IMPORTANT POINT
Punjab Electricity (Duty) Act, 2005 is constitutionally valid.

M.M.Kumar, J.

1. The petitioner has approached this Court with a prayer for issuance of appropriate writ order or direction declaring the Punjab Electricity (Duty) Act, 2005 (for brevity the 2005 Act) to be ultra vires of the Constitution and also quashing notification dated 1.3.2005 issued by the State of Punjab, Department of Power. According to the notification the electricity duty on the electricity supplied by the Punjab State Electricity Board-respondent No. 2 (for brevity `the Board) is charged @ 10 percent advalorem from the consumers except the consumers to whom electricity is supplied for agricultural purposes.

2. The petitioner has a manufacturing unit in Rajpura, District Patiala with the name of Siel Chemical Complex. It is engaged in the production of caustic soda and chlorine by electro chemical process. The unit was set up in 1998 and its commercial production commenced in 1999. The electricity is one of the major raw material and accounts for almost 65% of the input cost for producing caustic soda by electro chemical process. The unit is classified as a Power Intensive Unit. Its monthly energy bill is Rs. 6 to 7 crores. In addition, the petitioner is also obliged to pay electricity duty under the provisions of the Punjab Electricity (Duty) Act, 1958. It was granted exemption from payment of electricity duty for a period of five years upto 31.1.2004 and it started paying duty w.e.f. 1.2.2004. The object of levy of electricity duty was to off set the additional burden undertaken by the State Government for providing free education and related issues.

3. The electricity duty is payable @ 5% ad-valorem. By virtue of Section 4 of the 1958 Act (for brevity the 1958 Act), the Board is supposed to collect the electricity duty and pay it to the State Government which according to the petitioner has not been done. According to the allegations made, the duty has been collected and utilized by the Board instead of utilising the same by respondent no.1 for the purpose of imparting free education which was the object for which the 1958 Act was enacted. The State Government has permitted the Board to utilize its duty by treating it as subsidy advanced to the Board. The petitioner has also highlighted that Electricity Act, 2003 was promulgated by the Parliament and accordingly responsibility of fixing the electricity tariff was entrusted to the State Electricity Regulatory Commission (PSERC) which has been constituted by the State. For the year 2003-04, the PSERC increased the tariff of various types of consumers. The State Government protested against the proposal to reduce the tariff for the year 2004-05 and urged for increase of the same. The tariff payable by the petitioner for the year 2004-05 was Rs. 3.37 per unit which also ratably reduced the electricity duty collected by the Board. As a result, the State of Punjab felt aggrieved and wonder as to how it could run the Board profitably and efficiently. Accordingly, the Board filed CWP No. 1876 of 2005 challenging the tariff order for the year 2004-05. However, no interim order was granted in favour of the Board. Eventually the State Government was persuaded by the Board to generate more revenue by increasing the amount of electricity duty.

4. On 1.3.2005, the State Government promulgated the Punjab Electricity (Duty) Ordinance, 2005. As per Section 3 of the Ordinance, electricity duty is leviable at such rate not exceeding 25 % ad-valorem as the State Government may notify. Section 4 of the Ordinance deals with the computation of electricity duty. On 1.3.2005, the impugned notification was issued by the State of Punjab levying electricity duty @ 10% ad-valorem on all consumers except the consumers to whom the electricity is supplied for agricultural purposes. Eventually, on 5.5.2005, the 2005 Act was passed and the ordinance was repealed. The petitioner has also referred to the tariff order of 2005-06 (P.7) and 2006-07(p.8) The grievance made is that the hike in