Madhya Pradesh High Court
Principal Secretary The State Of Madhya ... vs Partner M/S Stuti Thr. Sampat Kumar And ... on 15 December, 2016
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HIGH COURT OF MADHYA PRADESH : BENCH AT INDORE
(D.B :- Hon'ble Shri P.K. Jaiswal & Hon'ble Virender Singh, JJ.)
W.A.No.140/2011
STATE OF M.P.
VERSUS
M/s. STUTI & ORS.
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Shri P.M. Bhargava, Dy. A.G. for the appellant / State.
Shri D.S. Kale, Advocate for respondent No.1.
Shri Prasana Prasad, Advocate for respondent No.3.
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ORDER
(15.12.2016) Per P.K. JAISWAL, J : -
By this intra court appeal, the appellant / State of M.P. is challenging the order dated 24.6.2009 passed in W.P.No.846/2005 (Annexure A/1) whereby, the learned court allowed the writ petition by quashing the order dated 19.4.2005 passed by the appellant and directed the appellant for adjudication of quantum of electricity duty with a rider that the State would not reopen the controversy, as to whether the stone crusher of the respondent No.1 is to be treated within the mining area or not, since specific declaration has already been given by the writ court on the basis of report of the Collector that the stone crusher of the appellant is to be treated outside the mining land.
2. Brief facts of the case are that the respondent - firm is a partnership firm and carrying out the business of crushing stones by installing a crusher unit in part of survey no.1429/1/3, situated at Khajrana, Indore. The total area of the survey no.1429/1/3 is about 45 acres. The quarry lease for extraction of stone has been granted over an area of 9 acres out of total area of 45 acres of 1429/1/3 to one M/s.
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Bee Jay Company (P.) Ltd, which is adjacent to Survey No.1429/1/3.
3. Under Section 3 of the M.P. Electricity Duty Act, 1949, (hereinafter referred to as 'the Act') duty chargeable at the rate provided in the Annexure thereto is leviable on all Industrial Units. The respondent No.1 with the help of stone crushing machine run by him with electricity, the power or diesel and converted it into Gitti and sell or supply such Gitti to consumer. The respondents No.2 to 4 are engaged in the activity of generation, sell or supply of electrical energy and levies electricity duty on sell and consumption of electrical energy.
4. Till the year July 1988, the respondent No.1 was being charged electricity duty at the rate of 4 paise per unit of electrical energy consumed which was prescribed rate for the industries receiving electricity at low tension tariff. However in the bill dated 8th July, 1988 (Annexure L/3), for the electricity energy consumed for the month of July 1988, the respondent No.1 was charged electricity duty at the rate of 61 paise per unit of the energy being the rate applicable to the mines treating the stone crusher unit as mining and not industrial unit.
5. The respondent No.1 raised a protest through a communication dated 14.9.1988 by maintaining that the stone crusher unit run by respondent No.1 company was neither a mine, within the meaning of Mines Act, 1952, nor was situated within the mining area and, therefore, the rate of electricity duty applicable could not be applied in its case. The matter was referred to the Addl. Electricity Inspector - cum - Executive Engineer (VS) who vide communication
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dated 4.1.1989, informed the Addl. Engineer that if the mining authorities certifies that a particular stone crusher is not covered under the definition of mines then such a stone crusher would liable to pay electricity duty at the rate of ordinary tariff rate applicable to the other industrial units. The request made my the respondent - company was accepted by the respondent No.2 and vide communication dated 19.1.1989, the junior engineer informed the respondent No.1 that stone crusher would not come under the purview of Mines Act, 1952, therefore, the electricity duty was required to be charged @ of 4 paise per unit, thereafter, the respondent No.1 claimed for refund of the amount of excess electricity duty paid at the higher rate.
6. The appellant and respondents No.2 to 4 instead of refund / adjusting excess duty recovered from the respondent No.3 issued a circular dated 24.9.1990 about the duty chargeable of the stone crusher situated within and outside the mining area. On 6.11.1999, the respondent No.1 received the electricity bill for the month of October 1995, the electricity duty payable was shown to be charged at the rate of 40% of the electricity tariff under Item No.3 of Part B. Section 3 of the Act as applicable to the mines and thus at the rate of 8 Paise per unit. Similar bill for subsequent months for November and December were also sent to the respondent No.1 - company.
