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SUPREME COURT OF INDIA
DHANANJAYA Y. CHANDRACHUD, VIKRAM NATH, B.V. NAGARATHNA, JJ.
M/S MAGADH SUGAR & ENERGY LTD. – APPELLANT
VERSUS
THE STATE OF BIHAR & ORS. – RESPONDENTS
CIVIL APPEAL NO. 5728 OF 2021
DECIDED ON : 24-09-2021
(A) Constitution of India – Article 226 – Writ Jurisdiction – Alternative remedy – While High Court would normally not exercise its writ jurisdiction under Article 226 of Constitution if an effective and efficacious alternate remedy is available, existence of an alternate remedy does not by itself bar High Court from exercising its jurisdiction in certain contingencies – When a right is created by a statute which itself prescribes remedy or procedure for enforcing right or liability, resort must be had to that particular statutory remedy before invoking discretionary remedy under Article 226 of Constitution – This rule of exhaustion of statutory remedies is a rule of policy, convenience and discretion – In cases where there are disputed questions of fact, High Court may decide to decline jurisdiction in a writ petition – However, if High Court is objectively of view that nature of controversy requires exercise of its writ jurisdiction, such a view would not readily be interfered with. (Para 19)
(B) Bihar Electricity Duty Act, 1948 – Sections 3(1) and 6B(1) – Constitution of India – Article 226 – Imposition of electricity duty and penalty – It is not the case of appellant that respondents have miscalculated duty and penalty imposed on it – Appellant contends that State Government does not have power to levy tax on its sale of electricity to BSEB – Plea strikes at exercise of jurisdiction by Government – In view of law on rule of alternate remedy, High Court can exercise its writ jurisdiction if order of authority is challenged for want of authority and jurisdiction, which is a pure question of law – Issues raised by appellant are questions of law which require, upon a comprehensive reading of Bihar Electricity Act, determination of whether tax can be levied on supply of electricity by a power generator (which also manufactures sugar) supplying electricity to a distributor; and whether first respondent has legislative competence to levy duty on sale of electricity to an intermediary distributor – Question of whether appellant is liable to file returns under Sections 6B(1) and 5A of Act is directly related to issue of whether sale of electricity by appellant to BSEB falls under charging provisions of Section 3(1) – Questions raised by appellant can be adjudicated without delving into any factual dispute – Present matter is amenable to writ jurisdiction of High Court – Judgment of High Court set aside and writ petition restored to file of High Court for fresh determination. (Paras 22, 24 and 25)
Facts of the case:
Appellant is a sugar mill company operating in Narkatiaganj, Bihar. It is engaged in the business of manufacture and sale of white crystal sugar. Present appeal arises out of the judgment of a Division Bench of the Patna High Court dated 18th September 2017. The High Court declined to entertain the writ petition instituted by the appellant on the ground that the dispute between the parties is factual in nature and is suitable for adjudication in terms of the statutory remedy provided in the Bihar Electricity Duty Act, 1948. The appellant had invoked the writ jurisdiction of the High Court to challenge the imposition of electricity duty and penalty on the electricity that it was supplying to Bihar State Electricity Board.
Findings of Court:
High Court made an error in declining to entertain the writ petition and it would be appropriate to restore the proceedings back to the High Court for a fresh disposal. In order to facilitate the decision on remand, we have recorded the broad submissions of the parties on merits but leave the matter open for a fresh evaluation by the High Court.
Result : Appeal allowed.
JUDGMENT :
Dr. Dhananjaya Y Chandrachud, J
1. Leave granted.
2. This appeal arises out of the judgment of a Division Bench of the Patna High Court dated 18 September 2017. The High Court declined to entertain the writ petition instituted by the appellant on the ground that the dispute between the parties is factual in nature and is suitable for adjudication in terms of the statutory remedy provided in the Bihar Electricity Duty Act 19481[“Bihar Electricity Act” or “the Act”]. The appellant had invoked the writ jurisdiction of the High Court to challenge the imposition of electricity duty and penalty on the electricity that it was supplying to Bihar State Electricity Board2[“BSEB”].
Facts of the case
3. The appellant is a sugar mill company operating in Narkatiaganj, Bihar. It is engaged in the business of manufacture and sale of white crystal sugar. The waste of sugarcane (bagasse) produced in the process of manufacturing sugar is used for the production of electricity for its own consumption and the surplus energy is supplied to BSEB. The appellant has been supplying electricity to BSEB since 6 March 2008.
4. The Bihar Electricity Duty Act 19483[“The Act”] in its initial form empowered the State Government (the first respondent) to levy electricity duty under Section 3 (1) on the units of energy consumed or sold, excluding the losses of energy in transmission and transformation at the rates specified by the first respondent. Rates of duty were specified in the Schedule to the Act. The Bihar Electricity Act was amended in 2002 which led to the deletion of the Schedule and amendment of Section 3(1). The amendment allowed the first respondent to levy tax on the basis of the units or the value of energy consumed or sold at rates specified by the State Government by a notification. Section 3 (1) in its current form provides as follows:
“3. Incidence of duty-(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.
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.
(2) No duty shall be leviable on units of energy-
(a) consumed by the Government of India, or sold to the Government of India, for consumption by that Government.
(b) consumed in the construction, maintenance, or operation of any railway company operating that railway, or sold to that Government or any such railway company for consumption in the construction, maintenance or operation of any railway.
(c) consumed by the licensee in the construction, maintenance and operation of his electrical undertaking.
(d) consumed by or sold by any class of persons exempted from payment of duty under section 9.
(e) consumed by the Damodar Valley Corporation for the generation, transmission or distribution of electricity by that Corporation.
(f) consumed for any purpose which the state Government may, by notification, in this behalf declare to be a public purpose and such exemptions may be subject to such conditions and exemptions if any, as may be mentioned in the said notification.
(3) when a licensee holds more than one licence, duty shall be payable separately in respect of each license.” (emphasis supplied)
5. In pursuance of its power under Section 3(1) of the Act, the first respondent issued a notification dated 21 October 20024[SO 137] which stipulated that the rate of duty applicable on the consumption or sale of electricity would be fixed at six per cent of th
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