Patna High Court
M/S Harinagar Sugar Mills Ltd vs The State Of Bihar & Ors on 16 September, 2009
Author: P. K. Misra
Bench: Shiva Kirti Singh, P. K. Misra
1
CIVIL WRIT JURISDICTION CASE No.4613 OF 2003
In the matter of applications under Article 226 of the
Constitution of India.
------------
1. Bihar Sugar Mills Association, a branch of Indian Sugar Mills Association,
New Delhi having its office at 31/A, Shri Krishnapuri, Patna - 1 through its
Secretary G. C. Goel.
2. M/s. Harinagar sugar mills limited, a Company registered under the Indian
Companies Act, 1856 having its registered office at 207, Kalbadevi Road,
Mumbai and its Sugar factory at Harinagar, P.S. Ramnagar and District West
Champaran through S. N. Poddar, Manager and holder of power of attorney on
behalf of the company.
3. M/s. M. P. Udyog Limited (Sugar Mills Branch), P. O. & P. S. Majhaulia and
District West Champaran through its Executive Director Ravindra Nath
Sharma.
4. M/s. H. M. P. Sugar Ltd. At Bagaha, P. O. Narainpur and District West
Champaran through its Chief Cane Manager Raj Kumar Jha.
5. M/s. New Swadeshi Sugar Mills Ltd. (Proprietor - Oudh Sugar Mills Ltd.) At,
P.O. and P.S. Narkatiaganj and District West Champaran through its Executive
President Madhusudah Sharma.
6. M/s. Vishnu Suguar Mills Ltd. At Harkhua, P. O. - Vishnu Suguar Mills, P. S.
and District Gopalganj through its General Manager P. R. S. Paniker.
7. M/s. Sasamusa Sugar Works Ltd., At & P. O. Sasamusa and District
Gopalganj through its Factory Manager Md. Rizwanullah.
8. M/s. Bharat Sugar Mills Ltd., At, P.O. & P.S. Sidhwalia and District
Gopalganj through its Senior Executive Vice President B. K. Sureka.
9. M/s. New India Sugar Mills Ltd., having its registered Office at 9/1, R. N.
Mukherjee Road. Kolkata - 700 001 and its sugar factory at Hasanpur, P.O.
Hasanpur Sugur Mills and District Samastipur through its Executive President
Ghanshyam Dhurka.
10. M/s. Riga Sugar Company Ltd., At, P. O. and P. S. Riga and District
Sitamarhi through its President S. L. Baheti. ------------Petitioners
Versus
1. THE STATE OF BIHAR.
2. The Secretary-cum-Commissioner of Commercial Taxes, Bihar, New
Secretariat, Patna.
3. The Assistant Commissioner of Commercial Taxes, Bagaha Circle, Bagaha
(West Champaran).
4. The Commercial Taxes Officer, Bagha Circle, Bagaha (West Champaran).
5. The Commercial Taxes Officer, Gopalganj Circle, Gopalganj.
6. The Assistant Commissioner of Commercial Taxes, Sitamarhi Circle,
Sitamarhi.
7. The Assistant Commissioner of Commercial Taxes, Samastipur circle,
Samastipur. ................... Respondents
CWJC No.13614 OF 2006
1. Bihar Sugar Mills Association, a branch of Indian Sugar Mills Association,
New Delhi having its office at M-2/4, Shri Krishnapuri, Patna - 1 through its
Secretary G. C. Goel.
2
2. M/s. Harinagar sugar mills limited, a Company registered under the Indian
Companies Act, 1856 having its registered office at 207, Kalbadevi Road,
Mumbai and its Sugar factory at Harinagar, P.S. Ramnagar and District West
Champaran through Hari Prasad Pancharia, Cane Controller and S. N. Poddar
Manager and both holder of power of attornery on behalf of the company
3. M/s. M. P. Chini Industries Limited, P. O. & P. S. Majhaulia and District West
Champaran through its Executive Director C. L. Giria.
4. M/s. Tirupati Sugars Ltd. At Bagaha, P. O. Narainpur and District West
Champaran through its General Manager Krishna Sahai Saxena.
5. M/s. New Swadeshi Sugar Mills Ltd. (Proprietor - Oudh Sugar Mills Ltd.) At,
P.O. and P.S. Narkatiaganj and District West Champaran through its Executive
Vice President (F) Banwari Lal Himmatsinghka.
6. M/s. Vishnu Suguar Mills Ltd. At Harkhua, P. O. - Vishnu Suguar Mills, P. S.
and District Gopalganj through its General Manager P. R. S. Paniker.
7. M/s. Sasamusa Sugar Works Ltd., At & P. O. Sasamusa and District
Gopalganj through its Factory Manager Jamaluddin.
8. M/s. Bharat Sugar Mills Ltd., At, P.O. & P.S. Sidhwalia and District
Gopalganj through its Senior Executive Vice President B. K. Sureka.
9. M/s. Hasanpur Sugar Mills, P.O. Hasanpur Sugur Mills and District
Samastipur through its Senior Executive Vice President Ravindra Kumar
Gupta.
10 .M/s. Riga Sugar Company Ltd., At, P. O. and P. S. Riga and District
Sitamarhi through its President S. L. Baheti. ------ Petitioners
Versus
1. The State Of Bihar.
2. The Secretary-cum-Commissioner of Commercial Taxes, Bihar, New
Secretariat, Patna.
3. The Assistant Commissioner of Commercial Taxes, Bagaha Circle, Bagaha
(West Champaran).
4. The Commercial Taxes Officer, Bagha Circle, Bagaha (West Champaran).
5. The Commercial Taxes Officer, Gopalganj Circle, Gopalganj.
6. The Assistant Commissioner of Commercial Taxes, Sitamarhi Circle,
Sitamarhi.
7. The Assistant Commissioner of Commercial Taxes, Samastipur circle,
Samastipur. ------- Respondents
CWJC No.4047 OF 2009
1. M/S HARINAGAR SUGAR MILLS LTD. a company registered under the
provisions of the Indian Companies Act. 1956, having its registered office at
207, Kolbadevi Road, Mumbai-400002 and its sugar factory at Harinagar, P.O.
- Harinagar, P. S. - Ramnagar, District - West Champran through it‟s Chief
General Manager S. N. Poddar @ Satya Narayan Poddar and the General
Manager (Finance) G. K. Chandak holders of power of attorney on behalf of
the company. ------------ Petitioner
Versus
1. THE STATE OF BIHAR.
3
2. The Commissioner of Commercial Taxes & Secretary to Government, Finance
(Commercial Taxes Department), Government of Bihar, New Secretariat,
Patna.
3. The Assistant Commissioner of Commercial Taxes, Bagha Circle, Bagha,
West Champaran. ------- Respondents
CWJC No.5619 OF 2009
1. M/S HARINAGAR SUGAR MILLS LTD. a company registered under the
provisions of the Indian Companies Act. 1956, having its registered office at
207, Kolbadevi Road, Mumbai-400002 and its sugar factory at Harinagar, P.O.
- Harinagar, P. S. - Ramnagar, District - West Champran through it‟s Chief
General Manager S. N. Poddar @ Satya Narayan Poddar and the General
Manager (Finance) G. K. Chandak holders of power of attorney on behalf of
the company ------- Petitioner
Versus
1. THE STATE OF BIHAR.
2. The Secretary cum Commissioner of Commercial Taxes, Bihar, New
Secretariat, Patna.
3. The Assistant Commissioner of Commercial Taxes, Bagha Circle, Bagha,
(West Champaran). ------ Respondents
CWJC No.5366 OF 2009
1. M/S HARINAGAR SUGAR MILLS LTD. a company registered under the
provisions of the Indian Companies Act, 1956, having its registered office at
207, Kolbadevi Road, Mumbai-400002 and its sugar factory at Harinagar,
P.O. - Harinagar, P. S. - Ramnagar, District - West Champran through it‟s
Chief General Manager S. N. Poddar @ Satya Narayan Poddar and the
General Manager (Finance) G. K. Chandak holders of power of attorney on
behalf of the company -----------Petitioner
Versus
1. THE STATE OF BIHAR.
2. The Secretary cum Commissioner of Commercial Taxes, Bihar, New
Secretariat, Patna.
