of Rs. 41,922/2 was sent to the petitioner.
It was also averred that according to the tariff, if the bills for large industrial loads are not paid within 17 days of the issue of the bills, the consumer would have to pay surcharge at the rate of 5% for the first 30 days and 2% for each succeeding 30 days. According to this condition, the Mills have yet to pay for the relevant period Rs. 27,371.4 as surcharge at the rate of 5% for not paying the bills within the prescribed time and Rs. 11041.16 for other arrears. It was. however, admitted that the mills have paid Rs. 51,743.16 towards the electricity duty demanded from them by the respondent. In these circumstances, the respondent prayed that the petitioner is not entitled to any relief in this writ application as the Deputy Commissioner, Commercial Taxes (Appeals) Bikaner has correctly interpreted the provisions of the law and the relevant notifications and the findings given by him cannot be said to be erroneous.
6. These rival contentions of the parties directly raise a question of the Interpretation of Section 3 of the Act which runs as follows:--
'There shall be levied for and paid to, the State Government on the energy consumed by a consumer, a duty (hereinafter referred to as the 'electricity duty') computed at such rate, not exceeding 6 naye paise per unit as may be fixed bythe State Government from time to time by notification in the Official Gazette a Provided that:--
(3) Where the State Government is of opinion that it is necessary or expedient in the public interest to do so, it may by notification in the Official Gazette reduce or remit-
(a) the electricity duty on the energy consumed-
(i) by a consumer in any industry in the manufacture, production, processing or repair of goods;
(ii) by or in respect of any mine as defined in the Mines Act, 1952 (Central Act 35 of 1952);
subject however, in the case of Clause (a) to the condition that any reduction or remission so made shall not be applicable to energy consumed in respect of any premises used for commercial or residential purposes.'
7. By issuing notifications from time to time, the State Government prescribed concessional rates for charging electricity duty on the energy consumed in an industry employed in the manufacture, production, processing or repair of goods. The rate for charging such duty as prescribed by the State Government by issuing notifications under Section 3 of the Act was 1 paisa per unit from 2-3-1963 onwards.
8. The question that has been raised by the Mills is whether the respondent Rajasthan State Electricity Board is entitled to charge electricity duty from the Mills on the energy consumed by it for lighting purposes at the full rate of 5 nP. per unit especially when the Mills are running the textile industry and consumed the energy for the purpose of manufacture of textiles finished products.
9. It is, however, not disputed that the Mills are paying to the respondents electricity duty on the energy consumed in respect of the premises used for commercial and residential purposes at the full rate i. e. at 5 nP. per unit and therefore on that account there is no dispute between the parties.
10. The argument raised by Mr. Bhargava appearing on behalf of the Mills is that the energy consumed in factory lighting must be included in the energy consumed for the manufacture o textiles in the Mills, and, therefore, the duty on the energy consumed and measured in the sub-meter installed for recording the power consumed for factory lighting must be charged at 1 nP. per unit. The respondents on the other hand contend that Clause (3) (a) (i) of the provision of Section 3 empowers the Government to reduce or remit the electricity duty only on that energy which is actually consumed in any industry for the manufacture, production, processing or repair of goods, and not for street or other lighting in the factory and, therefore, the notification issued by the State Government from time to time reducing the rate of energy consumed in the manufacture, production, processing' or repair of goods must be read only for that energy which is actually utilised by the consumer for manufacturing purposes and not for lighting purposes and, therefore, lighting is separately metered and the duty on that energy must be charged at the full rate of 5 nP. per unit.
11. Learned Deputy Commissioner Taxes (Appeals), Bikaner while deciding the appeal of the Mills observed that the word 'in' as used in the Act as well as in the notification before the words 'manufacturing, production etc.' clarified the intendment of the legislature that the electricity duty could be reduced or remitted by the State Government only on the energy actually consumed 'in' manufacture, production, processing or repair of goods. According to the learned Appellate Authority, the duty can be remitted only in respect of that energy which has been actually consumed in the process of manufacture, production, etc.
12. Section 3 of the Act lays down that where the State Government is of opinion that it is necessary or expedient in public interest to do so, it-may by notification in the Official Gazette, reduce or remit the electricity duty on the energy consumed by a consumer in any industry in the manufacture, production, processing or repair of goods. The expression 'in the manufacture, production, processing or repair' as used by the legislature in Clause (3) (a) (i) of the proviso to Section 3 requires to be interpreted to decide the objection raised by the Mills that the energy consumed in factory lighting must be taken as the energy consumed in manufacture, production, etc., because according to Mr. Bhargava without the factory lighting production of the textiles is impossible at least in the night tune when the night shifts work in the Mills. Mr. Bhargava also urged that while interpreting the taxing statute, the Court should look to the language used and if there is a reasonable doubt regarding the construction of the language of the statute, it should be construed in a manner which may be beneficial to the tax-payer.
In support of this, he placed reliance on the Supreme Court authorities reported as the State of Punjab v. M/s. Jullun-dur Vegetables Syndicate, AIR 1966 SC 1295 and Commr. of Income-tax, Patiala v. M/s. Shahzada Nand and Sons, AIR 1966 SC 1342.
