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PETITIONER: THE JIYAJEERAO COTTON MILLS LTD.

       Vs.

RESPONDENT: STATE OF MADHYA PRADESH

DATE OF JUDGMENT: 31/10/1961

BENCH: MUDHOLKAR, J.R. BENCH: MUDHOLKAR, J.R. SINHA, BHUVNESHWAR P.(CJ) KAPUR, J.L. HIDAYATULLAH, M. SHAH, J.C.

CITATION:  1963 AIR  414            1962 SCR  Supl. (1) 282

ACT:      Electricity-Levy of  duty-Producer, if liable to pay  duly on  electricity consumed  by himself- Such  levy   if  ultra   vires  the  Constitution- Government of  India Act,  1935 (26 Geo. 5 Ch. 2), List II  Entry 48B-Constitution  of India,  List I Entry 84,  List II, Entry 53-Central Provinces and Berar Electricity  Duty Act,  1949 (C. P. &. Berar 10 of 1959), as amended by Madhya Pradesh Taxation laws Amendment  Act, 1956 (311. P. 7 of 1956), 88. 2, 3

HEADNOTE:      The appellant  mill produced electricity over 100 volts  exclusively for its own consumption. It challenged the levy of the electricity duty by the Government of Madhya Pradesh      (1) (1962) 2 S. C. R. 839. 283 under the  C. P.  and   Berar Electricity  Act  as 1949, by  the Madhya Pradesh Act 7 of 1956, on the grounds, firstly that on proper construction of s. 3 of  the Act it was not liable to pay any duty at all as  the Table  of rates  did not prescribe any rate for  electricity consumed  by producers  and, secondly, the levy of duty on electricity consumed by producer  himself being  in substance an excise duty could  be levied only by the Parliament under Entry 84  List I. If it was not an excise duty the levying of  it was  beyond the  competence of  the State  Legislature   in   the   absence   of   any appropriate Entry in the List. ^      Held, that  on  a  combined  reading  of  the definition of ’consumer’ in s. 2(a) and ’producer’ in s. 2(d-1) of the C. P. & Berar Act, 10 of 1949, a  producer,   consuming  the   electrical  energy generated by him is also a consumer as he consumes electrical  energy   supplied  by  himself,  falls

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squarely within  the Table  under s.  3 of the Act prescribing rates  of duty  payable by  a consumer and is therefore liable to pay duty thereunder.      Held, further,  that the present Act for levy of duty  upon consumption  of electric  energy was enacted under  Entry 45B  of the  List II  of  the Government of  India Act,  1935, corresponding  to Entry 53  of List  II of the Constitution where as the  levy   of  duty  of  excise  on  manufacturer production of  goods by  Parliament is under Entry 84 of  List I. The taxable event with respect to a duty of  excise is  ’manufacture’ or ’production’; and not  ’consumption’; the  levy upon consumption of electric  energy cannot  be regarded as duty of excise falling within Entry 84 of List I.      Held,  also,   the  language   used  in   the Legislative Entries  in the  Constitution must  be interpreted in  a broad  way so  as  to  give  the widest amplitude  of power  to the  Legislature to legislate and not in a narrow and pendantic sense.

JUDGMENT:      CIVIL APPELLATE  JURISDICTION: CIVIL   Appeal No. 582 of 1960.      Appeal from  the  judgment  and  order  dated February 5, 1959, of the Madhya Pradesh High Court (Gwalior Bench)  at Indore in Civil Misc. Case No. 11 of 1959.      A. V.  Viswanatha Sastri, Rameshwar Nath," S. N. Andley and P. L. Vohra, for the appellant.      B. Sen,  B. K.  B.Naidu and I. N. Shroff, for the respondent. 284      1961. October  31. The  Judgment of the Court was delivered by      MUDHOLKAR,  J.-This   is  an   appeal  on   a certificate of  fitness granted  by the High Court of Madhya  Pradesh under  Art. 133  (1) (a) of the constitution.      The appellant is a textile mill at Gwalior in Madhya Pradesh.  It generates  electricity for the purpose of running its mills and for other purpose connected therewith.  It does  not sell electrical energy to any person.      Under the provisions of the Central Provinces and Berar  Electricity Duty  Act, 1949  (No. 10 of 1949)as amended  by the  Madhya  Pradesh  Taxation Laws Amendment  Act, 1956  (Act No. 7 of 1956) the Government  of  Madhya  Pradesh  levied  upon  the appellant  electricity   duty  amounting   to  Rs. 2,78,417/- for  a certain  period.  The  appellant paid it  under compulsion and thereafter preferred a writ  petition  to  the  High  Court  of  Madhya Pradesh under  Art. 226  of  the  Constitution  in which it  challenged the  validity of  the levy on two grounds.  The first  ground was  that  upon  a proper construction  of s.  3 of the C. P. & Berar Electricity Duty  Act,  1949  as  amended  by  the Madhya Pradesh  Taxation Laws  amendment Act, 1966 the appellant  would not be liable to pay any duty at all.  The second  ground was  that if  the  Act permitted the levy of duty on electricity consumed by the  producer himself  it was  ultra vires  the