3. The Assistant Commissioner of Commercial Taxes, Bagha Circle, Bagha,
(West Champaran). ------ Respondents
CWJC No.5906 OF 2009
1. M/S INDIAN OIL CORPORATION LTD., a Company incorporated under
the Companies Act, 1956 having its Registered Office at G-9, Ali Yavar Jung
Marg, Bandra (East), Mumbai - 400051 and also carrying on business at
Barauni Oil Refinery at Begusarai in the State of Bihar through its Senior
Finance Manager, Sukumar Banik, S/o. Suresh Chandra Banik, Resident of
Barauni Refinery Township, P. S. - Begusarai, District - Begusarai
---------Petitioner
Versus
4
1. THE STATE OF BIHAR through the Secretary-cum-Commissioner of
Commercial Taxes, Bihar, Vikash Bhawan, Bailey Road, Patna.
2. The Deputy Commissioner, Commercial Taxes, Begusarai Circle, Begusarai.
3. The Commercial Tax Officer, Begusarai Circle, Begusarai.
-------------Respondents
CWJC No.5638 OF 2009
1. M/S HARINAGAR SUGAR MILLS LTD. a company registered under the
provisions of the Indian Companies Act, 1956, having its registered office at
207, Kolbadevi Road, Mumbai-400002 and its sugar factory at Harinagar,
P.O. - Harinagar, P. S. - Ramnagar, District - West Champran through it‟s
Chief General Manager S. N. Poddar @ Satya Narayan Poddar and the
General Manager (Finance) G. K. Chandak holders of power of attorney on
behalf of the company -------------- Petitioner
Versus
1. THE STATE OF BIHAR.
2. The Secretary-cum-Commissioner of Commercial Taxes, Bihar, New
Secretariat, Patna.
3. The Assistant Commissioner of Commercial Taxes, Bagha, Circle, Bagha
(West Champaran). ------------Respondents
CWJC No.6012 OF 2009
1. M/S INDIAN OIL CORPORATION LTD., a Company incorporated under the
Companies Act, 1956 having its Registered Office at G-9, Ali Yavar Jung
Marg, Bandra (East), Mumbai - 400051 and also carrying on business at
Barauni Oil Refinery at Begusarai in the State of Bihar through its Senior
Finance Manager, Sukumar Banik, S/o. Late Suresh Chandra Banik, Resident
of Barauni Refinery Township, P. S. - Begusarai, District - Begusarai
--------- Petitioner
Versus
1. THE STATE OF BIHAR through the Secretary-cum-Commissioner of
Commercial Taxes, Bihar, Vikash Bhawan, Bailey Road, Patna.
2. The Deputy Commissioner, Commercial Taxes, Begusarai Circle, Begusarai.
3. The Commercial Tax Officer, Begusarai Circle, Begusarai.
----- Respondents
CWJC No. 6022 OF 2009
1. M/S INDIAN OIL CORPORATION LTD., a Company incorporated under the
Companies Act, 1956 having its Registered Office at G-9, Ali Yavar Jung
Marg, Bandra (East), Mumbai - 400051 and also carrying on business at
Barauni Oil Refinery at Begusarai in the State of Bihar through its Senior
Finance Manager, Sukumar Banik, S/o. Late Suresh Chandra Banik, Resident
of Barauni Refinery Township, P. S. - Begusarai, District - Begusarai
---------Petitioner
Versus
1. THE STATE OF BIHAR through the Secretary-cum-Commissioner of
Commercial Taxes, Bihar, Vikash Bhawan, Bailey Road, Patna.
2. The Deputy Commissioner, Commercial Taxes, Begusarai Circle,
Begusarai.
5
3. The Commercial Tax Officer, Begusarai Circle, Begusarai.
----------- Respondents
CWJC No.6026 OF 2009
1. M/S INDIAN OIL CORPORATION LTD., a Company incorporated
under the Companies Act, 1956 having its Registered Office at G-9, Ali
Yavar Jung Marg, Bandra (East), Mumbai - 400051 and also carrying on
business at Barauni Oil Refinery at Begusarai in the State of Bihar
through its Senior Finance Manager, Sukumar Banik, S/o. Late Suresh
Chandra Banik, Resident of Barauni Refinery Township, P. S. -
Begusarai, District - Begusarai -------- Petitioner
Versus
1. THE STATE OF BIHAR through the Secretary-cum-Commissioner of
Commercial Taxes, Bihar, Vikash Bhawan, Bailey Road, Patna.
2. The Deputy Commissioner, Commercial Taxes, Begusarai Circle,
Begusarai.
3. The Commercial Tax Officer, Begusarai Circle, Begusarai.
--------- Respondents
CWJC No.5620 OF 2009
1. HARINAGAR SUGAR MILLS LTD. a company registered under the
provisions of the Indian Companies Act, 1956, having its registered office
at 207, Kolbadevi Road, Mumbai-400002 and its sugar factory at
Harinagar, P.O. - Harinagar, P. S. - Ramnagar, District - West Champran
through it‟s Chief General Manager S. N. Poddar @ Satya Narayan Poddar
and the General Manager (Finance) G. K. Chandak holders of power of
attorney on behalf of the company -------------- Petitioner
Versus
1. THE STATE OF BIHAR.
2. The Secretary-cum-Commissioner of Commercial Taxes, Bihar, New
Secretariat, Patna.
3. The Assistant Commissioner of Commercial Taxes, Bagha, Circle, Bagha
(West Champaran). ------------ Respondents
CWJC No.5746 OF 2009
1. M/s HARINAGAR SUGAR MILLS LTD. a company registered under the
provisions of the Indian Companies Act, 1956, having its registered office
at 207, Kolbadevi Road, Mumbai-400002 and its sugar factory at
Harinagar, P.O. - Harinagar, P. S. - Ramnagar, District - West Champran
through it‟s Chief General Manager S. N. Poddar @ Satya Narayan Poddar
and the General Manager (Finance) G. K. Chandak holders of power of
attorney on behalf of the company -------------- Petitioner
Versus
1. THE STATE OF BIHAR.
2. The Secretary-cum-Commissioner of Commercial Taxes, Bihar, New
Secretariat, Patna.
3. The Assistant Commissioner of Commercial Taxes, Bagha, Circle, Bagha
6
(West Champaran). ------------ Respondents
CWJC No.5810 OF 2009
1. M/S. HARINAGAR SUGAR MILLS LTD. a company registered under the
provisions of the Indian Companies Act, 1956, having its registered office at
207, Kolbadevi Road, Mumbai-400002 and its sugar factory at Harinagar,
P.O. - Harinagar, P. S. - Ramnagar, District - West Champran through it‟s
Chief General Manager S. N. Poddar @ Satya Narayan Poddar and the
General Manager (Finance) G. K. Chandak holders of power of attorney on
behalf of the company -------------- Petitioner
Versus
1. THE STATE OF BIHAR.
2. The Secretary-cum-Commissioner of Commercial Taxes, Bihar, New
Secretariat, Patna.
3. The Assistant Commissioner of Commercial Taxes, Bagha, Circle, Bagha
(West Champaran). ------------ Respondents
CWJC No.4698 OF 2009
1. M/S M.P.CHINI INDUSTRIES LTD. (Formerly Motilal Padampat Udyog
Ltd.), At & P.O. Majhaulia, Dist. - West Champaran through its Deputy
Manager Chandan Kumar Garodia. ----- Petitioner
Versus
1. THE STATE OF BIHAR through the Chief Secretary, Government of
Bihar,Patna.
