Judgment

KHANNA, J. (for himself and on behalf of V. R. Krishna Iyer J.):- This appeal by certificate under Article 133 (1) (a) of the Constitution has been filed by the State of Mysore and the Electrical Inspector to the Government of Mysore against the judgment of Mysore (now Karnataka) High Court whereby that court in a petition under Article 226 of the Constitution quashed the demand made by the appellant State calling upon the West Coast Papers Mills Ltd. respondent company to pay electricity tax under the Mysore Electricity (Taxation on Consumption) Act, 1959 (Mysore Act No. 14 of 1959) (hereinafter referred to as the Act). The two questions which arise for determination in this case are :

(1) Whether electricity tax is chargeable on the quantity of electrical energy lost in the course of transmission; and

(2) Whether the respondent company is liable to pay electricity tax on the quantity of electrical energy used by it for generation of further electrical energy. The High Court answered both the questions in favour of the respondent company and quashed the demand which included tax on the above two counts. The State, it was held, was at liberty to make a fresh assessment of the