TMI Blog2021 (10) TMI 691X X X X Extracts X X X X X X X X Extracts X X X X ..... COURT ] and Harbanslal Sahni v. Indian Oil Corporation Ltd, [ 2002 (12) TMI 564 - SUPREME COURT ]. The principle of alternate remedies and its exceptions was also reiterated recently in the decision in Assistant Commissioner of State Tax v. M/s Commercial Steel Limited, [ 2021 (9) TMI 480 - SUPREME COURT ] - In State of HP v. Gujarat Ambuja Cement Ltd, [ 2005 (7) TMI 353 - SUPREME COURT ] this Court has held that a writ petition is maintainable before the High Court if the taxing authorities have acted beyond the scope of their jurisdiction. It is not the case of the appellant that the respondents have miscalculated the duty and penalty imposed on it. The appellant contends that the State Government does not have the power to levy tax on its sale of electricity to BSEB. Thus, the plea strikes at the exercise of jurisdiction by the Government. In view of the law discussed above on the rule of alternate remedy, the High Court can exercise its writ jurisdiction if the order of the authority is challenged for want of authority and jurisdiction, which is a pure question of law. The issues raised by the appellant are questions of law which require, upon a comprehensive r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt (the first respondent) to levy electricity duty under Section 3 (1) on the units of energy consumed or sold, excluding the losses of energy in transmission and transformation at the rates specified by the first respondent. Rates of duty were specified in the Schedule to the Act. The Bihar Electricity Act was amended in 2002 which led to the deletion of the Schedule and amendment of Section 3(1). The amendment allowed the first respondent to levy tax on the basis of the units or the value of energy consumed or sold at rates specified by the State Government by a notification. Section 3 (1) in its current form provides as follows: 3. Incidence of duty -(1) Subject to the provisions of sub-section (2), there shall be levied and paid to the State Government, either on the units or on the value of energy consumed or sold, excluding losses of energy in transmission and transformation, a duty at the rate or rates to be specified by the State Government in a notification. Provided that, the State Government may, by notification, specify different rates of duty in respect of different categories of consumption or sale of energy. Provided further that, the rate of duty shall no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 The appellant through the Bihar Sugar Mills Association challenged the notifications dated 21 October 2002 and 4 March 2005 in the High Court by filing a writ petition, CWJC No 13614 of 2006. The High Court by its judgement dated 16 September 2009 struck down the notifications and the amendment to Section 3 (1) of the Bihar Electricity Act on the ground that there were no guidelines in the statute or the notifications for construing the expression value of energy . The relevant extract of the judgment is reproduced below: 19. In view of the above discussion, the amendment of Section 3 (1), so far as it provides for payment of duty on the value of energy is liable to be struck down as there is no guideline provided in the statute as to in which case the duty will payable calculated on the basis of the value of energy consumed or sold. Similarly the notification dated 21.10.2002 providing for payment of duty at 6 per centum of the value of energy is liable to be quashed as there is no guidelines provided for the ascertaining the value of energy. The subsequent Notification SO no. 14 dated 04.03.2005 is also liable to be struck down on the self-same ground. Since the amend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7; 56 crores and for raising a demand of electricity duty and penalty of about ₹ 67 crores. The notice was issued on the basis of the report dated 24 December 2014 of the Accountant General (Audit) Bihar. In its reply dated 5 February 2015, the appellant contended that no tax can be levied on the supply of electricity by the appellant to BSEB for the following reasons: (i) Under Section 3 of the Act, tax is levied on the value of energy . Section 2(ee) only brings the sale to a consumer within the ambit of the phrase value of energy ; (ii) BSEB is a licensee and not a consumer in view of the definition of licensee provided under Section 2(d) of the Act; and (iii) The resolution dated 12 September 2006 issued by the first respondent announced various incentives for establishment and development of sugar and other allied industries including exemption from payment of electricity duty for cogeneration for five years. 