13. It is true that in case of doubt, a taxing statute should be interpreted in a manner favourable to the tax-payer.but even so the fundamental rule of construction is the same for all the statutes whether fiscal or otherwise and the underlying principle is that the meaning and intention of the statute must be collected from the plain and unambiguous expression used therein rather than from any notions which may be entertained by the Court as to what is just and expedient. The express intention of the legislature as can be spelt out from the language of the statute should therefore be a guide to the Court.
14. The words as used by the Legislature in Clause (a) (i) to proviso (3) to Section 3 of the Act are 'reduce or remit the electricity duty on the energy consumed -- (1) by a consumer in any industry in the manufacture, production, processing or repair of goods' and it is these words which are to be interpreted in the light of the principles laid down by the Supreme Court and to see whether the energy consumed in factory lighting can be taken as the energy consumed in the manufacture, production, processing or repair of goods.
15. The Supreme Court in connection with the interpretation of the Central Sales Tax Act had the occasion to consider the scope of the expression 'in the manufacture of goods' in J.K. Cotton Spinning and Weaving Mills Co., Ltd. v. Sales Tax Officer, Kanpur, AIR 1965 SC 1310, and therein it was observed as follows -
'The expression 'in the manufacture of goods' should normally encompass the entire process carried on by the dealer of converting raw materials into finished goods. Where any particular process is so integrally connected with the ultimate production of goods that but for that process, manufacture or processing of goods, would be commercially inexpedient, goods required in that process would in our judgment, fall within the expression 'in the manufacture 'f goods.' For instance, in the case of a cotton textile manufacturing concern, raw cotton undergoes various processes before cloth is finally turned out. Cotton is cleaned, carded, spun into yarn, then cloth is woven, put on rolls, dyed, calendered and pressed. All these processes would be regarded as integrated processes and included 'in the manufactura' of cloth. It would be difficult to regard goods used only in the process of weaving cloth and not goods used in the anterior processes as goods used in the manufacture of cloth. To read the expression 'in the manufacture' of cloth in that restricted sense, would raise many anomalies. Raw cotton and machinery for weaving cotton and even vehicles for transporting raw and finished goods would Qualify under.........goods. In our judgment if aprocess or activity is so integrally relatedto the ultimate manufacture of goods so that without that process or activity manufacture may, even if theoretically possible, be commercially inexpedient goods intended for use in the process or activity as specified in K. 13 will qualify for special treatment. This is not to say that every category of goods 'in connection with' manufacture of, or 'in relation to' manufacture, or which facilitates the conduct of the business of manufacture will be included within Rule 13.'
16. Mr. Gupta appearing on behalf of the Rajasthan State Electricity Board urged that the energy consumed 'in connection with' or 'in relation to' the manufacture of the finished goods of consumed to facilitate the conduct of the business of manufacture cannot be included in the energy consumed 'in manufacture.' The argument advanced by Mr. Gupta cannot be said to be frivolous. If we refer to the tariff for the supply of electricity, then we find that the tariff for factory lighting is different from the tariff which is prescribed for the consumption of power for large industrial loads. The factory lighting includes not only that lighting which is used in the factory itself, but it also includes the erergy consumed in the office, in the main factory building, stores, timekeeper's office, canteen, library, dispensary, staff welfare centres and factory yard lighting, and the energy consumed for lighting all these premises mentioned hereinabove shall be taken as factory consumption.
17. The expression energy consumed by a consumer in any industry in the manufacture of goods as used in Clause (3) (a) (i) of the proviso to Section 3 of the Act when interpreted in the light of the observations of the Supreme Court referred to above, then it becomes difficult for me to accept the contention of the Mills that the energy consumed for lighting the stores, the time-keeper's office, canteen, library, dispensary, staff welfare centres and factory yard can be said to have been used in the manufacture of the goods. The energy consumed for lighting the stores, canteen, yard etc., can be said to be consumed 'in connection with' or 'in relation to'' the manufacture of textiles but it cannot be said to be used 'in manufacturing' the cloth within the meaning of proviso (3) (a) (i) of Section 3 of the Act.
However, the electricity consumed for lighting that building of the Milk where the machineries are installed and where the process of turning raw cotton into the finished cloth takes place shall stand on a different footing, and according to the test laid down by the Supreme Court that energy shall be taken to be consumed 'in the manufacture' of cloth because without such light the ultimate production of the finished goods of theMills would not only be commercially inexpedient, but would be impossible. I The process of lighting that part of the Mills where the cotton is cleaned, carded, spun into yarn, the cloth is woven, put on rolls, dyed, calendered, and pressed is so integrally connected with the ultimate production of finished goods of the mills that without that consumption of energy into lighting, the manufacture of cloth would be commercially inexpedient and therefore such consumption of energy in lighting can safely be taken to have fallen within the expression 'in the manufacture' as used in proviso (3) (a) (i) of Section 3 of the Act.
