Andhra Pradesh High Court - Amravati
South India Shopping Mall vs The State Of Ap on 27 June, 2024
nt
IN THE HIGH COURT OF ANDHRA PRADESH :: AMARAVAT
(Special Original Jurisdiction)
WEDNESDAY, THE TWENTY SIXTH DAY OF JUNE
TWO THOUSAND AND TWENTY FOUR
PRESENT
THE HONOURABLE SRI JUSTICE VENKATESWARLU NIMMAGADDA
WRIT PETITION NO: 13024 OF 2024
Between:
1. M/s South India Shopping Mall (RJY :1572) Subash Road . Kakinada
Rep. by its Authorized Signatory Bommisetty Venkata Naga Naveen
Kumar S/0 Kanaka Malleshwar Rao Age; 45
2. M/s South India Shopping Mall (RJY 1897) Surya Nagar,
Amalapuram.Konaseema Dt Rep. by its Authorized Signatory
Bommisetty Venkata Naga Naveen Kumar S/O Kanaka Malleshwar
Rao Age; 45
3. M/s South India Shopping Mall (RLR 1373) DMart ,Eluru Town, West
Godavari DtRep. by its Authorized Signatory Bommisetty Venkata
Naga Naveen Kumar S/O Kanaka Malleshwar Rao Age: 45
4. M/s RS Brothers Retail India Pvt Ltd (RJY 814) Subash Street
Kakinada Rep. by its Authorized Signatory Bommisetty Venkata Naga
Naveen Kumar S/O Kanaka Malleshwar Rao Age; 45
5. M/s South India Shopping Mall (RJY 1478) RajamahendraVaram
,East Godvaari Dt Rep. by its Authorized Signatory Bommisetty
Venkata Naga Naveen Kumar S/O Kanaka Malleshwar Rao Age: 45
■6. M/s GT Hospitals & Trauma Center (VSP 1695) Health City.Arilova ,
Visakhapatnam Rep. by its Managing Partner Siva G Prasad S/O GJ
Rao Age: 54
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7. Mr/s Amrutha Hospitals (SKL 424) Saradhi Village,Rajam Mandal,
Srikalulam Dt Rep. by its Authorized Signatory Gara Ravi prasad S/0
Ranganadham Age: 46
8. M/s GSL Educational Society (RJY 476) Rajamandri , Rep. by its
Treasure GS Rama krishna S/0 Satyanarayana Murthi Age: 69
9. M/s GSL Medical college and Hospital Rural Health Center (RJY 1333)
Mallapudi .Rajamandri , Rep. by its Treasure GS Rama krishna S/0
Satyanarayana Murthi Age: 69
10. M/s GSL Trust (RJY 891) Kabalacheruvu .Rajamandri. Rep. by its
Trustee Gandi Kasimb W/0 Gandi Bhaskar Rao Age: 61
11. M/s Swatantra Hospitals (MS) Pvt Ltd(RJY 373) Kambala Park ,
Rajamandri , Rep. by its Director Gandi Kasimb W/O Gandi Bhaskar
Rao Age: 61
12. M/s Ayushu Hospitals (ELR 1317) Ashok Nagar .Eluru.West Godavari
Dt Rep. by its Authorized Signatory K Gopata krishna S/O
Venkataramana Rao Age: 69
13. M/s Usha Prima Multi Speciality Hospital (VSP 1327)
Anakapalli.Vishakapatnam Rep. by its Authorized Signatory CH Sai Babu
S/O Krishna Murthi Age: 46
14. M/s OMR Textiles and Jewellers Pvt Ltd (SC 1121030000274808)
Visakhapatnam Rep. by its Authorized Signatory L) Shankar Rao S/O
U Satyanarayana Gupta Age: 55
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15. M/s CMR Textiles and Jewellers Pvt Ltd (SC 1113300509010443)
Vadlapudi.Gajuwaka .Visakhapatnam Rep. by its Authorized Signatory
U Shankar Rao S/O U Satyanarayana Gupta Age; 55
16. M/s CMR Textiles and Jewellers Pvt Ltd (SC 1423650101027573)
Tuni , Jagampeta .East Godavari Dt Rep. by its Authorized Signatory U
Shankar Rao S/O U Satyanarayana Gupta Age: 55
17. M/s CMR Textiles and Jewellers Pvt Ltd (SC 1423650101027572)
Tuni , Jagampeta .East Godavari Rep. by its Authorized Signatory U
Shankar Rao S/O U Satyanarayana Gupta Age: 55
18. M/s Continental Cartons(ELR 824) Chinnapuleru .Undi Mandal .
Bhimavaram .West Godavari Rep. by its Authorized Signatory S Prudhvi
Raju S/O Gopala Krishna Raju Age; 36
19. M/s Costal Cartons (VSP 1178) Autonagar .Gajuwaka
.Vishakapatnam Rep. by its Authorized Signatory S Prudhvi Raju S/O
Gopala Krishna Raju Age: 36
20. M/s Pragati Print Pack Pvt Ltd (VSP 1428) JaggarajuPeta.Auto nagar,
Visakhapatnam Rep. by itsAuthorized Signatory S Prudhvi Raju S/O
Gopala Krishna Raju Age: 36
21. M/s Pragati Print Pack Pvt Ltd (VSP 1115) Autonagar. Visakhapatnam
Rep. by itsAuthorized Signatory S Prudhvi Raju S/O Gopala Krishna
Raju Age: 36
22. M/s Pragati Print Pack Pvt Ltd (VSP 1496) Autonagar. Visakhapatnam
Rep. by itsAuthorized Signatory S Prudhvi Raju S/O Gopala Krishna
Raju Age; 36
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23. IVl^/s Pragati Print Pack (VSP 1623) Autonagar. Visakhapatnam Rep.
by itsAuthorized Signatory S Prudhvi Raju S/O Gopala Krishna Raju
24. M/s Coromandel Carton Containers Pvt Ltd (VSP 1024) Autonagar.
Visakhapatnam Rep. by itsAuthorized Signatory S Prudhvi Raju S/O
Gopala Krishna Raju Age; 36
25. M/s Coromandel Packing (RJY 1330) Peddapuram .East Godavai Dt
Rep. by its Authorized Signatory S Prudhvi Raju S/O Gopala Krishna
Raju Age: 36
26. M/s Sarvani Industries Private Limited (ELR 1033) Vataluru ,
Peddapadu Mandal .West Godavari Dt Rep. by its Authorized Signatory
PeddiReddy Gopal Reddy S/O Rami Reddy Age; 62
27. M/s Sarvani Industries Private Limited (VSP 647) Auto Nagar
Gajuwaka . Visakhapatnam Rep. by its Authorized Signatory
PeddiReddy Gopal Reddy S/O Rami Reddy Age: 62
28. M/s Sarvani Industries Private Limited (VSP 1142) Cheemala Palli
Village . Atchutapuram . Visakhapatnam Rep. by its Authorized Signatory
PeddiReddy Gopal Reddy S/O Rami Reddy Age: 62
29. M/s Sarvani Industries Private Limited (SKL 599) Ranastalam Mandal
. Varisam Village . Srikalulam Rep. by its Authorized Signatory
PeddiReddy Gopal Reddy S/O Rami Reddy Age: 62
30. M/s Mavuri Venkata Ramana (VSP 2031) Kapulupadu Village .
Beemilipatnam .Madhurawada .Vishakapatnam Rep. by its Authorized
Signatory PeddiReddy Gopal Reddy S/O Rami Reddy Age: 62
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31. M/s Continuum Packages (VSP 2219) Industrial Park .
Gonnavanipalem , Gajuwaka .Vishakapatnam Rep. by its Proprietor P
Kranthi Prakash S/O Prakash Kumar Age; 41
32. M/s V & V Poly films (VSP 1564) Tungam,Gajuwaka, Visakhapatnam
Rep. by its Managing Partner P Vazara Latha D/0 PI Prakash Kumar
Age: 39
33. M/s Continuum Packages (VSP 2288) Maaruturu ,
Atchutapuram,Anakalapalli,Vishakapatnam Rep. by its Proprietor PI
Prakash Kumar S/O P JasuDas Kumar Age: 64
34. M/s Blossoms SAl Health Care Pvt. Ltd, (RJY 1848) Aryapuram
Rajamahendravaram Rep. by its Authorized Signatory K Vijaya Kumar
S/O Subramanyam Age; 49
35. M/s Tipsy Topsy (ELR 1408) Vatiuru ,Peddapadu Mandal, Eluru Rep.
by its Propritor ManPreetSing Sahani S/O Balbeer Sing Sahani Age; 58
36. M/s Tipsy Topsy (VSP 1814) Siripuram , Vishakapatnam Rep. by its
Propritor ManPreetSing Sahani S/O Balbeer Sing Sahani Age: 58
37. M/s Lalitha Jewellery Mart Limited (VSP 2188) Gajuwaka Road,
Visakhapatnam Rep. by its Authorized Signatory Nunna Venkata Sudhir
S/O Nunna Venkata Kfishnayya Age: 56
38. M/s Lalitha Jewellery Mart Limited (VSP 1920) Baji Junction ,
Gopalapuram , Visakhapatnam Rep. by its Authorized Signatory Nunna
Venkata Sudhir S/O Nunna Venkata Krishnayya Age; 56
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39. M/s Lahtha JeweWery Mart Limited (VSP 2233) GNT Road ,Old. Fort,
AnakapalH, Visakhapatnam Rep. by its Authorized Signatory Nunna
Venkata Sudhir S/0 Nunna Venkata Krishnayya Age: 56
40. M/s Lalitha Jewellery Mart Limited (RJY 1503) Near Mahatma Gandhi
Statue,Kambalacheruvu .Rajamahendravaram Rep. by its Authorized
Signatory Nunna Venkata Sudhir S/0 Nunna Venkata Krishnayya
41. M/s Lalitha Jewellery Mart Limited (RJY 1904) Cinema Road,
Amalapuram ,Conaseema Dt Rep. by its Authorized Signatory Nunna
Venkata Sudhir S/O Nunna Venkata Krishnayya Age: 56
42. M/s Lalitha Jewellery Mart Limited (RJY 1589) Rammohan Rai Street
Kakinada , Amalapuram .Conaseerna Dt Rep. by its Authorized Signatory
Nunna Venkata Sudhir S/O Nunna Venkata Krishnayya Age: 56
43- M/s Lalitha Jewellery Mart Limited (ELR 1190) Mavullamma Temple
Road, Bhimavaram Town Rep. by its Authorized Signatory Nunna
Venkata Sudhir S/O Nunna Venkata Krishnayya Age: 56
44. M/s Lalitha Jewellery Mart Limited (VZM 514) MG Road ,
VijayaNagaram Rep. by its Authorized Signatory Nunna Venkata Sudhir
S/O Nunna Venkata Krishnayya Age: 56
45. M/s Lalitha Jewellery Mart Limited (SKL 184) Golivari Street, GT Road ,
Srikakulam Rep. by its Authorized Signatory Nunna Venkata Sudhir S/O
Nunna Venkata Krishnayya Age: 56
46. M/s Manidas Industries (VSP 1376>Tungtam ,Gajuwaka,
Vishakapatnam Rep. by its Managing Partner P Kranthi Kumar S/O
Prakash Kumar Age: 41
... Petitioners
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AND
1. State of Andhra Pradesh. Rep. by its Pri. Secretary
Energy Department, A.P. Secretariat,
Velagapudi - 522 237, Guntur Pisfriot.
2. Eastern Power Distribution Company of Andbra Pradesh Limited (APEPDCL)
^ & T Colony, Seethammadhara, Visakhapatnam , §30 013
Rep. by ,ts Chairman & Managing Director
3. The Superintending Engi'neer.(Operation circle),The Eastern Power
Distribution
company of Andhra Pradesh Ltd Rajamandri, East Godavari Dt
4. The
Superintending Engineer,{Operation circle),The Eastern Power
Distribution
company of Andhra Pradesh Ltd Srikakulam , AP
5, The Superintending Engineer,(Operation circle),The Eastern Power
D.stnbut,on company of Andhra Pradesh Ltd . Visakhapatnam, AP
3. The Superintending Eng ineer.(Operation circle).The Eastern Power
Distribution
company of Andhra Pradesh Ltd Vizianagaram. AP
7. The Superintending Engineer, (Operation circle),The
ci Eastern Power
Distribution
company of Andhra Pradesh Ltd , Eluru, West Godavariri Dt
■■•Respondents
Petition under Article 226 of the Constitution of India praying that in the
circumstances stated in the affidavit filed therewith, the High Court may be
pleased to issue a Writ, Order or Direction more particularly one in the
nature of Writ of Mandamus declaring the action of respondents in issuing
G.O.Ms.No.7 Energy (Power - II) Department dated 08-04-2022 where
under the levy of electricity duty was increased from Rs. 0.06 Paise per unit
to Rs. 1/- on the energy sales made to the commercial and industrial
consumers and the consequential action of the respondents and their
subordinates in seeking to levy electricity duty at the enhanced rate from
the service connections of the petitioners as illegal, arbitrary and contrary to
the statutory provisions and issue a direction to the respondents and their
subordinates not to levy the electricity duty at the enhanced rate from the
petitioners service connections and adjust the refundable amount in the
future consumption bills of the petitioners and to levy electricity duty @
Rs.0.06 Paise only from the petitioners service connections.
lA NO: 1 OF 2024
Petition under Section 151 CPC praying that in the circumstances
stated in the affidavit filed in support of the petition, the High Court may be
pleased to direct the respondents and their subordinates not to disconnect
the power supply to the service connections of the petitioners for recovery
of electricity duty @ Rs. 1/- per unit in pursuance of G.O. Ms.No. 7 Energy
(Power - II) Department dated 08-04-2022, pending disposal of the Writ
Petition.
Counsel for the Petitioner: SRI^K V UPENDRA GUPTA
Counsel for the Respondents 1, 3 to 6: GP FOR ENERGY
Counsel for the Respondents 2 & 7: SRI METTACHANDRASEKHAR RAO,
SCforAPEPDCL
The Court made the following order:
APHC010263432024
IN THE HIGH COURT OF ANDHRA PRADESH
AT AMARAVATI [3329]
(Special Original Jurisdiction)
WEDNESDAY .THE TWENTY SIXTH DAY OF JUNE
TWO THOUSAND AND TWENTY FOUR
PRESENT
THE HONOURABLE SRI JUSTICE VENKATESWARLU
NIMMAGADDA
WRIT PETITION NO; 13024/2024
Between:
South India Shopping Mall and Others ...PETITIONER(S)
AND
The State Of Ap and Others ...RESPONDENT(S)
Counsel for the Petltioner(S):
1.KVUPENDRA GUPTA
Counsel for the Respondent(S):
1.GP FOR ENERGY
The Court made the following:
ORDER:
This Writ Petition is filed under Article 226 of the
Constitution of India, seeking the following relief:
"....to issue a Writ, Order or Direction more particularly one
in the nature of Writ of Mandamus declaring the action of
respondents in issuing G.O.Ms.No.7 Energy (Power-11)
Department dated 08.04.2022 where under the levy of
electricity duty was increased from Rs.0.06 Raise per unit to
Rs 1/ on the energy sales made to the commercial and
industrial consumers and the consequential action of the
respondents and their subordinates in seeking to levy
electricity duty at the enhanced rate from the service
connections of the petitioners as illegal, arbitrary and
contrary to the statutory provisions and issue a direction to
the respondents and their subordinates not to levy the
electricity duty at the enhanced rate from the petitioners
service connections and adjust the refundable amount in
the future consumption bills of the petitioners and to levy
electricity duty @ Rs.0.06 Raise only from the petitioners
service connections and pass such other order or orders..."
2. Heard learned counsel for the petitioners, learned
Government Pleader for Energy appearing for respondent No.1
and Sri Metta Chandra Sekhar Rao, learned Standing Counsel for
respondent Nos.2 to 7.
3. When the matter is taken up for consideration, learned
counsel for the petitioners submitted that the Coordinate Bench of
this Court has partly allowed the writ petitions on 15.9.2023 vide
W.P.No.16619 of 2022 and batch and the issue involved in this
writ petition is squarely covered by the order passed in
W.P.No.16619 of 2022 and batch and prayed to pass similar
orders. The Coordinate Bench order is placed on record and has
drawn the attention of this Court to the same.
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4. In reply, Sri Metta Chandra Sekhar Rao, learned standing
counsel for respondent nos.2 to 7, submitted that the order
passed in the batch of writ petitions by the Coordinate Bench
relied on by the learned counsel for the petitioners is not binding
on the subsequent Coordinate benches of equal strength and a
counter is required to be filed in the present writ petition.
5. In reply, learned counsel for the petitioners submitted that
a ruling of a coordinate bench binds the orders of the subsequent
coordinate benches and relied on the judgment of the Hon'ble
Apex Court in between Dr. Shah Faesal and others vs. Union
of India and another^ and has drawn the attention of this Court
to paras 23 and 24, which read as follows:
23. This brings us to the question, as to whether a
ruling of a coordinate Bench binds subsequent coordinate
Benches. It is now a settled principle of law that the
decisions rendered by a coordinate Bench Is binding on the
subsequent Benches of equal or lesser strength. The
aforesaid view is reinforced in the National Insurance
Company Limited v. Pranay Sethi, (2017) 16 1 680 wherein
this Court held that;
59.1. The two Judge Bench in Santosh Devi [Santosh
Devi i/. National Insurance Co. Ltd., (2012) 6 I 421 7] should
have been well advised to refer the matter to a larger Bench as
it M/as taking a different view than what has been Stated in
Sarla Verma [Sarla Verma v. DTC, (2009) 6 I 121], a Judgment
(2020) 4 Supreme Court Cases I
)
by a coordinate Bench. It is because a coordinate Bench of the
same strength cannot take a contrary view than what has been
held by another coordinate Bench"
24. The impact of non-consideration of an earlier
precedent by a coordinate Bench is succinctly delineated
by Salmond in his book in the following manner:
.. .A refusal to follow a precedent, on the other hand, is
an act of coordinate, not of superior, jurisdiction. Two courts of
equal authority have no power to overrule each other's
decisions. Where a precedent Is merely not followed, the result
is not that the later authority is substituted for the earlier, but
that the two stand side by side conflicting with each other. The
legal antinomy thus produced must be solved by the act of a
higher authority, which will in due time decide between the
competing precedents, formally overruling one of them, and
sanctioning the other as good law. In the meantime the matter
remains at large, and the law uncertain.
6. The observations made in the above referred decision
enunciate a principle of law that the decisions rendered by a
coordinate Bench is binding on the subsequent Benches of equal
or lesser strength.
7. Perusal of the material placed on record would indicate
that the relief sought in writ petitions i.e. W.P.No.16619 of 2022
and batch and the relief sought in the present writ petition is one
and the sarhe and all the writ petitions were filed challenging the
validity of G.O.Ms.No.7, Energy (Power-ll) Department, dated
08.04.2022. A Coordinate Bench of this court has partly allowed
% ■
W.P.No.16619 of 2022 and batch dealing with the similar issue.
Thus the objection raised by the learned Standing counsel is not
tenable.
8. In view of the above, keeping in view of the settled
principle of law that decisions rendered by a coordinate bench is
binding on the coordinate benches of equal or lesser strength
since a coordinate bench of this Court had allowed batch of writ
petitions filed for similar relief, this Court is inclined to pass the
same order in this writ petition as was passed in writ petitions
vide W.P.No.16619 of 2022 and batch by the Coordinate Bench
of this Court.
9. Accordingly, the writ petition is partly-allowed. There
shall be no order as to costs.
10.Registry is directed to enclose a copy of the order dated
15.9.2023 in W.P.No.16619 of 2022 and batch, to this order.
As a sequel, miscellaneous petitions pending, if any, shall
stand closed.
Sd/- K.TATA RAO
DEPUTYAREGI^RAR
//TRUE COPY//
SE Sn OFFICER
To, State of Andhra Pradesh, A.P. \
1 The Prl. Secretary, Energy Department
■ Secretariat, Velagapudi - 522 237, Guntur District.
2. The Chairman and Managing Director. Eastern Power Distribution
Company of Andhra Pradesh Limited (APEPDCL), P and T Colony
Seethammadhara, Visakhapatnam - 530 013.
3. The Superintending Engineer.(Operation circle), The Eastern Power
Distribution company of Andhra Pradesh Ltd , Rajamandri East
Godavari District.
4. The Superintending Engineer, (Operation circle). The Eastern Power
Distribution company of Andhra Pradesh Ltd , Srikakulam. AP
5. The Superintending Engineer,(Operation circle). The Eastern Power
Distribution company of Andhra Pradesh Ltd , Visakhapatnam, AP
6. The Superintending Engineer,(Operation circle). The Eastern Power
Distribution company of Andhra Pradesh Ltd , Vizianagaram, AP
7. The Superintending Engineer,(Operation circle). The Eastern Power
Distribution company of Andhra Pradesh Ltd , Eluru, West Godavari
District.
8. One CC to Sri K V Upendra Gupta, Advocate [OPUC]
9. One CC to Sri Metta Chandra Sekhar Rao, SC for APEPDCL [OPUC]
lO.Two CCs to GP for Energy, High Court of Andhra Pradesh. [OUT]
11.TWO CD Copies
(Along with a copy of the order dated 15.09.2023 in WP.No 16619 of 2022 7
batch)
RAM
HIGH COURT
DATED:26/06/2024
^OURf^
5?
6>.
^eo
ORDER
WP.No.13024of 2024
PARTLY ALLOWING THE WP
WITHOUT COSTS
RNT,J
WP No.l6619of2022& Batch
THE HON'BLE SRI JUSTICE RAVI NATH TILHARI
W.P. Nos.16619, 21616, 25165, 26807, 28108, 29614, 30036,
30742, 30801, 32559, 32605, 32609, 33988, 36442, 36883,
37271, 37272, 37273, 37274, 37275, 38328, 40830 and 42301
of 2022
&
W.P.Nos. 506, 1543, 1546, 1572, 1658, 1665, 1666, 2165, 2334,
2601, 2610, 2922, 2935, 3009, 3067, 3315, 3557, 4124, 5617,
5800, 7163 & 7246 of 2023
COMMON JUDGMENT:
Heard Sri K. Gopal Chowdary, Sri Sricharan Telaprolu, Sri Challa
Gunaranjan, Sri Nimmala Satyanarayana, learned counsel, representing Sri G.