2. The Principal Secretary-cum-Commissioner of Commercial Taxes,
Government of Bihar, Patna.
3. The Assistant Commissioner, Commercial Taxes, Bettiah Circle,
Bettiah. --------- Respondents
CWJC No.4813 OF 2009
1. M/S M.P.CHINI INDUSTRIES LTD. (Formerly Motilal Padampat Udyog
Ltd.), At & P.O. P.S. Majhaulia, Dist. - West Champaran through its Deputy
Manager Chandan Kumar Garodia. ----- Petitioner
Versus
1. THE STATE OF BIHAR through the Chief Secretary, Government of
Bihar, Patna.
2. The Principal Secretary-cum-Commissioner of Commercial Taxes,
Government of Bihar, Patna.
3. The Assistant Commissioner, Commercial Taxes, Bettiah Circle,
Bettiah. --------- Respondents
CWJC No.4814 OF 2009
7
1. M/S M.P.CHINI INDUSTRIES LTD. (Formerly Motilal Padampat Udyog
Ltd.), At & P.O. Majhaulia, Dist. - West Champaran through its Deputy
Manager Chandan Kumar Garodia. ----- Petitioner
Versus
1. THE STATE OF BIHAR through the Chief Secretary, Government of
Bihar, Patna.
2. The Principal Secretary-cum-Commissioner of Commercial Taxes,
Government of Bihar, Patna.
3. The Assistant Commissioner, Commercial Taxes, Bettiah Circle,
Bettiah. --------- Respondents
CWJC No.4815 OF 2009
1. M/S M.P.CHINI INDUSTRIES LTD. (Formerly Motilal Padampat Udyog
Ltd.), At & P.O. Majhaulia, Dist. - West Champaran through its Deputy
Manager Chandan Kumar Garodia. ----- Petitioner
Versus
1. THE STATE OF BIHAR through the Chief Secretary, Government of
Bihar, Patna.
2. The Principal Secretary-cum-Commissioner of Commercial Taxes,
Government of Bihar, Patna.
3. The Assistant Commissioner, Commercial Taxes, Bettiah Circle,
Bettiah. --------- Respondents
CWJC No.4816 OF 2009
1. M/S M.P.CHINI INDUSTRIES LTD. (Formerly Motilal Padampat Udyog
Ltd.), At & P.O. Majhaulia, Dist. - West Champaran through its Deputy
Manager Chandan Kumar Garodia. ----- Petitioner
Versus
1. THE STATE OF BIHAR through the Chief Secretary, Government of
Bihar, Patna.
2. The Principal Secretary-cum-Commissioner of Commercial Taxes,
Government of Bihar, Patna.
3. The Assistant Commissioner, Commercial Taxes, Bettiah Circle,
Bettiah. --------- Respondents
CWJC No.8663 OF 2009
1. M/s. Bharat Sugar Mills (proprietor Upper Ganges Sugar and Industries
Limited), At, P.O. & P.s. Sidhwalia, District - Gopalganj through its Senior
Executive Vice President B. K. Sureka, S/o. Sri Babulat Sureka.
----- Petitioner
Versus
1. THE STATE OF BIHAR through the Chief Secretary, Government of
Bihar, Patna.
2. The Principal Secretary-cum-Commissioner of Commercial Taxes,
Government of Bihar, Patna.
3. The Assistant Commissioner, Commercial Taxes, Bettiah Circle,
Bettiah. --------- Respondents
8
CWJC No.8666 OF 2009
1. M/s. Bharat Sugar Mills (proprietor Upper Ganges Sugar and Industries
Limited), At, P.O. & P.S. Sidhwalia, District - Gopalganj through its
Senior Executive Vice President B. K. Sureka, S/o. Sri Babulat Sureka.
----- Petitioner
Versus
1. THE STATE OF BIHAR through the Chief Secretary, Government of
Bihar, Patna.
2. The Secretary-cum-Commissioner of Commercial Taxes, Government of
Bihar, Patna.
3. The Assistant Commissioner, Commercial Taxes, Gopalganj Circle,
Gopalganj. --------- Respondents
CWJC No.6377 OF 2009
1. M/S NEW SWADESHI SUGAR MILLS, proprietor Oudh Sugar Mills Limited
At & P.O. - Narkatiaganj, Distt. - West Champaran, through its Executive
Vice President (Finance) Banwari Lal Himmatsinghka.
-------------- Petitioner
Versus
1. THE STATE OF BIHAR through the Chief Secretary, Government of Bihar,
Patna.
2. The Principal Secretary-cum-Commissioner of Commercial Taxes,
Government of Bihar, Patna.
3. The Assistant Commissioner, Commercial Taxes, Bettiah Circle,
Bettiah. -------------- Respondents
CWJC No.6378 OF 2009
1. M/S NEW SWADESHI SUGAR MILLS, proprietor Oudh Sugar Mills
Limited At & P.O. - Narkatiaganj, Distt. - West Champaran, through its
Executive Vice President (Finance) Banwari Lal Himmatsinghka.
-------------- Petitioner
Versus
1. THE STATE OF BIHAR through the Chief Secretary, Government of Bihar,
Patna.
2. The Principal Secretary-cum-Commissioner of Commercial Taxes,
Government of Bihar, Patna.
3. The Assistant Commissioner, Commerical Taxes, Bettiah Circle,
Bettiah. ------------ Respondents
CWJC No.9282 OF 2009
1. M/S TIRUPATI SUGARS LIMITED (Formerly H.M.P. Sugars Ltd.), Bgaha,
P.O. - Naraipur, P.S. - Bagaha, District - West Champaran through
its Resident Manager-cum-Authorized Signatory Arun Kumar, son of
Late Ranjeet Kumar ------------------------ Petitioner
Versus
1. THE STATE OF BIHAR through the Chief Secretary, Government of
Bihar, Patna.
9
2. The Secretary-cum-Commissioner of Commercial Taxes, Government of
Bihar, Patna.
3. The Assistant Commissioner, Commercial Taxes, Bagaha Circle,
Bagaha, West Champaran. ------------------------ Respondents
CWJC No.6348 oF 2009
1. M/S INDIAN OIL CORPORATION LTD., a Company incorporated under the
Companies Act, 1956 having its Registered Office at G-9, Ali Yavar Jung
Marg, Bandra (East), Mumbai - 400051 and also carrying on business at
Barauni Oil Refinery at Begusarai in the State of Bihar through its Senior
Finance Manager, Sukumar Banik, S/o. Late Suresh Chandra Banik, Resident
of Barauni Refinery Township, P. S. - Begusarai, District - Begusarai
-------- Petitioner
Versus
1. THE STATE OF BIHAR through the Secretary-cum-Commissioner of
Commercial Taxes, Bihar, Vikash Bhawan, Bailey Road, Patna.
2. The Deputy Commissioner, Commercial Taxes, Begusarai
Crcle,District - Begusarai.
3. The Commercial Tax Officer, Begusarai Circle, Begusarai.
----------- Respondents
CWJC No.3233 oF 2009
1. M/S RIGA SUGAR COMPANY LIMITED, At & P.O. Riga, Distt. -
Sitamarhi, through its President Sri Amar Sharma, son of Late Major
B.R. Sharma. ------- Petitioner
Versus
1. THE STATE OF BIHAR through the Chief Secretary, Government of
Bihar, Patna.
2. The Secretary-cum-Commissioner of Commercial Taxes, Government of
Bihar, Patna.
3. The Assistant Commissioner, Commercial Taxes, Sitamarhi Circle,
Sitamarhi --------------------- Respondents
CWJC No.3517 oF 2009
1. M/S RIGA SUGAR COMPANY LIMITED, At & P.O. Riga, Distt. -
Sitamarhi, through its President Sri Amar Sharma, son of Late Major B.R.
Sharma. ------- Petitioner
Versus
1. THE STATE OF BIHAR through the Chief Secretary, Government of
Bihar, Patna.