9 The definition of the term consumer has a bearing on the present appeal since the appellant has argued that the term value of energy used in Section 3 for the levy of tax is not applicable to it because the definition of consumer excludes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r tagging the writ petitions filed by the appellant and NTPC on the ground that the issue raised in both the petitions was substantially similar. Thereafter, on 20 October 2016, the High Court de-tagged the writ petitions holding that the matters are not similar since NTPC is a power generation company, while the appellant is a company which runs a sugar mill and also generates electricity from molasses. The relevant portion of the order is extracted below: On an examination of the facts of the present matter as also of the other two writ petitioners in the batch of cases it is found that the other writ petitioners are power generating companies, whereas the petitioner is a Sugar Mill Company which also generates electricity from molasses. Moreover, the case of the petitioner along with the association of Bihar Sugar Mills Association was allowed by this Court by a judgment dated 16.09.2009, by which certain amendments in the Bihar Electricity Duty Act have been struck down but subsequently on an appeal filed by the State of Bihar in the Supreme Court, the Supreme Court has remanded the matter to this Court. For the aforesaid reasons, the present matter shall not be heard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsumption or sale for consumption of electricity. Second, the High Court observed that in terms of the provisions of the Bihar Electricity Act, a power generation company is liable to pay duty only if it is selling electricity to the consumer, as defined in the legislation. The High Court held that: We are also in agreement with the submission of learned counsel for the petitioners on the basis of the provisions of Section 3(1) read with Section 2(b),(d) and ( ee) of the Act. It is evident from the definition of value of energy in Section 2(ee) which is the computation provision brought in by amendment, after the earlier provisions and notifications had been struck down by the Court as providing no guidelines, that it provides for only two type of cases under sub-clause (i) that is, firstly, energy sold to a consumer by a licensee and, secondly, energy sold to a consumer by a person who generates energy. Since we are not concerned with the 2nd type of case mentioned in sub-clause (ii) with regard to the person generating energy consuming the same, the only circumstance under which a generation company like the petitioners or any other person who generates energy would be l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submissions have been urged: (i) On a combined reading of Section 3 with Sections 2(b), 2(d) and 2(ee) of the Act, the sale of electricity by a generator to a licensee would not attract the levy of tax for the following reasons: (a) Section 3 of the Act is the charging provision of the statute which states that tax shall be levied either on the units or on the value of the energy consumed or sold; (b) Section 2(ee) defines the phrase value of energy as the charge payable by the consumer to the licensee or by the consumer to the person who generates the energy; (c) Section 2(d) defines the term licensee to include the Bihar Electricity Board; (d) The phrase value of energy states that it is the charge payable by the consumer to either the licensee or the generator. Since the BSEB is a licensee under Section 2(d) of the Act and not a consumer, the sale by the generator of the electricity (the appellant ) to the licensee (BSEB) is not covered in the phrase value of energy and is not taxable under Section 3 of the Act; (ii) BSEB pays electricity duty for the electricity sold by it to consumers, including the electricity supplied by the company to the Board. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... milar. The High Court erroneously de-tagged the writ petitions and then dismissed the appellant s writ petition while entertaining the writ petition filed by NTPC. 16 On behalf of the respondent, the following submissions have been urged referring to the scheme of the statute: (i) Section 3 has two parts (i) levy of tax on the value of energy consumed; and (ii) levy of tax on the units of energy sold. Under Section 2(ee) which defines the phrase value of energy , only a sale to the consumer is included. Though the sale to a licensee is not covered by the first part, it is covered by the second portion of Section 3, which refers to the units of energy sold; (ii) Section 3(2)(c) provides that no duty shall be leviable on the units of energy consumed by the licensee in the construction, maintenance and operation of its electrical undertaking. Section 4 provides that every licensee shall pay duty to the State Government on the units of energy consumed or sold by him . Section 4A provides that duty shall be leviable at each point in a series of sales of energy . If Section 3 is read in a restricted manner by excluding the units of energy sold in the definition, then ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and consumption would be the same