This interpretation of mine gets support from the tariff for the supply of electricity as prescribed by the Rajasthan State Electricity Board under which the factory lighting is charged upto a maximum of 10% of the monthly industrial consumption at the same rate at which the energy consumed for running the machinery of the mills is charged which, according to Mr. Bhargava means that the electricity consumed in factory lighting has been dealt with by the Rajasthan State Electricity Board to the extent of 10% of the total energy consumed in the manufacture itself as if It was consumed for manufacturing purposes and it is why concessional rates have been prescribed in the tariff and it is charged under the tariff as large industrial loads.
18. Relying on the Bench decision of this Court in Messrs. Chohan Pan Bhandar v. Asstt. Sales Tax Officer. Beawar, 1965 Raj LW 444, Mr. Bhargava urged that the exemption clause appearing in a taxation law must be interpreted in a way so that the remedy provided by the legislature may be availed of by the tax-payer. Mr. Mathur appearing on behalf of the State on the other hand contended that the exemption clause in the taxing statute should be interpreted strictly and in support of this submission, he placed reliance on another Bench decision of this Court in Indersingh v. Sales-Tax Officer, Jodhpur, 1961 Raj LW 314.
19. In the case of Chohan Pan Bhandar, 1965 Raj LW 444, it was observed,--
'that the exemption clause appearing In taxation laws should be reasonably interpreted. The interpretation should neither be so liberal that it may promote fraud and open flood-gates for the taxpayers to evade the tax by subtle and dishonest devices, nor should it be so narrow and unreasonable that the remedy provided by the Legislature becomes only nominal and the very object which it is sought to accomplish is defeated. It should be given its full and reasonable scope and amplitude so long as no violence is done to the language used and the exemption should not be whittleddown by importing limitations not contemplated by the Legislature.'
20. In that case, observations in 11961 Raj LW 314, on which reliance has been placed by Mr. Mathur to interpret the exemption clause strictly, were considered and were explained on the ground that in that case the exemption clause was strictly construed because the petitioner wanted to stretch the scope of exemption clause to unreasonable length and in that connection it was further observed 'that every observation which is made by the Court should be understood in the context of the facts and circumstances of that particular case.' In Indersingh'9 case, 1961 Raj LW 314, the tax-payer wanted to stretch the scope of term 'cloth' unreasonably and, therefore, the Court made remark from that angle of vision that exemption clause 'must not be extended beyond the express requirements of the language used.'
21. In my opinion, neither a narrow nor a liberal construction should be placed on exemption clause and it should be given its full and reasonable scope and amplitude so long as violence is not done to the language used and also the exemption should not be whittled down by importing limitation not inserted-or contemplated by the legislature.
22. Let me see whether the expression 'energy consumed by a consumer in any industry in the manufacture of goods' includes that energy which is consumed by the consumer in lighting the factory premises where the actual process of manufacture of cloth takes place and without such a light it is not only difficult but impossible for the Mills to produce its goods. In view of the rule of interpretation laid down by this Court on Chohan Pan Bhandar's case, 1965 Raj LW 444 supra, I am inclined to hold that the energy consumed in lighting the premises where the machines are installed and where the process of manufacturing the cloth actually takes place shall be taken as the energy consumed 'in the manufacture' of goods and that energy shall attract the application of Clause (3) (a) (i) of the proviso to Section 3 of the Act and the notification issued by the Government from time to time reducing the rate of duty.
23. The demand raised by the Rajasthan State Electricity Board includes surcharge also. The reply filed by the Rajasthan State Electricity Board shows that the petitioner Mills were considered by the Board as defaulters as the duty was not paid by the petitioner at the full rate of 5 paisas per unit. It Is, however, admitted by the respondents that the Mills did pay the bills which were presented to them within time but these bills did not charge the duty at the rate prescribed by the law and therefore the Mills could be treated as defaulter. If the Rajasthan State Electricity Board for one reason or the other did not charge the electricity duty at the full rate and prepared the bills at the reduced rate, and if that amount of bill was paid by tile Mills within the specified time then on that case the Mills cannot fall within the terra 'defaulter' simply because the Board later on discovered its error in the preparation of the bills and raised the demand to pay the electricity duty at the full rate.
If the petitioner did not deposit that amount of electricity duty which according to the respondents was payable by the petitioner under Clause (3) (a) (i) of proviso to Section 3 of the Act then in that event, it will not be just and fair to treat the petitioner Mills as defaulter. Under these circumstances, it will not be just and proper if the petitioner is made to pay penalty in the form of a surcharge for the non-payment of the electricity duty at the rates which were later on discovered by the respondents as the proper rates. In my opinion, in such controversial matters, where the interpretation of the provision of the Act and the notification was not as simple as the respondents considered it to be, it will be unjust to subject the petitioner to the payment of penalty by way of surcharge.
24. For the reasons mentioned above, the writ application is allowed to this extent that the energy consumed for lighting the building or buildings where the actual process of manufacture of cloth takes place in the premises of the Mills shall be taken as the energy consumed 'in the manufacture of the goods' of the Mills and on that energy the electricity duty shall be chargeable @ 1 paisa per unit. The electricity duty on the energy consumed for lighting other portion of the Mills shall be charged at the full rate of 5 paise per unit. Looking to the circumstances of the case, I leave the parties to bear their own costs.