2. The Secretary-cum-Commissioner of Commercial Taxes, Government of
Bihar, Patna.
3. The Assistant Commissioner, Commercial Taxes, Sitamarhi Circle,
Sitamarhi ---------------------Respondents
10
CWJC No.3234 OF 2009
1. M/S RIGA SUGAR COMPANY LIMITED, At & P.O. Riga, Distt. -
Sitamarhi, through its President Sri Amar Sharma, son of Late Major B.R.
Sharma. ------- Petitioner
Versus
1. THE STATE OF BIHAR through the Chief Secretary, Government of
Bihar, Patna.
2. The Secretary-cum-Commissioner of Commercial Taxes, Government of
Bihar, Patna.
3. The Assistant Commissioner, Commercial Taxes, Sitamarhi Circle,
Sitamarhi
--------------------- Respondents
CWJC No.3523 OF 2009
1. M/S RIGA SUGAR COMPANY LIMITED, At & P.O. Riga, Distt. -
Sitamarhi,
through its President Sri Amar Sharma, son of Late Major B.R.
Sharma. ------- Petitioner
Versus
1. THE STATE OF BIHAR through the Chief Secretary, Government of
Bihar, Patna.
2. The Secretary-cum-Commissioner of Commercial Taxes, Government of
Bihar, Patna.
3. The Assistant Commissioner, Commercial Taxes, Sitamarhi Circle,
Sitamarhi --------------------- Respondents
CWJC No. 5748 of 2009
1. M/S INDIAN OIL CORPORATION LTD., a Company incorporated under
the Companies Act, 1956 having its Registered Office at G-9, Ali Yavar
Jung Marg, Bandra (East), Mumbai - 400051 and also carrying on business
at Barauni Oil Refinery at Begusarai in the State of Bihar through its Senior
Finance Manager, Sukumar Banik, S/o. Late Suresh Chandra Banik,
Resident of Barauni Refinery Township, P. S. - Begusarai, District -
Begusarai --------- Petitioner
Versus
1. THE STATE OF BIHAR through the Secretary-cum-Commissioner of
Commercial Taxes, Bihar, Vikash Bhawan, Bailey Road, Patna.
2. The Deputy Commissioner, Commercial Taxes, Begusarai
Crcle,District - Begusarai.
3. The Commercial Tax Officer, Begusarai Circle, Begusarai.
----------- Respondents
----------
11
For the Petitioners :- Dr. Debi Pal, Senior Advocate,
Mr. Y. V. Giri, Senior Advocate,
Mr. Ramesh Kumar Agrawal,
Mr. S.D.Sanjay, Mr. Gautam Kejriwal
Mrs. Sushila Agrawal, Mr. Ashish Giri,
Mr. Anup Anand Jha,
For the State Respondents :- Mr. P.K. Shahi, Advocate General
Mr. Lalit Kishore, AAG - III
With Mr. Vikash Kumar, A. C. to A.G.
--------
PRESENT
THE HON'BLE THE CHIEF JUSTICE & THE HON'BLE MR. JUSTICE SHIVA KIRTI SINGH
-----------
P.K. Misra, C.J. In these writ petitions, the primary challenge is to the validity of the provisions contained in Section 3(1) of the Bihar Electricity Duty Act, 1948 (hereinafter referred to as the Act) and also regarding the validity of the notification issued by the State Government fixing the rate of duty payable by the various sugar mills and other organizations generating electricity in their own power plants.
The Act was enacted for the levy of duty on the sale and consumption of electrical energy in the State of Bihar. Its validity was once challenged in the Patna High Court mainly on the ground of lack of legislative competence. In decision reported in Indian Aluminium Co. and another v. State of Bihar (1992(1) PLJR 55), the validity of Section 3(2) of the Act was upheld by observing that the electricity duty imposed was a "tax" and not a "fee" and the State had the necessary legislative competence.
1.1 The present challenge is on account of amendment to Section 3(1) and the consequential issuance of notifications under such amended 12 provisions. To appreciate the contentions now raised by the parties it is necessary to notice the relevant provision of the Act and the notifications as amended from time to time.
1.2 Section 3(1) of the Act, as it originally stood, is extracted below:
―3. Incidence of duty:- (1) Subject to the provision of sub section (2), there shall be levied and paid to the State Government on the units of energy consumed or sold, excluding losses of energy in transmission and transformation a duty at the rate or rates specified in the Schedule.‖ 1.3 Sections 4 and 5, which have remained unaltered, to the extent relevant, are extracted hereunder:
―4. Payment of duty:- (1) Every licensee or any person other than licensee who is liable to pay duty shall pay every month to the State Government, at the time and in the manner prescribed, the proper duty payable under section 3 and section 3A on the units of energy consumed or sold by him.
(2) xx xx xx xx
(3) xx xx xx xx
(4) Every person including any department of the State Government, other than a licensee, who generates energy for his own use or for the use of his employees, or partly for such use and partly for sale, shall pay every month at the time and in the manner prescribed the proper duty payable under section 3, on the units of energy consumed by him or his employees or sold by him.
(4a) Every person other than a licensee who obtains, for sale or partly for his own use and partly for sale, bulk supply of energy generated by a licensee or other person shall pay every month to the State Government at the time and in the manner prescribed, the duty payable under section 3 of the units of energy so obtained and sold or partly sold and partly consumed by him.
(5) The licensee or other person who is liable to pay duty under this Act shall, subject to the prescribed conditions, be entitled to a rebate of such percentage as may be prescribed on the amount of duty paid by him within the prescribed time.‖
5. Obligation to keep books of account and to submit returns:- Every licensee, and every other person, who is liable to pay duty under sub-section (4) or (4a) of section 4, shall--
(a) keep books of account in the prescribed forms;
and
(b) submit returns in such form and at such times and to such officers as may be prescribed.‖ 13 1.4 The schedule, which was specified in the original Act, was subsequently amended by virtue of the Bihar Electricity Duty (Amendment) Act, 1993 (Act 15 of 1993). The said schedule, as amended, is extracted hereunder:
THE SCHEDULE (See Section 3) Serial. Premises Rate of duty No 1 2 3 1 For agricultural, irrigational 2 paise per unit of energy.
and industrial purposes save in respect of its premises used for residential or office purposes.
2 For domestic purposes in all 8 paise per unit of energy.
premises not falling under Sl. No.1 3 For mining purposes in all 8 paise per unit of energy.
premises where total load does not exceed 100 B.H.P. 4 For commercial purposes in 12 paise per unit of energy.
all premises not falling under Sl. Nos. 1 to 3.
5 For mining purposes in all 15 paise per unit of energy.
premises where total load
exceed 100 B.H.P.
6 In premises where supply of 10 per cent of the energy
electricity is unmetered by charges.
Bihar State Electricity
Board.
2. The petitioners have been paying the aforesaid duty without demur. While the matters stood thus, the Act was amended by the Bihar Electricity Duty (Amendment) Act, 2002, whereby the Schedule was deleted and Section 3(1) was amended. After such amendment, Section 3(1) reads as follows:
―(1) Subject to the provisions of sub-section (2), there shall be levied and paid to the State Government, either on the units or on the value of energy consumed or sold, excluding losses of energy in transmission and transformation, a duty at the rate or rates to be specified by the State Government in a notification.14
Provided that, the State Government may, by notification, specify different rates of duty in respect of different categories of consumption or sale of energy.
Provided further that, the rate of duty shall not exceed twenty paise per unit in case the duty is levied on the basis of units consumed or sold and ten percentum of the value of the energy consumed or sold in case the duty is levied on the basis of the value of energy." (emphasised portions are the additions).