7. The respondent No.1 challenged the charging of electricity duty by filing W.P.No.165/1996. On 11.2.1998, the writ petition was dismissed in limine on the ground that the case of the respondent No.1 is covered by the judgment of Division Bench of this court in M.P. No.673/1993 ( Stone
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Crusher Owners Association & Ors. V/s. M.P. Electricity Board & Ors.) dated 19.10.1994, which is confirmed by the Apex Court. The respondent No.1 challenged the order passed by the learned writ court by filing LPA No.219/1998. The Division Bench by order dated 1.9.1999, disposed of the matter and granted liberty to approach to the appellant. Para 5 of the order dated 1.9.1999 reads as under :-
"5. Be that as it may, the whole dispute boils down to the rate at which petitioner was chargeable and as it was not possible for this court to examine the disputed claims and counter claims and to direct the Board to charge him at particular rate, it would, therefore, be just and proper to dispose off the matter including petitioner's writ petition by providing as under :-
Petitioner may approach Principal Secretary, Energy Department with his representation on the subject matter regarding the rate of duty chargeable in his case within one month and on so doing the Secretary concerned shall examine his claim taking in regard the report of the Collector and the rate charged in other similarly situated cases and pass appropriate order within two months from receipt of such representation. Appellant shall be at liberty to assail such orders in case he would feel aggrieved. Meanwhile, no steps shall be taken to effect any recovery from him at the disputed rate."
8. In terms of the liberty granted to the respondent No.1, it filed a representation, which was dismissed by the appellant. Against the rejection order the respondent No.1 again approached to this court through W.P.No.1257/2000. The writ court vide order dated 13.8.2003, allowed the writ petition and the matter was sent back to the appellant - State Government to re-determined the controversy in the light of the directions issued by the Division Bench in LPA No.219/1998. The relevant portion of the order dated 13.8.2003 passed by the writ court in W.P.No.1257/2000 reads as under :-
"17. In this manner now again the present writ petition has been filed. On going through the order Annexure /U dated 24.4.2000 passed by Government of M.P., Energy
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Department through its principal Secretary (Energy) it would reveal that the letter dated 23.9.1988 issued to the petitioner by Collector Mining (Annexure/G) was not taken into consideration by the Principal Secretary. In that letter it has been specifically mentioned by the Mining Officer that the land on which crusher machine of the petitioner is installed does not come under the purview of Mining Act, 1952 and similarly there is an another letter of Divisional Engineer M.P.E.B., Indore Division dated 191.1989."
9. The appellant by order dated 19.4.2005, rejected the representation by holding that the electricity consumed by the respondent's crusher is chargeable to the duty @ applicable to mines and rejected the representation of the petitioner dated 13.9.2013.
10. The issue involved in this writ appeal was again considered in the case of Jai Hanuman Stone Crusher V/s. M.P. Poorva Kshetra Vidyut Vitran Co. Ltd. & Ors . The learned writ court relying on the decision in the case of Hindustan Copper Ltd. (supra) came to the conclusion that crusher unit holders are liable to pay the electricity duty as applicable to the mines "(other than captive mines of a cement industries)"
11. Levy of duly on sale or consumption of electrical energy is governed by the provisions of Act. 1949. Section 3 (1) whereof provides for that subject to the exceptions specified in Section 3-A, every distributor of electrical energy and every producer shall pay every month to the State Government at the prescribed time and in the prescribed manner a duty calculated at the rates specified in the table appended therewith or the units of electrical energy sold or supplied to a consumer or consumed by himself for his own purposes or for purposes of his township or colony, during the preceding month.
12. Part B of Table appended to sub-section (1) of
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Section 3 of 1949 Act as applicable since 13.3.1997 (relevant for the cases at hand) provides for rates of duty as percentage of the electricity tariff per unit.
