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HIGH COURT OF PATNA (RANCHI BENCH)
S. B. Sinha and R. N. Sahay, JJ.
Indian Aluminium Co. and another - Petitioners
Vs.
The State of Bihar and – Respondents
Civil Writ Jurisdiction Case No. 2336 of 1990 (R)
Decided On : 9.4.1991
ELECTRICITY DUTY - Bihar Electricity Duty Act, 1948 (Bihar Act 36 of 1948) - Section 3(2) - Exemption from payment of electricity duty - Discrimination - Article 14 of the Constitution of India - Refund of surcharge paid by mistake - Section 3A - Penalty for failure to furnish returns or pay duty - Section 5A - Held, section 3(2) of the Act is not ultra vires Article 14 of the Constitution - Petitioner entitled to refund of surcharge paid by mistake - Penalty imposed on petitioner quashed.
Fact of the Case:
Petitioner, a captive producer of electrical energy, challenged the vires of section 3(2) of the Bihar Electricity Duty Act, 1948 (Bihar Act 36 of 1948) on the ground that it discriminated against them by granting exemptions to certain classes of consumers while denying the same to them. The petitioner also sought a refund of the surcharge paid by them under section 3A of the Act and challenged the imposition of a penalty for failure to furnish returns or pay duty under section 5A of the Act.
Finding of the Court:
The Court held that section 3(2) of the Act was not ultra vires Article 14 of the Constitution as the classification made by the Act was based on reasonable differentia and had a rational relation to the object sought to be achieved by the Statute. The Court further held that the petitioner was entitled to a refund of the surcharge paid by mistake and quashed the penalty imposed on the petitioner.
Issues: 1. Whether section 3(2) of the Bihar Electricity Duty Act, 1948 (Bihar Act 36 of 1948) is ultra vires Article 14 of the Constitution of India? 2. Whether the petitioner is entitled to a refund of the surcharge paid by mistake under section 3A of the Act? 3. Whether the penalty imposed on the petitioner for failure to furnish returns or pay duty under section 5A of the Act is valid?
Ratio Decidendi: 1. The classification made by section 3(2) of the Act was based on reasonable differentia and had a rational relation to the object sought to be achieved by the Statute. Therefore, it was not discriminatory and did not violate Article 14 of the Constitution. 2. The petitioner was entitled to a refund of the surcharge paid by mistake as it had made the payment under protest and without any statutory liability. 3. The penalty imposed on the petitioner was quashed as the authority had not given the petitioner an opportunity of hearing before imposing the penalty.
Final Decision: The petition was allowed in part. Annexures 8 and 12 were quashed. However, there was no order as to costs.
S. B. Sinha, J. :- The petitioners in this case, inter alia, have prayed for a declaration that section 3 (2) of the Bihar Electricity Duty Act, 1948 (Bihar Act 36 of 1948) thereinafter to be referred to as the said Act is ultravires the Constitution.
2. The fact of the matter lies in a very narrow compass.
The petitioner generates electrical energy for consumption in its own factory allegedly owing to shortage in supply of electrical energy by the Bihar State Electricity Board.
According to the petitioners, it also supplies under the direction of the State of Bihar, a part of the electrical energy generated by it to the Railway Administration. It is however, not a sanction holder within the meaning of section 28 of the Indian Electricity Act, 1910.
3. The petitioners questioned the vires of section 3 (2) of the Act inter alia on the ground that the State had no jurisdiction to levy electricity duty which is in the nature of excise in view of Entry 84 List I of the 7th Schedule of the Constitution of India.
4. The petitioners further contended that in any event as in terms of section 3 (2) of the Act, certain exemption, have been provided to the Establishments mentioned therein, but as the exemption for payment of duty either in whole or any part have not been granted to the petitioner, the same is ultravires Article 14 of the Constitution.
5. At the time of admission, by an order dated 3.12.1990 the contention of the petitioners with regard to the lack of competence of the State Legislature to enact the said Act was rejected in view of a decision of the Supreme Court in Jiyajeerao Cotton Mills Ltd. v. State of Madhya Pradesh reported in AIR 1963 SC 414 and this application was directed to be heard inter alia on the question as to whether the said Act is ultravires Article 14 of the Constitution of India or not.
6. Mr. S. Pal, learned counsel appearing on behalf of the petitioner submitted that whereas by reason of clauses (a), (b) and (d) of sub-section (2) of section 3 of the Act, a total exemption from payment of electricity duty has been granted to the persons named therein partial exemption has been granted to the licensees in D. V. C. as envisaged in clause 'c' and 'e' thereof. It was submitted by the learned counsel that the State even in the matter of exemption form payment of tax cannot make any discrimination except on discernible reasons and/or valid classifications.
7. Learned counsel in this connection has submitted that the State in its return has not mentioned any reason as to how and in what manner captive producers of electrical energy like the petitioners has been denied the privilege of exemption from payment of electricity duty: whereas the persons similarly situated, namely the licensee or the D. V. C. we re so exempted.
According to the learned counsel, the petitioners being similar situated with those of the other producers was entitled to grant of exemption from payment of electricity duty.
Learned counsel further submitted that the very fact that in terms of sub-section (2) of section 4 of the Act, a licensee is entitled to recover from the consumer the amount which falls to be paid by it as duty in respect of energy sold to the consumer to show that the object of the Act was that even the Iicer1see is entitled to recover the amount of fee from the consumers to the extent the same was sold to them.
8. Learned counsel in this connection has strongly relied upon State of Rajasthan vs. Mukan Chand and others reported in A.I.R. 1964 SC 1633; Motor General Traders vs. State of Andhra Pradesh, reported in AIR 1984 SC 121 ; Ratan Arya vs. State of Tamil Nadu and another reported in AIR 1985 SC 1444.
Learned counsel also relied upon Khas Karanpura Collieries vs. State of Bihar and others reported in AIR 1971 Patna 328; Umesh Chandra Sinha vs. V.N. Singh and others, reported in AIR 1968 Patna 3 and Annapurna Match Industries vs. Union of India and another (AIR 1971 A.P. 69).
9. Learned counsel next contended that t
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