3 In accordance with the power conferred by Section 3(1) as amended, the Government issued a notification - S.O No.137 dated 21.10.2002, wherein it is notified that the levy of duty on consumption or sale of electrical energy mentioned in Column 2 of the Schedule shall be at the rate specified in column 3 of the Schedule. The schedule appended to such notification is extracted hereunder:
Schedule Serial Description of electrical energy Number consumed or sold Rate of duty 1 2 3
1. Electrical energy consumed or sold for purposes of irrigation 4 paise per unit
2. Electrical energy consumed or 6 percentum of sold for any purpose other the value of than irrigation. energy.
The validity of Section 3(1), as amended by such amendment Act, has been challenged by the Bihar Sugar Mills Association and others by filing CWJC No.4613 of 2003. In the said writ petition, the demand notices issued by the Salestax Authorities are also challenged.
3.1 While matters stood thus, the State of Bihar in the Department of Commercial Taxes issued a fresh notification - S.O No.14 dated 4.3.2005 to amend the schedule appended to the earlier notification dated 1.10.2002. By virtue of such amendment, an entry was made at Sl. No. 3 to the following effect:
15
Schedule _______________________________________________________ Serial Description of electrical Number energy consumed or sold Rate of duty 1 2 3
3. Consumption of electrical 6 percentum of the value energy generated by of energy, which shall Captive DG set/Power be equivalent to the Plants energy tariff as fixed by B.S.E.B. The validity of this notification has been challenged by the very same Sugar Mill Association by filing CWJC No. 13614 of 2006. The Indian Oil Corporation has also filed separate writ petitions viz. CWJC Nos.5906 and 5708 of 2009 challenging the validity of the provisions in Section 3(1) as amended in 2005 and the notifications issued. The other writ petitions have been filed by various Sugar Mills challenging the orders of assessment. The contentions which are raised in the batch of writ petitions being similar, all the writ petitions have been heard together and are being disposed of by the present common judgment.
4 The basic contention raised in all the writ petitions is to the effect that by incorporating an additional provision in Section 3(1) of the Act delegating the power of levying tax on the basis of the "value of electrical energy consumed or sold" without giving any guidelines, such amended provision has become ultra vires as it has delegated the legislative function to the Executive, that too without laying down any guidelines whatsoever, thereby making such provisions arbitrary.
4.1 While elaborating upon the above basic contention, the counsel appearing for the various petitioners and more particularly Dr. Debi Pal, Senior Advocate, have submitted that as per the provision of Section 3 before its amendment and Sections 4 and 5 which have not been amended, duty is required to be paid "on the units of energy consumed or sold", but, as per the 16 amended Section 3, it is now contemplated that duty shall be paid either "on the units of energy consumed or sold" or "on the value of energy consumed or sold". This is impermissible, according to the learned counsel, being contrary to the scheme of the Act, more particularly Sections 4 and 5, which have not been amended.
4.2 The next submission is to the effect that even though the amended provision contemplates payment of duty "on the value of energy consumed or sold", the important question, as to how "value of energy consumed or sold" is to be ascertained, has not been indicated in the statutory provision and has been left to the unbridled discretion of the Executive without laying any guideline whatsoever and thus it amounts to excessive delegation of legislative function.
4.3 It is further submitted that the provision does not lay down any principle or guideline as to in which case the duty is to be levied, "on the unit of energy consumed or sold" and "on the value of energy consumed or sold", thereby giving scope for arbitrary exercise of executive power. The effect of the amendment makes the statutory provisions contained in Sections 4 and 5 totally unworkable, making it impossible for the assessee to file return as per the statutory provisions, the rules and the prescribed forms. 4.4 So far as the validity of the subsequent notification - S.O No.14 dated 4.3.2005 is concerned, it has been submitted that Section 3 as amended only permits the Executive, that is to say the State Government, to specify the rates at which the duty is to be levied by issuing notification. But, in the present case, the State Government has apparently issued a notification incorporating a definition of the expression "value of energy" by prescribing that "the value of energy ...... shall be equivalent to the energy tariff as fixed by B.S.E.B", 17 thereby arrogating to itself the legislative function of defining a particular expression.
4.5 The other ground of challenge to the validity of the said notification is that by indicating that the rate of duty of 6% of the energy tariff as fixed by the Bihar State Electricity Board (the Board, for brevity), the State Government, which is the delegated authority to fix the rate at which duty is to be levied, has further sub-delegated such power to the Board. In other words, the rate is now fixed by the Board and not by the State Government in as much as if the Board increases the tariff, the 6% of "value of energy" would go up and if, on the other hand, the Board decreases the tariff, the 6% of "value of energy"
would be reduced and, therefore, ultimately, it is the discretion of the Board, which will ultimately determine the rate at which the duty shall be levied and not of the State Government.
4.6 It is further submitted that there is no basis for laying down that the person, who is consuming electrical energy generated by its own captive DG set or power plants, has to pay duty at 6% of the value of energy, which is equivalent to the energy tariff fixed by the Board, whereas others have been subjected to payment of duty at a different rate. In the absence of any basis for such classification and nexus between the basis of classification and the object sought to be achieved, the provision suffers from the vice of arbitrary discrimination, thereby violating Article 14 of the Constitution of India.
5 In the counter affidavit filed on behalf of the State, it is contended that there is no excessive delegation of any essential legislative function and the amendment of Section 3(1) as well as the notification issued by the State specifying the rate as contained in the Schedule is valid.
5.1 The learned Advocate General, appearing for the State, has submitted that while imposing a tax, the State must have the necessary leeway or „play at 18 the joints‟ and can tax at different rates. In the present case, according to him, the electrical energy used or sold for irrigation purpose is subjected to payment of duty at a different and may be reduced rate, but the classification itself is self-explanatory as there is justified and felt necessity for encouraging agricultural activities. It has been further submitted by him that the expression "value of energy" can have an accepted meaning by keeping in view the purpose for which the energy is used and it is obvious that the amount which a person is liable to pay is the value of such energy. If the energy is „consumed‟, the amount which a person is required or would be required to pay for such energy is obviously the value of such energy and keeping in view this well accepted meaning, it has been specified in the notification dated 4.3.2005 that the value will be equivalent to the energy tariff as fixed by the Board. It is further submitted that if the energy is used or consumed for domestic purpose, the tariff as applicable to such domestic user would represent the value and if energy is used or consumed for commercial purpose, the tariff as applicable for commercial purpose would be the value and similarly if the energy is used for industrial purpose, the tariff as fixed for industrial purpose would represent the value and, therefore, it cannot be said that there is any confusion. 6 Before we delve further, it would be appropriate to notice some of the relevant decisions touching upon the question relating to interpretation of taxing statutes.