13. Entries 3 and 5 of Part B of Table, which are relevant, with respective rate of duty as percentage of the electricity tariff per unit stipulates:
Sl. Purpose Rate of duty as percentage
No. on the electricity tariff per
unit
3. Mines (other than captive 40
mines of cement industry)
5. For other industries not
covered under above categories
(a) Industries receiving electricity at low tension tariff:
(i) up to 75 HP 3 (ii) In excess of 25 HP up to 75 HP 4(iii) In excess of 75 HP up to 100 HP 3.5 (iv) In excess of 100 HP up to 150 HP 3 (b) Other industries 80
14. Explanation for the purpose of sub-section (1) defines "Mines" to mean " a mine to which the Mines Act, 1952 (No. 35 of 1952) applies and includes the premises or Machinery situated in or adjacent to mine and used for crushing, processing, treating or transporting the mineral." The definition being inclusive indicates exhaustive nature of definition (Please see : State of Bombay v. Hospital Majdoor Sabha : AIR 1960 SC 610 at page 614; M/s. Mahalaxmi Oils v. State of A.P. : (1989) 1 SCC 164:
Municipal Corporation of Greater Bombay v. Indian Oils Corporation : AIR 1991 SC 686, at page 689, The Quarry Owners Association v. State of Bihar : AIR 2000 SC 2870 (paragraph 31), Ramanlal Bhailal Patel v. State of Gujarat : (2008) 5 SCC 449 paragraph 23; Karnataka Power Transmission Corporation v. Ashok Iron Works
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Pvt. Ltd : (2009) 3 SCC 240 paragraph 15 to 17 and Chapter 3, synopsis 8 (a) at pages 179 and 180: Principles of statutory interpretations: Justice G.P. Singh 12th Edn. 2010).
15. The validity of definition of 'Mines' as given in Section 3 of 1949 was challenged in M.P. 673/1993: The Stone Crusher Owners Association and others v. Madhya Pradesh Electricity Board and others . The validity was upheld vide order dated 17.10.1994, it was held "The State is allowed wide choice in selection of objects and person. Such an exercise has never been said to be arbitrary or without any legislature competence. The legislature, therefore, cannot be said to have erred in defining "mine" under Section 3 of the Act for the purpose of imposition of electricity duty paragraph 9 of the order).
16. The extended definition of 'mine' again came under challenge in M.P. No. 2821/1988 : Hindustan Copper Limited v. The State of M.P. And others. This time, the challenge was on the ground that it results in dissimilar treatment to similar (processing) activity by prescribing different rates for different factories and the definition has the effect of categorizing the factories registered under the Factory Act, and carrying on the same activity of processing, treating and transport the minerals, into the categories. viz. One those which are adjacent to mine, and others which are not adjacent, I.e., leased on proximity with the mine. The said petition was dismissed on 9.2.2005. The order was, however, set aside by the Supreme Court in Civil Appeal No. 6725/2008 on 19.11.2008. The matter was remanded for a decision on the issue. i.e., "Whether copper concentrate is a mineral and whether explanation to Part B of the Act applies
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even though manufacturing process is involved to bring it into existence?".
17. On remand the writ petition M.P. No. 2821/1988 has been decided on 1.12.2011.
18. That while deciding the issue wherefor the matter was remanded, the Division Bench considered the expression "mine" and the ratio drawn in paragraph 11 of the order will have a direct bearing upon the present case. It is held:
"11. The expression 'mine' used in explanation
(b) to Part B of Section 3 creates a legal fiction. In interpreting the provisions creating a legal fiction, the Court is required to ascertain for what purpose the fiction is created. [See : State of Bombay v.
Pandurang Vinayak and Others. AIR 1953 SC 244}. In includes has been used which has to be considered as exhaustive. In other words, the definition will embrance only what is comprised within the ordinary meaning of 'mines' part, together with what is mentioned in the inclusive part of the definition. The expression 'mineral' which is used in explanation (b) to Part B of Section 3 has not been defined in the Act and, therefore, as per well settled rules of statutory interpretation referred to supra it has to be read with regard to subject and object of the Act. The object of the Act is to raise revenue by prescribing rate of duty. As stated above, the highest rate of duty is prescribed for mining industries as it is exploiting the natural wealth which is non- renewable, therefore, it must pay higher rate of duty which can be utilized for meeting the essential expenditures by the State Government. Taking into account the fact that the expression 'mine' creates a legal fiction and if the word 'mineral' is read subject to the context and object of the Act, it is graphically clear that wide meaning has to be given expression 'mineral'. If the copper ore is converted of copper in the copper concentrate and it does not cease to be 'mineral'. Merely on its' conversion from copper ore to copper concentrate.
