The central legal point established in the judgment is that the State Legislature did not have the authority to levy terminal tax on electricity transmission outside the corporation limits under Entry 56 of List II, Schedule VII, of the Constitution, and that the inclusion of 'electricity' in List III, Schedule VII, did not grant the State Legislature the authority to impose such a tax.

Ajit Singh, J.

1. This order shall also decide Writ Petition No.12767/2008 because it was heard analogously along with the present petition and involves a common issue.

2. By this petition, the petitioner has mainly prayed that levy of terminal tax on electricity transmitted through wire outside the corporation limits of Singrauli be declared as illegal being violative of the provisions of Article 246 and Entry 56 of List II, Schedule VII, of the Constitution. The petitioner has also prayed for quashing of demand notices for payment of terminal tax issued by respondent no.1, Commissioner, Municipal Corporation, Singrauli.

3. Petitioner, National Thermal Power Corporation Limited (in short, “the NTPCL”) has a thermal power station situated at Vindhya Nagar, District Singrauli. The electricity generated by the petitioner is fed into Power Grid Corporation of India Limited (PGCL) from where the transmission lines transmit the electricity to several States. The electricity so transmitted is also consumed in the State of Madhya Pradesh. Respondent no.1 is Commissioner of the Municipal Corporation, Singrauli. He has issued the impugned demand notices to the petitioner levying terminal tax on the electricity exported from the municipal limits of Singrauli at the rate of 0.10% on the basis of price. Aggrieved, the petitioner has filed the present petitions on the ground that neither respondent no.1 nor respondent no.2, the State of Madhya Pradesh, is competent to levy such a tax on the transmission of electricity.

4. It is argued by the learned senior counsel for the petitioner that from the reading of Entry 56 of List II, Schedule VII, read with Article 246 of the Constitution it is clear that the State Legislature has power to levy taxes only on goods and passengers carried by road or on inland waterways. According to the learned senior counsel although the electricity is goods, it is not carried by road or on inland waterways and, therefore, does not come within the purview of Entry 56 of List II. The learned senior counsel further submitted that the terminal tax on electricity can be levied by the Parliament alone in exercise of its powers under Entry 97 of List I read with Article 246 of the Constitution which covers any other matter not enumerated in List II or List III.

5. The learned senior counsel appearing for respondent no.1, on the other hand, defended the levy of terminal tax on the ground that Entry 56 of List II, Schedule VII, of the Constitution covers levy of such tax and the State Legislature has power to impose tax on the consumption or sale of electricity. The learned senior counsel also submitted that under subsection (6) of section 132 clause (o) of the Madhya Pradesh Municipal Corporation Act, 1956 (in short, “the Act”) the Corporation for the purposes of the Act, subject to general or special order, which the State Government may make in this behalf, impose any other tax which the State Government has power to impose under the Constitution of India with the prior approval of the latter. The learned senior counsel further submitted that the State Government has made The Terminal Tax (Assessment and Collection) On The Goods Exported From The Madhya Pradesh Municipal Limits Rules, 1996 (in short, “the Rules”) and subrule (3) of Rule 2 of the Rules defines “terminal tax” to mean terminal tax on goods exported from the Municipal limit in accordance with the sanction of the State Government under clause (o) of subsection (2) of the Act. According to the learned senior counsel, subrule (3) of the Rules provides that every person, businessman, establishment and the licence holder shall be responsible to collect the terminal tax or the goods at the rate specified in the Schedule, if he himself exports any goods as shown in the Schedule or sale for the purpose of export. The learned senior counsel also referred to the definition of “goods” defined in clause (28) of section 5 of the Act.

6. The learned Deputy Advoca