6.1 In M/s. Govind Saran Ganga Saran v. Commissioner of Sales Tax and others (AIR 1985 SC 1041), it was observed:
―6. The components which enter into the concept of a tax are well known. The first is the character of the imposition known by its nature which prescribes the taxable event attracting the levy, the second is a clear indication of the person on whom the levy is imposed and who is obliged to pay the tax, the third is the rate at which the tax is imposed, and the fourth is the measure or value to which the rate will be applied for computing the tax liability. If those components are not 19 clearly and definitely ascertainable, it is difficult to say that the levy exists in point of law. Any uncertainty or vagueness in the legislative scheme defining any of those components of the levy will be fatal to its validity‖. (emphasis added) 6.2 In A.V Fernandez v. State of Kerala (AIR 1957 SC 657), the Constitution Bench of the Supreme Court observed thus:
―29. It is no doubt true that in construing fiscal statutes and in determining the liability of a subject to tax one must have regard to the strict letter of the law and not merely to the spirit of the statute or the substance of the law. If the Revenue satisfies the court that the case falls strictly within the provisions of the law, the subject can be taxed. If, on the other hand, the case is not covered within the four corners of the provisions of the taxing statute, no tax can be imposed by inference or by analogy or by trying to probe into the intentions of the legislature and by considering what was the substance of the matter. We must of necessity, therefore, have regard to the actual provisions of the Act and the rules made thereunder before we can come to the conclusion that the appellant was liable to assessment as contended by the Sales Tax Authorities.‖ (emphasis added) 6.3 In Sneha Enterprises v. Commissions of Customs (2006(7) SCC
714), it was held that:
―24. While dealing with a taxing provision, the principle of ‗strict interpretation' should be applied. The court shall not interpret the statutory provision in such a manner which would create an additional fiscal burden on a person. It would never be done by invoking the provisions of another Act, which are not attracted. It is also trite that while two interpretations are possible, the court ordinarily would interpret the provisions in favour of a taxpayer and against the Revenue.‖
7 We have already noticed the provisions of the Act keeping in view the historical perspective. If one compares the provision of Section 3(1) as it originally stood with such provision after amendment, the following distinctive picture emerges. As per the provision contained in Section 3(1) before amendment, the consumer of electricity or the seller of electrical energy was required to pay at a particular rate to be fixed by the Legislature in the Schedule as per the unit of electricity consumed or sold. In other words, the rate was fixed by the Legislature and the liability to pay duty was measured on the basis of the unit of energy consumed or sold. As per the 20 amended provision, the levy can be either on units of the energy consumed or sold or "on the value of energy" consumed or sold. As per the unamended provision, the rate of levy on the unit consumed was being fixed by the Legislature in the Schedule, whereas as per the amended provision, the rate at which the levy is to be made on the unit consumed or sold is left to be specified by the State Government in a notification. In addition to the above method, the amended provision also contemplates that the rate can be fixed by the State Government by notification "on the value of energy" consumed or sold. As per the amended provision, while the first proviso empowers the State Government to specify different rates of duty in respect of different categories of consumption or sale of energy, as per the second proviso, it is laid down that the duty shall not exceed 20 paise per unit consumed or sold and shall not exceed 10% of the value of energy in case the duty is levied on the basis of the value of energy.
7.1 We have also extracted the notification which was issued in the year 2002 which indicates that for the electrical energy consumed or sold for the purpose of irrigation, the concerned person was required to pay at the rate of 4 paise per unit and in respect of electrical energy consumed or sold for any purpose other than irrigation, the person concerned was required to pay 6% of the value of energy. Under the subsequent notification dated 4.3.2005, as per the third entry added to the schedule, a person is required to pay at the rate of 6% of the value of energy in respect of consumption of electrical energy generated by the captive DG set/captive power plants. It has been indicated that the value of energy shall be equivalent to the energy tariff fixed by the B.S.E.B. 8 The expression "value of energy" is not defined in the Statute. The word „value‟ can be used either as a noun or as a verb. When used as a noun, 21 it means, as per the Oxford Advanced Learner's Dictionary, „how much is worth in money or other goods for which it can be exchanged‟. In the Chambers Dictionary, the meaning of the word „value‟, when it is used as a noun, is „worth; a fair equivalent; intrinsic worth or goodness‟. When used as a verb, the meaning is given as „to estimate the worth of; to rate at a price‟. When any particular expression used in a Statute is not defined, its well accepted meaning in ordinary parlance is required to be applied. 9 Can it be said that the expression „value of energy‟ has a well accepted meaning leaving no scope for any ambiguity? If a person purchases energy and consumes the same, the amount spent for the purchase of such energy can be considered as the value of such energy. If a person purchases energy and sells the same, what is the value of energy so far as he is concerned? Is it the amount spent by him for the purchase of such energy or is it the amount for which he sells such energy? When a person generates energy and consumes the same, what is the value of energy so far as he is concerned? Is it the cost of generation? Or is it the „profit‟ he makes that is to say the cost of such energy which he would have otherwise paid minus the cost of generation? Or is it the entire cost of energy he which would have otherwise paid if he would have purchased the same from available source? 9.1 It is interesting to note that in the counter affidavit, which has been filed on behalf of the State in the batch of writ petitions, wherein the notification - S.O No.137 dated 21.10.2002 was challenged, it has been indicated that the expression „value of energy‟ is equivalent to the cost of manufacture of such energy incurred by the various sugar mill owners. In other words, at that point of time, even the State Government considered that the value of energy was equivalent to the cost of generation of such energy. 9.2 Thus it appears that the expression "value of energy" is a verbal cast 22 of many colours and cannot be said to have a precise meaning to be adopted in every case. If it is purchased from some source and consumed, the value may be the cost of such purchase. If it is generated by the person concerned and thereafter consumed by him, the value may be equivalent to the cost of generation or the „saving‟ made. . If it is sold, the value may be equivalent to the sale price, whereas if it is not sold, the value may be different. 10 In such a scenario, the amended provision leaving it open to the State Government to levy duty on the value of energy consumed or on the value of energy sold can be held to be an obvious instance of excessive delegation of power, leaving it to the unbridled discretion and the unguided wisdom of the Executive to adopt any method.
11 In this context, it has to be remembered that if a person purchases electrical energy from any licensee, he has to pay certain amount for purchase of such energy. The value or price at which such energy is sold by the licensee is dependent upon so many factors such as the expenses, the margin of profit, loss of energy in transmission and transformation, the policy of subsidizing a particular sector of consumer and the like. A consumer who generates electricity and consumes such energy by himself and the consumer who purchases electricity and consumes the same cannot be treated alike. If the price of the energy supplied also includes certain amounts towards the loss of energy in transmission and transformation and yet the value of energy is calculated by taking into account such tariff, it would obviously be contrary to the provision contained in Section 3(1), which envisages levy of duty either on the unit or on the value of the energy consumed or sold, excluding loss of energy in transmission and transformation. Though there may be some justification in assuming that the value of energy, so far as the purchaser is concerned, is equivalent to the 23 price paid by such purchaser for availing the energy, can it be said that it is of the same value qua a person who generates electricity and consumes it himself? Since all these factors are left to the wisdom and discretion without any guideline whatsoever, in our considered opinion, the provision, so far as it envisages payment of duty on the value of energy consumed or sold, is liable to be struck down on the ground of excessive delegation of legislative function.
12 The subsequent amendment as per S.O No.14 dated 4.3.2005 cannot have the effect of improving the matter for the State in as much as such notification, in effect, purports to provide a definition for the expression „value of energy‟ by indicating that the value of energy shall be equivalent to the energy tariff as fixed by the Board. This amendment has been made applicable for the persons who are consuming electrical energy generated by their own captive DG/power plants. In this connection, it has been rightly submitted by the counsel appearing for all the petitioners and more particularly Dr. Debi Pal that by the notification, the State Government has further delegated its power of fixing the rate to the Board. This is impermissible as it is well known that a delegated authority cannot further sub-delegate its power. If the notification is accepted as valid, it would mean that whenever the Board enhances the energy tariff, there will be automatic enhancement of the duty which would be offending the scheme of the provision. As per the provision in Section 3 as amended, it is for the State Government to specify the rate at which duty is payable. By stating that the person will be liable to pay 6% of the value of energy which is equivalent to the energy tariff as fixed by the Board, the delegated power to fix the rate at which „duty‟ is payable is further sub-delegated to the Board. In other words, it is ultimately the tariff fixed by the Board which would be the 24 governing factor and it cannot be said that the rate is being fixed by the State Government.
