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High Court Of Delhi
DELHI CLOTH AND GENERAL MILLS COMPANY LIMITED - Appellant
Versus
MUNICIPAL CORPORATION OF DELHI - Respondent
Civil 503 of 1967
Decided On : 02/24/1975
ELECTRICITY TAX - Levy of tax on consumption of sale of electricity - Optional tax - Maximum rate of tax to be specified by resolution of Corporation - Sanction of Central Government required - Resolution determining actual rates at which tax is levied - Demand notices served on petitioner - Petitioner's representation regarding excessive assessment not considered - Writ petition filed challenging validity of demands - Whether maintainable - Whether barred by res judicata - Whether excessive assessment can be challenged in writ petition - Held, writ petition maintainable - No bar of res judicata - Excessive assessment can be challenged in writ petition.
Fact of the Case:
Petitioner, a company engaged in the manufacture of caustic soda, filed a writ petition challenging the validity of the electricity tax demands served on it by the Municipal Corporation of Delhi (MCD). The petitioner contended that the tax was excessive as the rate of tax for electricity consumed in its caustic soda plant was higher than the rate for other plants. The MCD resisted the petition, contending that the petitioner should have filed an appeal against the demands under the relevant provisions of the Delhi Municipal Corporation Act, 1957, and that the petition was barred by res judicata as the petitioner had not challenged the excessive assessment in an earlier writ petition filed by it. The petitioner argued that it was not required to file an appeal as the tax was invalid and that the earlier writ petition did not challenge the excessive assessment.
Finding of the Court:
The court held that the writ petition was maintainable as the petitioner was not required to file an appeal against the demands as the tax was invalid and that the earlier writ petition did not challenge the excessive assessment. The court also held that the plea of res judicata was not available to the MCD as the petitioner was not seeking to raise the same grounds in the present petition as it had raised in the earlier petition. The court further held that the excessive assessment could be challenged in a writ petition as the petitioner had made representations to the MCD regarding the excessive assessment and the MCD had failed to consider the same.
Issues: 1. Whether the writ petition is maintainable? 2. Whether the petition is barred by res judicata? 3. Whether excessive assessment can be challenged in a writ petition?
Ratio Decidendi: 1. The writ petition is maintainable as the petitioner was not required to file an appeal against the demands as the tax was invalid and that the earlier writ petition did not challenge the excessive assessment. 2. The plea of res judicata is not available to the MCD as the petitioner is not seeking to raise the same grounds in the present petition as it had raised in the earlier petition. 3. Excessive assessment can be challenged in a writ petition as the petitioner had made representations to the MCD regarding the excessive assessment and the MCD had failed to consider the same.
Final Decision: The court allowed the writ petition and quashed the impugned demands to the extent of the same being in excess of what was admitted by the petitioner. The MCD and its agents were restrained from collecting any tax at a rate higher than 1/3 Paise per Kwhr for the energy generated by it and consumed in the Caustic Soda plant, as stated by the petitioner.
( 1 ) THE petitioner is the Delhi Cloth and General Mills Co. Ltd. , which filed this petition on 9-5-1967. under Article 226 of the Constitution to quash the notices of demand served on behalf of respondent No. 1 (Municipal Corporation of Delhi) by respondent No. 2 (Assistant Assessor and Collector of the Corporation L io restrain them from enforcing the aforementioned notices of demand or to collect the amount specified therein in any manner, and alternatively, to direct amendment of the said notices of demand (copies of which arc Annexures E and F to the petition) by hearing and determining them. The demand dated 31-12-1966 is for a sum of Rs. 29,13,170. 56 P. due on account of electricity tax on energy generated by the petitioner, leviable under section 113 of the Delhi Municipal Corporation Act, 1957, for the period 1-7-1959 to 31-3-66. The Union of India has been impleaded as the third respondent but this petition has been contested by respondents 1 and 2.
( 2 ) IT will be necessary to notice a few facts which have been succinctly stated in the judgment of K. N. Wanchoo, C. J. in Municipal Corporarion of Delhi v. Biria Cotton Spinning and Weaving Mills (1968) 3 SCR 251 ). There were similar Writ Petitions filed by the petitioner as well as the Biria Mills; the judgment in the case filed by the petitioner followed the judgment rendered in the above case. On the 9th of February, 1959 the Municipal Corporation of Delhi (hereinafter called the Corporation passed a resolution purporting to be under-sub-section I of Section 150 of the Delhi Municipal Corporation Act (66 of 1957) (hereinafter referred to as the Act) for levy of three taxes including a tax on consumption of sale of electricity. Section 113 of the Act which confers powers on the Corporation to impose taxes divided them into two kinds, namely, obligatory taxes and optional taxes which may be imposed under sub-sections (1) and (2) respectively, of Section 113 of the Act. Section 150 (1) of the Act provides that the maximum rate of tax lo be levied in the case of optional taxes (tax on generation of electricity is an optional tax) will be specified by a resolution of the Corporation. After the maximum rate which has thus been specified, the resolution has to be submitted to the Central Government for sanction under Section 150 (2) of the Act and if sanctioned by the Government, the rate comes into force on and from such date as may be specified in the order of sanction. Subsequently the Corporalion passed another resolution lrndcr sub-section (3) of section i5 () determining the actual rates at which the. tax is levled and the tax comes into force on the first day of the quarter of the year next followings the date on which such second resolution is passed. The Corporation forwarded the resolution, dated 9th February. 1959 which was somewhat defective, to the Government for sanction. The Central Government sanctioned, on 20th June, 1959 the tax on consumption or sale of electricity w th effect from 1st July. 1959 with contain modifications regarding the rates. On 23rd June, 1959 the Standing Committee took the Government sanction into consideration and recommended to the Corporation the rates of lax as sanctioned by Government for being determined under sub-section (3) of Section 150 as the actual rates at. which the Sax would be leviable for the year 1959-60. On 24{h June. i959 the. Corporation resonved that the recommendations of the Standing Committeeregardng tax on consumption of sale of electriciry be approved. Then folleowed de mauds by the Corporation on the basis of the imposition of tax from 1st July, 1959.
( 3 ) WHEN the tax was demanded from the petitioner it filed a Writ Petition (Civil Writ No. 291-D of 1960) on the the of the Punjab High Court challenging the levy of the tax and the same was dismissed by a learned single Judge on 27-2-1963. The appeal (L. P. A. 47-D of 1963) against the said decision was allowed by a Division Bench on 10-1
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