since the very act of sale of electricity means that it is being consumed because electricity can neither be preserved nor stored. Entry 54 of List II dealt (at the material time) with the levy of taxes on the sale or purchase of goods including electricity but excluding newspapers and was subject to provisions of Entry 92-A of List I. The meaning of sale of electricity under Entry 54 would mean the sale for consumption of electricity in view of the decision of this Court in State of AP (supra). Thus, irrespective of the provisions of the Bihar Electricity Act, the first respondent does not have the legislative competence to levy a tax on the sale of electricity that is not for consumption. The appellant is not selling electricity to BSEB for the consumption of BSEB; rather it is BSEB which is distributing electricity for the consumption of the end users. 19 While a High Court would normally not exercise its writ jurisdiction under Article 226 of the Constitution if an effective and efficacious alternate remedy is available, the existence of an alternate remedy does not by itself bar the High Court from exercising its jurisdiction in cert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also reiterated recently in the decision in Assistant Commissioner of State Tax v. M/s Commercial Steel Limited, Civil Appeal No. 5121 of 2021. In State of HP v. Gujarat Ambuja Cement Ltd, (2005) 6 SCC 499 this Court has held that a writ petition is maintainable before the High Court if the taxing authorities have acted beyond the scope of their jurisdiction. This Court observed: 23. Where under a statute there is an allegation of infringement of fundamental rights or when on the undisputed facts the taxing authorities are shown to have assumed jurisdiction which they do not possess can be the grounds on which the writ petitions can be entertained. But normally, the High Court should not entertain writ petitions unless it is shown that there is something more in a case, something going to the root of the jurisdiction of the officer, something which would show that it would be a case of palpable injustice to the writ petitioner to force him to adopt the remedies provided by the statute. It was noted by this Court in L. Hirday Narain v. ITO [(1970) 2 SCC 355: AIR 1971 SC 33] that if the High Court had entertained a petition despite availability of alternative remedy and heard th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to enforce one which would be frivolous-lex neminem cogit ad vana seu inutilia-the law will not force anyone to do a thing vain and fruitless. In other words, if exercise of jurisdiction by the tribunal ex facie appears to be an exercise of jurisdiction in futility for any of the stated reasons, then it will be permissible for the High Court to interfere in exercise of its jurisdiction. This issue is no longer res integra and has been settled by a catena of judgments of this Court, which we find entirely unnecessary to refer to in detail... (emphasis supplied) 21 In Union of India v State of Haryana, (2000) 10 SCC 482 the assessing authorities imposed sales tax on the rentals charged for supply of telephones. Writ petitions were filed in the High Court challenging the levy. The writ petitions were dismissed on the ground that an alternative remedy of a statutory appeal was available. An appeal against these orders was filed before this Court. The appeal was allowed and the matter was remanded back to the High Court for determination since it involved a question of law on whether the supply of telephones amounted to sale. 22 It is not the case of the appellant that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch both these questions run into each other, forming so to say, enclaves within each other. The questions that arise for determination in that area are known as mixed questions of law and fact. These questions involve first the ascertainment of facts on the evidence adduced and then a determination of the rights of the parties on an application of the appropriate principles of law to the facts ascertained. To take an example, the question is whether the defendant has acquired title to the suit property by adverse possession. It is found on the facts that the land is a vacant site that the defendant is the owner of the adjacent. residential house and that he has been drying grains and cloth and throwing rubbish on the plot. The further question that has to be determined is whether the above facts are sufficient to constitute adverse possession in law. Is the user continuous or fugitive? Is it as of right or permissive in character? Thus, for deciding whether the defendant has acquired title by adverse possession the court has firstly to find on an appreciation of the evidence what the facts are. So far, it is a question of fact. It has then to apply the principles of law regarding a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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