13 It is, no doubt, true that as per Section 3(1) as amended and more particularly as per the proviso to sub-section (1), the State Government may specify different rates of duty in respect of different categories of consumption or sale of energy. It is well known that while fixing tariff, the Board or the Regulatory Commission fixes different tariff for different categories of consumers. The domestic user is normally called upon to purchase energy from the licensee at a lower rate as compared to a commercial user or an industrial user. Similarly at times distinction is made between the consumers in a rural area and the consumers in an urban area. Distinction is also at times made between the consumers during peak hours and non-peak hours and, therefore, it is obvious that the State Government may specify different rates of duties in respect of different categories of consumption or sale of energy, obviously, keeping in view the relevant factors. However, the provision in Section 3(1) that duty can be levied on the units or on the value of energy consumed or sold does not contain any basic policy giving any guideline. It is not discernible from the statutory provision itself as to in which case duty will be levied at the rate calculated on the basis of the "unit consumed or sold" or "on the value of energy consumed or sold". The legislature, instead of indicating instances wherein the duty will be leviable „on the value of energy consumed or sold‟ and instances where it will be on the basis of the units of energy consumed or sold, has left it to the unguided wisdom of the executive. It is, no doubt, true that ultimately the value of energy has to be measured keeping in view the sum total or the aggregate of all the units consumed or sold. However, without providing the basic guideline in which case it would be on the basis of units consumed or 25 in which case it is on the basis of value of energy, in our considered opinion, the legislature has abdicated its function and left the matter to the unguided discretion of the executive. It can be said that there is an effacement to such an extent that the provision can be said to be arbitrary and hit by the principle of excessive delegation.
14 In Devi Das Gopal Krishnan v. State of Punjab (AIR 1967 SC 1895), it was observed thus:
―Under that section the legislature practically effaced itself in the matter of fixation of rates and it did not give any guidance either under that section or under any other provisions of the Act ... no other provision was brought to our notice. The argument of the learned counsel that such a policy could be gathered from the constitutional provisions cannot be accepted, for, if accepted, it would destroy the doctrine of excessive delegation. It would also sanction conferment of power by legislature on the executive Government without laying down any guidelines in the Act. The minimum we expect of the legislature is to lay down in the Act conferring such a power of fixation of rates clear legislative policy or guidelines in that regard. As the Act did not prescribe any such policy, it must be held that Section 5 of the said Act, as it stood before the amendment, was void.‖ 14.1 In Agricultural Market Committee v. Shalimar Chemical Works Ltd (1997 (5) SCC 516), it was observed by the Supreme Court thus:
―24. The power of delegation is a constituent element of the legislative power as a whole under article 245 of the constitution and other relative articles and when the legislatures enact laws to meet the challenge of the complex socio-economic problems, they often find it convenient and necessary to delegate subsidiary or ancillary powers to delegates of their choice for carrying out the policy laid down by the Acts as part of the Administrative Law. The legislature has to lay down the legislative policy and principle to afford guidance for carrying out the said policy before it delegates its subsidiary powers in that behalf (see Vasantlal Maganbhai Sanjanwala v. State of Bombay (AIR 1961 SC 4). This Court in another case, namely, Municipal Corporation of Delhi v. Birla Cotton Spg. and Wvg. Mills (AIR 1968 SC 1232) as also in an earlier decision in Delhi Laws Act, 1912, In re AIR 1951 SC 332 has laid down the principle that 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 concerned.
25. xx xx xx xx
26. The principle which, therefore, emerges out is that the essential legislative function consists of the determination of 26 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 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 authorised 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. xx xx xx xx
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.‖ 14.2 In National Mineral Development Corporation Ltd v. State of M.P and another (2004 (6) SCC 281), it was observed as follows:
―23. Section 9 is not the beginning and end of the levy of royalty. The royalty has to be quantified for purpose of levy and that cannot be done unless the provisions of the Second Schedule are taken into consideration. For the purpose of levying any charge, not only has the charge to be authorised by law, it has also to be computed. The charging provision and the computation provision may be found at one place or at two different places depending on the draftsman's art of drafting and methodology employed. In the latter case, the charging provision and the computation provision, though placed in two parts of the enactment, shall have to be read together as constituting one integrated provision. The charging provision and the computation provision do differ qualitatively. In case of conflict, the computation provision shall give way to the charging provision. In case of doubt or ambiguity the computing provision shall be so interpreted as to act in aid of charging provision. If the two can be read together homogeneously then both shall be given effect to, more so, when it is clear from the computation provision that it is meant to supplement the charging provision and is, on its own, a substantive provision in the sense that but for the computation 27 provision the charging provision alone would not work. The computing provision cannot be treated as mere surplusage or of no significance; what necessarily flows therefrom shall also have to be given effect to.
24. Applying the above stated principle, it is clear that Section 9 neither prescribes the rate of royalty nor does it lay down how the royalty shall be computed. The rate of royalty and its computation methodology are to be found in the Second Schedule and therefore the reading of Section 9 which authorises charging of royalty cannot be complete unless what is specified in the Second Schedule is also read as part and parcel of Section 9‖.
14.3 In Gupta Modern Breweries v. State of J & K and others (2007 (6) SCC 317), it was held thus:
20. It is now a well-settled principle of law that the regulatory powers are generally to be widely construed. However, empowering the State Government to impose taxes, fees or duties and such demands must be authorised by the statute and must contain sufficient guidelines.‖
15 The learned Advocate General appearing on behalf of the State has placed strong reliance upon the decision of the Supreme Court in State of U.P and others v. Renusagar Power Co. and others (AIR 1988 SC 1737). Section 3 of the U.P Electricity Duty Act, 1952 sought to levy a duty for the consumption of electrical energy in the State of Uttar Pradesh. Section 3 of the Act provided, inter alia, as under:
―3. Levy of electricity duty:-- (1) Subject to the provisions hereinafter contained, there shall be levied for and paid to the State Government on the energy:
(a) sold to a consumer by a licensee, the Board, the State Government or the Central Government; or
(b) consumed by a licensee or the Board in or upon premises used for commercial or residential purposes, or in or upon any other premises except in the construction, maintenance or operation of his or its works; or
(c) consumed by any other person from his own source of generation; a duty (hereinafter referred to as ‗electricity duty') determined at such rate or rates as may from time to time be fixed by the State Government by notification in the Gazette, and such rate may be fixed either at a specified percentage of the rate charged or at a specified sum per unit.28
Provided that such notification issued after October 1, 1984 but not later than March 31, 1985 may be made effective on or from a prior date not earlier than October 1, 1984.
(2) In respect of clauses (a) and (b) of sub section (1), the electricity duty shall not exceed thirty-five per cent of the rate charged.
Provided that in the case of one-part tariff where the rate charged is based on units of consumption, the electricity duty shall not be less than one paisa per unit or more than eight paise per unit.
Explanation - For the purposes of the calculation of electricity duty as aforesaid, energy consumed by a licensee or the Board or supplied free of charge or at the concessional rates to his or its partners, directors, members, officers or servants shall be deemed to be energy sold to consumers by the licensee or the Board, as the case may be, at the rates applicable to other consumers of the same category.‖ It was held by the Supreme Court thus:
71. The provisions of sub-section (4) of section 3 have been noticed. As we have read the said provisions, it appears to us that the dominance of public interest is significant and we refer to the various factors, namely, (a) prevailing charges for supply of energy in any area, (b) the generating capacity of any plant, (c) the need to promote industrial production generally or any specified class thereof and other relevant factors and then taking all these factors into consideration, in public interest, to fix different rates of electricity duty in relation to different classes of consumption of energy or allow any exemption from payment thereof. Various grounds have been made out.
72. Shri Sen for the respondents is right that in view of the ceilings prescribed the power conferred upon the State under section 3(1) of the Act by itself is valid and does not amount to excessive delegation. See also in this connection the observations of this Court in Devi Das Gopal Krishnan v. State of Punjab (1967) 3 SCR 557 : (AIR 1967 SC 1895) and Ram Bachan Lal v. State of Bihar, (1967) 3 SCR 1 : (AIR 1967 SC 1404).
73. xx xx xx xx
74. xx xx xx xx
75. Referring to the aforesaid observations of the State Government, the High Court was of the view that the said observations of the State Government clearly showed that the State Government did not address itself to the need of promoting aluminium industry for increasing production of aluminium which would in the long run save foreign exchange.
