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2020 (5) TMI 241 - HC - Indian LawsConstitutional validity of Sections 3[1] and [2] and Sections 4[3] of the 1959 Act amended by Sections 5 and 6 of the Karnataka Electricity [Taxation on Consumption] [Amendment] Act, 2013 - Levy of tax on consumption of electricity by captive generative units - Validity of notification bearing No.EN 27 EBS 2013, Bengaluru dated 24.11.2014 - HELD THAT:- In MP CEMENT MANUFACTURERS VERSUS STATE OF MADHYA PRADESH AND OTHERS [2003 (12) TMI 581 - SUPREME COURT], the Hon’ble Apex Court while considering Section 3[2] of [Sanshodhan] Adhyadesh, 2001 held that imposing cess on generation of electricity is beyond the competence of the State. In view of the Constitutional validity of subsections [1] and [2] of Section 3 of the Act, 2013 being upheld by this Court, now the challenge would only revolve around Section 4[3] of the Act, 2013. Section 4[3] of the Act, 2013 deals with the payment of tax. In terms of sub-section [3] of Section 4, the incidence of tax is on the consumption. The consumption of electricity relates to every person generating electricity by himself, and or who supplies electricity free of charge or otherwise to any other person through his own system - The electricity tax is payable as per Section 3, the charging Section. Section 4[3] is the payment of tax to be made by different class of persons. The Hon’ble Apex Court in the case of GOVIND SARAN GANGA SARAN VERSUS COMMISSIONER OF SALES TAX AND OTHERS [1985 (4) TMI 65 - SUPREME COURT], has held that the components which enter into the concept of a tax are well known. The first is the character of the imposition known by its nature which prescribes the taxable event attracting the levy, the second is a clear indication of the person on whom the levy is imposed and who is obliged to pay the tax, the third is the rate at which the tax is imposed, and the fourth is the measure or value to which the rate will be applied for computing the tax liability. If these components are not clearly and definitely ascertainable it is difficult to say that the levy exists in point of law - Any uncertainty or vagueness in the legislative scheme defining any of those components of the levy will be fatal to its validity. Keeping this principles in mind, if the levy of electricity tax in terms of Sections 3[1] [2] and 4[3] of the Amendment Act, 2013 is examined, the taxable event attracting the levy is consumption, the person on whom the levy is imposed may be the generator also who is obliged to pay the tax. That itself would not be construed as the taxable event to find the levy fatal to its validity. These two are different aspects and cannot be integrated together in order to bring the incidence of tax on the generation, merely for the reason that the generator is paying the tax. Moreover, the heading of Section 4[3] denotes payment of tax i.e., the person who is liable to pay the tax, the same cannot invalidate the charging section since generator is made liable to pay the tax on its consumption. The notification impugned dated 24.11.2014 prescribes the rate of tax on captive consumption and auxiliary consumption of electricity generated by the captive generation plant/co-generation plant which is in conformity with the provisions of the Amendment Act, 2013. Thus, the amended Sections 3[1], 3[2] and 4[3] of the Act, 2013 are validly enacted by the State Legislature and held to be intra vires the Constitution - the Notification dated 24.11.2014 impugned as well as the consequential demand notices are held to be justifiable. Petition dismissed.
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