The judgment of the Court was delivered by

B. P. JEEVAN REDDY, J. - Andhra Pradesh Electricity Duty Act, 1939 - originally enacted as Madras Act 5 of 1939 and subsequently made applicable to the entire State of Andhra Pradesh - provides for levy of duty on certain sales and consumption of electrical energy by licensees in the State of Andhra Pradesh. Section 2 defines certain expressions occurring in the Act. "Energy" is defined to mean electrical energy [clause (a)]. "Licensee" is defined to mean :

"(i) any person including a company or a local authority licensed under Part II of the Indian Electricity Act, 1910, to supply energy, or any person including a company or a local authority who has obtained the sanction of the State Government under section 28 of that Act to supply energy;

(ii) the Andhra Pradesh State Electricity Board constituted under section 5 of the Electricity (Supply) Act, 1948;

(iii) the National Thermal Power Corporation or any other corporation engaged in the business of supplying energy" [clause (b)].

Section 3 is the charging section. Sub-section (1) alone is relevant for our purposes, and may be set out in full :

"3. Levy of duty in certain sales of electrical energy. - (1) Save as otherwise provided in sub-section (2), every licensee in the State of Andhra Pradesh shall pay every month to the State Government in the prescribed manner, a duty calculated at the rate of four paise per unit of energy, on and in respect of all sales of energy, except sales to the Government of India, for consumption by that Government or sales to the Government of India or a railway company operating any railway for consumption in the construction, maintenance or operation of that railway, effected by the licensee during the previous month, at a price of more than twelve paise per unit, and on and in respect of all energy which was consumed by the licensee during the previous month for purposes other than those connected with the construction, maintenance and operation of his electrical undertaking and which, if sold to a private consumer under like conditions, would have fetched a price of more than twelve parse per unit :

Provided that no duty under this sub-section shall be payable on and in respect of sale of energy effected :

(a) by the Andhra Pradesh State Electricity Board to any other licensee;

(b) by the National Thermal Power Corporation to the Andhra Pradesh State Electricity Board ......"

An analysis of sub-section (1) of section 3 yields the following features :

(a) Duty is levied on "all sales of energy" effected by the licensee during the previous month at a price more than twelve paise per unit. The rate of duty is four paise per unit of energy. However, sales to (i) Government of India for consumption by that Government, (ii) sales to the Government of India, or a railway company operating any railway, for consumption in the construction, maintenance or operation of that railway, are exempted from duty. Similarly, sales (i) by A.P. State Electricity Board to any other licensee, and (ii) by the National Thermal Power Corporation to the A.P. State Electricity Board, are again exempted.

(b) Duty at the same rate is also levied on all energy consumed by the licensee during the previous month for purposes other than those connected with the construction, maintenance and operation of his electrical undertaking and which, if sold to a private consumer under like conditions, would have fetched a price of more than twelve paise per unit.

In this case, we are not concerned with duty levied on consumption, mentioned as clause (b) in the above analysis.

Both the National Thermal Power Corporation (NTPC), the writ-petitioner herein, and the A.P. State Electricity Board, are "licensees" within the meaning of the definition of "licensee" in section 2(b).

National Thermal Power Corporation (NTPC) is a Government company wholly owned by the Government of India. It was set up to meet the fast growing demand of powe