12. In view of the preceding analysis, in our considered opinion, copper concentrate is a mineral as defined in explanation (b) to Part B of Section 3 of the Act applies to it.
13. Besides "copper concentrate" is the end product. What is 'crushed, processed, treated or transported' is not copper concentrate but the ore.
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The electricity in question is being consumed for such "crushing, processing. Trcating or transportation".
14. Another line of argument advanced was alleged discrimination between industries located in close proximity of the mine and other industri9es carrying on the same activity namely 'crushing, processing, treating or transportation, which are not located in such close proximity of the mine. The word 'adjacent' does not mean 'adjoining' or 'abutting', but has a wider connotation, and would include close proximity such being in the same locality. This proposition is not disputed, and therefore it is not necessary to refer to the case law cited for the meaning of the word "adjacent". In reply the learned Additional Advocate General submits that this differentiation is justified the increased overheads such as transportation cost as considered for not subjecting the far away industries. Considering the case law cited above permitting wide discretion to the State in respect of taxes inclined to agree with the submission of the learned Additional Advocate General."
19. The said decision in M.P. 2821/1988, will have an over riding effect on the observation by learned Single Judge in W.P. No. 1640/2007 : M/s. Ashish Enterprises v. The State of Madhya Pradesh and W.P. No. .3153/2004 : Shri Krishna Mehrotra v. Madhya Pradesh State Electricity Board and others decided on 28.8.2008, which is being relied by the learned counsel for the petitioners.
14. In M/s. Ashish Enterprises (supra), it is observed:
"At the outset it may be noticed that and identical controversy, with regard to the electricity tariff payable by a Stone Crusher, not situated within the mining land, had come up before this Court in the case of M/s. Stuti v. M.P. Electricity Board and others, W.P. No. 846/2005 decided by this Court on June 24, 2009. While deciding the aforesaid case, a note was taken of another Division Bench judgment in LPA No. 247/1998 decided on December 17, 2002, wherein the Division Bench had noticed that in M.P. No. 673/1993, since a challenge had been raised to the vires of the definition of mine, given under Section 3 (b) of the M.P. Electricity Act, 1949, and the said challenge had been rejected by the Division Bench, therefore, the definition of mine was not even a matter of any interpretation in M.P. No.
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673/1993 and therefore, the observations of the said Division Bench in M.P. No. 673/1993 could not be applied to the controversy as to whether the stone crusher in question was situated outside or adjacent to the mine and would also be covered under the definition of mine.
It would also be appropriate to extract the relevant portion of the observations from the order of the Division Bench dated December 17, 2002 in L.P.A. No. 247/1998 (M/s. Vastu v. M.P. Electricity Board and others).
"3. We have perused the judgment dated 19.10.1994 passed in M.P. No. 673/1993. In the said M.P. No. 673/1993, the challenge was to the vires of the said definition of mine given in Sec. 3 (b) of the M.P. Electricity Duty Act, 1949, as also the amendment made in the Schedule, imposing higher tariff. The Division Bench held that the provisions under challenge do not suffer from any constitutional vice or from any statutory invalidity. With this finding the said petition was dismissed. The point projected in the present petition as to whether a crushing unit situated outside the mining area or to be more precise not situated in or adjacent to a mine will also be covered by the said definition of 'mine'. Was not in issue or decided in M.P. 673/93. In out considered opinion, the Learned Single Judge out to have considered the aforesaid issue involved in the petition. ................".
20. In Shri Krishna Mehrotra (supra), learned Single Judge relying upon the reversed decision in M.P. 2821/1988 (The petition was decided on 9.2.2005 along with M.P. No. 3827/1993 and W.P. No. 3103/1994. The order was set aside by the Supreme Court in Civil Appeal No. 6725/2008 dated 19.11.2008), and confining the definition of "mine" as defined vide explanation (b) to Section 3 of 1949 Act, observed that, the stone crushing activities carried out by those other than mine owners and at a distinct place than the mine are not covered by the definition of 'mine' and cannot be subjected to the electricity duty applicable to "mine (other than captive mines of cement industry)". Accordingly, the decision in M.P. 2821/1988 was distinguished. It is stated at bar that the decision in Shri
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Krishna Mehrotra (supra) is under challenge in a writ appeal. Even otherwise, the decision in M.P. 673/1993: The Stone Crusher Owners Association and others v. Madhya Pradesh Electricity Board and others, decided on 17.10.1994; wherein, while approving the extended definition of the expression "Mines" as it appear in Explanation (b) of Section 3 of 1949 Act, its validity was upheld. Be that as it may.