We are unable to agree. What was paramount before introduction of the development programme and how the funds should be allocated and how far the Government considers negligible increase and rise in the cost of aluminium for the purpose of raising monies for other development activities are matters of policy to be decided by the Government. It is true as the High Court has pointed out that the question regarding public interest and need to promote indigenous industrial 29 production was related with the question of exemption of duty. But what the High Court missed, in our opinion with respect, was that a matter of policy which should be left to the Government. Reading the order of the Government, it appears to us that the Government had adverted itself to all the aspects of sub-s. (4) of S. 3 of the Act. It is true that certain amount of encouragement was given to Hindalco to start the industry in a backward area. After considerable point of time the very low rate of duty was charged. But if we need other sectors of growth and development for example, food, shelter, water, rural electrification, the need for encouragement to aluminium industry had to be subordinated by little high cost because that is a matter on which the Government as representing the will of the people is the deciding factor. Price fixation, in our opinion, which is ultimately the basis of rise in cost because of the rise of the electricity duty, is not a matter for investigation of Court. This question was examined by this Court in Union of India v. Cynamide India Ltd (1987) 2 SCC 720: (AIR 1987 SC 1802) where one of our learned brothers who delivered the judgment of the High Court of Allahabad was a party. There in exercise of the powers under section 3(2)(c) of the Essential Commodities Act, the Drugs (Price Control) Order, 1979 was made. The Central Government thereafter issued notification thereunder. At page 741 (of SCC) at p.1810 of AIR) of the report, Chinnappa Reddy, J. speaking for the Court referring to a passage of the Administrative Law by Schwartz with approval expressed the view that those powers were more or less legislative in character. Fixation of electricity tariff can also to a certain extent be regarded of this category. Chinnappa Reddy, J observed at page 735 (of SCC) : (at p. 1806 of AIR) of the report that price fixation is more in the nature of a legislative activity than any other. He referred to the fact that due to the proliferation of delegated legislation, there is a tendency for the line between legislation and administration to vanish into an illusion. Administrative, quasi- judicial decisions tend to merge in legislative activity and, conversely, legislative activity tends to fade into and present an appearance of an administrative or quasi-judicial activity. Any attempt to draw a distinct line between legislative and administrative functions, it has been said, is ‗difficult in theory and impossible in practice'. Reddy, J. insisted that it is necessary that the line must sometimes be drawn as different legal rights and consequences may ensue. It appears to us that sub-section (4) of S. 3 of the Act in the set up is quasi- legislative and quasi-administrative in so far as it has power to fix different rates having regard to certain factors and in so far as it has power to grant exemption in some cases, in our opinion, is quasi-legislative in character. Such a decision must be arrived at objectively and in consonance with the principles of natural justice. It is correct that with regard to the nature of the power under S. 3(4) of the Act when the power is exercised with reference to any class it would be in the nature of subordinate legislation but when the power is exercised with reference to individual it would be administrative. Reference was made in this connection to the cases of Union of India v. Cynamide India Ltd (supra) and P.J Irani v. State of Madras, (1962) 2 SCR 169 at pp.179-180 and 181-182 : (AIR 1961 SC 1731 at pp. 1737-38.
76 to 89 xx xx xx xx 30
90. In the premises, the High Court was in error in setting aside the order of the State Government in its entirety. The High Court should have allowed the claim of Hindalco for the reduced rate of bill on the basis that Renusagar Power Plant was its own source of generation under section 3(1)(c) and the bills should have been made by the Board on that basis. But the High Court was in error in upholding the respondents' contention that the State Government acted improperly and not in terms of section 3(4) of the Act and in violation of the principles of natural justice. We, therefore, allow the appeal to the extent indicated above and set aside the judgment of the Allahabad High Court to that extent and restore the State Government's impugned order subject to the modification of the bills on the basis of own source of generation. We, therefore, direct that the electricity bills must be so made as to give Hindalco the benefit of the rate applicable to its own source of generation from Renusagar Plant‖.
16 We do not think the aforesaid decision, in any way, advances the cause of the State Government. In U.P. Act, sufficient guidelines had been provided as to under what circumstances exemption can be granted or not. In the present case, in the absence of any parameters indicated in the Statute regarding evaluation of „value of energy consumed or sold‟, the executive by taking upon itself the task of defining the meaning of „value of energy‟ as equivalent to the tariff fixed by the Board has far exceeded its assigned and delegated role of fixing the rate of duty.
17 The learned Advocate General, in order to highlight the scope and ambit of the delegated legislation, has placed reliance upon the decision in Harishankar Bagla and another v. The State of Madhya Pradesh (AIR 1954 SC 465). It was observed in the said case as follows:
―(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 the - ‗Constitution of India and Delhi Laws Act, 1912 etc', AIR 1951 SC 332 (B) that essential powers of legislation 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.31
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. Reg', (1882) 7 AC 829 (C); - ‗Hodge v. Reg', (1884) 9 AC 117 (D) and - ‗Shannon v. Lower Mainland Dairy Products Board', 1938 AC 708 (E) 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 the - ‗AIR 1951 SC 332 (B)'. As already pointed out, the preamble and the body of the sections sufficiently formulate the legislative policy & the ambit and character of the Act is 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.‖ There cannot be any doubt about the proposition of law as expounded in AIR 1951 SC 332, which has been subsequently followed and applied to facts and circumstances of a particular case, in many subsequent Supreme Court decisions, including Harishankar Bagla's case (supra). In Harishankar Bagla's case (supra), in the facts and circumstances of that case, it was found that sufficient guidelines had been indicated and only the non essential functions have been delegated. In the present case, in our considered opinion, in the absence of any precise meaning attributable to the expression „value of energy‟, the amended provision has become unworkable and susceptible of being applied differently by the executive without any basic guideline relating to exercise of such power and, therefore, is vulnerable. Similarly, the views expressed in Pandit Banarsi Das Bhanot and others v. State of Madhya Pradesh and others (AIR 1958 SC 909) pressed into service by the learned Advocate General are of no assistance in the present case.
18 It has to be found out in every case whether there is delegation of legislative function or whether any guideline has been provided for exercise of executive power. In the Corporation of Calcutta and another v. Liberty 32 Cinema (AIR 1965 SC 1107), the provision contained in Section 548(2) of the Calcutta Municipal Act was found not vitiated by the principle of excessive delegation. It was observed that fixation of rate of tax may be legitimately left by a statute to a non-legislative authority. The challenge in the present case is not relating to delegation of authority to fix the rate inasmuch as the upper limit of rate which can be fixed has been indicated by the legislature. But the challenge is on the ground that enabling the executive to fix tax at a rate depending upon the „value of energy‟, without defining what is the meaning of value of energy, has made the provision vulnerable to the challenge on the ground of excessive delegation. Similarly, the observation made in M/s. Devi Das Gopal Krishnan and others v. State of Punjab and others (AIR 1967 SC 1895) is also not applicable to the peculiar facts and circumstances of the present case.
19 In view of the above discussion, the amendment of Section 3(1), so far as it provides for payment of duty "on the value of energy", is liable to be struck down as there is no guideline provided in the statute as to in which case the duty will be payable calculated on the basis of the value of energy consumed or sold. Similarly, the notification dated 21.10.2002 providing for payment of duty at 6 percentum of the value of energy is liable to be quashed as there is no guideline provided for ascertaining the value of energy. The subsequent notification - S.O No. 14 dated 4.3.2005 is also liable to be struck down on the self same ground. Since the amendment and the notifications are found to be inoperative, it is obvious that the duty will be payable as per the schedule which was in vogue by virtue of the Bihar Electricity Duty (Amendment) Act, 1993.
20 All the writ petitions are allowed, to the extent indicated above. Fresh assessments are required to be made in accordance with the conclusions made 33 in the present judgment. If any excess amount has been paid, such amount may be adjusted against the future bills.
(P. K. Misra, C.J.) Shiva Kirti Singh, J., I agree (Shiva Kirti Singh, J.) Patna High Court, The - 16th September, 2009 (Amin) A.F.R.