Sudheer Kumar, Sri V.R.N.Prashanth, Sri 0. Manohar Reddy, learned Senior
Counsel, assisted by Sri K. Dheeraj Reddy, and Sri Alladi Ravinder, learned
Senior Counsel, assisted by J. Srinadh Reddy, learned counsels appearing for
the petitioners, and Sri P. Shreyas Reddy, learned Government Pleader,
attached to the learned Advocate General's Office for the State of Andhra
Pradesh and Sri V. R, Reddy Kowuri, learned standing counsel along with Sri
Abhay Jain, and Sri Metta Chandrasekhar Rao, learned standing counsel for the
Central Power Distribution Corporation of A.P.Ltd. (APCPDCL), appearing for the
respondents.
2. The petitioners in the batch of the above writ petitions except in
W.P.No.33988 of 2022, have challenged the notification in G.O.Ms.No.7, Energy
(Power-Ill) Department, dated 08.04.2022 with further consequential reliefs.
3. The W.P.No.16619 of 2022 is being taken as the leading writ petition.
The prayer of this writ petition is reproduced hereinafter. In rest of the writ
RNT, J
petitions, except in W.P.No.33988 of 2022, there are same prayers in
substance, worded differently. However in W.P.Nos.2601, 2610 of 2022, there
is no prayer for refund, may be because any duty pursuant to G.O.Ms.No.7
might not have been collected from them.
"....to issue an appropriate Writ Order or direction more particularly one in the
nature of Writ of Mandamus declaring the action of the 1^' Respondent in
issuing G.O.Ms.No. 7 Energy Power-Ill Department dated 08.04.2022
exorbitantly increasing the levy of electricity duty from Rs. 0.06 per unit to
Rs.l per unit on the energy sales made to commercial and industrial consumers
in colourable exereise of the powers conferred under Section 31 of the Andlira
nd
Pradesh Electricity Duty Act, 1939 and the consequential action of the 2
Respondent in seeking to levy electricity duty at the enhanced rate inter alia by
raising RT Bill Nos. 2201593300, 2201584106 and 2201576585 dated
05.05.2022 for the month of May, 2022 and HT Bill Nos.2201630500 ,
2201628436 and 2201632042 dated 05.06.2022 for the month of June, 2022 as
arbitrary illegal unjust unfair unreasonable excessive violative of the
fundamental and constitutional rights guaranteed under the Constitution of
India violative of the principles of natural justice contrary to the National Tariff
Policy 2016 contrary to the Common Order on Tariff for Retail Sale of
Electricity during financial year 2022-2023 dated 30.03.2022 passed by the
Andhra Pradesh Electricity Regulatory Commission and contrary to law and to
consequently set aside G.O.Ms No.7 Energy Power-Ill Department dated
08.04.2022 as well as the aforesaid RT Bills dated 05.05.2022 and HT Bills
dated 05.06. 2022 to the extent of the enlianced electricity duty by directing the
2"^' Respondent to refund the excess electricity duty paid by the Petitioners for
the month of May, 2022 and not levy electricity duty on the Petitioners at the
enhanced rate anymore and pass such other orders "
4. The petitioners in the above batch of the Writ Petitions are the
commercial and industrial consumers.
RNT, J
5. In Writ Petition No.33988 of 2022, the petitioners are the
proprietors/owners of the cold storages and claim to be not the commercial and
industrial consumers, but the agriculture category consumers. Their stand is
that they shall stand exempted from levy of any such duty, like agricultural
consumers, and they cannot be asked to pay any duty pursuant to
G.O.Ms.No.7, dated 08.04.2022.
6. The prayer in W.P.No.33988 of 2022 is as under:
" to issue an order or writ or direction more particularly one in the
nature of writ of Mandamus declaring that the demand made by the respondents
to the petitioners to pay the electricity duty at the rate of Re 1/ per unit
increasing the same from Re. 0.06 Ps Per unit from April 2022 and True Up
Charges in pursuant to the G.O.Ms.No.7, Energy Power III Department, dated
8-4-2022, is illegal and arbitrary and against to the constitution of India and
exorbitant and it is just and unfair and unreasonable excessive and violative of
fundamental rights guaranteed under the Constitution of India and also it
violates the principles of natural justice and consequently directing the
respondents not to demand and collect the electricity duty and TRUE UP
charges and further direct the respondents to refund the amount collected at the
enhanced rate which is paid to the respondents from April 2022 onwards and
pass such other reliefs ...
7. By the impugned notification G.O.Ms.No.7, issued in exercise of
powers conferred by Section 3 (1) of the Andhra Pradesh Electricity Duty Act,
1939, in short (APED Act, 1939), the Government of Andhra Pradesh levied
electricity duty of Re.l per kilowatt hours (kwh) unit on energy sales for the
commercial and industrial consumers category, as indicated in the yearly 'Retaii
Supply Tariffs Order 2022-23' (in short 'the Tariffs Order') issued by the Andhra
Pradesh Electricity Regulatory Commission (in short 'APERC').
RNT, J
8. The G.O.Ms.No.7 further provides that for the domestic consumers the
existing electricity duty of 6 paise per kwh unit shall continue to be levied, and
for the agriculture consumers they shall continue to be exempted from levy of
any such duty.
9. The challenge to the impugned notification is to the extent of levy of
electricity duty of Re.l per kwh unit on energy sales for the commercial and
industrial consumers category and also that such rate is excessive.
10. The challenge to the impugned notification is mainly on the ground
that it makes hostile discrimination against the industrial and commercial
consumers and suffers from colorable exercise of power also violating Article 14
of the Constitution of India.
nd
11. The challenge to the demand of electricity duty by the 2
respondent-central Power Distribution Corporation of Andhra Pradesh Limited
(in short 'APCPDCLO in its monthly current consumption bills, is additionally on
the ground that it cannot be recovered from the petitioner consumers, by the
'licensee', as under Section 3 of the APED Act, it is the duty of the 'licensee' to
make the payment of electricity duty and there is no previous sanction of the
State Government under Section 7 (1) of the APED Act, 1939, permitting the
'licensees' to recover the electricity duty either wholly or partly from the
industrial and commercial consumers. Consequently, the payment of electricity
duty already paid/recovered, also deserves to be refunded to the petitioners.
RNT, J
WP No.l6619of2022& Batch
12. The respondents have filed counter affidavit in the leading writ
petition and in rest of the writ petitions in some same counter affidavit and in
others Memo of adoption of the counter affidavit, has been filed.
13. Facts are not in dispute.
Submissions of learned counsels for the petitioners:
14 Sri K. Gopal Chowdary, learned counsel for the petitioners, submitted
that the impugned notification dated 08.04.2022 is colourable exercise of
power. He submitted that what cannot be done directly by the State, can also
not be done indirectly. He submitted that initially the duty was imposed by the
Statute itself, but now by legislature, this power has been given to the State
Government after amendment of Section 3 of APED Act. Consequently, the
sovereign power to tax which was being exercised by the legislature is now
delegated and is being exercised by the executive. Consequently, the doctrine
of colourable exercise of power as applicable in the matter of legislation would
equally apply to the exercise of power by the executive.
15. Sri K. Gopal Chowdary submitted that the tariff policy notified under
the Electricity Act is a statutory document and has force of law, placing reliance
in Energy Watchdog v. Central Electricity Regulatory Commission^. He
submitted that the APERC passed the Tariff Order dated 30.03.2022 and
considering that the industrial and commercial category consumers are already
saddled with high tariffs and any further increase in tariff for those categories
was highly unsustainable for them, and if it becomes unsustainable, it will lead
^ (2017) 14 see 80
RNT, J
to closure of their industries affecting the livelihood of millions of people and
the economy of the State as a whole, the APERC, did not increase the tariff rate
on these categories.
16. Sri K. Gopal Chowdary submitted that as per the order of Appellate
Tribunal for Electricity (in short'APTELO the tariffs of subsidizing categories was
not to be increased beyond the cap of 120% of their cost of service, which in
his submission is already significantly over 120% of the cost of service in the
case of 11 KV consumers and only just less than 120% in the case of 33 KV
consumers. In this respect, he referred to Tables /O and 72 in the Tariff Order
as also mentioned in the writ petition. He submitted that the ratio of tariff,
considered as Average Billing Rate (in short 'ABRO as approved for 2022-23 and
the Average Cost of Service (in short 'ACOSO for the different voltage levels, is
referred in Table-72 as under:
Table-72: Ratio of Average Billing Rate (ABR) per unit and
Average Cost of Supply (ACoS) per Unit (Voltage wise)
ABR Approved for ACOS
FV2022-23 ABR/ACOS (%]
Particulars
SPDCL EPDCL CPDCL SPDCL EPDCL CPDCL SPDCL EPDCL CPDCL
For LT Level 3.42 4.60 4.66 7.18 6.72 7.09 47.67% . 68.49% 65.77%
For llkV Level 9.90 9.37 9.43 7.18 6.72 7.09 137.89% 139.52% 132.94%
J
For 33 kV Level 8.07 7.72 7.67 7.18 6.72 7.09 112.49% 114.90% 108.09%
For 132 kV Level
7.53 6.22 7.18 7.18 6.72 7.09 104.97% 92.60% 101.28%
and above
Average for the 5.07 5.71 5.63 7.18 6.72 7.09 70.69% 85.05% 79.37%
licensee
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Referring to Table 72, he submitted that ACOS as shown in Table-72, uniformly.
for all voltage levels for each DISCOM, is incorrect. The Commission approved
the ACOS separately for each voltage level for each DISCOM in Table-70 of the
Tariff Order, which is as under:
Table 70: Approved: Cost of Service for FY2022-23 (Rs. Unit)
For the three
Particula APSPDCL APEPDCL APCPDCL
DISCOMs
rs
CoS for LT consumers 7.40 6.89 7.21 7.18
I • I
CoS for 11 kV consumers 7.09 6.69 6.95 6.87
CoS for 33kV consumers 6.87 6.52 6.73 6.71
CoS for 132kV & above consumers 6.66 6.34 6.52 6.50
Average cost of service (ACoS) 7.18 6.72 7.09 6.98 ,
Consequently, he submitted that the petitioner has given a table, of his own, in
para No.10 of W.P.No.25165 of 2022, substituting ACoS as in Table-70, in place
of ACoS as given in .Table-72 and based thereon it is submitted that the cap of
120% is already exceeded in the case of 11 KV consumers and it is just below
in case of 33 KV consumers. Table 72 as in para-10 of the writ petition is as
under:
ABR
ACOS ABR/ACOS%
Voltage
SP EP CP SP EP CP SP EP CP
LT 3.42 4.6 4.66 7.4 6.89 7.21 46.22 66.76 64.63
llkV 9.9 9.37 9.43 7.Q9 6.69 6.95 139.63 140.06 135.68
33 kV 8.07 7.72 7.67 6.97 6.52 6.73 115.78 118.40 113.97
132>kV
7.53 6.22 7.18 6.66 6.34 6.52 113.06 98.11 110.12
RNT, J
17. Sri K. Gopal Chowdary submitted that while making determination of
tariff, the APERC also considers the aspect of subsidy, if the State Government
so requires, with respect to any consumer or class of consumers, for which the
State Government has to pay in advance and in specified manner, the amount
to compensate the person effected by the grant of subsidy. The submission is
that the aspect of subsidy is a matter to be considered by the APERC under
Section 65, while determining the tariff under Section 62 of the Electricity Act.
The Government has to make the payment of an amount towards subsidy,
which is to compensate the category of consumers affected by the grant of
subsidy. Once that was taken into consideration by the APERC in the
determination of the tariff order, imposition of duty or enhancement of duty
and levying the same in respect of industrial and commercial consumers, to fill
the gap or to recover the loss, by virtue of grant of subsidy to agricultural
consumers, is directly a burden being imposed on the industrial and commercial
consumers, which as per the tariff order, are already saddled with high tariff
and for that reason the APERC did not enhance tariff on them. He further
submitted that the impugned G.O.Ms.No.7 was issued on 08.04.2022 just 8
days after the APERC issued its tariff order, enhancing the Electricity duty on
the energy sales made to the commercial and industrial consumers, which is
indicative of subsidy to agriculture consumers being realized from the industrial
and commercial consumers.
18. Sri K. Gopal Chowdary submitted that so long as levy of tax is in a
reasonable manner and made fairly and not selectively, it could be done. But,
RNT, J
13- WP No. 16619 of 2022 & Batch-
here, the Government grants subsidy, while determination of tariff, to the
agriculture consumers and realizes the same by imposing duty on commercial
. and industrial consumers. It is nothing but cross subsidy. The subsidy, in fact.
is granted at the cost of industrial and commercial consumers and this cross
subsidy interferes with the scheme of determination of tariff. He submitted that
the Government has the power to tax, but not arbitrarily nor to tax diffferently.
There is no differentia to exempt domestic and agriculture consumers.
19. Additionally, he referred to the following judgments in support of his
aforesaid submissions:
1. K. C. Gajapati Narayan Deo v. State of Orissai^
2. Attorney General-Alberta v. Attorney General-CanadaP
3. Bailey v. Drexe! Furniture Co.
4. The Lord Krishna Sugar Mills Ltd. v. Union ofIndia^
5. State ofW.B. v. Kesoram Industrie^
^.Automobile Transport (Rajasthan) Ltd. v. State of Rajasthani
20. Sri K. Gopal Chowdhary, further submitted that the Electricity Duty is
imposed upon the 'licensee' under Section 3 of the APED Act. In the absence of
any previous sanction of the State Government under Section 7 of APED Act, it
cannot be recovered by the 'licensee' from the consumers. He submitted that
there was no such previous sanction. As such the demand made in the
^ AIR 1953 sc 375
^ 1938 see Online PC 43
259 US 20 - 1922
^AIR 1959 SC 1124
® (2004) 10 see 201
^ AIR 1962 SC 1406
RNT, J
electricity bills and its payment or recovery, being unsustainable, the petitioners
are entitled for refund of such amount from the respondents.
21. Sri Challa Gunaranjan, learned counsel for the petitioners submitted
that the ground of grant of subsidy to the category of agriculture consumers in
tariff, cannot be a ground for enhancement of electricity duty. He submitted
that the point of subsidy is to be considered while determining the tariff under
Section 62 of the Electricity Act, 2003, in view of Section 65 thereof and once
that aspect was taken into consideration and tariff order was issued on dated
30.03.2022 the impugned G.O, within a gap of 7 to 8 days could not be issued.
It amounts to, on the one hand granting subsidy to the agriculture consumers
category, but on the other hand to realize the same from the industrial and
commercial consumers category by burdening them of such duty, He
submitted that the tariff was not enhanced by the APERC for such category of
consumers i.e. industrial and commercial, on objective considerations and in the
tariff order itself it is mentioned that it could be only upto the cap of 120%. He
also submitted that what could not be done directly before the APERC in
determination of tariff, could also not be done indirectly by imposing the duty,
adopting the submission of Sri K. Gopal Chowdary.
22. Sri Challa Gunaranjan, however, further submitted that no procedure
has been prescribed for determination of rate of duty. The increase in the
amount of duty from 0.06 paise to Re.l/- and charging the same only from the
two (02) category of consumers. Industrial and Commercial, but exempting the
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other categories, Domestic to some extent and Agriculture, full exemption, is
discriminatory and violative of Article 14 of the Constitution of India.
23. Sri Challa Gunaranjan placed reliance upon the Division Bench
judgment of Chhattisgarh High Court in the case of Lafarge India Private
Limited vs. State of ChattisgartP.
24. Sri V. R. N. Prashanth, learned counsel for M/s. Indus Law Firm,
submitted that in the tariff order dated 30.03.2022, the electricity duty aspect
was alsQ considered. His submission is,;,also the same that once the Electricity
Duty @ 0.06 paise per unit was considered by APERC, now the same cannot be
enhanced to Re.l/- per unit, after the passing of the tariff order. He submitted
that upon an application under Right to Information Act, dated 18.05.2022 by
the petitioners under his representation, to furnish the entire note file
pertaining to G.O.Ms.No.7, dated 08.04.2022 along with all the
documents/records relied on by the Government, information was not provided
and "The information" was rejected.
25. Sri Alladi Ravinder, learned senior counsel in W.P.No.7163 of 2023,
raised the same objections with respect to the challenge to the G.O.Ms.No.7
i.e., colourable' exercise of power and arbitrariness being violative of Article 14
of the Constitution of India on the ground of differentiation between two
categories of electrical consumers and the rate of duty being unreasonable. He
placed reliance in Nationai Thermai Power Corporation Ltd. v. State of
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m
A.P^ and Delhi Cloth & General Mills Co.Ltd. v. Municipal Corporation of
Delhf° as also in Ajay Hasia v. Khalid Mujib SehravardF^.
26. Sri 0. Manohar Reddy, learned Senior Advocate in W.P.Nos.2601,
2610, 2922, 3067, 3557 and 4124 of 2023 submitted additionally that the ferro
alloy industry is a separate category in the tariff order and though they also fall
in industrial consumers category, but in the tariff order the tariff for such
industrial consumer being different, their cases should have been considered
separately while imposing the duty on Ferro Alloy Industry and some exercise
should have been done with respect to them in imposition of the duty @ Re.l/-.
He has placed reliance in the case of Indian Aluminium Company vs. State
ofKeraia andotheri^ in support of his contention.
27. Sri Nimmala Satyanarayana, learned counsel in W.P.No.33988 of
2022 submitted that under the G.O.Ms.No.7, the agricultural consumers are
exempted from levy of any such duty. The petitioners' cold storage are helpful
in safeguarding the agricultural produce and to preserve the storage of
products by the farmers. The petitioners are not the manufactures of any
product or any byproducts of the commodities. They allow the farmers to keep
their agricultural produce into the cold storage on cooly basis for a period often
or 12 months per year. Based thereon the contention is that their categories
amount to one of agricultural consumer. It is connected with agriculture and
there is no processing bringing into existence a different substance.
® 1990 see OnLine AP 245
1992 see OnLine Del 495
(1981) 1 see 722
AIR 1996 Se 1431
RNT, J
Consequently, they also stand exempted from levy of duty under the category
of agricultural consumers. Learned counsel referred to the Andhra Pradesh
(Agricultural Produce and Livestock) Markets Act, 1966 (Act 16 of 1966),
G.O.Ms.No.333, dated 14.11.2003, which will be referred later on.
28. Sri Nimmala Satyanarayana placed reliance in the following cases:
{V)M/s. Kalyan Roller Flour Mills Pvt., Ltd and others vs. Central
Power Distribution Company ofA. P. Ltds., Hyd and others^^.
{2}Madhava Hi-Tech Cold Stqrage (P) Limited v. Assistant
Commercial Tax Officei^"^.
(3) Chowgule & Company Private Limitedv. Union oflndiai^^
Delhi Cold Storage Private Limitedv. Commissioner of Income
Tax, NewDeih'i^^
(5) Central Bank of India v. Guru Nanak Cold Storage and Ice
Factory^^
(6) Krishna Poultry Farm v. State of Orissa^^
(7) Tuijabhavani Cold Storage Pvt. Ltd. v. Superintending
Engineer^
(8) AZ/s, Odisha Cold Storage Association v. CEO, TPCODL^°.
2010(1) U.P.LJ. 182 (HC)
M
2022 see On Line AP 2574 (DB)
(1981) 1 see 653
(1991) 4 see 239
1997 see OnLine DRAT 50
2015 see OnLine Ori 301
ease No.05/2017, decided on 06.04.2017 by eonsumer
Grievance Redressal Forum, Baramati
ease No.03/2021, decided on 29.02.2022
Of Odisha Electricity Regulator Oommission,
Bhubaneswar
RNT, J
29. Other learned counsels for the petitioners adopted the aforesaid
arguments advanced.
Submissions of learned counsels for the Respondents:
30. Sri P. Shreyas Reddy, learned GP submitted that the tariff
determination by the Commission is referable to Part VII and Section 86 of the
Electricity Act, 2003 which emanates from Entry 38 of List III of Schedule VII of
the Constitution of India. The electricity duty is referable to the A.P.E.D Act
which emanates from Entry 53 of List II of Schedule VII. The tariff and duty
operates in separate legislative fields, serving distinct legislative purpose. The
APERC acknowledged it in its common tariff order. He submitted that the
G.O.Ms.No.7 does not interfere with the exclusive statutory power and function
of APERC under the Electricity Act. He submitted that without there being a
challenge to the statutory amendments which enabled the implementation of
the duty, the plea of colourable exercise of power cannot stand. Further, there
is no colourable exercise of power in issuing G.O.Ms.No.7, the source of power
is under Section 3 of the APED Act. Electricity Duty, the State has the power to
impose, on sale of the electricity. It is an exercise Independent of
determination of tariff by APERC under the Electricity Act 2003. He further
submitted that the tariff for industrial and commercial consumers was not
enhanced vide the APERC's tariff order dated 30.03.2022, when compared with
the order issued for the year 2021. Consequently, their claim about the tariff
increasements and the effect thereof is unfounded. There is no question of an
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additional burden while increase of electricity duty. They are statutorily
required to pay the duty under the APERC Act in addition to the tariff.
31. Sri P. Shreyas Reddy, learned GP submitted that the reasons for
enhancement of the electricity duty have been adequately and elaborately
given in G.O.Ms.No.7. It cannot be considered a hostile discrimination against
industrial and commercial consumers. Availing of electricity supply by these
electricity consumers stands at different levels when compared to
agricultural/domestic consumers. It was, on consideration of the detailed study
of the duty rates levied and enhanced across the years in various States, where
even currently, the electricity duty levy vary to Rs.1.44 and Rs. 1.80 energy per
unit. There was no revision of electricity duty for about 18 long years i.e. since
1993-22 in the State of Andhra Pradesh. He submitted that in view of the
reasons assigned, the time gap of 18 years since the last revision of duty, and
when compared to the rate of duty in different States, the current rate of
electricity duty @Rs.l.OO by the impugned G.O.Ms.No.7 cannot be termed as
arbitrary or unreasonable.
