TMI Blog2010 (5) TMI 952X X X X Extracts X X X X X X X X Extracts X X X X ..... m 0.12 paise to 0.20 paise per unit. According to the Petitioners, the impugned impost is expressly on generation/production of electricity, which is beyond the scope and ambit of Entry 53, List-II of Schedule VII of the Constitution of India. In fact, it falls within the legislative field under Entry 84, List-I, Schedule-VII of the Constitution of India. The impost being beyond the legislative competence of the State Legislature, it is ab-initio void and non-est. The Petitioners, who do not consume electricity pursuant to any supply, are not liable to pay the duty imposed. Furthermore, the Petitioners being not consumers, as defined in Section 2(c) of the Act, they are not liable to pay the same. If Section 3(1) of the Act is allowed to sustain, it would amount to be an unanalyzed , unguided and uncontrolled delegation of power on the Executive. The Petitioners further question the validity of categorization of the consumers. The impugned enhancement is discriminatory, as it singles out the Petitioners, who generate electrical energy from their captive power plants for their own consumption. In terms of Section 3(ii) of the Act 1961, the impugned notification having not been laid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he historical background of Legislation on Electricity Duty in the State of Orissa. Duty on consumption of electrical energy was first introduced by the Orissa Electricity (Duty) Act, 1961, which came into force on 14.10.1961. Under Section 3 thereof, the duty was payable on rate charged at different percentage basis. In Orissa Electricity (Duty) Amendment Act, 1986, Section 3 of the Principal Act was amended and electricity duty was fixed in the schedule of the Act prescribing different rates for different categories of consumers. The next amendment was introduced in the year, 1992, in which, Section 3 of the Act was fully substituted and legislature delegated powers to the State Government to levy duty on different types of consumers. On the basis of the said amended provision, the notification dated 10.10.2001 was issued, wherein the Petitioners were to pay 20 paise per unit instead of 12 paise, which they were paying earlier. 5. At the outset, it was argued by learned Counsel for the Petitioners that the impugned impost is expressly on generation of electricity, which is beyond the scope and ambit of Entry-53, List-11 of Schedule-VII to the Constitution of India. In fact, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it was ultra vires the 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 even 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 apex court turned down the argument, holding as follows: (6) It is difficult to see 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 its consumption. If a 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 the duty prescribed by the Act. Similarly, in the case of Orient paper and Industries Ltd. v. Orissa Electricit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons v. Excise, Commissioner and Anr. AIR 1975 SC 1007, it has been held that the laying of rules before the legislature is controlling power on the delegated legislation. The legislature may also retain its control over its delegate by exercising its power of repeal of the Act. So, it can not be said that there was no guidelines. 9. Learned Counsel appearing for the Petitioners, next submitted that as per Section 3(ii) of the Act, all notifications issued by the State Government from time to time under Sub-section (1) should be laid before the State Legislature as soon as may be for a period of 14 days, which may be comprised in one or more sessions. The notification dated 10.10.2001 even though was issued on 10.10.2001 itself, it was laid before the State Legislature in the year, 2004. In the case of General Insurance Council and Ors. v. State of Andhra Pradesh and Ors. AIR 2007 (SC) 2696, so also in the case of Ibrahim Ahmad Batti v. State of Gujarat and Ors. AIR 1982 (SC) 1500, it was held by the Apex Court that as soon as means, do it within a shortest possible time. According to learned Counsel for the Petitioners, it is the established principle of law that if a statute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e both Houses of Parliament, as soon as may be, after it is made. It does not provide that it shall be subject to the negative or the affirmative resolution by either House of Parliament. It also does not provide that it shall be open to the Parliament to approve or disapprove the order made under Section 3 of the Act. It does not even say that it shall be subject to any modification which either House of Parliament may in its wisdom think it necessary to provide. It does not even specify the period for which the order is to be laid before both Houses of Parliament nor does it provide any penalty for non-observance of or non-compliance with the direction as to the laying of the order before both Houses of Parliament. It would also be noticed that the requirement as to the laying of the order before both Houses of Parliament is not a condition precedent but subsequent to the making of the order. In other words, there is no prohibition to the making of the orders without the approval of both Houses of Parliament. In these circumstances, we are clearly of the view that the requirement as to laying contained in Sub-section (6) of Section 3 of the Act falls within the first category i.e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he case of Orissa Consumers Association (supra) this Court held that: Where a statute directs that the rules shall be laid before the legislature whether direction is mandatory or directory depends upon several consideration notwithstanding the use of expression shall and the requirement can be held to be directory, where no penalty is attached under the statute for non-laying of the Rules before the Legislature. In the case at hand, no penalty has been attached to the relevant provision for non-laying of the notification before the State Legislature. There is also no provision to show that non-laying of the notification before the State Legislature would render the notification invalid. But, as we have stated earlier the impugned notification was laid before the State Legislature, albeit at a belated stage, so the notification dated 25.4.1992 and 10.10.2001 prescribing payment of electricity duty to be paid by the Petitioners cannot be quashed. 11. Next, it was submitted by learned Counsel for the Petitioners that vide impugned notification dated 10.10.2001 the rate of electricity duty has been enhanced from 0.12 paise per unit to 0.20 paise, only in respect of the comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arh decided on 15.12.2006 by Chhattisgarh High Court, Mr. Panigrahi, learned senior counsel appearing for opp. parties contended that the classification was reasonable and as such there was no question of violation of Article 14 of the Constitution. 