2021 Supreme(SC) 486

SUPREME COURT OF INDIA
Uday Umesh Lalit, Vineet Saran, JJ.
M/s. Indsil Hydro Power and Manganese Limited - Appellant
Versus
State of Kerala and Others - Respondents
Civil Appeal Nos.9845-9846 of 2016 with Civil Appeal Nos.9847-9850 OF 2016
Decided On : 06-09-2021

Headnote:

Constitution of India,1950 - Articles 14 and 265 - Orissa Hindu Religious Endowments Act, 1939 – Sections 49 and 50 - Bombay Public Trust Act, 1950 - Section 58 - Storage benefits of existing reservoirs and tailrace benefit of existing power - Setting up of sanctioned hydel schemes of category small/mini/micro at their own cost - - Maintenance of hydel scheme were to be managed as per stipulations made by the Government - Government framed a policy allowing private agencies and public undertakings to set up hydel schemes for generation of electricity at their own cost - Policy, the matters concerning construction, operation and maintenance of hydel scheme were to be managed as per the stipulations made by Government/Board - Normally generation of power from schemes of category small/mini/micro utilizing storage benefits of existing reservoirs and tailrace benefit of existing power stations will not be entrusted with private agencies - Government may under special circumstances allow such schemes to be set up by private parties. In such cases, in order to account for the additional advantage gained by agency by way of getting Controlled releases, the agency will have to pay to Government or Board, as the case may be, in tariff equivalent to cost component for controlled release utilized by agency the energy generated from the scheme - This will be in addition to royalty of water if any, to be paid - Tariff storage/controlled release as above are to be worked out in respect of each scheme separately taking into account factors. - Factories in State of Kerala and is in business of manufacturing electro minerals using electric arc furnaces, which process requires continuous supply of electricity - CUMI filed an application with State for allotment - After the Scheme was allotted CUMI undertook to establish Hydro Electric Project with 12 MW capacity on River - Agreement was entered into between CUMI and the Board which specifically referred to the Policy and stated that terms and conditions of the Policy “shall form part of this agreement as if incorporated - requirement of CUMI is generated from the projects during one accounting year such excess energy shall be fed into the KSEB grid itself at rates to mutually agreed upon shall CUMI be entitled for the sale or transfer of any excess energy or any energy produced from the project to any party other than the KSEB - Accounting of energy fed into grid and supplied by KESB to CUMI or operating their factories will be settled on an annual basis – Held, Court distinction between a tax and a fee - Court has described a tax as a compulsory exaction for public purposes which does not require the taxpayers consent while fee is a charge for specific service to some, and it must have some relation to the expenses incurred for the service is in consideration of Films Division supplying films to exhibitor, packing film and arranging for its delivery - This is clearly an agreed fee charged for rendering services. It cannot be viewed as a compulsory exaction or as a tax - There is a statutory obligation which is cast on the exhibitors to exhibit certain films - To carry out this statutory obligation, if the exhibitors enter into an agreement with Films Division and agree to pay a certain amount of rental for procuring films from the Films Division to comply with the statutory obligation, the levy must, since it is correlated with the Films Division discharging certain obligations under the contract, be viewed, at highest, as a fee and not as a tax. It is an agreed payment, and is not unreasonable - construed to be compensation paid for rights and privileges enjoyed by the grantee and normally has its genesis in agreement entered into between the grantor and grantee - As against tax which is imposed under a statutory power without reference to any special benefit to be conferred on payer of the tax, the royalty would be in terms of agreement between the parties and normally has direct relationship with the benefit or privilege conferred upon the grantee - arrangement entered into between the parties, though, not referable to any statutory instrument - Controlled release of water made available to INDSIL and CUMI, has always gone a long way in helping them in generation of electricity - For such benefit or privilege conferred upon them, Agreements arrived at between the parties contemplated payment of charges for such conferral of advantage - Such charges, in our view, were perfectly justified - Appeals dismissed.