32. Sri Shreyas Reddy submitted that the category of domestic
consumers for which category the APERC had in fact increased the tariff, the
electricity duty was decided to be levied at the previously existing rate of Rs.
0.06 paise per energy unit and the agricultural consumers category were to be
exempted from payment of the duty. Such exemption from payment of
electricity duty was also available vide G.O.Ms.No.82 (Energy Power-Ill)
Department dated 07.07.2003. He submitted that such exemption is given inter
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alia across the State of Chhattisgarh, Haryana, Gujarath, Karnataka, Tamilnadu,
Madhya Pradesh, Sikkim, Nagaland, Punjab, West Bengal, Arunachal Pradesh,
Puducherry and Sikkim. The petitioners cannot compare their needs of
electricity consumption and electricity duty paying, to those of agricultural and
domestic consumers. Consequently, the challenge on the ground of hostile
discrimination and unreasonableness or violation of Article 14 of the
Constitution of India cannot be sustained.
33. Sri Shreyas Reddy submitted that the National Tariff Policy and the
APERC tariff order both are referable only to the Electricity Act, 2003 in the
specific context of tariff determination and cannot be brought to bear upon the
application to determine duty under the APED Act.
34. Sri Shreyas Reddy, learned GP, further submitted that State can
reasonably decide to pick any commodity, good or subject for taxation and
there is no obligation to impose uniform tax/duty. The legislature enjoys wide
range of freedom to make classification in tax/duty law and the burden is on
the person/complainant to prove that equals are treated as unequals.
35. Sri Shreyas Reddy further submitted that the burden of subsidy given
to the agriculture class does not fall on industrial class and the argument that it
falls on industrial class and therefore the cross subsidy is misconceived. He
submitted that even if a tax falls heavily on some in one category that by itself
would not be a ground to render the law invalid. He submitted that a
reasonable classification is one which includes of persons who are similarly
situated with respect to the purpose of the law. Judicial defference must be
RNT, J
WP No.l6619of2022& Batch
given ot the legislature in the field of economic regulation. Laws relating to
economic activities must be viewed with greater latitude, than laws touching
civil rights. He submitted that in the matter of economic policy, the Courts are
reluctant to interfere with the conclusion reached by the experts unless the
Court is satisfied that there is illegality in the decision itself, which he
submitted, is not in the present case.
36. Sri Shreyas Reddy, with respect to Ferro Alloys Industries and Cold
Storages, submitted that in the exercise of powers under Section 3 (e) in
granting exemption, the government considered it appropriate to grant
exemption to the domestic consumers to some extent and to the agricultural
consumers to full extent. Consequently, the case of exemption was considered
to whom the government considered and to grant exemption, exemption was
granted and to others it was not granted. The industrial and commercial
consumers were not granted exemption. Each and every industry with respect
to different items cannot claim independent consideration. They are the same
class falling within the same category of consumers and consequently each
industry cannot claim independent consideration.
37. Sri' Shreyas Reddy placed reliance on the following judgments in
support of his contentions:
{1) Gujarat Urja Vikas Nigam Ltd. v. Solar Semiconductor Power
Company (India) Pvt. Ltd.
(2) East India Tobacco Co. v. State ofAndhra Pradesh^^
AIR 2017 SC 5372
RNT, J
(3) The Twyford Tea Co. Ltd. and Ors. v. State of kerala and Ors.^^
(4) Sie! Ltd. v. State of Punjab^"*
(5) Income Tax Officer^ Shillong and Ors. v. R. Takin Roy Rymbai and
Ors.
(6) Parivar Seva Sanstha v. Ahmedabad Municipal Corporation^^
(7) Federation of Indian Hotel & Restaurant Association of India v.
Union of India and Ors.V
(8) Rane Engineering Valves Ltd. v. State ofA.P. and Ors.^^
i9i)BALCO Employees Union v. Union ofIndia and Ors.^^
38. Sri V. R. Reddy Kowuri, learned Standing Counsel for the Central
Power Distribution Corporation of Andhra Pradesh Limited (APCPDCL) for the
respondent No.2, along with Sri Abhay 3ain, submitted that tariff and duty are
separate, distinct and independent aspects from each other. They are for
different purposes and operate in separate legislative fields. The tariff
determination is made by APERC based on average cost of supply or rate of
billing. The National Tariff Policy and the steps undertaken to bear the subsidy
burden for determination of tariff cannot be mixed with the duty so as to
contend the colourable exercise of power. Such references and the contentions
based on tariff, to impugn G.O.Ms.No.7 are baseless. He submitted that the
(1963) 1 SCR 404
AIR 1970 SC 1133
AIR 2010 P & H 121
AIR 1976 SC 670
2022 see OnLine SC 1622
(1989) 3 see 634
W.P.IMo.6095/2004, decided on 19.05.2016
Erstwhile High Court of A.P
(2002) 2 see 333
RNT, J
National Tariff Policy or otherwise providing for the tariff determination to be
within a particular percentage, parameter, scope of the average cost of supply
is not relevant for challenging the impugned G.O on the point of duty.
39. Sri V. R. Reddy Kowuri submitted that as regards subsidy, the
APCPDCL.vide letter ENEQl-APCC/1/2021, dated 24.03.2022 had written to
APERC to provide the subsidy amounts determined by the APERC under Section
65 of the Electricity Act, 2003. He submitted that the tables as referred by the
petitioners' counsel from the tariff order and the observation made in the tariff
order cannot be made the basis to challenge the duty, as those are for the sole
purpose of determination of tariff and not the electricity duty. It was further
submitted that even going by the petitioners' self-serving table in para-10 of
the W.P.No.25165 of 2022, the APERC fixed the tariff for 33KV Voltage which is
still within the 120% range of the cost of service. Therefore, their contention
that the permissible limits have been exceeded is not correct.
40. Sri V. R. Reddy Kowuri, further submitted that vide G.O.Ms.No.277,
Energy Department, dated 09.12.1994, sanction was accorded by the
Government under Section 7 (1) of the A.P.E.D. Act, 1939 to the Andhra
Pradesh State' Electricity Board to recover the electricity duty from consumer or
class of consumers to whom energy is sold at a price of more than 0.12 paise
per unit, falling under different categories.
41. It is submitted that the Andhra Pradesh Electricity Reforms Act, 1998
was saved from total repeal and its provisions not inconsistent with the
Electricity Act, 2003 were saved.
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#
42. The Andhra Pradesh Electricity Regulatory Commission, (Electricity
Supply Code) Regulation No.5 of 2004, was rpade by the Andhra Pradesh
Electricity Regulatory Commission, in exercise of power conferred by clause (x)
of sub section (2) of Section 181 read with Section 50 of the Electricity Act,
2003. Regulation 3.4 of the Regulations 2004 clearly provides that the
consumer shall also pay all the amounts chargeable by the Government by way
of tax/duty etc to the appropriate authority as specified by the Government.
43. The general terms and conditions of supply of distribution and retail
supply licensee in Andhra Pradesh by the Andhra Pradesh Electricity Regulatory
Commission vide proceedings No. Secy/01--, dated 06.01.2006 under clause
5.3.5 charges for electricity consumption in sub-clause 5.3.5.3, clearly provides
that the consumers shall pay in addition to the latest statute in the tariff order
or schedule of rates prescribed by the Commission, the amounts leviable by the
Government or any other authority by way of taxes, electricity, duty. Octroi or
any other duties in respect of supply of electricity to the consumers unless
there is a specific mention in the tariff order that the rates are inclusive of such
taxes, duty or Octroi etc.
44. He submitted that the Appendix IIA, is an agreement of supply of
electricity high tension, annexed to the counter affidavit and making a
reference to the same, particularly, condition No.4, it was submitted that as per
the agreement entered for supply of power the consumer had undertaken to
comply with all the requirements of the Electricity Act, 2003, the rules and
regulations framed there under, provisions of the tariffs, the scope of
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miscellaneous and the general charges and the general terms and conditions of
supply prescribed by the company with approval of the APERC from time to
time and not to dispute the same.
45. He further referred to the terms and conditions from the tariff order
in respect of the three (03) distributor licensees in the State of Andhra Pradesh,
to submit that it clearly provided that the tariffs determined in Para-A and Para-
B are subject to the mentioned general conditions. It is mentioned therein that
the tariffs are exclusive of electricity duty payable as per the provisions of the
Andhra Pradesh Electricity Duty Act. Consequently, the petitioners are liable for
payment of electricity duty and the demand made from them in the bills is
perfectly justified.
46. Sri V. R. Reddy Kowuri, placed reliance in the following judgments:
{1) Southern Petrochemical Industries Co.Ltd. v. Electricity
Inspector & ETI(f°
(2) BSESLtd., V. TATA Power Co. Ltd.
(3) State ofA.P. v. National Thermal Power Corpn. ltd.
47. Sri Metta Chandrasekhara Rao, learned Standing Counsel submitted
, i
that the duty was imposed for augmentation of revenue for the benefit of the
weaker section, farmers etc. and the same would go to the State exchequer.
He submitted that the thing used in the legislative entries in the Constitution
must be interpreted in a way so as to give the wider latitude of the power to
(2007) 5 see 447
(2004) 1 see 195
(2002) 5 see 203
RNT,J
the legislature to legislate and not in a narrow and pedantic sense. He
submitted that the duty under the A.P.Electricity Duty Act, 1939 is framed
under Entry 53 of List-II of the Constitution. Consequently, the power is
derived from the APED Act 1939. The contention of the petitioner's counsel that
it is colorable exercise of power is not sustainable because the power is there
with the State conferred by Section 3, as amended, under the Act, 1939
enacted by the State legislature within its legislative competence.
48. Sri Metta Chandrasekhar Rao, further submitted that the primary
purpose of the G.O. is to raise the revenue for the development work in public
interest. He submitted that the rise of the electricity duty is not a matter for
investigation of Court. In the present case, he submitted that the rise of the
electricity duty was due to various factors and such rise was being made for the
first time after about 18 years.
49. Sri Metta Chandrasekhar Rao, placed reliance in the following
judgments in support of his contentions:
(1) Jiyajeerao Cotton Mills Ltd., BiHanagar v. Gwalioi^^
(2) State of Uttar Pradesh and others v. Renusagar Power Co. and
others^"^
(3) Indian Aluminium Company v. State of Keraia and others^^
50. I have considered the submissions of the learned counsels for the
parties and perused the material on record.
AIR 1963 SC 414
AIR 1988 SC 1737
AIR 1996 SC 1431
RNT. J
Points for consideration:
51. The following pointsarise for consideration and determination:-
A. Whether the G.O.Ms.No.7, Energy (Power-Ill) Department, dated
08.04.2022 deserves to be quashed on the grounds of
(1) colourable exercise of power;
(2) violating Article 14 of the Constitution of India by imposing
duty on industrial and commercial consumers of electricity,
but granting exerription to agricultural consumers as also
for the rate of duty being unreasonable and excessive;
B. Whether the licensees can recover the duty imposed on them.
from the petitioners / consumers, under Section 7 of the APED
Act?
C. Whether the petitioners / Alloy Industries have to pay the same
duty?
D. Whether the petitioners / cold storage industries are agriculture
consumers and exempted from payment of duty?
52. Before proceeding further, it is to be brought on record that.
i) There is no challenge to the Andhra Pradesh Electricity Duty
(Amendment) Act, 2020 (Act No. 10 of 2021) in the writ petitions.
li) There is also no challenge to the provision of Section 3 of the
APED Act 1939 amended or unamended or to any of its other
provisions.
RNT, J
iii) The challenge is only to the G.O.Ms.No.7, dated 08.04.2022, and
that too, to the limited extent with respect to imposition of duty
@Re.l per unit on the commercial and industrial consumers
category and on its rate @Re.l.
iv) There is no challenge to the classification of the electrical energy
consumers, viz., industrial, commercial, domestic and agricultural.
v) There is also no dispute that the petitioners (including Alloy
Industries and the Cold storages) were making the payment of
the duty at the rate of six paise per unit of energy in respect of all
sales of energy, in terms of Section 3 of the APED Act 1939, to
their licensees which were included in their electricity bills.
Determination of Point-A fl^
(larifO
53. There is no dispute with respect to the determination of the tariff, by
the tariff order by the Andhra Pradesh Electricity Regulatory Commission, nor
the same is the subject matter of this writ petition. But a reference to the
provisions for determination of tariff is being made to consider the submissions.
advanced to challenge the G.O.Ms.No.7, dated 08.04.2022, by which duty has
been imposed at the rate of Re.l per unit of sale, on the ground that the
matter of subsidy is to be considered by APERC while determining tariff.
whereas the G.O.Ms.No.7 has been issued for one of the reasons of grant of
subsidy to the agriculture consumers, as assigned in the G.O.Ms.No.7 itself.
54. The submission of the learned counsels for the petitioners centres
round the grant of subsidy to agricultural consumers by State in determination
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of tariff by APERC, but imposing duty vide G.O.Ms.No.7 on industrial and
commercial consumers, due to grant of such subsidy, which in their submission
enhances the burden on Industrial and Commercial consumers through the
APERC did not enhance tariff on them to avoid burdening them for reasons in
the tariff order, as already mentioned above.
55. The Electricity Act 2003, in Part-II, Section 3 provides for the
National Electricity Policy and Plan. According to Section 3 (1) the Central
Government shall from time to time prepare the National Electricity Policy and
tariff policy, in consultation with the State Governments and the Authority for
development of the power system based on optimal utilization of resources.
such as coal, natural gas, nuclear substances or materials, hydro and renewable
sources of energy. Under sub-section (2), the Central Government shall publish
the National Electricity Policy and tariff policy from time to time, which, under
sub-section (3), in consultation with the State Governments and the Authority
may be reviewed or revised from time to time by the Central Government.
Under Sub-section (4), the Authority shall prepare a National Electricity Plan in
accordance with the National Electricity Policy and notify such plan once in five
years, provided that the Authority while preparing National Electricity Plan shall
publish, the draft National Electricity Plan and invite suggestions and objections
thereon from licensees, generating companies and the public within such time,
as may be prescribed, provided further that, the Authority shall, (a) notify the
plan after obtaining the approval of the Central Government, (b) revise the plan
incorporating the directions, if any, given by the Central Government while
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granting approval under clause (a). Sub-Section (5) provides that the Authority
may review or revise the National Electricity Plan in accordance with the
National Electricity Policy.
56. The 'Authority' as defined under Section 2 (6) of the Electricity Act
2003, means the Centra^ Electricity Authority referred to in sub-section (1) of
Section 70, which provides for constitution of 'Central Electricity Authority' etc.
57. Part-VII of the Electricity Act, 2003, from Sections 61 to 66 is on the
subject of 'tariff'. Section 61 provides that the appropriate Commission shall.
subject to the provisions of the Electricity Act 2003, specify the terms and
conditions for the determination of tariff, and in doing so, it shall be guided by
the considerations as mentioned under Clauses (a) to (i). One of the
considerations, is, the National Electricity Policy and tariff policy. Section 62
provides for determination of tariff, which is to be determined by the
Appropriate Commission in accordance with the provisions of the Act, "(a) for
supply of electricity by a generating company to a distribution licensee", "(b)
transmission of electricity", "(c) wheeling of electricity", and "(d) retail sale of
electricity".
58. The 'Appropriate Commission' as defined under Section 2 (4), means
the Central Regulatory Commission referred to in sub-section (1) of Section 76
or the State Regulatory Commission referred to in Section 82 or the Joint
Commission referred to in Section 83, as the case may be. The 'Appropriate
Government' as defined under Section 2 (5) means, "(a) the Central
Government; (i) in respect of a generating company wholly or partly owned by
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it"; (ii) in reiation to any inter-State generation, transmission, trading or supply
of electricity and with respect to any mines, oil-fields, railways, nationai
highways, airports, telegraphs, broadcasting stations and any works of defence,
dockyard, nuclear power installations; "(iii) in respect of the National Load
Dispatch Centre and Regional Load Dispatch Centre"; (iv) in relation to any
works or electric installation belonging to it or under its control; and "(b) in any
other case, the State Government having jurisdiction under the Act 2003".
59. Section 64 provides for procedure for tariff order. As per the
procedure prescribed for tariff order, an application for determination of tariff
under Section 62 shall be made by a generating company or licensee in such
manner and accompanied by such fee, as may be determined by regulations.
Every applicant shall publish the application, in such abridged form and
manner, as may be specified by the Appropriate Commission. The Appropriate
Commission shall, within 120 days from receipt of an application under sub
section (1) and after considering all suggestions and objections received from
the public, (a) issue a tariff order accepting the application with such
modifications or such conditions as may be specified in that order; (b) reject
the application for reasons to be recorded in writing if such application is not in
accordance with the provisions of the Act and the rules and regulations made
thereunder or the provisions of arry other law for the time being in force, with
the proviso, that the applicant shali be given a reasonable opportunity of being
heard before rejecting the application for determination of the tariff. The
Appropriate Commission, then within 7 days of making the order, shall send a
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copy of the order to the Appropriate Government, the Authority and the
concerned licensees and to the person concerned. A tariff order unless
amended or revoked, continues to be in force for the period, as may be
specified in the tariff order.
60. Section 65 of the Electricity Act 2003 provides for making provision
of subsidy by the State Government. According to Section 65, if the State
Government requires the grant of any subsidy to any consumer or class of
consumers in the tariff determined by the State commission under Section 62,
the State Government shall, notwithstanding any direction which may be given
under Section 108, pay in advance and in such manner as may be specified, the
amount to compensate the person affected by the grant of subsidy in the
manner the State Commission may direct, as a condition for the licence or any
other person concerned to implement the subsidy provided for by the State
Government. As per the proviso to Section 65, such direction of the State
Government shall not be operative if the payment is not made in accordance
with the provisions contained in Section 65 and the tariff fixed by the State
Commission shall be applicable from the date of issue of orders by the
Commission in that regard.
61. Section 108 of the Electricity Act 2003 provides for the directions by
the State Government. It provides that in discharge of its functions, the. State
Commission shall be guided by such directions in matters of policy involving
public interest as the State Government may give to it in writing and if any
question arises as to whether any such direction relates to a matter of policy
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involving public interest, the decision of the State Government thereon shall be
final.
62. Section 82 of the Electricity Act 2003 provides for Constitution of
State Commission and Section 86 provides for Functions of State Commission.
As per Sub-section (4) of Section 86, in discharge of its functions, the State
Commission shall be guided by the National Electricity Policy, National Electricity
Plan and Tariff Policy published under Section 3. The Ministry of Power
published the National Tariff Policy in the Gazette of India, Extraordinary Part-I
Section-1, No.39, dated 28.01.2016, under Section 3 of the Electricity Act,
2003.
63. The Andhra Pradesh Electricity Regulatory Commission (in short
'APERCT passed common order on tariff for retail sale of electricity during
financial year 2022-23, dated 30.03.2022. The APERC in issuing the tariff order
inter alia observed that the Commission has come to the conclusion that the
Distribution Companies (in short 'DISCOMsO are no longer in a position to
sustain their operations unless the tariffs for retail supply are increased.
64. The APERC observed that the Commission has examined the
possibility of 'increasing tariffs for other categories of consumers such as
industrial and commercial etc., by sparing the poor and middleclass domestic
consumers, and noticed that these categories of consumers are already saddled
with high tariffs. Any further increase in tariffs for these categories is highly
unsustainable for them. For example, if the tariffs to the industrial category
become so unsustainable, it will lead to the closure of the industries which will
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affect the livelihood of millions of people and the economy of the State as a
whole. The Commission did not enhance tariff on industrial and commercial
consumers.
65. As regards the agricultural category, the APERC observed that the
Government of Andhra Pradesh is bearing the entire burden of agricultural
consumption at the cost of service rate for this category. Further, the
Commission has to comply with the mandate of National Tariff Policy, 2016 and
the orders of the Appellate Tribunal for Electricity (for short 'APTELO not to
increase the tariffs of subsidizing categories beyond 120% of their Cost of
Service. Moreover, as per the National Tariff Policy, 2016, the tariff for
consumers below the poverty line shall be at least 50% of the average cost of
suppiy. The Commission observed that, for the said reasons, the Commission
has been left with no option other than to increase the tariffs for domestic
consumers across all the slabs, depending on the scale of their consumption.
However, keeping in view the less paying capacity of the poor and middleclass
consumers, the Commission affected only modest increases to the tariffs of
these consumers. Even after the above increase, the tariffs for the
consumption up to 75 units are still much below 50% of the average cost of
supply.
(ii) Duty:
66. Now with respect to 'duty', the Andhra Pradesh Electricity Duty Act,
1939 is an Act for the levy of a duty on certain sales and consumption of
electrical energy by 'licensees'.
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67. Section 3 of the APED Act 1939 which read as under, prior to its
amendment vide Andhra Pradesh Electricity Duty (Amendment)
Act (in short 'Act No. 10/2021') provided for levy of a duty on certain sales of
electrical energy.
'3.Levy of a duty in certain sales of electrical energy
(1) Save as otherwise provided in sub-section (2), every licensee in the State of
Andhra Pradesh shall pay every month to the State Government in the
prescribed manner, a duty calculated at the rate of [six paise] per unit of energy,
on and in respect of all sales of energy [except sales to the Government of India
for consumption by that Government or sales to the Government of India or a
railway company operating any railway for consumption in the construction,
maintenance or operation of the railway] effected by the licensee during the
previous month at a price of more than [Twelve paise] per unit and on and in
respect to all energy which was consumed by the licensee during the previous
months for purposes other than those connected with the construction,
maintenance and operation of his electrical under-taking and which, if sold to a
private consumer under like conditions, would have fetched a price of more
than [Twelve paise] per unit.