21. In the Stone Crusher Owners Association and others (supra) the Division Bench dwelt with the challenge to the validity of the definition 'mines' as it stood vide Explanation
(b) of Section 3 of the 1949 Act. The petition was at the instance of Stone Crusher owners who installed Stone crushing units at Jawahar Tekri, Indore alleging that their activity is industrial inasmuch as it consists of converting stones into stone chips, popularly known as 'gitti'. In the said case State of Madhy Pradesh had awarded a lease of Stone Mine situated at jawahar Tekri to co-operative society known as Shramik Kamgar Karigaron Ki Sahkari Sanstha (Maryadit) Village Sinhasa, Jawahar Tekri, Indore. Stones extracted by the Society at Jawahar Tekri in form of boulders was sold to member of the Stone Crusher Owners Association who crushed it with power gererator (or diesel as the case may be) by electricity and convert it into 'gitti' and sell or supply to consumers. The challenge to validity of the definition 'mines' vide Explanation 2 (b) of 1949 Act, was challenged on the following grounds; viz., i. Being beyond legislative competence. ii. Discriminatory being violation of Article 14 of the Constitution of India - That the explanation (Sec. 3 Explanation (b) makes an irrational and arbitrary discrimination between premises and machinary used for crushing processing treating or transporting any mineral which is situated in or adjacent to a mine and the
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premises or machinery which is not so situated or adjacent to mine.
iii. That the boulders crushed loose their character and become raw material for the purposes of industrial activity of crushing and, therefore, the inclusive definition of 'mine' inapplicable.
22. The Division Bench upheld the validity on the ground that it is within the power of the State Legislature to have an 'extended definition of mine' for the purpose of charging electricity duty which includes crushing process etc. As activity in relation to minerals and in that view of that matter the charges applicable would be at the rate of 75 paise per unit and not at any lower rate as claimed by the petitioner." While dealing with the allegation of discrimination that those Stone Crushers are not located in the premises or Machinery situated in or adjacent to a mine and used for crushing, processing, treating or transporting the mineral, the Division Bench in the Stone Crusher Owners Association (supra) held : "12. Yet another submission put-forth was that the State has not charged the same rate in respect of other person the details of which have been given in the petition. It is alleged that the State is discriminating between the same class. The averments made in this regard in para (1) of the petition have not been controverted by the State or the Electricity Board. It is a wrong exercise of power by the authorities which does not make the law invalid. The respondents shall look into the matter and correct the bills issued in respect of persons mentioned in the petition.
23. The issue as to whether a crushing unit situated outside the mining area or to be more precise not situated in or adjacent to a mine being covered by decisions in the Crusher owners Association and others (supra) and Hindustan Copper Limited (supra), i.e., the petitioners
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though not the mine owners, having the crushing unit established at place not adjacent or in the premises where the mine is situated being covered by the definition of 'mine' as contained in Explanation (b) to Section 3 of 1949 Act are liable to pay electricity duty as applicable to the "mines (other than captive mines of a cement industry)".
24. Thus once the validity of the expression 'mines' as per Explanation 3 (b) of 1949 Act having been upheld in the Stone Crusher Owners Association and others (supra) decided on 17.10.1994, the contention that the respondent charged from a retrospective date on the basis of the explanation tendered by the Secretary, Department of Energy, State of Madhy Pradesh, does not stand to reason. The respondent unit having been held to be covered by the definition of mine, the respondent ought to have volunteered to pay the duty.
25. For the above mentioned reasons, the impugned order dated 24.6.2009 passed in W.P.No.846/2005, is liable to be set aside. Accordingly, it is set aside. Writ appeal filed by the appellant - State is allowed, but without orders as to costs.
(P.K. JAISWAL) (VIRENDER SINGH)
JUDGE JUDGE
SS/-