12. In the decision Indian Express News papers (Bombay) Private Ltd. and Ors. (supra), the apex court held that classification of the newspapers small, medium and big for levying custom duty is not violative of Article 14 of the Constitution. So, this decision is not helpful to the Petitioners. In the case of State of Kerala (supra), Kerala Buildings Tax Act (Act 19 of 1996) was challenged on the ground that it infringed Articles 13, 14 and 265 of the Constitution since Section 4 of the said Act, which was the charging section read with schedule of the Act was violative of the equality clause of the constitution as there was no rational classification. In that case the Legislature adopted merely the floor area of the building as the basis of tax. It did not take into consideration the class to which the buildings belong, the nature of construction, purpose for which it was being used, its situation, its capacity for profitable user a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... State of Uttar Pradesh and Ors. v. Renusagar Co. and Ors. AIR 1988 (SC), the Apex Court has held that the exercise of power whether legislative or administrative will be set aside, if there is manifest error in exercise of such power or the exercise of power is manifestly arbitrary. Similarly, if the power has been exercised on a non-consideration or non-application of mind to the relevant factors, the exercise of power will be regarded as manifestly erroneous. In the case of Shri Sitaram Sugar Co. Ltd. and Anr. v. Union of India and Ors. AIR 1990 (SC) 1277, the Apex Court has held that judicial review is not concerned with the matter of economic policy. The Court does not substitute its judgment for that of the legislature or its agents as to matters within the province of either. When the legislature acts within the sphere of its validity and delegates powers to an agent, it may empower the agent to make findings of fact which conclusively provides that such findings specified the basis of reasonableness. In all such cases, judicial enquiry is confined to the question whether the findings of fact is reasonably based on evidence and whether such findings are consisted with the law ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reasons for which the Government had made it. All that the court has to see whether the power was used for an extraneous purpose, i.e., to say not for achieving the object for which the power had been granted. When it is. alleged that the power was used for a purpose other than achieving an object for which the power is granted, initial onus must be on a party which alleged abuse of power and there must be prima facie evidence in support of the allegation, it is only then that the onus may shift. In the decision Dai-Lchi Karia Ltd v. Union of India and Ors., AIR 2000 (SC) 1741, the Apex Court held that the Court can examine whether relevant factors were taken into account while issuing notification under the Act. The mere fact that the notification issued under an Act is. required to be laid before the Parliament, does not make any substantial difference as regard the jurisdiction of the Court to pronounce its validity. Further, if it is challenged in Court that a particular notification has been made contrary to public interest, there can be no presumption that the action of the Government is in public interest. 14. Here, in the case at hand, the Petitioners who are power inten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 14 of the Constitution of India. 16. Learned Counsel appearing for ICCL/IMFA further submitted that Section 14 of Orissa Electricity Reforms Act, 1995 lays down that no person, other than those authorized to do so by licence or by virtue of exemption under the said Act or otherwise or exempted by any other authority under Electricity (supply) Act 1948 can be engaged in the State in the business of transmitting or supplying electricity. As per Section 2(e) of Orissa Electricity Reforms Act, 1995 licence means a licence granted under Chapter-VI. Section 2(f) defines licence or licence holder as a person licensed under Chapter-VI to transmit or supply energy including GRIDCO. The aforesaid provisions came for interpretation in the case of GRID Corporation of Orissa Ltd. v. Indian Charge Chrome Ltd, AIR 1998 SC 1761, where the apex court held that IMFA is a licensee. Per contra, Mr. Panigrahi, learned Senior Counsel appearing for the opposite parties contended that ICCL/IMFA started commercial production on 5.2.1989 and was granted 50% exemption of electricity due for a period of 10 years in accordance with policy of the State Government. In the year 1986, the electricity due for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rson licensed under part-I of the Indian Electricity Act, 1910 to supply energy. Since ICCL/IMFA has not been licensed to supply energy in terms of 1998 Amendment Act, it cannot claim as a licensee. As regards the judgment delivered in Grid Corporation of Orissa Ltd. (supra), the Apex Court did not hold that ICCL/IMFA was a licencee, but since it was authorized to supply electricity to OSEB and thereafter to GRIDCO, the dispute between the GRIDCO and ICCL could be arbitrable under Section 37(1) read with Section 33 of the Reforms Act, 1956. As it appears, the definition of licencee as amended by Act 15 of 1998 was not brought to the notice of the Apex Court. The Apex Court has not specifically held that ICCL/IMFA is a licencee. Section 41 of the Reforms Act, 1995 lays down that a licencee or any person exempted under the Act or authorized or exempted by any other authority under the Electricity (supply) Act, 1948 shall engage in the State in the business of transmitting or supplying electricity. So, even if it is held that ICCL/IMFA was authorized to do so still then it cannot be said to be a licencee for payment of electricity duty at lesser rate in terms of notification dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Rath, learned senior counsel further contended that the distance between the Angul Captive Power Plant and the Smelter plant is about 5.959 K. Ms. This has not been countered by learned Counsel for the opp. party during argument. So, certainly some energy is being lost during the process of transmission on which the NALCO is not liable to pay duty. Duty if any paid by NALCO, on transmission loss shall be calculated and refunded to it by opposite parties or the same shall be adjusted with its dues within three months hence. Mr. Rath, learned senior counsel further contended that the words so however, that such modifications shall be without prejudice to the validity of any electricity duty levied or collected tinder the notifications shall be strike out from Section 3(ii) of Orissa Electricity Duty Act, 1961. Section 3(ii) reads as follows: All notifications that may be issued by the State Government from time to time under Sub-section (1) shall, as soon as may be after they are issued, be laid before the State Legislature for a total period of fourteen days which may be comprised in one or more sessions and if during the said period the State Legislature makes notificatio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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