["Provided that no duty under this sub-section shall be payable on and in
respect of sale of energy effected
(a) by the Andhra Pradesh State Electricity Board to any other licensee;
(b) by the National Thermal Power Corporation to the Andhra Pradesh State
Electricity Board],
[(2) A licensee shall be exempt from duty under sub-section (1) in any month if
in the previous month the total sales of energy effected by him at whatever
price together with the energy consumed by him for purposes other than those
connected with the construction, maintenance and operation of 'his electrical
undertaking, did not exceed 16,666 units :
Provided that if at the end of any financial year, it is found that in such year
the total sales of energy effected by the licensee at whatever price together with
the energy consumed by him for purposes other than those connected with the
construction, maintenance and operation of his electrical undertaking, were not
less than 2,00,000 units, the licensee shall pay the duty in respect of any month
or months comprised in such year in which the total of the sales and of the
consumption as aforesaid did not exceed 16,666 units]
(3) Where a licensee holds more than one licence duty shall be calculated and
levied under this section separately in respect of each licence.
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[(4) Where a licensee who is liable to pay duty under this section sells energy to
the Government of India for consumption by that Government or to a railway
company operating any railway for consumption, in the construction,
maintenance or operation of that railway], the price charged on such sales shall
be less by the amount of the duty than the price charged to other consumers of a
substantial quantity of energy, provided the price last mentioned is more than
[twelve paisa per unit].
In this sub-section, the expression 'price charged to other consumers' shall
include the duty, if any, recoverable from the consumer under sub-section (1) of
Section 7
[Explanation:- The expression 'railway' in this section and in Section 9 shall
have the meaning assigned to it in clause (20) of Article 366 of the
Constitutioir].
68. Section 3 (1) of the APED Act, as it stood, prior to its amendment,
levied duty at the rate of six paise per unit of energy on and in respect of all
sales of energy, except sales to the Government of India for consumption by
that Government or sales to the Government of India or a railway company
operating any railway, for consumption in the construction, maintenance or
operation of the railway effected by the licensee during the previous month at a
price of more than Twelve paise per unit and on and in respect to all energy
which was consumed by the licensee during the previous months for purposes
other than those connected with the construction, maintenance and operation
of his electrical undertaking and which, if sold to a private consumer under like
conditions, would have fetched a price of more than Twelve paise per unit.
However, no duty was payable on and in respect of sale of energy effected; (a)
by the Andhra Pradesh State Electricity Board to any other licensee; and (b) by
the National Thermal Power Corporation (in short 'NTPCO to the Andhra
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Pradesh State Electricity Board. Payment of duty on licensee was subject to the
otherwise provision in sub-section (2) of Section 3.
69. Act 10 of 2021 amended the APED Act [Act No. 19 of 1939].
70. Act 10 of 2021 reads as under:
AN ACT FURTHER TO AMEND THE ANDHRA PRADESH
ELECTRICITY DUTY ACT, 1939
"Be it enacted by the Legislature of the State of Andhra Pradesh in the
Seventy Second year of the Republic of India as folio ws:-
1. (1) This Act may be called the Andhra Pradesh Electricity Duty
(Amendment) Act, 2020. [short title and commencement]
(2) It shall come into force on such date as the State Government may,
by notification, appoint.
2. In the Andhra Pradesh Electricity Duty Act, 1939 (hereinafter referred to as
the Principal Act), in section 2, for sub-clause (i) of clause (b), the following
shall be substituted, namely, [Amendment of Section 2. Act No.5 of 1939.
Central ActNo.36 of 2003]
"(i) a person who has been granted a license under section 14 of the
Electricity Act, 2003."
3. [Amendment of Section 3]
"3. In Section 3 of the Principal Act, in sub-section (1), for the words "a
duty calculated at the rate of six paise per unit of energy", the words "a duty
calculated at the rate notified by the State Government from time to time for
different consumer categories", shall be substituted."
71. Section 3 of the APED Act 1939 was amended to the effect that in
. sub-section (1) for the words "a duty calculated at the rate of six paise per unit
of energy", the words "a duty calculated at the rate notified by the State
Government from time to time for different consumer categories" was
substituted.
72. The effect of such amendment in Section 3 is that whereas under the
unamended APED Act 1939, the statute prescribed a duty calculated at the rate
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of six paise per unit of energy, it was now substituted by a duty calculated at
the rate notified by the State Government from time to tinie, for different
consumer categories. In other words, Section 3 of the Act 1939, prior to its
amendment by Act 10/2021 itself provided for the specified rate of six paise per
unit of energy. But, now, the rate of the duty was to be notified by the State
Government and from time to time for different category of consumers.
73. Section 3A of the APED Act 1939, provides for the exemption to a
licensee, from the payment of the whole or part of the duty payable under
Section 3, by the government, by notification setting out the grounds, therefor,
either permanently or temporarily or for a specified period, subject to such
terms and conditions, as may be specified in the notification.
74. Section 3,A of APED Act 1939 also provided as under:
[3-A. Power to exempt: - Not withstanding anything contained in this Act, the
Government may, in public interest, by notification, setting out the grounds
therefor, exempt, either permanently or for a specified period, a licensee from
payment of the whole or part of the duty payable under Section 3, subject to
■ such terms and conditions as may be specified in the said notification]."
75. G.O.Ms.No.7, dated 08.04.2022 has been issued in the exercise of
the powers conferred by sub-section (1) of Section 3 of APED Act, 1939.
76. G.O.Ms.No.7, dated 08.04.2022 is reproduced as under:-
GOVERNMENT OF ANDHRA PRADESH
ABSTRACT
Andhra Pradesh Electricity,Duty Act, 1939 - Levy of duty on certain sales of
energy under Section 3 (1) of the A.P. Electricity Duty Act, 1939 - Notification -
Issued.
ENERGY (POWER-III) DEPARTMENT
•'•I! ■
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G.O.Ms.No.7 Dated: 08/04/2022 .
Read the following:-
1. Andhra Pradesh Electricity Duty (Amendment) Act, 2003 (A.P.Act No. 14 of
2003)
2. The Electricity Act, 2003,
3. Act 10 of 2021, Andhra Pradesh Electricity Duty (Amendment) Act, 2020.
ORDER:-
Whereas State Government levied electricity duty @6 paise per unit on all the
sales of electrical energy from the year 1994, except to the exempted categories;
and whereas, sub section (1) of Section 3 of Electricity Duty Act 1939 as amended
by Act 10 of 2021, empowered the State Government to notify the rate of
electricity duty from time to time to be paid by different consumer categories
Consumers on energy sales.
2. Whereas, in other States like Maharashtra, Madhya Pradesh, Karnataka,
Odisha, Tamil Nadu, West Bengal, Gujarat and Kerala the electricity duty is as a
percentage of consumption charges. Precisely, in the States of Gujarat, Karnataka,
Madhya Pradesh, Maharashtra, Himachal Pradesh, Kerala, Manipur, Punjab, West
Bengal and Jammu & Kashmir the rate of duty is from 14 paise to 180 paise per
unit sale of energy, whereas in the State of Andhra Pradesh, electricity duty is
being levied @ 6 paise per unit only on all the sales of electrical energy from the
year 1994 except the exempted categories.
3. Whereas, Post bifurcation of the erstwhile State of Andhra Pradesh, the
successor State remained a predominantly agrarian one, with the agriculture sector
contributing to 35.47% as per the advance estimates of GVA for the financial year
2021-22. Owing to the requirement of providing the necessary support to the
agriculture sector, the State exchequer is having to endure a huge burden, in the
form of agriculture subsidy to the State Distribution Utilities.
4. Whereas, the gap between the ARR (Average Revenue Realization)and
ACOS (Average Cost of Supply) has widened significantly over the years,
increasing the subsidy requirement from Rs.2,607 crores in financial year 2014-15
to Rs.l 1,123 'crores in financial year 2022-23. The Average Cost of Supplying
power approved by the Andhra Pradesh Eleetricity Regulatory Commission, has
increased by 29.26% over the last seven years. A key reason that has primarily
contributed to this increase in cost of service is the substantial increase in debt of
the State public sector undertakings in power sector, over the period 2014-19.
Inadequate release of subsidy during the period 2014-19 has also resulted in the
Distribution utilities and AP GENCO availing huge working capital liabilities to
sustain operations. Cost assoeiated with servicing of this debt was partly allowed
by APERC while determining the tariff and this has contributed to an increase in
the subsidy component. If the disallowed portion is also taken into consideration,
the subsidy requirement from the Government is higher.
--p
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5. Whereas, the economic recovery from the Covid - 19 pandemic led
disruptions has resulted in a steep rise in the demand for power and the coal
production in the Country is not adequate to meet the higher requirements of the
thermal power plants, leading to increase in cost of power available in power
exchanges. Added to this, the geopolitical tensions have resulted in an
unprecedented surge in the costs of import coal and also the crude oil prices,
indirectly impacting the mining costs of coal. Owing to these reasons, the subsidy
burden on the Government is likely to be higher than what is anticipated. In view
of the above, there is imperative need for the State Government to augment
revenue by tapping all available sources.
6. Whereas, due to the above compelling reasons. State Government have felt
the inevitable need to enhance the electricity duty.
7. Now, therefore, the Government have decided to revise electricity duty on
energy sales for different categories of Consumers in exercise of the powers
conferred by Sub-Section (1) of Section 3 of the Andhra Pradesh Electricity Duty
Act, 1939.
8. Accordingly, the following notification will be published in the extraordinary
issue of Andhra Pradesh Gazette:
NOTIFICATION
In exercise of the powers conferred by sub-section (1) Section 3 of the
Andhra Pradesh Electricity Duty Act, 1939, the Government of Andhra Pradesh
hereby levy an electricity duty of 1 (one) rupee per kWh (unit) on energy sales for
the Commercial & Industrial Consumers as indicated in the relevant yearly Retail
Supply Tariff Order issued by Hon'ble APERC. For Domestic Consumers, the
existing electricity duty of 6 paise per kWh (unit) shall continue to be levied,
while Agriculture consumers shall be exempted from levy of any such duty.
9. The notification shall come into force with immediate effect.
(BY ORDER AND IN THE NAME OF THE GOVERNOR OF ANDHRA
PRADESH)
Sd/-B. SREEDHAR
Secretary to Government"
77. The State Government notified the rate of duty as Re.l per unit for
the commercial and industrial category consumers, but continuing with the
exemption on for the agriculture consumers category as also continuing with six
paise duty per unit for the domestic consumers category.
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78. Thus, the tariff determination is by the APERC under the Electricity
Act, 2003 which legislation is referable to Entry 38 of List-Ill of Schedule VII. In
Gujarat Urja Vikas Nigam Limited v. Soiar Semiconductor Power
Company (India) Private Limited and other^^, the Hon'ble Apex Court
held that in exercise of its statutory duty under Section 62 of the Electricity Act
the Commission has fixed the tariff rate. The word 'tariff' means a Schedule of a
standard/prices or charges provided to the category or categories for
procurement by licensing from generating company, wholesome or bulk or
retail/various categories of consumers. After taking into consideration the
factors in Section 61 (1) (a) to (i), the State Commission determines the tariff
rate for various categories and the same is applied uniformly throughout the
State.
79. In BSES Ltd. v. TATA Power Co.Ltd.^^ Hon'ble Apex Court
observed that the word "tariff" has not been defined in the Act. "Tariff" is a
cartel of commerce and normally it is a book of rates. It will mean a schedule of
standard prices or charges provided to the category or categories of customers
specified in the tariff.
80. In Paschimanchal Vidyut Vitran Nigam Ltd & others vs. M/s.
Adarsh Textiles & anothei/^ the Apex Court held that it is apparent from a
bare reading of the provisions of the Electricity Act, and the Reforms Act, 1999,
that in discharge of its functions the State Commission shall be bound by such
AIR 2017 SC 5372
(2004) 1 see 195
(2014) 16 sec 212
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directions in the matters of policy involving public interest as the State
Government may give it in writing. Such decisions/direction of the State
Government in the matter of policy, subsidy and public interest shall be finak
Under Section 65, it is prerogative of the State Government to grant any
subsidy to any consumer or class of consumers in the tariff determined by the
Commission under Section 62. It is apparent from the provisions contained in
Section 65 and 108 of the Act 2003 Act that to grant subsidy to any consumer
or class of consumers is the prerogative of the State Government.
81. Imposition of electricity duty is under APED Act which is referable to
Entry 53 of List II of Seventh Schedule. It is on consumption or sale of
electricity.
(iii) Difference between Tariff & Duty;
82. There is difference between tariff and duty on sale. In Southern
Petrochemical Industries Co.Ltd. v. Electricity Inspector & ETI(f^ the
Hon'ble Apex Court held that the tariff as framed by the State Electricity Boards
under Sections 46 and 49 of the then Electricity Act 1948, they may have
different considerations for imposition of tariffs. It was further held that a tax
on tariff and a tax on consumption or sale of electrical energy operate in
different fields. If it is to be held that the power of the Electricity Regulatory
Commission to fix tariff does not include a power to impose tax, axiomatically.
the same principle would also apply when a tax is sought to be levied on
(2007) 5 see 447 .
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consumption or sale of electrical energy and not on tariff. Power of taxation
operates differently from power to impose tariff.
83. Paragraphs 138 and 139 of Southern Petrochemical Industries
Co.Ltd. (supra) read as under:
"138. We have noticed hereinbefore that the legislative fields,carved out by
reason of Entry 53 of List II and Entry 38 of List III of the Seventh Schedule of
the Constitution of India operate in different fields. The 1948 Act was enacted
to provide for the rationalisation of the production and supply of electricity, and
generally for taking measures conducive to electrical development.
139. Tariff is framed by the State Electricity Boards under Sections 46 and
49 of the 1948 Act. They may have different considerations for imposition of
tariffs. We have noticed hereinbefore, the definition of "tariff' mBSES
Ltd. [('2004') 1 see 1951 whereupon Mr Andhyarujina himself relied upon. A
tax on tariff and a tax on consumption or sale of electrical energy, thus, operate
in different fields. If it is to be held that the power of the Electricity Regulatory
Commission to fix tariff does not include a power to impose tax, axiomatically,
the same principle would apply also when a tax is sought to be levied on
consumption or sale of electrical energy and not on tariff. Power of taxation, as
noticed hereinbefore, operates differently from power to impose tariff. A tariff
validly fiamed by the licensee, in exercise of its statutory power, may lav down
a higher rate on the sale of power to various types of con.sumers having regard
to the necessity to maintain infrastructure. A maximum demand charge, when
levied, does not contemplate a sale or consumption of electrical energy.
Maximum tariff is provided for various reasons. It has been noticed by this
Court mIPI Steel Ltd. [(1995) 4 SCC 320] in the following terms : (SCC pp.
327-28, paras 10-11) "
84. Thus, both operate in different field. Both are to be imposed under
different Statutes emanating from different Lists of the Seventh Schedule.
Grant of subsidy to any consumer or class of consumers in the tariff
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determination is the prerogative of the State for which it has to pay in advance
under Section 65 of the Electricity Act. Duty is in the nature of tax. In Indian
Aluminium Company (supra), it was held that levy of duty goes into the
public revenue. It is an imposed, a compulsory exaction for the benefit to the
coupers of the public exchequer and therefore it is a tax.
(iv) Colourable exercise of power:
85. The court proceeds to consider the submission of the learned
counsels for the petitioners on colourable exercise of power in issuing
G.O.Ms.No.7.
86. In K. C. Gajapati Narayan Deo (supra), the Hon'ble Apex Court
held that the doctrine of colourable legislation does not involve any question of
bona fides or mala tides on the part of the legislature. The whole doctrine
resolves itself into the question of competency of a particular legislature to
enact a particular law. If the legislature is competent to pass a particular law.
the motives which impelled it to act are really irrelevant. On the other hand, if
the legislature lacks competency, the question of motive does not arise at all.
Whether a statute is constitutional or not is always a question of power. It was
further held that if the constitution of a State distributes the legislative powers
amongst different bodies, which have to act within their respective spheres
marked out by specific legislative entries, or if there are limitations on the
legislative authority in the shape of fundamental rights, questions do arise as to
whether the legislature in a particular case has or has not, in respect to the
subject matter of the statute or in the method of enacting it, transgressed the
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limits of its constitutional powers. Such transgression may be patent, manifest
or direct, but it may also be disguised, covert and indirect and it is to this latter
class of cases that the expression 'colourable legislation' has been applied in
certain judicial pronouncements. The idea conveyed by the expression is that
although apparently a legislature in passing a statute purported to act within
the limits of its powers, yet in substance and in reality it transgressed these
powers, the transgression being veiled by what appears, on proper
examination, to be a mere pretence or disguise.
87. In paragraph-18 of the judgment in K. C. Gajapati Narayan Deo
(supra) upon which much reliance was placed it was held that the whole
doctrine of 'colourable legislation' is based upon the maxim that you cannot do
indirectly what you cannot do directly. It was further held that if a legislature is
competent to do a thing directly, then the mere fact that it attempted to do it in
an indirect or disguised manner, cannot make the Act invalid.
88. It is apt to refer paragraphs 9 and 18 of K. C. Gajapati Narayan
Deo (supra), relied upon by the learned counsel for the petitioners, as under;
"9. It may be made clear at the outset that the doctrine of colourable
legislation does not involve any question of bona fides or mala fides on the
part of the legislature. The whole doctrine resolves itself into the question
of competency of a particular legislature to enact a particular law. If the
legislature is competent to pass a particular law, the motives which
impelled it to act are really irrelevant. On the other hand, if the legislature
lacks competency, the question of motive does not arise at all. Whether a
statute is constitutional or not is thus always a question of power [
Cooley's Constitutional Limitations, Vol 1 p 379] . A distinction,
however, exists between a legislature which is legally omnipotent like the
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WP No.l6619of2022&Batch
British Parliament and the laws promulgated hy it which could not be
challenged on the ground of incompetence, and a legislature which enjoys only
a limited or a qualified jurisdiction. If the Constitution of a State distributes the
legislative powers amongst different bodies, which have to act within their
respective spheres marked out by specific legislative entries, or if there are
limitations on the legislative authority in the shape of fundamental rights,
questions do arise as to whether the legislature in a particular case has or hqs
not, in respect to the subject-matter of the statute or in the method of enacting
it, transgressed the limits of its constitutional powers. Such transgression may
be patent, manifest or direct, but it may also be disguised, covert and
indirect and it is to this latter class of cases that the expression "colourable
legislation" has been applied in certain judicial pronouncements . The idea
conveyed by the expression is that although apparently a legislature in
passing a statute purported to act within the limits of its powers, yet in
substance and in reality it transgressed these powers, the transgression
being veiled by what appears, on proper examination, to be a mere
pretence or disguise. As was said by Duff, J. m Attorney-General for
Ontario v. Reciprocal Insurers [1924 AC 328 at 337] :
"Where the law making authority is of a limited or qualified character it
may be necessary to examine with some strictness the substance of the
legislation for the purpose of determining what is that the legislature is
really doing."
In other words, it is the substance of the Act that is material and not
merely the form or outward appearance, and if the subject-matter in
substance is something which is beyond the powers of that legislature to
legislate upon, the form in which the law is clothed would not save it from
condemnation. The legislature cannot violate the constitutional prohibitions by
employing an indirect method. In cases like these, the enquiry must always be
as to the true nature and character , of the challenged legislation and it is the
result of such investigation and not the form alone that will determine as to
whether or not it relates to a subject which is within the power of the legislative
authority [ Vidie Attorney-General for Ontario v. Reciprocal Insurers, 1924 AC
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328 at 337] . For the purpose of this investigation the court could certainly
examine the effect of the legislation and take into consideration its object,
purpose or design [ Nide, Attorney-General for Alberta v. Attorney-General for
Canada, 1939 AC 117 at 130] . But these are only relevant for the purpose of
ascertaining the true character and substance of the enactment and the class of
subjects of legislation to which it really belongs and not for finding out the
motives which induced the legislature to exercise its powers. It is said by
Lefroy in his well known work on Canadian Constitution that even if the
legislature avows on the face of an Act that it intends thereby to legislate in
reference to a subject over which it has no jurisdiction; yet if the enacting
clauses of the Act bring the legislation, within its powers, the Act cannot be
considered ultra vires [ See Lefroy on Canadian Constitution, page 75] .
18. The contention of Mr Narasaraju really is that though apparently it
purported to be a taxation statute coming, under Entry 46 of List II, really and in
substance it was not so. It was introduced under the guise of a taxation statute
with a view to accomplish an ulterior purpose, namely, to inflate the deductions
for the purpose of valuing an estate so that the compensation payable in respect
of it might be as small as possible. Assuming that it is so, still it cannot be
regarded as a colourable legislation in accordance with the principles
indicated above, unless the ulterior purpose which it is intended to serve is
something which lies beyond the powers of the legislature to legislate upon.
The whole doctrine of colourable legislation is based upon the maxim that
you cannot do indirectly what you cannot do directly. If a legislature is
competent to do a thing directly, then the mere fact that it attempted to do
it in an indirect or disguised manner, cannot make the Act invalid. Under
Entry 42 of List III which is a mere head of legislative power the legislature can
adopt any principle of compensation in respect to properties compulsorily
acquired. Whether the deductions are large or small, inflated or deflated they do
not affect the constitutionality of a legislation under this entry. The only
restrictions on this power, as has been explained by this Court in the earlier
cases, are those mentioned in Article 31(2) of the Constitution and if in the
circumstances of a particular case the provision of Article 31(4) is attracted to a
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legislation, no objection as to the amount or adequacy of the compensation can
at all be raised. The fact that the deductions are unjust, exorbitant or improper
does not make the legislation invalid, unless it is shown to be based on
something which is unrelated to facts. As we have already stated, the question
of motive does not really arise in such cases and one of the learned Judges of
the High Court in our opinion pursued a wrong line of enquiry in trying to find
out what actually the motives were which impelled the legislature to act in this
maimer. It may appear on scrutiny that the real purpose of a legislation is
different from what appears on the face of it, but it would be a colourable
legislation only if it is shown that the real object is not attainable to it by
reason of any constitutional limitation or that it lies within the exclusive
field of another legislature. The result is that in our opinion the Orissa
Agricultural Income Tax (Amendment) Act, 1950 could not be held to be a
piece of colourable legislation, and as such invalid. The first point raised on
behalf of the appellants must therefore fail."
