IMPORTANT POINT
Even bare consumption of electricity energy by a person who generates the same is permissible to be taxed by reference to Entry 53 of the State List.

JUDGMENT

Ranjit More, CJ. - Heard Mr. S.Jindal, learned counsel for the petitioner and Mr. A.Kumar, learned AG along with Mr. K.Khan, learned Sr. GA for the respondents.

2. By this petition filed under Article 226 of the Constitution of India, the petitioner is challenging the constitutional validity of Section 3(1)(c) of the Meghalaya Electricity Duty (Assam Act XXX of 1964 as adapted by Meghalaya) as amended vide amendment Act dated 15th October, 2019 (hereinafter for the sake of brevity referred to as “the Act”).

3. Before the 2019 amendment, Section 3(1)(c) of the Assam Electricity Duty Act, 1964 (Assam Act XXX of 1964) reads as follows:

“3. (1) There shall be levied and paid to the State Government a duty, to be called the “electricity duty”, at the rate of five paise per unit of energy.

(c) generated by a person or a company or a firm or any organisation for own use or consumption”.

4. The provision of Sub-section (c) of Section 3(1) was challenged before the Gauhati High Court by filing WP(C) No. 710/2010. Admittedly, the Division Bench of the Gauhati High Court held and declared that the State is not legally competent to levy duty from the cellular phone companies on self-produced and self-consumed electricity. The Division Bench further held that taxable event is generate and that cannot be read as consumption and hence Entry 53 of the State List of the Seventh Schedule does not support the State action. Consequently, Section 3(1)(c) of the Assam Electricity Duty Act, 1964 is declared ultra vires. Sub Section 3 (1)(c), thereafter was subsequently substituted by the State of Assam. Similar action was taken by the State of Meghalaya and Sub Section 3(1) (c) of the Meghalaya Electricity Duty (Assam Act XXX of 1964 as adapted by Meghalaya) was amended. Thereby, Sub-Section (c) was substituted as follows:

“(c) Consumed by any person or any organization generating energy”.

5. Mr. S.Jindal, learned counsel for the petitioner invited our attention to the definition of “consumer” in Section 2 (b) of the said Act and submitted that the petitioner does not fall within this definition and therefore, is not a consumer. He submitted that if the petitioner is not a consumer of electricity, in that event, the electricity duty cannot be levied against it under Section 3 (1) of the said Act. He also submitted that the petitioner is generating the electricity as well as consuming the electricity generated by it. In short, his argument is that self-consumption cannot be taxed or levied under Section 3 (1) of the said Act.

6. Per contra, Mr. A.Kumar, learned AG and Mr. K.Khan, learned Sr. GA appearing for the respondents submitted that the 2019 amendment of the said Act is in consonance with Entry 53 of the State List. Learned AG further submitted that the 2019 amendment to the said Act has made it abundantly clear that taxable event in respect of captive consumption of electricity is when the electricity is “consumed” by the person generating it. Consequently, the duty is not imposed under Section 3 (1) (c) of the said Act on the mere act of “generation” of electricity. He further submitted that levy of electricity duty under the amended Sub Section 3(1) on consumption of electricity is perfectly admissible. In this regard, they relied upon decisions of the Hon’ble Apex Court in Jiyageerao Cotton Mills Ltd. v. State of Madhya Pradesh AIR 1963 SC 414 and State of Andhra Pradesh v. National Thermal Power Corporation Limited (NTPC) AIR 2002 SC 1895.

7. Having considered the rival submission of the respective counsels, we are of the opinion that the issue raised in this petition is squarely covered by the two Apex Court judgments in Jiyageerao Cotton Mills Ltd. (Supra) and National Thermal Power Corporation Limited (Supra). The Hon’ble Supreme Court in Jiyageerao Cotton Mills Ltd. (Supra) in para 5 and 6 held as follows:

“5…’Producer’ as defined in Section 2 (d-1) of the Act means “a person who generates electrical energy at a voltage exceeding hundred