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Constitution because  in substance  it would  be a duty  of  excise  which  can  be  levied  only  by Parliament under  Entry 84 of List I and that oven if it  was not  excise  duty  it  was  beyond  the competence of  the Madhya  Pradesh legislature  to levy it in the absence of any appropriate entry in List II.  The petition  was summarily  rejected by the High  Court, but  upon an  application made by the appellant  it granted  to  it  certificate  of fitness, as already stated. 285      Mr. Viswanatha  Sastri has  reiterated before us the  same grounds  which were urged in the High Court.      For the  purpose of  appreciating  the  first ground it  would be  useful to reproduce the terms of B. 3 of the Act. The section runs thus:           "Levy of  duty on sale or consumption of      electrical energy-Subject  to the  exceptions      specified in Section 3-A every distributor of      electrical energy  and every  producer  shall      pay every  month to  the State  Government at      the prescribed  time and  in  the  prescribed      manner  a   duty  calculated   at  the  rates      specified in  the Table below on the units of      electrical  energy  sold  or  supplied  to  a      consumer  or   consumed  by  himself  or  his      employees during the preceding month.                       Table                   Rates of Duty      (i)  Electrical    energy     supplied    for           consumption  for  lights,  fans  of  any           other appliances normally connected to a           lighting circuit.                                     6 nP. per unit                                         of energy.      (ii) Electrical energy  supplied for purposes           other than  those specified  in item (i)           above.                                     1 nP. per unit                                         of energy. This is  the charging  section. It is not disputed by Mr. Sastri that under this provision a producer of electrical  energy is  made liable  to pay duty for the  units of  electrical energy  consumed  by himself. He,  however, contends that rates of duty have been  prescribed in the Table below s. 3 only with respect  to electrical  energy "supplied  for consumption" to others and that no rates have been prescribed with 286 respect  to  electrical  energy  consumed  by  the producer himself.  Section 2(a) of the Act defines "consumer". The  definition, so  far as  relevant, runs thus:           "  ‘Consumer’   means  any   person  who      consumes electrical  energy sold  or supplied      by a  distributor of  electrical energy  or a      producer.............." ‘Producer’ as  defined s.  2(d-1) of the Act means "a person  who generates  electrical energy  at  a voltage  exceeding   hundred  volts  for  his  own consumption or  for supplying  to others".  If  we read the  two definitions  together, omitting  the non-essentials,  ’consumer’  would  include  "’any

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person who  consumes electrical energy supplied by a person  who generates  electrical energy for his own  consumption".   under  s.   3  a  person  who generates electrical energy over hundred volts for his own  consumption is  liable to pay duty on the units of  electrical energy consumed by himself. A producer consuming the electrical energy generated by him is also a consumer, that is to say, he is a person who  consumes electrical energy supplied by himself.  The   Table  prescribes  rates  of  duty payable with respect to electrical energy supplied for consumption  and, therefore,  the levy  on the appellant falls squarely within the Table under s. 3 of the Act and M/s. Viswanatha Sastri’s argument is devoid of substance.      It is  difficult to  see how the levy of duty upon consumption  of   electrical  energy  can  be regarded as duty of excise falling within Entry 84 of List  I. Under  that Entry what is permitted to Parliament  is   levy  of   duty  of   excise   on manufacture or  production of  goods  (other  than those  excepted  expressly  by  that  entry).  The taxable event  with respect to a duty of excise is "manufacture" or  "production". Here  the  taxable event  is   not  production   or   generation   of electrical energy but 287 its consumption.  If producer generates electrical energy and  stores it up, he would not be required to pay  any duty under the Act. It is only when he sells, it or consumes it that he would be rendered liable to  pay any duty prescribed by the Act. The Central Provinces  and Berar  Electricity Act  was enacted  under   Entry  48B  of  List  II  of  the Government  of   India  act,  1935.  The  relevant portion of that Entry read thus:      "Taxes  on   the  consumption   or  sale   of electricity.......... " Entry 53 of List II of the Constitution is  to the  same effect. The argument of Mr.  Sastri  is  that  the  word  "consumption" should be  accorded the meaning which it had under the various  Act, including the Indian Electricity Act, 1980.  Under that  Act and  under the various Provincial and   Act,  consumption of  electricity mean, according  to him,  consumption  by  persons other  than   producers  and   that  both  in  the Government of India Act any under the Constitution the word ’consumption’ must be deemed to have been used in  the Fame sense. The Acts in question deal only  with   a  certain   aspect  of   the   topic "’electricity",  and   not  with   all  of   them. Therefore, in  those Acts  the word  "consumption" they have  a limited  meaning, as  pointed out  by learned counsel.  But the word "consumption" has a wider meaning. It means also "use up" "spend" etc. The mere fact that a series of laws were concerned only with  a certain  kind of  use of electricity, that is  consumption  of  electricity  by  persons other  than   the  producer   cannot  justify  the conclusion that  the British  Parliament in  using the  word  "consumption"  in  Entry  48B  and  the Constituent Assembly in Entry 53 of List he wanted to limit  the meaning of "consumption" in the same way. The  language used in the legislative entries in the Constitution must be interpreted in a broad

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way so as to give the widest amplitude of power to the legislature  to legislate  and not in a narrow and pedantic sense. we 288 cannot,  therefore,   accept  either  of  the  two grounds urged by or. Viswanatha Sastri challenging the  vires of the Act.      The appeal fails and is dismissed with costs.                                   Appeal dismissed