89. In K. C. Gajapati Narayan Deo (supra), it has been clearly held
that the question of motive does not really arise in such cases. It may appear
on scrutiny that the real purpose of a legislation is different from what appears
on the face of it, but it would be a colourable legislation only if it is shown that
the real object is not attainable to it by reason of any constitutional limitation or
that it lies within the exclusive field of another legislature.
90. In Attorney-General for Ontario v. Reciprocal Insurers [192^
AC 328 at 337] it was held that "Where the law making authority is of a
limited or qualified character it may be necessary to examine with some
strictness the substance of the legislation for the purpose of determining what
is that the legislature is really doing." In other words, it is the substance of the
Act that is material and not merely the form or outward appearance, and if the
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subject matter in substance is something which is beyond the powers of that
legislature to legislate upon, the form in which the law is clothed would not
save it from condemnation. The legislature cannot violate the constitutional
prohibitions by employing an indirect method. It was further held in Attorney-
General for Ontario (supra) that for the purpose of the investigation the Court
could certainly examine the effect of the legislation and take into consideration
its object, purpose or design. These are only relevant for the purpose of
ascertaining the true character and substance of the enactment and the class of
subjects of legislation to which it really belongs.
91. Even applying the principle as aforesaid, the G.O.Ms.No.7 is on the
subject of duty on sale of electricity and the object is augmentation of revenue.
92. In Bailey (supra) known as Child Labour Tax case, upon which
reliance was placed by the learned counsel for the petitioners, the constitutional
validity of Child Labour Tax Law was in question, it was held that where the
sovereign enacting the law has power to impose both tax and penalty, the
difference between revenue production and mere regulation may be immaterial.
But this is not so when one sovereign can impose a tax only, and the power of
regulation rests in another. ''
93. The submission of Sri K. Gopal Chowdary is that for production of
revenue, the duty cannot be imposed/enhanced as the power to impose a tax
i.e., the duty, is with the State, but the power of regulation of electricity rests in
the Union. . Relying on the said judgment he submitted that the taxes are
occasionally imposed in the discretion of the legislature on proper subjects with
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the primary motive of obtaining revenue from them and with the incidental
motive of discouraging them by making their continuance onerous. They do
not lose their character as taxes because of the incidental motive. But there
comes a time in the extension of the penalizing features of the so-called tax
when it loses its character as such and becomes a mere penalty, with the
characteristics of regulation and punishment.
94. In ^a//e/(supra) the Constitutional validity of the Child Labour Law
enacted by the Congress was in issue, on the ground that such law was in the
nature of regulation which was within the power of the State. The Child Labour
Tax Law was entitled "An act to provide revenue and for other purposes". It
was found that the so called tax lost its character as such and was a mere
penalty, with the characteristics of regulation and punishment. It was held that
if such law was held valid, all that Congress would need to do, thereafter, to
take over control in any one of the great number of subjects of public interest,
jurisdiction of the States and reserve to them would be to enact a detailed
measure of complete regulation of the subject and enforce it by a so called tax
upon departures from it. To give such magic to the word 'tax' would be to
break down all constitutional limitations of the powers of congress and
completely wipe out the sovereignty of the States.
95. In Attorney General-Alberta (supra), on which, also much
emphasis was laid, it was held that it is not competent either for the Dominion
or a Province under the guise or the pretence or in the form of an exercise of
■f. I "'ll .
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its own powers, to carry out an object which is beyond its powers and a
trespass on the exclusive powers of the other.
96. The principle as in Attorney General-Alberta (supra) that it is not
competent either for the Dominion or Province under the guise or the pretence
or in the form of exercise of its own powers to carry out an object which is
beyond its powers and a trespass on the exclusive powers of the other, is
settled and recognized under our Constitution as well. The State and the Union
derive their legislative powers from Articles in Part-IX of the Constitution, and
the subject of legislative field is provided by the respective lists. The Seventh
Schedule provides for the lists. The items in the First List are the exclusive
Dominion of the Union. They have not to transgress the exclusive powers of the
others.
. 97. So far as the present case is concerned, the Electricity Duty is the
State List, Item-53, and consequently, the State has the power to enact the
law, to charge the duty on sale of electricity.
98. One of the reasons, the State to burden the subsidy, may be for
imposition of the duty on sale of electricity, but because of that reason, it
. cannot be said ithat the State cannot augment its revenue by imposing duty on
the sale of the electricity to the consumers of Industrial and Commercial
category.
99. Reliance was also placed in the case of The Lord Krishna Sugar
Mills Ltd. (supra) to contend that in judging the reasonableness of a
restriction, the surrounding circumstances can be looked into. Attorney
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Genera! - Alberta (supra) case was also referred in The Lord Krishna
Sugar Mills Ltd. (supra). It was observed by the Hon'ble Apex Court that ir>
judging the reasonableness of law, will necessarily see, not only the
surrounding circumstances but all contemporaneous legislation passed as part
of a single scheme. The reasonableness of the restriction and not of the law
has to be found out, and if restriction is under one law but countervailing
advantages are created by another law passed as part of the same legislative
plan, the Court should not refuse to take that other law into account. The
Courts can take judicial notice of it in determining the effect of legislation.
100. In the case of Kesoram Industries (supra) it was held that the
power to levy tax and fee is available to the State so long it does not interfere
with the regulation - the power assumed and occupied by the Union. In view
of Kesoram Industries (supra), there is difference between "power to
regulate and develop" and "power to tax". The primary purpose of taxation is
to collect revenue. The State legislation levying a tax in such manner or of
such magnitude as can be demonstrated to be tampering or intermeddling with
the Centre's regulation and control of an industry is the exception to the rule
that the power to tax of augmenting revenue shall continue to be exercisable
by the State Legislation in spite of regulation or control having been assumed
by the Union.
IQl. It is apt to reproduce paragraph-129 in Kesoram Industries
(supra) as under:
"129. The relevant principles culled out from the preceding discussion are
summarised as under:
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(I) In the scheme of the lists in the Seventh Schedule, there exists a clear
distinction between the general subjects of legislation and heads of taxation.
They are separately enumerated.
(2) Power of "regulation and control" is separate and distinct from the power
of taxation and so are the two fields for purposes of legislation. Taxation may
be capable of being comprised in the main subject of general legislative head by
placing, an extended construction, but that is not the rule for deciding the
appropriate legislative field for taxation between List I and List 11. As the fields
of taxation are to be found clearly enumerated in Lists I and II, there can be no
overlapping. There may be overlapping in fact but there would be no
overlapping in law. The subject-matter of two taxes by reference to the two lists
is different. Simply because the methodology or mechanism adopted for
assessment and quantification is similar, the two taxes cannot be said to be
overlapping. This is the distinction between the subject of a tax and
the measure of a tax.
(3) The nature of tax levied is different from the measure of tax. While the
subject of tax is clear and well defined, the amount of tax is capable of being
measured in many ways for the purpose of quantification. Defining the subject
of tax is a simple task; devising the measure of taxation is a far more complex
exercise and therefore the legislature has to be given much more flexibility in
the latter field. The mechanism and method chosen by the legislature for
quantification of tax is not decisive of the nature of tax though it may constitute
one relevant factor out of many for throwing light on determining the general
character of the tax.
(4) Entries 52, 53 and 54 in List I are not heads of taxation. They are general
entries. Fields of taxation covered by Entries 49 and 50 in List II continue to
remain with State Legislatures in spite of the Union having enacted laws by
reference to Entries 52, 53 and 54 in List I. It is for the Union to legislate and
impose limitations on the States' otherwise plenary power to levy taxes on
inineral rights or taxes on lands (including mineral-bearing lands) by reference
to Entries 50 and 49 in List II, and lay down the limitations on the States'
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power, if it chooses to do so, and also to define the extent and sweep of such
limitations.
(5) The entries in List I and List II must be so construed as to avoid any
conflict. If there is no conflict, an occasion for deriving assistance from non
obstante clause "subject to" does not arise. If there is conflict, the correct
approach is to find an answer to three questions step by step as under:
One Is it still possible to effect reconciliation between two entries so as
to avoid conflict and overlapping?
Two In which entry the impugned legislation falls by finding out the pith
and substance of the legislation?
and
Three Having determined the field of legislation wherein the impugned
legislation falls by applying the doctrine of pith and substance, can an
incidental trenching upon another field of legislation be ignored?
(6) "Land", the term as occurring in Entry 49 of List II, has a wide
connotation. Land remains land though it may be subjected to different user.
The nature of user of the land would not enable a piece of land being taken out
of the meaning of land itself Different uses to which the land is subjected or is
capable of being subjected provide the basis for classifying land into different
identifiable groups for the purpose of taxation. The nature of user of one piece
of land would enable that piece of land being classified separately from another
piece of land which is being subjected to another kind of user, though the two
pieces of land are identically situated except for the difference in nature of user.
The tax would remain a tax on land and would not become a tax on the nature
of its user.
(7) To be a tax on land, the levy must have some direct and definite
relationship with the land. So long as the tax is a tax on land by bearing such
relationship with the land, it is open for the legislature for the purpose of
levying tax to adopt any one of the well-known modes of determining the value
of the land such as annual or capital value of the land or its productivity. The
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methodology adopted, having an indirect relationship with the land, would not
alter the nature of the tax as being one on land.
(5) The primary object and the essential purpose of legislation must be
distinguished from its ultimate or incidental results or consequences, for
determining the character of the levy. A levy essentially in the nature of a tax
and within the power of the State Legislature cannot be annulled as
unconstitutional merely because it may have an effect on the price of the
commodity. A State legislation, which makes provisions for levying a cess,
whether by way of tax to augment the revenue resources of the State or by way
of fee to render services as quid pro quo but without any intention of
regulating and controlling the subject of the levy, cannot be said to have
encroached upon the field of "regulation and control" belonging to the
Central Government by reason of the incidence of levy being permissible to
be passed on to the buyer or consumer, and thereby affecting the price of
the commodity or goods. Entry 23 in List II speaks of regulation of mines and
mineral development subject to the provisions of List I with respect to
regulation and development under the control of the Union. Entries 52 and 54
of List I are both qualified by the expression "declared by Parliament by law to
be expedient in the public interest". A reading in juxtaposition shows that the
declaration by Parliament must be for the "conhol of industries" in Entry 52
and "for regulation of mines or for mineral development" in Entry 54. Such
control, regulation or development must be "expedient in the public interest".
Legislation by the Union in the field covered by Entries 52 and 54 would not
like a magic touch or a taboo denude the entire field forming the subject-matter
of declaration to the State Legislatures. Denial to the State would extend only to
the extent of the declaration so made by Parliament. In spite of declaration
made by reference to Entry 52 or 54, the State would be free to act in the field
left out from the declaration. The legislative power to tax by reference to
entries in List II is plenary unless the entry itself makes the field "subject
to" any other entry or abstracts the field by any limitations imposable and
permissible. A tax or fee levied by the State with the object of augmenting
its finances and in reasonable limits does not ipso facto trench upon
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regulation, development or control of the subject. It is different if the tax or fee
sought to be levied by the State can itself be called regulatory, the primary
purpose whereof is to regulate or control and augmentation of revenue or
rendering service is only secondary or incidental.
(9) The heads of taxation are clearly enumerated in Entries 83 to 92-B in
List I and Entries 45 to 63 in List 11. List III, the Concurrent List, does not
provide for any head of taxation. Entry 96 in List I, Entry 66 in List II and
Entry 47 in List III deal with fees. The residuary power of legislation in the
field of taxation spelled out by Article 248(2) and Entry 97 in List I can be
applied only to such subjects as are not included in Entries 45 to 63 of List II. It
follows that taxes on lands and buildings in Entry 49 of List II cannot be levied
by the Union. Taxes on mineral rights, a subject in Entry 50 of List II, can also
not be levied by the Union though as stated in Entry 50 itself the Union may
ivn^osQ limitatians on the power of the State and such limitations, if any,
imposed by Parliament by law relating to mineral development to that extent
shall circumscribe the States' power to legislate. Power to tax mineral rights is
with the States; the power to lay down limitations on exercise of such power, in
the interest of regulation, development or control, as the case may be, is with
the Union. This is the result achieved by homogeneous reading of Entry 50 in
List II and Entries 52 and 54 in List 1. So long as a tax or fee on mineral rights
remains in pith and substance a tax for augmenting the revenue resources of the
State or a fee for rendering services by the State and it does not impinge upon
regulation of mines and mineral development or upon control of industry by the
Central Government, it is not unconstitutional."
102. The Hon'ble Apex Court in Kesoram Industries (supra) held that
the primary object and the essential purpose of legislation must be
distinguished from its ultimate or incidental results or consequences, for
determining the character of the levy. A levy essentially in the nature of a tax
and within the power of the State Legislature cannot be annulled as
unconstitutional merely because it may have an effect on the price of the
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commodity. A State legislation, which makes provisions for levying a cess,
whether by way of tax to augment the revenue resources of the State or by
way of fee to render services as quid pro quo but without any intention of
regulating and controlling the subject of the levy, cannot be said to have
encroached upon the field of "regulation and control" belonging to the Central
Government by reason of the incidence of levy being permissible to be passed
on to the buyer or consumer, and thereby affecting the price of the commodity
or goods.
103. The Hon'ble Apex Court in Kesoram Industries (supra) further
held that the legislative power to tax by reference to entries in List II is plenary
unless the entry itself makes the field "subject to" any other entry or abstracts
the field by any limitations imposable and permissible. A tax or fee levied by the
State with the object of augmenting its finances and in reasonable limits does
not ipso facto trench upon regulation, development or control of the subject. It
is different if the tax or fee sought to be levied by the State can itself be called
regulatory, the primary purpose whereof is to regulate or control and
augmentation of revenue or rendering service is only secondary or incidental.
104. The Hon'ble Apex Court in Kesoram Industries (supra) held that
so long as a tax or fee on mineral rights (it was a case of minerals) remains in
pith and substance a tax for augmenting the revenue resources of the State or
a fee for rendering services by the State and it does not impinge upon
regulation of mines and mineral development or upon control of industry by the
Central Government, it is not unconstitutional.
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105. It is not the submission of any of the learned counsels appearing
for the petitioners that the duty in the nature of the tax is not for augmentation
of revenue or augmentation of revenue is the secondary or incidental
consequence. It is also not their submission that the duty in the nature of tax
on sale levied by the State can itself be called regulatory or controlling the
subject of duty, i.e., Electricity. Their submission is that because of imposition
and increase in duty the result would be the burden on the industrial and
commercial consumers' category. This may be the consequence. The ultimate
or incidental results or consequences are to be distinguished from the primary
object which is augmentation of revenue to meet the financial burden on the
State Exchequer for various reasons as disclosed in the notification itself, one of
which is the grant of subsidy to agricultural consumers.
106. The argument of colourable exercise of power is with respect to the
exercise of power by the Executive in issuing the notification. There being no
challenge to the legislation, the argument of colourable exercise of power by
the Executive is not open or available, as the power to impose duty is derived
from the APED Act, which in turn is referable to Entry-53 in List-II. The
notification has been issued in exercise of power conferred by Section 3 of the
Electricity Duty Act. So, the competence for such imposition of duty is with the
State. The power to impose duty on sale of electricity is with the State
Government. There is no challenge to such power and competence of the State
Government to fix the rate of duty and also to grant exemption to certain
category of electricity consumers. There appears to be no transgression of
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powers or the lack of competence in the State. The power has been exercised
only on the subject of duty, on sale or consumption of electricity within the
legislative power under List II Entry 53 for which APED Act is enacted. The
purpose is augmentation of income. Imposition of tax/duty could not be
argued as regulatory, with the primary object to regulate or control, the subject
electricity and the augmentation being secondary or incidental. The Court does
not find force ip the submission of the learned counsels appearing for the
petitioners that the issuance of the notification suffers from the vice of
colourable exercise of power on the grounds of challenge.
107. Here it is apt to make reference to the judgment in Automobile
Transport (Rajasthan) Ltd. (supra) which was considered in Kesoram
Industries (supra).
108. In Automobile Transport (Rajasthan) Ltd. (supra), the Hon'ble
Apex Court held that the States must also have revenue to carry out their
administration and there are several items relating to the imposition of taxes in
List II. The Constitution-makers must have intended that under those items the
States will be entitled to raise revenue for their own purposes. If the widest
view is accepted, then there would be for all practical purposes, an end of State
autonomy even within the fields allotted to them under the distribution of
powers envisaged by our Constitution. An examination of the entries in the lists
of the Seventh Schedule to the Constitution would show that there are a large
number of entries in the State List (List II) and the Concurrent List (List III)
under which a State Legislature has power to make laws. Linder some of these
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entries the State Legislature may impose different kinds of taxes and duties,
such as property tax, profession tax, sales tax, excise duty etc. and legislation
in respect of any one of these items may have an indirect effect on trade and
commerce. Even laws other than taxation laws, made under different entries in
the lists referred to above, may indirectly or remotely affect trade and
commerce. If it be held that every law made by the legislature of a State which
has a repercussion on tariffs, licensing, marketing regulations, price control etc.
must have the previous sanction of the President, then the Constitution insofar
as it gives plenary power to the States and State Legislatures in the fields
allocated to them would be meaningless.
109. It is apt to refer para-13 of Automobile Transport (Rajasthan)
Ltd. (supra) as under:
"13. It would appear from what we have stated above that this interpretation
consists of two main parts : one part is that taxation simpliciter is not within the
terms of Article 301 and the second part is that Article 301 must take colour
from the provisions of Article 303 which, it is said, is restricted to legislation
with respect to entries relating to trade and commerce in any of the lists in the
Seventh Schedule. In Atiabari Tea Co. case [(1961) 1 SCR 809] this Court
dealt with the correctness or otherwise of this narrow interpretation and by the
majority decision held against it. The majority judgment in the Atiabari Tea Co.
case [(1961) 1 SCR 809] deals with the arguments advanced in support of the
interpretation in detail and as we are substantially in agreement with the reasons
given in that judgment, we do not think that any useful purpose would be
served by repeating them. It is enough to point out that though the power of
levying tax is essentially for the very existence of government, its exercise may
be controlled by constitutional provisions made in that behalf It cannot be laid
down as a general proposition that the power to tax is outside the purview of
any constitutional limitations. We have carefully examined the provisions in
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Part XII of the Constitution and are unable to agree that those provisions
exhaust all the limitations on the power to impose a tax. The effect of Article
265 was considered in the majority decision and it was pointed out that the
power of taxation under our Constitution was subject to the condition that no
tax shall be levied or collected except by authority of law. Article 245 which
deals with the extent of laws made by Parliament and by the Legislatures of
States expressly states that the power of Parliament and of. the State
Legislatures to make laws is "subject to the provisions of this Constitution".
. The expression "subject to the provisions of this Constitution" is surely wide
. enough to take in the provisions of both Part XII and Part XIII. In view of the
provisions of Article 245, we find it difficult to accept the argument that the
restrictions in Part XIII of the Constitution do not apply to taxation laws. As to
the argument that Article 301 must take colour from Article 303, we are unable
to accept as correct the argument that the provisions of Article 303 must delimit
the general terms of Article 301. It seems to us that so far as Parliament is
concerned. Article 303(1) carves out an exception from the relaxation given in
favour of Parliament by Article 302; the relaxation given by Article 302 is itself
in the nature of an exception to the general terms of Article 301. It would be
against the ordinary canons of construction to treat an exception or proviso as
having such a repercussion on the interpretation of the main enactment so as to
exclude from it by implication what clearly falls within its express terais."
110. The Hon'ble Apex Court in Kesoram Industries (supra) further
held that a reasonable tax or fee levied by the State Legislation cannot be
construed as. trenching upon the Union's power and freedom to regulate and
control mines and minerals.
111. In Indian Aiuminium Company (supra), the primary question
was whether the legislature trespassed and trenched into the preserve of the
basic feature of the judicial review. It was observed that the principle of power
of validation vested in the legislature is no longer res Integra. The Apex Court
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in Pate! Gordhandas Hargovindas v. Municipal Corporation^^, observed
and held that if the legislature has the power over the subject matter and
competence to make a valid law, it can at any time make such valid law and
make it retrospectively also so as to bind even past transactions.The validity of
a law therefore depends upon whether the legislature possess the competence
which it claims over the subject matter and whether in making the validation it
removes the defects which the Courts had found in the existing law and makes
adequate provisions in the validity law for a valid imposition of the tax.
112. In National Thermal Power Corporation Ltd. (supra), upon
which Sri Alladi Ravinder, learned Senior Counsel placed reliance, the Andhra
Pradesh High Court held that interstate sale of electrical energy cannot be
taxed by the State legislature. In the said case, it is clearly held that the
applicability of A.P.Electricity Duty Act should only be confined to sales other
than inter-state sales. The present is not a case of inter-state sale and
consequently, the reliance placed on National Thermal Power Corporation
Ltd. (supra) is of no help.
113. The aforesaid judgment was challenged in the Hon'ble Apex Court.
In State ofA.P. v. National Thermal Power Corpn.Ltd. the Hon'ble Apex
Court held that the prohibition which is imposed by Article 286(1) of the
Constitution is independent of the legislative entries in the Seventh Schedule.
The bans imposed by Articles 286 and 269 on the taxation powers of the State
are independent and separate and must be got over before a State Legislature
1963 AIR SC 1742
(2002) 5 see 203
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can impose tax on transactions of sale or purchase of goods. Such ban would
operate by its own force and irrespective of the language in which an entry in
List II of the Seventh Schedule has been couched. The dimension given to the
field of legislation by the language of an entry in List II of the Seventh Schedule
shall always remain subject to the limits of constitutional empowerment to
legislate and can. never afford to spill over the barriers created by the
Constitution. The power of the State Legislature to enact law to levy tax by
reference to List II of the Seventh Schedule has two limitations, one, arising out
of the entry itself, and the other, flowing from the restriction embodied in the
Constitution. It was further held that the field of taxation on sale or purchase
taking place in the course of inter-State trade or commerce has been excluded
from the competence of the State Legislature. The situs of the sale or purchase
is wholly immaterial as regards the inter-State trade or commerce.
