TMI Blog1997 (5) TMI 410X X X X Extracts X X X X X X X X Extracts X X X X ..... m tariff. The petitioner, in effect, is seeking a reduction of the uniform tariff fixed by the Board. It is not the case of the petitioner that the tariff has been fixed regardless of considerations which have to be taken into account under section 49.Thus the High Court was clearly in error in directing modification of the tariff fixed by the Board. Appeal allowed. - C.A. 2347 OF 1988 With Civil Appeals Nos. 3461, 3462, 3462A of 1992 and Civil Appeal Nos. 3409 - 3411 of 1997 - - - Dated:- 8-5-1997 - Mr. Suhas C. Sen and Mr. K.T. Thomas, JJ. Dushyant Dave, Sr. Adv., Ranjit Kumar, Ms. Binu Tamta, Padam Khaitan, Suman Khaitan, P.N. Misra, and Pramod Swarup, Advs. with him for the appearing parties JUDGMENT SEN, J. This is an appeal from an order passed by the Patna High Court, Ranchi Bench, holding that the charge levied by Bihar State Electricity Board for supply of electricity to M/s. Usha Martin Industries, the respondents herein, was excessive as the uniform tariff was not reduced even when Excise Duty on electricity was abolished. We are of the view that the High Court was clearly in error in coming to this decision. Electricity has to be supplied by the Board ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ities, the Board chose not to do so. The Board cannot be compelled to reduce the tariff regardless of the economic factors and the losses incurred by it. Mr. Dave contended that, to start with, central excise duty was charged separately by the Board. It was not treated as part of the uniform tariff. But that practice was abandoned by the Board on and from the 6th April, 1979. Central excise duty was imposed on generation of electricity at the rte of 0.02 paise per unit for the first time in 1978. The Board thereupon levied a surcharge at the rate of 0.03 paise per unit on consumption of electricity by a Notification which was as under :- "BIHAR STATE ELECTRICITY BOARD, PATNA NOTIFICATION No. Com/TAR - 1003/78/265/Patna the 13th May, 1978 In partial modification of notification No.Com/IAR/1037/75/ 315 dated the 12th July, 1975, it is hereby notified for general information that consequent upon imposition of Central Excise Duty by the Govt. of India on electricity generation and by virtue of the power conferred under Section 46 and 49 of the Electricity (Supply) Act, 1948 the Bihar State Electricity Board hereby levies a surcharge at the rate of three paise per unit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or to be served by the Board and laid down the terms and conditions for supply of electricity to its consumers. It was repeated in Clause 16.4 that Central Excise Duty on generation of power has been merged "in the above mentioned rates where applicable". It was specified that the impact of any subsequent increase notified by the Government of India in the existing rate would be computed and realised from the consumers. The Charge of Central Excise on electricity was withdrawn with effect from 1st October, 1984. The contention on behalf of the respondent-Company which found favour with the High Court was that the Board was under an obligation to reduce its tariff when the Central Government withdrew the duty of excise payable by the Board on generation of electricity. This argument overlooks the statutory scheme for charging tariff for supply of electricity. By the Notifications of 1981 and 1983, the Board has fixed a rate of tariff to be paid by its customers. The tariff may have included in it the burden of Central Excise Duty payable by the Board. But what the consumers paid was nothing but the uniform tariff fixed by the Board. It was specifically stated in the Tariff Notific ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... city supplied by the Board to consumers. The price included Central Excise Duty. Therefore, on abolition of Central Excise Duty, this price has to be brought down by excluding the amount of the Central Excise Duty. There are several difficulties in accepting this argument. The first and foremost is that this contention was not taken before the lower authorities including the Tribunal. The applicability of Section 64-A will depend upon the agreement between the parties. No evidence was led before the authorities below to show that the parties intended that the relief of excise duty if abolished or reduced would be passed on to the consumers. It was specifically stated in Clause 16.4, one of the clause of Tariff Notification, that if the excise duty was enhanced, the tariff would be raised. No provision was made for reduction of tariff under any circumstance. The specific provision for raising tariff in case of enhancement of excise duty and absence of any such provision for reduction of tariff in case of lowering or abolition of excise duty go to show that there was intention on the part of the Board to reduce the tariff in case of lowering or abolition of the excise duty. The pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rice inclusive of excise duty because that would be the consideration payable by the purchaser for the sale of the goods . . . . . But even so it would be part of the sale price because it forms a component of the consideration payable by the purchaser to the dealer . . . and on this reasoning, it would make no difference whether the amount of excise duty is included in the price charged by the dealer or is shown as a separate item in the bills. In either case, it would be part of the sale price." Mr. Dave contended that even on general principle of law the rate fixed under the tariff included Central Excise Duty, even if it was not mentioned separately in express words. We are unable to uphold any of these arguments. The proposition laid down in the case of Love v. Norman Right (Builders) Ltd. (1994) 1 All E.R. 618, goes directly against the argument advanced by Mr. Dave. M/s. Usha Martin Industries is the purchaser of electricity. The price it pay will include costs of production, profits plus taxes. But the purchaser pays nothing but the price. The consideration for the sale of electricity is the price charged by the Board. The law laid down by Lord Goddard LJ in Love v. N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was Rs. 15.31 crores, in 1979-80 Rs. 10.27 crores, in 1980-81 Rs. 32.69 crores and in 1981-82 Rs. 18.60 crores. The statement also shows that the revenue earned per unit of electric energy sold was much lower than the actual cost of production incurred by the Board per unit. The cost of production per unit in the four years aforementioned was 51.00 p., 65.10 p., 73.86 p., and 87.16 p., respectively, whereas the revenue per unit was only 38.48 p., 47.17 p., 5307 p., and 66.39 p., respectively. It is thus found that notwithstanding the mandatory provision contained in Section 59 of the Act, the Board has been selling energy t rates which are lower than the actual cost incurred by its per unit actual cost incurred by it per unit of production. Such being the factual situation, there is absolutely no basis for the contention urged or behalf of the appellants that the tariff fixation the vice of arbitrariness and is liable to be interfered with by the Court on that ground." The period involved in that dispute was the years 1978-79 and 1981-82 (This period is also relevant for the purpose of this case). In that case scope of Section 59 of the Act was examined and it was observed that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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