114. The judgment in National Thermal Power Corpn.Ltd. (supra) is
not applicable as in the present cases the question involved is not of interstate
trade or commerce. So far as, the two limitations on the power of the State
legislature to enact law to levy tax by reference to List II of Seventh Schedule,
one, arising out of the entry itself and the other, flowing from the restrictions
embodied in the Constitution are concerned, firstly there is no challenge to
State Act 1939 and secondly so far as the G.O.Ms.No.7 is concerned, it could
not be argued that the said G.O.Ms.lMo.7 is beyond the power of the State
Executive under Sections 3 &. 3A of the APED Act. Challenge on the ground of
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violation of Article 14 of the Constitution of India, the Court will consider
shortly.
115. In Lafarge India Private Limited {suprdi) which was relied upon
by Sri Chalfa Gunaranjan to submit that the taxation law is no exception to the
doctrine of equal protection. Referring to Para-30 of the judgment he
contended that the State Commission under Section 86 (4) of the Electricity
Act, shall be guided by the National Electricity Policy and National Tariff Policy
which are published under Section 3 of the Electricity Act. The imposition of a
discriminatory and substantial cess on captive power plants alone, will certainly
have impact on the investments in electricity industry. It will impact the
promotion of competition, efficiency and economy in activities of electricity
industry and matters concerning with the generation of electricity. The State
Electricity Regulatory Commission is also supposed to determine tariff under
Section 62 of the Act and for this also it is to be guided by the National
Electricity Policy and the National Tariff Policy. The discriminatorycess imposed
under the impugned provision on captive power producers was totally contrary
to the provisions of the several national and state policies referred therein.
116. There is no dispute on the proposition of law that the National
Electricity Policy and the National Tariff Policy is binding in determination of
tariff. In the case of Energy Watchdog (supra) it is held that the tariff policy
is a statutory document being issued under Section 3 of the Electricity Act and
has force of law, there is no dispute on such proposition.
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117. A careful reading of the judgment in Lafarge India Private
Limited (supra), shows that the legislative power of Chhattisgarh State
Legislature to levy tax on consumption or sale of electricity, was not doubted, in
terms of Entry 53 of List-II of the 7^^ Schedule of the Constitution. Section 3(1-
a) of the concerned Act, as challenged therein, levied the cess on the electrical
energy "sold or supplied" and there was no reference to the generation or
production of electrical energy. The cess was levied under Section 3(l-a) only
on sale or supply and not on generation or production of electrical energy. It
was held that sub-section (1-a) in Section 3 was not without legislative
competence. The contention as raised in the said case was that the provision
was a "piece of colourable legislation". The Chhattisgarh High Court held that
essentially the question of constitutionality is always a question of power. The
whole doctrine of 'colourable legislation' revolves itself into the questions of
competency of a particular Legislature to enact a particular law. The contention
of a colourable exercise of power as raised therein was not accepted as
competence to enact such law was there with the State legislature.
118. In Lafarge India Private Limited (supra), the facts were that
under Section 3 (1) of the Act as involved therein, a distributor was charged
energy development cess @ 5 paise per unit, a captive power producer was
charged (g> 10 paise.per unit. While the capital power producer was charged @
10 paise per unit, any other producer who was neither a distributor nor a
capital power producer was not charged any other energy development cess on
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WP No. 16619 of 2022 & Batch
any power produced by him whether it was sold by him to the State Electricity
Board, consumed by him or his employees or sold by him to a third party.
119. In Lafarge India Private Limited (supra), the High Court of
Chhattisgarh, giving the examples and illustrations, to show the hostile
treatment meted out to the captive power producers, qua independent power
producers who were not charged any cess with respect to the electricity supply.
held the same to be discriminatory. The different treatment was between two
(02) categories of public producers, (i) the capital power producers who were
charged with 10 paise per unit and (ii) the independent power producers who
were not charged with any cess. The justification given by the State was that
the independent power producers were not charged any cess when such energy
was supplied to the State Electricity Board to engage establishment of
independent power producers for supplying electrical energy to the Board. This
was not accepted by the High Court, by observing that a captive power
producer need not consume its entire power produced. Thus,'where surplus
electricity was supplied by a captive power producer to the State Electricity
Board, it fulfills exactly the same objective i.e. establishment of power projects
from where electricity could be supplied to the State Electricity Board. Further
there, the impugned levy was found not merely on electrical energy consumed
by a captive producer, but also on electrical energy supplied by them to others
including the State Electricity Board, It was found that there was absolutely no
rational basis for discriminating captive power producers against the
independent power producers. From Para 26 of the judgment, it is also evident
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&7 WP No.l6619of2022& Batch
that the National Tariff Policy specifically disapproved the imposition of the
duties, taxes, cess etc. on consumption of electricity by linking it to generation
like captive generation on a non-uniform basis.
120. Lafarge India Private Limited (supra) is of no help to the
petitioners to support their contention of discrimination or violation of Article 14
of the Constitution in the present case. There, both captive power producer
and independent power producers were fulfilling exactly the same objective.
but one was charged with cess and the other was not, for which there was no
rational basis. The same analogy cannot be applied in the present case.
121. In Jiyajeerao Cotton Miiis (supra), relied upon by Sri Metta
Chandrasekhar Rao, the Act involved was the Central Provinces and Berar
Electricity Act, 1949 as amended by the Madhya Pradesh Taxation Laws
Amendment Act, 1956. The said Act was enacted under Entry 48-B of List II of
the Government of India Act, 1935 which was to the same effect as Entry 53 of
List-II in the 7'^^ schedule of the Constitution of India. The point as raised
therein was that the good consumption of electricity would mean consumption
by persons other than producers and as in that case the consumption was by
the producer the imposition of the levy of duty upon consumption by the same
producer/generator of electricity was not covered under Entry 48-B / 53 of List-
II.
122. The Hon'ble Apex Court held that the language used in the
legislative entries in the constitution must be interpreted in broad way so as to
give the widest amplitude of power to the Legislature to legislate and not in a
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narrow and pedantic sense. In the present case it is nobody's case that the
G.O.Ms.No.98 is not covered by the legislative field of Entry 53 in List-II upon
which APED Act is enacted. So, the question of giving widest amplitude of
power to bring within the legislative field does not arise.
123. The submission of the learned counsels for the petitioners of cross
subsidy is also without substance. The subsidy granted to agricultural
consumers in determination of tariff, the amount therefore is paid by the
Government. It is not a burden fastened bn the Industrial and Commercial
consumers.
124. In SIEL limited vs. State of Punjab^^, the contention that the
petitioners therein shall bear the burden of subsidy found no merit. It was held
that even if the State Government was required to pay the subsidy, it was to be
paid to the supplier of Electricity i.e. the Board. It was held to be misconceived
argument that consumers like the petitioner therein share the burden of
subsidy given, which in fact the Government pays to the Board as per the
requirements of Section 65 of the Electricity Act, 2003.
Determination of Point A f2^:
Violation of Article 14 of the Constitution of India:
125. Now the Court proceeds to consider the submissions on the point of
G.O.Ms.No.7 being arbitrary and violative of Article 14 of the Constitution of
India.
AIR 2010 P&H 121
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126. The submission by the learned counsels for the petitioners is that
the duty imposed on two categories only leaving the other two categories of
consumers is arbitrary and violates the equality clause. Further submission, as
raised by Sri Challa Gunaranjan, is that the increase of duty from 6 paisa to
. Re.l/- is excessive, unreasonable and for such determination no procedure has
been prescribed. They submitted that the taxation law is no exception to the
doctrine of equal treatment.
127. Contrary to the aforesaid, the submission of the learned counsels
for the respondents, Sri Shreyas Reddy, Sri V. R. Reddy Kowuri, Sri Abhay Jain
and Sri Metta Chandrashekhar Reddy is that there is no discrimination in
imposing the duty within category and the rate of Re.l/- is also not
unreasonable considering that such rise was made after 18 years and
comparatively to other States, it is not so high. Sri Shreyas Reddy submitted
that the State does not have to tax everything in order to tax something. It is
allowed to pick and choose reasonably the objects, persons and even rates for
taxation. The Courts are reluctant in the matters of economic policy to
interference.
128. In Ajay Hasia (supra), upon which Sri Alladi Ravinder, learned
senior counsel relied, the Hon'ble Apex Court held that what Article 14 strikes at
is arbitrariness because any action that is arbitrary, must necessarily involve
negation of equality. The doctrine of classification is merely a judicial formula
for determining whether the legislative or executive action in question is
arbitrary and therefore constituting denial of equality. If the classification is not
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reasonable and does not satisfy the two conditions, (i) that the classification is
founded on an intelligible differentia which distinguishes persons or things that
are grouped together from others left out of the group; and (ii) that the
differentia has a rational relation to the object sought to be achieved by the
impugned legislature or executive action, then the impugned legislative or
executive action would be arbitrary and the guarantee of equality under Article
14 would be breached. It was further held that wherever, there is arbitrariness
in State action, whether it be of the legislature or of the executive or of an
'authority' under Article 12 of the Constitution of India,, Article 14 immediately
springs into action and strikes down such State action.
129. In U.P. Power Corpn. Ltd. v. Ayodhya Prasad Mishra"*^ the
Hon'ble Apex Court reiterated that it is well settled that Article 14 is designed to
prevent discrimination. It seeks to prohibit a person or class of persons from
being singled out from others similarly situated or circumstanced for the
purpose of being specially subjected to discrimination by hostile legislation. It,
however, does not prohibit classification, if such classification is based on legal
and relevant considerations. The Hon'ble Apex Court further held that equals
cannot be treated unequally. But it is equally well settled that unequals cannot
be treated equally. Treating of unequals as equals would as well offend the
doctrine of equality enshrined in Articles 14 and 16 of the Constitution of India.
130. It is apt to refer paragraphs-36, 37 and 40 of U.P. Power Corpn.
Ltd. (supra) as under:
(2008) 10 see 139
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"36. It is well settled that Article 14 is designed to prevent discrimination.
It seeks to prohibit a person or class of persons from being singled out from
others similarly situated or circumstanced for the purpose of being specially
subjected to discrimination by hostile legislation. It, however, does not prohibit
classification, if such classification is based on legal and relevant
considerations.
37. Every classification, to be legal, valid and permissible, must fulfil
the twin test, namely,:
(/) the classification must be founded on an intelligible differentia which
distinguishes persons or things that are grouped together from others left out of
the group; and
(ii) such differentia must have a rational relation to the object sought to be
achieved by the statute or legislation in question.
40. It is well settled that equals cannot be treated unequally. But it is
equally well settled that unequals cannot be treated equally. Treating of
unequals as equals would as well offend the doctrine of equality enshrined in
Articles 14 and 16 of the Constitution. The High Court was, therefore, right in
holding that Executive Engineers plaeed in Category I must get priority and
preference for promotion to the post of Superintendent Engineer over Executive
Engineers found in Category II."
131. In Parivar Seva Sanstha vs. Ahmedabad Municipal
Corporation^, the Hon'ble Apex Court held that Article 14 comes upon what
constitutes hostile discrimination, but does not bar classification which is
reasonable. To answer whether a classification is reasonable, one must look
beyond the classification to the purpose of law. A reasonable classification is
one which includes all persons who are similarly situated with respect to the
purpose of law. The purpose of law may be either elimination of public
mischief or achievement of some positive public good. Generally, the two-fold
2022 see OnLine Se 1622
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test applied by the Courts is (i) the classification must be founded on an
intelligible differentia and (ii) the differentia must have a rational relation with
the object sought to be achieved by the legislature in question. If the object
itself is not discriminatory, it should be held that there is a reasonable
classification because it has rational relation to the object sought to be
achieved.
132. Paragraphs 12 & 16 of Parivar Seva Sanstha (supra) are being
reproduced as under:-
12. Recently, this Court in Manish Kumar v. Union of India and
Others {(2021) 5 SCC 1}, has exhaustively referred to the case law on
the subject of reasonable classification under Article 14 of the
Constitution of India vide paragraphs 210 to 230 to observe that
Article 14 frowns upon what constitutes hostile discrimination but
does not bar classification which is reasonable. To answer whether a
classification is reasonable, one must look beyond the classification to the
purpose of law. A reasonable classification is one which includes all
persons who are similarly situated with respect to the purpose of law.
The purpose of law may be either elimination of public mischief or
achievement of some positive public good. Reference in this regard
was made to the decision in State of Gujarat and Another v. Shri
Ambica Mills Ltd., Ahmedabad and Another, (12 (1974) 4 SCC 656}
which elucidates and explains the distinction between imder-inclusive and
over-inclusive classification. A classification is urider-inclusive when the
State benefits or burdens persons in a manner that furthers a legitimate
purpose but does not confer the same benefit or place the same burden on
others who are similarly situated. An over-inclusive classification is one,
where it imposes a burden on a wider range of individuals who are
included in that class of those attended with mischief at which the law
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aims. Piecemeal approach to the general problem is permitted in under-
inclusive classification on the ground that legislative dealing with
problems of classification is usually an experimental matter. It is
impossible to tell how successful a particular approach may be, what
dislocations might occur, what evasions might develop^ and what new
evils might be generated in the attempt. Administrative expedients must
he forged and tested. This decision also propounds that laws
regulating economic activity should he viewed differently from the
laws which touch or concern freedom of speech or religion, voting,
procreation, rights with respect to criminal procedure, etc. Judicial
deference should he given to legislature in the field of economic
regulation viz. the constitutional requirement and need to vigorously
enforce equal protection clause to strike down legislative action in the
area of fundamental human rights. Equally, this Court in State of
Jammu and Kashmir v. Shri Triloki Nath Kosa and Others {(1974) 1
see 19}, has held that there is always a presumption in favour of the
constitutionality of an enactment and the burden is upon the person
who attacks it to show that there has been a clear transgression of
constitutional principles. A provision cannot be struck down as
discriminatory on any a priori reasoning. The question of classification is
primarily for legislative judgment. Power to classify being extremely
broad and based upon consideration of executive pragmatism, the
judicature cannot rush in where the legislature varily treads. Generally^
the two-fold test applied by the courts is (i) the classification must be
• founded on an intelligible differentia, and (ii) the differentia must have a
rational relation with the object sought to be achieved by the legislature in
, question. If the object itself is not discriminatory, it should be held that
there is a reasonable classification because it has a rational relation to the
object sought to be achieved.
16. This Court in State of Bihar and Others v. Sachchidanand
Kishore Prasad Sinha and Others {(1995) 3 SCC 86}, had set aside the
judgment of the Patna High Court striking down the assessment rules as
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being violative of Article 14 of the Constitution of India by relying upon
the earlier decision in Twyford Tea Co. Ltd. and Another v. The State
of Kerala and Another, {(1970) 1 SCC 189} wherein the Constitutional
Bench by majority had held that the legislature must have a wide range
of selection and freedom in appraisal not only in the objects of
taxation, and the manner of taxation, but also in the determination of
the rate or rates applicable. A person, to succeed on the ground of
discrimination, must show hostile unequal treatment. This is more so
when uniform taxes are levied. In this connection it was stressed:
"15....This indicates a wide range of selection and freedom in
appraisal not only in the objects of taxation and the manner of
taxation but also in the determination of the rate or rates applicable.
16....The burden of proving discrimination is always heavy and
heavier still when a taxing statute is under attack. ... The burden is
On a person complaining of discrimination. The burden is proving
not possible 'inequality' but hostile 'unequal' treatment. This is
more so when uniform taxes are levied."
This judgment in Sachchidanand Kishore Prasad Sinha (supra) also
refers to the earlier decision in R.K. Garg v. Union of India and Others
{(1981) 4 SCC 675}, that the laws relating to economic activities
should be viewed with greater latitude than laws touching civil rights.
The economic mechanism is highly sensitive and complex, laws are
not abstract propositions, do not relate to abstract units, are not to be
measured by abstract symmetry and exact wisdom and nice adaption
of remedy are not always possible. Every legislation, especially in
economic matters, is essentially empiric, and it is based on
experimentation or what one may call the trial and error method. It may
not provide for all possible situations or anticipate all possible abuses.
There can be crudities or inequities in complicated experimental
economic legislation but on that aecount alone it cannot be struck down as
invalid "
I ■
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133. On doctrine of'Equality', recently, in Janhit Abhiyan v. Union of
India'*^\he Hon'ble Apex Court held as under in paragraphs-82 to 88 as under:
"Expanding Doctrine of "Equality"
. 82. It would be apt to begin this discussion with the following words of
H.M. Seervai, a jurist of great repute, as regards fundamentals of the concepts
of Liberty and Equality;
"Liberty and equality are words of passion and power. They were the
watchwords of the French Revolution; they inspired the unforgettable words of
Abraham Lincoln's Gettysburg Address; and the US Congress gave them
practical effect in the 13th Amendment, which abolished slavery, and in the
14th Amendment, which provided that "the State shall not deny to any person
within its jurisdiction ... the equal protection of the laws". Conscious of this
history, our Founding Fathers not only .put Liberty and Equality in the Preamble
to our Constitution but gave them practical effect in Article 17 which abolished
"Untouchability", and in Article 14 which provides that "the State shall not
deny to any person equality before the law and the equal protection of the laws
in the territory of India" [ H.M. Seervai, "Constitutional Law of India, A
Critical Commentary", 4th Edn., (1991-reprinted 1999) at p. 435.] , [ The
echoing words of Abraham Lincoln's Gettysburg Address, as reproduced by
H.M. Seervai read as follows:"Four score and seven years ago our fathers
brought forth on this continent a new nation conceived in liberty and dedicated
to the proposition that all men are created equal. We are engaged in a great
civil war, testing whether that nation, or any nation so conceived and so
dedicated, can long endure. "] .
83. Articles 14 to 18 of the Constitution are to ensure the right to equality.
The makers of our Constitution noticed the widespread social and economic
inequalities in the society that obtained ever since a long past, often sanctioned
by public policies, religion and other social norms and practices. Therefore,
they enacted elaborate provisions for eradication of inequalities and for
establishing an egalitarian society. The first expression "equality before the
■ law" of Article 14 is taken from the all-time wisdom as also from English
Common Law, implying absence of any special privilege in any individual [ In
fact, total equality has been fundamental to the concept of Dharma, leaving no
scope for discrimination on any ground. These aspects have been succinctly
explained by the acclaimed jurist M. Rama Jois in his classic work Legal and
Constitutional History of India (N.M. Tripathi Pvt. Ltd. 1984 -- Vol. I, at p.
582) in the following amongst other expressions while reproducing from Rig
Veda:"...The very expressionD/zarmais opposed to and inconsistent with any
such social inequality. The relevant provisions of the Shruti (Vedas) leave no
room for doubt that discrimination on the ground of birth or otherwise had no
Vedic sanction; on the other hand such discrimination was plainly opposed to
Vedic injunctioii. Discrimination of any kind is, therefore, eontrary to Dharma.
It is really ^«7/zar/z7fl.Charter of equality (Samanata) is found incorporated in
(2023) 5 see 1
RNT, J
the Rigveda, the most ancient of the Vedas, and also in
the Atharvaveda.Rigveda -- Mandala 5, Sukta 60, Mantra 5'A**Aj'yestaso
akanishtasa eteSam bhrataro va vridhuhu sowbhagaya.'No one is superior
{ajyestasaha) or inferior (akanishtasaha). All are brothers (ete bhrataraha). All
should strive for the interest of all and should progress collectively
(sowbhagaya sam va vridhuhu)."] ; and the other expression ''the equal
protection of the laws", referable to the 14th Amendment to the US
Constitution, is a constitutional pledge of protection or guarantee of equal laws.
Both these expressions occur in Article 7 of the Universal Declaration of
Human Rights, 1948.
84. In a nutshell, the principle of equality can be stated thus : equals must be
treated equally while unequals need to be treated differently, inasmuch as for
the application of this principle in real life, we have to differentiate between
those who being equal, are grouped together, and those who being different, are
left out from the group. This is expressed as reasonable classiifcation. Now, a
classification to be valid must necessarily satisfy two tests : first, the
distinguishing rationale should be based on a just objective and secondly, the
choice of differentiating one set of persons from another should have a
reasonable nexus to the object sought to be achieved. However, a valid
classification does not require mathematical niceties and perfect equality; nor
does it require identity of treatment. [ "From the fact that people are very
different, it follows that, if we treat them equally, the result must be inequality
in their actual position, and that the only way to place them in an equal position
would be to treat them differently ...", said an Austrian economist Friedrich A.
Hayek (1899-1992) in The Constitution of Liberty, 1960, the University of
Chicago, p. 87.] If there is similarity or uniformity within a group, the law will
not be condemned as discriminatory, even though due to some fortuitous
circumstances arising out of a particular situation, some included in the class
get an advantage over others left out, so long as they are not singled out for
special treatment. In spite of certain indefmiteness in the expression "equality",
when the same is sought to be applied to a particular case or class of cases in
the complex conditions of a modem society, there is no denying the fact that the
general principle of "equality" forms the basis of a Democratic Government. [
Dr Alladi Krishnaswami Aiyar, The Constitution and Fundamental Rights, The
Srinivasa Sastri Institute of Politics, Mylapore, Madras (1955), at p. 28.]
85. Since the early 1970s, equality in Article 14 being a dynamic concept,
has acquired new dimensions. InE.P. Royappa [E.P. Royappav. State ofT.N.,
(1974) 4 see 3 : 1974 See (L&S) 165] , a new approach to this doctrine was
propounded in the following words : (See p. 38, para 85)
"85. ... Equality is a dynamic concept with many aspects and dimensions
and it cannot be "cribbed, cabined and confined" within traditional and
doctrinaire limits. From a positivistic point of view, equality is antithetic to
arbitrariness. In fact equality and arbitrariness are sworn enemies; one belongs
to the rule of law in a republic while the other, to the whim and caprice of an
absolute monarch. Where an act is arbitrary, it is implicit in it that it is imequal '
both according to political logic and constitutional law and is therefore violative
of Article 14,..."
(emphasis supplied)
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86. In Maganlal Chhaganlal (P) Ltd. v. Municipal Corpn. of Greater
Bombay [Maganlal Chhaganlal (P) Ltd. v. Municipal Corpn. of Greater
Bombay, (1974) 2 SCC 402], it was observed : (SCC pp. 435-36, para 33)
"53. ... Article 14 enunciates a vital principle which lies at the core of our
republicanism and shines like a beacon light pointing tow^ds the goal of
classless egalitarian socio-economic order which we promised to build for
ourselves when we made a tryst with destiny on that fateful day when we
adopted our Constitution. If we have to choose between fanatical devotion to
this great principle of equality and feeble allegiance to it, we would
unhesitatingly prefer to err on the side of the former as against the latter."
87. Indian constitutional jurisprudence has consistently held the guarantee
of equality to be substantive and not a mere formalistic requirement. Equality is
at the nucleus of the unified goals of social and economic justice. In Minerva
Mills [Minerva Mills Ltd. v. Union of India, (1980) 3 SCC 625] it was observed
; (SCCp. 709, para III)
''111. ...the equality clause in the Constitution does not speak of mere
formal equality before the law hut embodies the concept of real and substantive
equality which strikes at inequalities arising on account of vast social and
economic differentials and is consequently an essential ingredient of social and
economic justice. The dynamic principle of egalitarianism fertilises the concept
of social and economic justice; it is one of its essential elements and there can
be no real social and economic justice where there is a breach of the egalitarian
principle."
(emphasis supplied)
88. Thus, equality is a feature fundamental to our Constitution but, in true
sense of terms, equality envisaged by our Constitution as a component of social,
economic and political justice is real and substantive equality, which is to
organically and dynamically operate against all forms of inequalities. This
process of striking at inequalities, by its very nature, calls for reasonable
classifications so that equals are treated equally while unequals are treated
differently and as per their requirements."
134. In East India Tobacco Company v. State of Andhra
Pradestt^, the Hon'ble Apex Court held that the taxation laws must also pass
the test of Article 14. But in deciding whether a taxation law is discriminatory or
not it is necessary to bear in mind that the state has a wide discretion in
selecting the persons or objects it will tax, and that a statute is not open to
attack on the ground that it taxes some persons or objects and not others. It is
(1963) 1 SCR 404
RNT, J
only when within the range of its selection, the law operates unequally, and
that cannot be justified on the basis of any valid classification, it would be
violative of Article 14. The Hon'ble Apex Court referred to the statement of the
law in Willis on "Constitutional Law" Page 587, observing that, that would
correctly represent the position with reference to taxation statutes under the
Constitution.
"A State does not have to tax everything in order to tax something. It is
allowed to pick and choose districts, objects, persons, methods and even
rates for taxation if it does so reasonably The Supreme Court has been
practical and has permitted a very wide latitude in classification for
taxation".
135. In East India Tobacco Company {su^vd) the Hon'ble Apex Court
held that if a State can validly pick and chose one commodity for taxation and
that is not open to attack under Article 14, the same results must follow when
the State picks out one category of goods and subject it to taxation.
136. In the Twyford Tea Company Limited and others v. the
State of Keraia and others^^, where the constitutionality of the Kerala
Plantation (Additional Tax) Act, 1960 (Act XVII of 1960) and the Kerala
Plantation (Additional Tax) Amendment Act, 1967 (Act XIX of 1967) was
challenged, the Hon'ble Apex Court held that one of the principles, when the
question of the application of Article 14 arises, on which the courts have always
acted is nowhere better stated then by Willis in his "Constitutional Law". "A
State does not have to tax everything in order to tax something. It is allowed to
AIR 1970 SC 1133
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pick and choose districts, objects, persons, methods and even rates for taxation
if it does so reasonably It was observed that, this was approved by the
Hon'ble Apex Court in East India Tobacco Company (supra) that, "if a
State can validly pick and choose one commodity for taxation and that is not
open to attack under Article 14, the same result must follow when the State
picks out one category of goods and subjects it to taxation." After referring to
the aforesaid, the Hon'ble Apex Court in Twyford Tea Company Limited
(supra) held that "a wide range of selection and freedom in appraisal not only
in the objects of taxation and the manner of taxation, but also in the
determination of the rate or rates applicable". The Hon'ble Apex Court further
held that the next principle is that the, burden of proving discrimination is
always heavy and heavier still when a taxing statute is under attack. The
burden is on a person complaining of discrimination. The burden is proving not
possible 'inequality' but hostile 'unequal' treatment. It was further held that
simply stated, the law is this; "Differences in treatment must be capable of
being reasonably explained in the light of the object for which the particular
legislation is undertaken. This must be based on some reasonable distinction
between the cases differentially treated. When differential treatment is not
reasonably explained and justified the treatment is discriminatory. If different
subjects are equally treated there must be some basis on which the differences
have been equalized otherwise discrimination will be found. To be able to
succeed in the charge of discrimination, a person must establish conclusively
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that persons equally circumstanced have been treated unequally and vice
versa .
137. It is apt to refer paragraphs 15 to 18 of the Twyford Tea
Company Limited and others {su^K3) as under:-
15. We may now state the principles on which the present case must be
decided. These principles have been stated earlier but are often ignored when
the question of the application of Article 14 arises. One principle on which
our Courts (as indeed the Supreme Court in the United States) have always
acted, is nowhere better stated then by Willis in his "Constitutional Law"
page 587. This is how he put it:
"A State does not have to tax everything in order to tax something.
It is allowed to pick and choose districts, objects, persons, methods
and even rates for taxation if it does so reasonably, The Supreme
Court has been practical and has permitted a very wide latitude in
classification for taxation."
This principle was approved by this Court in East Indian Tobacco Co. y.
State of Andhra Pradesh MANU/SC/0064/1962 : [1963] 1SCR404. Applying
it, the Court observed;
"If a State can validly pick and choose one commodity for taxation
and that is not open to attack under Article 14, the same result must
follow when the State picks out one category of goods and subjects
it to taxation."
This indicates a wide range of selection and freedom in appraisal not only in
the objects of taxation and the manner of taxation but also in the
determination of the rate or rates applicable. If production must always be
taken into accoimt there will have to be a settlement for every year and the
tax would become a kind of income-tax.
16. The next principle is that the burden of proving discrimination is
always heavy and heavier still when a taxing statute is under attack. This was
also observed in the same case of this Court at page 411 approving the
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dictum of the Supreme Court of the United States in Madden v. Kentucky
(1940) 309 U.S. 83 :
"In taxation even more than in other fields, Legislatures possess
the greatest freedom in classification. The burden is on the one
attacking the legislative arrangement to negative every
conceivable basis which might support it."
As Rottschaefer said in his Constitutional Law at p. 668:
.."A statute providing for the assessment of one type of intangible at its actual
value while other intangibles are assessed at their face value does not deny
equal protection even when both are subject to the same rate of tax. The
decisions of the Supreme Court in this field have permitted a State
Legislature to exercise an extremely wide discretion in classifying property
for tax purposes so long as it refrained from clear and hostile discrimination
against particular persons or classes.
The burden is on a person complaining of discrimination. The burden is
proving not possible 'inequality' but hostile "unequal" treatment. This is more
so when uniform taxes are levied. It is not proved to us how. the different
plantations can be said to be 'hostilely or unequally' treated. A uniform wheel
tax on cars does not take into account the value of the car, the mileage it
runs, or in the case of taxis, the profits it makes and the miles per gallon it
delivers. An Ambassador taxi and a Fiat taxi give different out turns in terms
of money and mileage. Cinemas pay the same show fee. We do not take a
doctrinaire view of equality. The Legislature has obviously thought of
equalising the tax through a method which is inherent in the tax scheme.
Nothing has been said 'to show that there is inequality much less 'hostile
treatment'. All that is said is that the state must demonstrate equality. That is
not the approach. At this rate nothing can ever be proved to be equal to
another.
17. There is no basis even for counting one tree as equal to another.
Even in a thirty years' settlement, the picture may change the very next year
for some reason but the tax as laid, continues. Siwai income is brought to
land revenue on the basis of number of trees but not on the basis of the
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produce. This is worked out on an average income per tree and not on the
basis of the yield of any particular tree or trees.
18. What is meant by the power to classify without unreasonably
discriminating between persons similarly situated, has been stated in several
other cases of this Court. The same applies when the legislature reasonably
applies a uniform rate after equalising matters between diversely situated
persons. Simply stated the law is this: Differences in treatment must be,
capable of being reasonably explained in the light of the object for which the
particular legislation is undertaken. This must be based on some reasonable
distinction between the cases differentially treated. When differential
treatment is not reasonably explained and justified the treatment is
discriminatory. If different subjects are equally treated there must be some
basis on which the differences have been equalised otherwise discrimination
will be found. To be able to succeed in the charge of discrimination, a person
must establish conclusively that persons equally circumstanced have been
treated unequally and vice versa. However, in Khandige Sham Bhat and
others v. The Agricultural Income Tax Officer MANU/SC/0189/1962 :
[1963] 3SCR809 it was observed :
"If there is equality and uniformity within each group, the law
will not be condemned as discriminative though due to some
fortuitous circumstance arising-out of a peculiar situation some
included in a class get an advantage over others, so long as they are
not singled out for special treatment. Taxation law is not an
exception to this doctrine: vide Purshottam Govindji Halai v. Shree
B. N. Desai, Additional Collector of Bombay
MANU/SC/0017/1955 : 1956CriLJ129 and Kunnathat Thatunni
Moopil Nair v. State of Kerala MANU/SC/0042/1960 : [1961]
3SCR77. But in the application of the principles, the courts, in view
of the inherent complexity of fiscal adjustment of diverse elements,
permit a larger discretion to the Legislature in the matter of
classification, so long it adheres to the fundamental principles under
lying the said doctrine. The power of the Legislature to classify is of
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"wide range and flexibility" so that it can adjust its system of
taxation in all proper and reasonable ways."
138. In Income Tax Officer^ Shillong and others v. R. Takin Roy
Rymbai & others^^, the Hon'ble Apex Court held that while it is true that a
taxation law cannot claim immunity from the quality clause in Article 14 of the
Constitution, and has to pass, like any other law, the equality test of that
Article, it roust remembered that the State has in view of the intrinsic
complexity of fiscal adjustments of divorce elements, in considerably wide
discretion in the matter of classification for taxation purpose given- legislative
competence, the legislature has ample freedom to select and classify persons
districts, goods, proprieties, income and objects which it would tax, and which it
vyould not tax. So long as the classification made within this wide and flexible
range, a taxing statute does not transgress the fundamental principles
underlying the doctrine of equality, it is not vulnerable on the ground of
discrimination merely because a taxes or exempts from fax some incomes or
objects and not others.. Nor, the mere fact that a tax falls more heavily on some
in the same category, is by itself a ground to render the law invalid.
139. It is apt to refer para-27 of Income Tax Officer/ Shillong and
offers (supra) as under:
"27. While it is trae that a taxation law, cannot claim immunity from the
equality clause in Article 14 of the Constitution, and has to pass like any other
law, the equality test of that article, it must be remembered that the State has, in
view of the intrinsic complexity of fiscal adjustments of diverse elements, a
considerably wide discretion in the matter of classification for taxation
AIR 1976 SC 670
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purposes. Given legislative competence, the legislature has ample freedom to
select and classify persons, districts, goods, properties, incomes and objects
which it would tax, and which it would not tax. So long as the classification
made within this wide and flexible range by a taxing statute does not transgress
the fundamental principles underlying the doctrine of equality, it is not
vulnerable on the ground of discrimination merely because it taxes or exempts
from tax some incomes or objects and not others. Nor the mere fact that a tax
falls more heavily on some in the same category, is by itself a ground to render
the law invalid. It is only when within the range of its selection, the law
operates unequally and caimot be justified on the basis of a valid classification,
that there would be a violation of Article 14. (See East India Tobacco
Co. V. State of Andhra Pradesh [AIR 1962 SC 1733 : (1963) 1 SCR 404 : 13
STC 529] ; Vivian Joseph Ferriera v. Municipal Corporation of Greater
Bombay [(1972) 1 SCC 70] ; Jaipur Hosiery Mills v. State ofRajasthan [(1970)
2 SCC 26])"
140. In Balco Employees Union vs. Union of India and others^^,
also the Hon'ble Apex Court held that in the case of a policy decision on
economic matters, the Courts should be very circumspect in conducting any
enquiry or investigation and must be most reluctant to impugn the judgment of
experts who may have arrived at a conclusion unless the Court is satisfied that.
there is a illegality in the decision itself. The Apex Court held that wisdom and
advisability of economic policies, are ordinarily not amenable to judicial review
unless it can be demonstrated that the policy is contrary to any statutory
provision or the Constitution. In other words, it is not for the courts to
consider relative merits of different economic policies and consider whether a
wiser or better one can be evolved.
(2002) 2 SCC 333
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141. True, the taxation law is no exception to the doctrine of equal
protection and it has to stand the test of reasonable classification, but in the
present case, it is not that, the duty is being levied on some
industrial/commercial consumers and not on the other consumers falling in the
same category of industrial / commercial. It is aiso not the case that, the
imposition of duty is of different rates on different consumers but falling within
the same category of industrial or commercial category. The consumers of the
. industrial and commercial category are claiming the equal treatment with the
consumers of the agriculture category. This Court find that there is a
classification made between these two (02) kinds of categories. Even in the
tariff order such distinction is made between these categories. The tariff
determination is made for different categories. The classification of these
categories, is not under challenge. A classification of category of consumers
between Commercial, Industrial, Domestic and Agriculture could not be shown
to be . arbitrary or unreasonable classification. The consumers of the
commercial and industrial category, unless they show that they stand equal to
other category of consumers of electricity, cannot claim equality or equal
treatment in the matter of imposition of tax on sale of electricity or with respect
to the rate of tax with the other category consumers,, domestic or agricultural.
142. This Court find that the classification between the industrial and
commercial consumers, the domestic consumers and the agriculture consumers
is well recognized by the APERC, in the tariff order as well. The different rates
of tariff are fixed for these different categories of electricity consumers. It
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could also not be argued, as to how all these kinds of electricity consumers
stand on equal footing, inter alia, with respect to consumption, sale of
electricity, their paying capacity, the object of sale to the industrial and
commercial consumers, and sale to domestic and agriculture consumers. In
other words, when the petitioners are claiming equal treatment with the
agricultural consumers or the domestic consumers of electricity, they will have
to establish that they stand on the equal footings with those consumers of
electricity i.e., agriculture, domestic, to whom the sale is made by the Licensee.
But that has not been established. The classification made between different
kinds of consumers, based on differentia is permiODle.
143. The principle of equality under Article 14 is that the persons
similarly situated are to be treated similarly. Equals are to be treated equally.
Unequals, if treated equally, that would also be negation of rule of law and
violative of right to equality under Article 14. The unequals cannot be treated
equally. The persons dissimilarly circumstanced cannot be treated similarly.
The intelligible differentia, may be based on the financial capacity to pay. It
may be considering the nature of the activity, for which, they use electricity.
Some category of consumers may require State help / assistance, for which
they are extended subsidy as well. So, the petitioners not having established
that they stand equal to the agriculture consumers or domestic consumers,
cannot claim equal treatment in imposition of electricity duty or with respect to
the rate of duty levied.
n
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144. Here it is apt to referJanhit Abhiyan (supra), the Constitution
Bench of the Hon'ble Supreme Court in the context of economically weaker
sections of citizens and reservation in their favour laid down that economic
criteria, as the sole basis for affirmative action, does not violate the basic
structure of the Constitution. It was observed that our jurisprudence supports
making of a provision for tackling the disadvantages arising because of adverse
economic conditions. Article 38 of the Constitution, inter alia, provides for
securing economic justice and for striving to minimize the inequalities in income
amongst individuals and groups of people. The equality clause in the
Constitution does not speak of mere formal equality but embodies the concept
of real and substantive equality, which strikes at inequalities arising on account
of vast social and economic differentials; and that the dynamic principle of
egalitarianism furthers the concept of social and economic justice. In giving
effect to the rule of equality enshrined in Article 14, the Courts have also been
guided by the jurisprudence evolved by the US Supreme Court in the light of
the amendments made to their Constitution, which were founded on economic
considerations. Any civilized jurisdiction differentiates between haves and have-
nots, in several walks ■ of life and more particularly, for the purpose of
differential treatment by way of affirmative action.
145. In Janhit Abhiyan (supra), the Hon'ble Apex Court, reiterated that
equality is a feature fundamental to our Constitution but, in true sense of
terms, equality envisaged by our Constitution as a component of social,
economic and political justice is real and substantive equality, which is to
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organically and dynamically operate against all forms of inequalities. This
process of striking at inequalities, by its very nature, calls for reasonable
classifications so that equals are treated equally while unequals are treated
differently and as per their requirements.
146. Even if some category of consumers is granted exemption from
payment or lesser duty as compared to the petitioners, is imposed, the
government is vested with the power to grant exemption under Section 3-A of
the APED Act. The validity of such provision. Section 3-A, on the ground of
being violative of Article 14 or on any other ground is also not under challenge.
The State Government therefore, derives power to grant exemption, under
Section 3-A of the APED Act. Consequently, the contention that G.O.Ms.No.7 is
violative of Article 14 of the Constitution of India on such different treatment in
the matter of imposition of duty cannot be legally sustained.
147. It is, if, within the category of consumers, duty is being imposed
on some of them, leaving the others or the imposition of duty is at different
rates, for which there is no reasonable classification amongst the consumers
falling within the same category, as there can be classification within
classification, fulfilling the twin test, then only it can be said that the equals are
being treated unequally. When there is categorization of electricity consumers
and different rates are being levied on different categories, or even exemption
is granted to some category, there would be no violation of Article 14 of the
Constitution of India. It would not offend the equality clause.
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148. So far as the submission with respect to rise rate of duty @ Re.l
kWh is concerned , the G.O.Ms.No.7 assigns various reasons for such increase.
It was made after 18 years. In other States it ranges from 14 paisa to 180
paisa. There is reorganization of Andhra Pradesh and post bifurcation it is
predominantly agrarian one. The gap between Average Revenue Realization
(ARR) and Average Cost of Supply (ACoS) has widened over the years. Covid
19 pandemic led disruptions, surge of costs of import of coal and also the crude
oil prices etc., have been the reasons assigned in the G.O.Ms.No.7 itself. The
determination of rate of duty therefore appears to be for well assigned reasons
and a conscious decision. The petitioners have not been able as to how such
increase is arbitrary or unreasonable. This Court in the exercise of writ
jurisdiction would not enter into such arena of what should be the increase, as
it is in the field of experts on the subject, and lies on the domain of policy
decision, which could not be shown to be arbitrary or violative of such
provisions on which this Court may interfere in the exercise of judicial review.
149. In Renusagar Power Co. and others (supra), the Hon'ble Apex
court held as under in paras-74 & 75:
74. The High Court in the instant case reiterated the necessity of cheap
electricity and if cheap electricity was not made available, the cost of
indigenous aluminium would go up. It would necessitate import of
aluminium causing drain on the foreign exchange of the country. On the
other hand, the learned Additional Advocate General for the State of U.P.
contended and in our opinion rightly that primary purpose of the Act as
stated in the preamble was to raise the revenue for the development
projects. Whether in a particular situation, rural electrification and
development of agriculture should be given priority or electricity or
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development of aluminium industry should be given priority or which is
in public interest, in our opinion, are value judgments and the
legislature is the best judge. The High Court in its impugned judgment
referred to the order of the Government. The said order read as follows:
(1985 All LJ 250 at p. 257)
"The Corporation has also emphasized that the Govermnent of India is
spending a huge sum of money in foreign exchange to meet the
requirements of aluminium in India, with a view to increasing the
aluminium production by Hindalco Electricity should be made
available at cheap rate and exemption should be granted to the
Corporation from payment of electricity duty. In this connection it may
again be pointed out that the imposition of electricity duty will not
affect the productivity of aluminium by M/s Hindalco as electricity
duty is negligible as clearly made out in the earlier paragraphs.
Accordingly, the electricity duty is not likely to have any adverse
effect on foreign exchange of the country."
75. Referring to the aforesaid observations of the State Government,
the High Court was of the view that the said observations of the State
Government clearly showed that the State Government did not address itself
to the need of promoting aluminum industry for increasing production of
aluminum which would in the long run save foreign exchange. We are
unable to agree. What was paramount before introduction of the
development programme and how the funds should be allocated and how far
the Government considers a negligible increase and rise in the cost of
aluminum for the purpose of raising monies for other development activities
are matters of policy to be decided by the Government. It is true as the High
Court has pointed out that the question regarding public interest and need to
promote indigenous industrial production was related with the question of
exemption of duty. But what the High Court missed, in our opinion with
respect, was that a matter of policy which should be left to the
Government. Reading the order of the Government, it appears to us that the
Government had adverted itself to all the aspects of sub-section (4) of section
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India .{AIR 1959 SC 1124}, Attorney General - Alberta v. Attorney
GeneraJ-Canada { Privy Council - (1939) AC 117}, State of Andhra
Pradesh v. National Thermal Power Corporation Ltd. { (2002) 5 SCC
203}, and State of West Bengal v. Kesoram Industries Ltd. { (2004) 10
SCC 201), upon which reliance is placed in the present case as well, held that
'the primary object of the Act, 1939 is to levy duty on sale and consumption of
electricity and to augment revenue to the state exchequers. The State realizes
that there is imperative need to augment revenue by all available sources. The
state justifies its decision, to levy duty @ 0.25 paise per unit consumed
internally as state require to augment resources to undertake social obligations
in providing assistance to the power sector. Guided by the principles of law
enunciated in plethora of precedents and on forensic analysis of the legislation,
we see no infirmity in the impugned amendment.
154., The Division Bench further held in paragraph-27.16 that it is
permissible to treat equals alike and different ones differently. It is settled
principle of law that there is no imperative requirement that taxation shall be
absolutely equal. As held by Supreme Court in Spences Hotel Pvt.Ltd., "Equality
and. uniform policy means uniform and equal rates of assessment and taxation
which has been followed in this tax. The concept of equality and uniformity has
to adjust from time to time to new and advancing social and economic
conditions and needs of public finance and fiscal policy, of course within
constitutional limitations." It being a taxation provision with the object to
augment the resources for the State for its utilization in welfare activities, the
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Court cannot strike down such provision merely on the ground that what is
levied by the impugned provision is higher on the petitioners as compared to
the duty levied on a licensee selling it to others. As long as power is traceable
to entry 53 of List II of schedule VII of the Constitution and there is no
discrimination among same class of persons, merely because of class of.
consumers are treated as separate group and higher duty is levied cannot be a
ground to strike down such provision.
155. The Division Bench in Rane Engineering Valves Ltd. (supra)
further observed and held in paragraph - 27.17 that in the field of taxation
interference of writ Court is in a very narrow compass. It must be left to
legislative wisdom. Court cannot trench into such field unless it is shown as
patently illegal offending mandate of Constitution. Furthermore, respondents
have given sufficient justification to target a particular class of captive power
generating units to impose higher duty.
156. It is apt to reproduce paragraphs-25.1, 27.12, 27.13, 27.16, 27.15
and 27.17 as under:
"25.1.Supreme Court held that the intention to levy cess on generation of
electricity is clearly discernible from the words employed in the offending
provision and therefore the State legislature has no competence. Supreme Court
observed as under:
"14. A plain reading of sub-section (2) of Section 3 introduced by the
amendment to the 1981 Adhiniyam makes it clear that the levy of cess was
"on the electrical energy produced". The phrase "whether for sale or supply"
merely clarified that all electricity produced irrespective of its destination
would be liable to cess at the specified rate. The use of the word "whether"
after the phrase "energy produced" means that the cess would apply on units
produced, whichever of the alternatives mentioned after the word "whether",
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namely, sale or supply or consumption is the case. There is no reason to
assume that the words used did not reflect the intention of the legislature.
The imposition envisaged was on the production of electricity units. The
charge was on generation and not on the sale or consumption of electricity.
There is a conscious linguistic departure from the language used in Section
3 of the Electricity Duty Act, 1949 and indeed the language used in Section
3(1) of the same Act where the cess is levied on the total units of electrical
energy sold or supplied by distributors of electrical energy. When dealing
with producers under sub-section (2) of the same section, the cess is
required to be paid "on the total units of electrical energy produced". If, as is
contended by the respondents, the incidence of levy under sub-section (1)
and sub-section (2) were identical, the same language should have been used
in both sub-sections. The deliberate change in language reflects an intention
to alter the subject-matter of levy as far as producers were concerned."
(emphasis supplied)
27.12. The primary object of the Act, 1939 is to levy duty on sale and
consumption of electricity and to augment revenue to the state exchequers. The
State realizes that there is imperative need to augment revenue by all available
sources. The state justifies its decision to levy duty @ 0.25 paise per unit
consumed internally as state require to augment resources to undertake social
obligations in providing assistance to the power sector. Guided by the principles
of law enunciated in plethora of precedents and on forensic analysis of the
legislation, we see no infirmity in the impugned amendment.
27.13. In the counter affidavit filed on behalf of power utilities it is
contended that levy of 0.25 paise is not exorbitant as those who consumed
electricity from captive generation would ordinarily incur the fuel costs of
approximately Rs.4/- per unit and fraction of it is being charged towards duty,
which is reasonable and levying of such duty is necessary to augment state
resources. The state also recognizes that this class of consumers do have paying
capacity and levying small percentage of cost incurred by them to generate
electricity would not burden them and this additional source of revenue is
intended to be utilized to fulfil its other obligations, such as, supply of
electricity to all classes of consumers.
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27.15. On account of these orders, it is now clear that only small group of
captive power generating units which are brought into the duty net
under Section 3B are those who eonsume only partially the captive power
generated by them and sell balance to the grid even though they have
requirement of electricity for their own use. By this, two fold object of the
legislation is discemable i.e. to augment revenue to the State and to discourage
captive generating units from indulging in sale of electricity. The primary
object in encouraging captive power generating units was that economic
activity should not suffer on aecount of acute shortage of power and therefore
the business enterprises others can make their own provision to generate
electricity for its internal use. The captive power generating units which
consume electricity generated by them only partially and sell the balance
electricity form into a separate homogeneous group. This is a separate class by
itself and, therefore, this particular class is treated differently as compared to
any other consumers. As long as there is a justification for such classification
and within the same class there is no discrimination, offending statutory
provision stands the test of Article 14 and it cannot be said that such action is
arbitrary and discriminatory.
27.16. It is permissible to treat equals alike and different ones differently. It
is settled principle of law that there is no imperative requirement that taxation
shall be absolutely equal. As held by Supreme Court in Spences Hotel Pvt.Ltd.,
"Equality and uniform policy means uniform and equal rates of assessment and
taxation which has been followed in this tax. The concept of equality and
uniformity has to adjust from time to time to new and advancing social and
economic conditions and needs of public finance and fiscal policy, of course
within constitutional limitations." It being a taxation provision with the object
to augment the resources for the State for its utilization in welfare activities, the
Court cannot strike down such provision merely on the ground that what is
levied by the impugned provision is higher on the petitioners as compared to
the duty levied on a licensee selling it to others. As long as power is traceable to
entry 53 of List II of schedule VII of the Constitution and there is no
discrimination among same class of persons, merely because a class of
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consumers are treated as separate group and higher duty is levied cannot be a
ground to strike do'wn such provision.
27.17. In the field of taxation interference of writ Court is in a very narrow
compass. It must be left to legislative wisdom. Court cannot trench into such
field unless it is shown as patently illegal offending mandate of Constimtion.
Furthermore, respondents have given sufficient justification to target a
particular class of captive power generating units to impose higher duty."
Determination of Point No.B:
157. The duty was thus levied by the statute i.e., APED Act 1939
@Re.0.06 (6) paisa per unit and was payable by the licensee. It was fixed by
the statute itself. Now it is @ Re.l kWh on the licensees. There is no dispute
that the respondent - DISCOMS are the licensees.
158. Section 7 (1) of APED Act 1939 provides that any licensee may with
the previous sanction of the State Government and subject to such conditions
as they may impose, recover from any person or class of persons to whom
enrgy is sold at a price of more than twelve paise per unit, the duty which falls
to be paid by the licensee in respect of the energy so sold or any part of it, as
may be determined by the State Government. Sub-Section (2) of Section 7
provides that the licensee may, for the purpose of sub-section (1), exercise the
power conferred on a licensee by sub-section (1) of Section 24 of the Indian
Electricity Act, 1910, for the recovery of any charge or sum due in respect of
energy supplied by him.
159. Section 7 of the APED Act 1939 reads as under:
"Section 7- Licensee to reimburse himself from consumer in certain cases:
Any licensee may with the previous sanction of the State Government
and subject to such conditions as they may impose, recover from any person or
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class of persons to whom energy is sold at a price of more than twelve paise per
unit, the duty which falls to be paid by the licensee in respect of the energy so
sold or any part of it, as may be determined by the State Government.
Explanation
(1) Save as provided in sub-section (4) of Section 3, the duty
recoverable from any person under this sub-section shall not be deemed to be
part of the price charged for the energy by the licensee. (2) The licensee may,
for the purpose of sub-section (1), exercise the power conferred on a licensee by
sub-section (1) of Section 24 of the Indian Electricity Act, 1910, for the
recovery of any charge or sum due in respect of energy supplied by him.
160. Thus, Section 7 of APED Act 1939 provides for the licensee to
recover from any person or class of persons to whom the energy was sold at a
price of more than twelve paise per unit with the previous sanction of the State
Government, either as a whole or any part thereof, as might be determined by
the State Government. This duty is that which falls to be paid by the licensee
under Section 3 of the APED Act.
161. With respect to the previous sanction of the State Government to
recover the duty from the consumers by the licensee, reliance is placed upon
G.O.Ms.No.277, dated 09.12.1994.
162. G.O.Ms.No.277, dated 09.12.1994 is reproduced as under:-
GOVERNMENT OF ANDHRA PRADESH
ABSTRACT
ELECTRICITY DUTY PAYABLE TO GOVERNMENT Enhancement of
Electricity Duty from PS / Unit to 6 Ps Unit with effect from 12.1993 -
Additional burden on the A.P. State Electricity Board - Proposal to recover the
Electricity Duty from the Consumers of chargeable categories - Orders - Issued.
ENERGY 7 FORESTS (PR.I (I) DEPARTMENT
G.O.Ms.No.277 Dated: 09.12.1994
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From.the Chairman, APSE Board, Hyderabad, D.O.Lr.No.CE
(Coml.)/P02/ED/l 69/94, Dt. 14.07.94.
ORDER:
The Chairman, Andhra Pradesh State Electricity Board has informed that, the
levy of Electricity Duty, as enhancement from 4 Ps./Unit to 6 Ps. Unit with effect
from 01.12.1993 has become an additional burden on the Andhra Pradesh State
Electricity Board and is cutting into the revenue, thereby depleting the net
surpluses amounting, in fact, to reduction to tariff for all categories and proposed
to recover the Electricity Duty of 6 Ps./Unit from the consumers with
retrospective effect from 01.12.1993. The Chairman, has also informed that
unless the Electricity Duty is passed on to the .consumers, the revenue the
A.P.State Electricity Board drastically gets reduced for the years 1993-94 and
would adversely effect the performance as well as the not surplus. This would
also affect the revenues in 1994-95. Therefore, the Chairman, A.P.State
Electricity Board has requested the Government, in his letter read above to accord
permission to Andhra Pradesh State Electricity Board under sub-section (1) of
Section 7 of Andhra Pradesh Electricity Duty Act, 1939 to enable the Board to
recover the Electricity Duty of 6 Ps./unit from 1992-93 from the consumers, to
whom energy is supplied at a price of more than 12 Ps./Unit.
2. After careful examination of the above issue and in exercise of the
powers under sub-section (1) of Section 7 of the Andhra Pradesh Electricity
Duty Act, 1939, as amended from time to time the Government hereby
accord permission to Andhra Pradesh State Electricity Board to recover the
Electricity Duty from any consumer or class of consumers, to whom energy is
sold at a price of more than 12 paise per unit and who fall under the durable
categories, except consumers using Low Tension Electrical energy for
agricultural purposes, at an effective tariff rate, presently below twelve paise
per unit the duty, which falls to be paid the Board with effect from
01.12.1993, at the rate of six paise per unit on the energy sold, subject to the
following conditions :-
a) The electricity duty recoverable from such consumer or class of consumers
shall not be a part of the price charged for the energy sold by the Board,
b) The duty recoverable from a consumer or class of consumers shall be a first
charge on the amounts recoverable by the Board for the energy supplied by the
Board and shall be a debt due by the Board to the State Government.
Provided that, where the Board has been enabled to recover the amounts due
from the consumer for the energy supplied by it, the Board shall not be liable to
pay the duty in respect of the energy so supplied,
c) The Andhra Pradesh State Electricity Board shall show separately the
Electricity duty amount recoverable from a consumer or class of consumers in the
bills sent by Board to the consumers for collection of C.C.Charges, provided that
in respect of supply to the licences, the Board shall not show any Electricity duty
amount recoverable from them.
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d) The Board shall exercise the powers under sub-section (1) of Section 24 of
Indian Electricity Act of 1910, if any consumer defaults to pay the electricity duty .
as permitted by Government in this order,
e) Any sum due from the consumers on account of electricity duty, if not paid
within the due date and in the manner prescribed, shall be deemed to be in arrears
and there upon, interest at 24% per annum shall be payable on such sum, and the
sum, together with any interference thereon, shall be recoverable either through
Civil Court or as an arrear of land revenue at the option of the Government.
However, in respect of the duty recoverable for the period from 01.12.93, no
interest shall be leviable from 01.12.93 upto the due date of demand as per the bill
to be served,
f) In case of dispute regarding the electricity duty recoverable from any
consumer or class of consumers, the matter shall be referred to the Chief
Electricity Inspector to Government for a decision.
This order issues with the concurrence of Finance & Planning (Finance Wing
Expenditure (E&F) Department vide their U.O.No.2228/AFS(B)/94, Dt.04.11.94.
(By order and in the name of the Governor of Andhra Pradesh)
Sd/-xxx,
S.RAY,
Principal Secretary to Government"
163. The aforesaid G.O.Ms,No.277 granted sanction to Andhra Pradesh
State Electricity Board to recover @ 6 paise only. At that time, that was the
duty imposed by the APED Act. There is no dispute that under the Andhra
Pradesh Electricity Reform Act, 1998 and the scheme of transfers, now the
DISCOMs are the licensees in place of Andhra Pradesh State Electricity Board.
Consequently, the G.O.Ms.No.277 applies to the present DISCOMs. It is
undisputed that till now the petitioners have been paying the duty @ 6 paise to
the respondents-licensees. There is no other order of sanction under Section 7
of the APED Act. The G.O.Ms.No.7, has been issued under Section 3 of APED
Act only. It is not under Section 7 (1). The contents of the G.O.Ms.No.7 also
do not show that the State has granted any sanction to the licensees to
recover, from the consumers petitioners, the amount of duty as now enhanced
or in excess of 6 paisa for which there is sanction under G.O.Ms.No.277.
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101 WP NQ.16619of2022& Batch
164. Consequently, after the enhancement of duty @ Re.l, unless the
licensees are granted sanction by the State Government to recover the same
either full, or part thereof, the licensees cannot recover any amount of duty, in
excess of 6 paise from the petitioners.
165. Sri V. R. Reddy Kowuri placed reliance on Regulation 3 of the
Regulations, 2005 and the terms of conditions of the Agreement, to contend
that the petitioners are bound to pay duty to the licensees as imposed under
G.O.Ms.No.7.
166. Regulation 3 of the Regulations 2005 reads as under:-
"3. Recovery of Electricity Charges from consumers
3.1 The distribution licensee shall recover the electricity charges for the
electricity supplied to the consumer as per the tariff determined by the
Commission from time to time in accordance with the provisions of Electricity
Act 2003:
Provided that where there are more than one Licensee in the same distribution
area the Licensees may be allowed by the Commission to recover the charges at
such tariffs as the licensee may consider appropriate subject to the maximum
ceiling of tariff fixed by the Commission.
3.2 Unless otherwise specified, all HT and LT rates refer to one point of
supply and each separate establishment will be given separate point of supply.
3.3 The consumer shall pay to the distribution licensee within the time specified
for the purpose under clause 4 every month/billing period at the appropriate
office of the distribution licensee or any other place allowed by the distribution
licensee,charges for the electrical energy supplied to the consumer during the
preceding billing period at the tariff in force from time to time.
3.4 The consumer shall pay, in addition to the charges fixed in the Tariff
determined by the Commission, all surcharges, additional charges if any
and any other charges payable relating to the supply of energy to the
consumer as per the tariff conditions in force from time to time. The
consumer shall also pay all the amounts chargeable by the Government by
way of tax/duty etc, to the appropriate authority as specified by the
Government.
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3,5 When supply to a new consumer is commenced in the middle of a billing
period, the demand charges, or any other similar fixed charges shall be levied
pro rata for the number of days for which supply is given during the billing
period. In the case of energy, pro rata minimum charge or the charges at
appropriate tariff for the energy actually consumed, whichever is higher shall be
payable by the consumer."
167. Appendix IIA, condition No.4 is reproduced as under:-
"4. Obligation to comply with Requirements of Act, and General Terms
and Conditions of Supply:
I/We further undertake to comply with all the requirements of the Electricity
Act, 2003, the Rules and Regulations Earned thereunder, provisions of the
tariffs scale of Miscellaneous and General Charges and the General Terms
and Conditions of Supply prescribed by the Company with approval of the AP
Electricity Regulatory Commission herein after called as Commission from
time to time and agree not to dispute the same."
168. From the aforesaid only, it is evident that the tariff determination is
exclusively of the electricity duty. Consequently, though the petitnioers are to
pay the duty in addition to tariff, but, in the absence of sanction from the State
Government, they cannot be asked to pay more than 6 paisa. Regulation No.3
clearly provides "shall also pay all the amounts chargeable by the Government
by way of tax / duty etc., to the appropriate authority as specified by the
Government". What has been specified by the Government is 6 paise kWh
vide G.O.Ms.No.277.
169. The submission to the contrary by the learned standing counsel for
DISCOMs is unsustainable and is rejected.
Determination of Point No.C:
170. In view of the aforesaid consideration, the petitioners / Alloy
Industries have to pay the same duty as aforesaid, unless there is exemption in
their favour by the State Government under the statutory provisions.
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Determination of Point No.D:
171. The petitioners of WP No.33988 of 2022 are engaged in the
business of Cold Storage of agricultural produce. They have filed writ petition
being aggrieved from the demand made by the respondents to pay the
electricity duty @ Rs.l/- per unit increasing the same from Rs.0.06 per unit,
from April, 2022 and True Up Charges pursuant to the G.O.Ms.No.7 Energy
Power-Ill Department dated 08.04.2022, and for the direction to refund the
amount already collected at the enhanced rate from April, 2022 onwards.
There is no challenge to the G.O.Ms.No.7, dated 08.04.2022.
172. Sri Nimmala Satyanarayana, learned counsel for the petitioners.
submitted that in the State of Andhra Pradesh, the cold storages are governed
under the statute namely the A.P Agricultural Produce and Live Stock Markets
Act, 1966 (in short'Act 19660 and license is also obtained as an ancillary to the
agricultural industry. Referring to the definition of the agricultural produce
under Section 2(i) of the Act 1966, it was submitted that the "Agricultural
produce" means anything produced from land in the course of agriculture or
horticulture and includes forest produce or any produce of like nature either
processed or un-processed and declared by the Government by the notification
to be agricultural produce for the purposes of the Act 1966. It was submitted
that the agricultural produce is kept in the cold storage to be used at future
dates and as no process is undertaken and the nature of the produce will also
not. change, the exemption clause of the notification is applicable to the cold
storages as well, and the petitioners cannot be asked to pay any electricity
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104 WP Np.l6619of2022& Batch
duty. Learned counsel for the petitioners-Cold Storages, submitted that the
State of Andhra Pradesh issued G.O.Ms.No,333 dated 14.11.2003 and classified
the cold storage as food processing units which were allowed concessional rate
of Rs.1.75 ps per unit which still holds good. Therefore all food processing
industry fall under the agricultural category. Placing reliance on the said
G.O.Ms.No.333, they submitted that the cold storage unit is ancillary to and
connected with agriculture. The Government itself in its wisdom to save
agricultural and allied products granted exemption to alt food processing units
including food grain milling and processing.
173. The G.O.Ms.No.333, dated 14.11.2003 is being reproduced as
under:
"G.O.Ms.No.l79 Industries & Commerce (FP) Department dated 22.6.2005.
1. G.O.Ms.No.333 Industries & Commerce (C&EP) Department dated 14.11:2003.
2. G.O.Ms.No.55 Industries & Commerce (C&EP) Department, dated 5.3.2004.
3. From the Commissioner of Industries, Andhra Pradesh, Hyderabad Single
FileNo.30/3/2005/0565 dated 20.6.2005.
ORDER:
In the GO first read above, orders were issued on Food Processing Policy of
Andhra Pradesh State and extending various incentives and concessions to the Food
Processing Industries in the State. In the G.O. second read above operational
guidelines were also issued for implementation of the Food Processing Policy in
the State.
2. The Commissioner of Industries, Andhra Pradesh, in the single file
third read above has reported that some of the Food Processing Industries in the
State have approached the High Court of Andhra Pradesh. Keeping in view
of the all consequences in view, the Commissioner of Industries, has
requested the Government to consider the earlier policy and issue necessary
orders on the Food Processing Policy of the Andhra Pradesh.
3. Government, after careful examination of the matter in detail, have decided
to evolve a food processing policy of Andhra Pradesh State by
superseding the orders issued in the G.O. first read above and the operational
guidelines issued in the GO second read above.
4. Accordingly, in supersession of the orders issued in GO first read above and
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consequent operational guidelines issued in GO second read above, approved the
fresh State policy on "Food Processing Industries" as detailed below.
Coverage:
The policy will cover the following activities and
areas: HORTICULTURE:
Fruit & Vegetable processing
Fruit based ready to serve beverages.
Tissue culture Laborators/Green houses/Green house nurseries/Mushroom
Laboratories/Seed production units based on modem scientific methods to
meetindustry standards.
Wine
making.
AGRICULT
URE:
Food grain milling/processing.
■ Using modem technology and equipment (except Rice Mills)Alcohol for
blendingwith fuels.
ANIMAL HUSBANDRY.
Dairy products.
Processing of poultry, eggs, meat and meat products.
FISHERIES:
Fish processing including shrimps.
AGRO FOOD PROCESSING INDUSTRIES:
Bread, Oilseed meals (edible), breakfast, foods, biscuits, confectionery,
including cocos processing and chocolate, oil expellers and refining, malt
extract, protein isolates, high protein foods, weaning foods, extmded/other
ready to eat food products and all other processed foods (excluding non-
packed fooditems served in Hotels and Restaurants of all categories)
ALLIED INDUSTRIES:
Cold Storage unit.
Refrigerated Transport vehicles containers; (excluding second hand
Reflirbishedvehicles/contains)
Units manufacturing food grade packaging materials for food processing
industry.
Units engaged in packaging, canning and bottling of process foods.
Units manufacturing additives/preservatives/colors/fragrances for the processed
food industry.
Biotechnology industries.
2. INCENTIVES AND CONCESSIONS:
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Reimbursement of cost of power for all eligible units shall be allowed @ Re. 1.00
per.unitas against Re.0.75 per unit as provided for the other eligible industries under
IIPP.
5. The Fresh Food Processing Policy will come into effect from 1.4.2005. The
reimbursement of cost of power shall be extended for a period of five years from the
date 1.4.2005. The Food Processing units of those, which have gone into
commercial production after 14.11.2003, shall be eligible for reimbursement of cost
of power.
6. The Commissioner of Industries shall be the Nodal Agency
to implenient the fresh policy.
7. The State Level Committee of the Industries Department shall decide and
finalise all cases relating to the incentives/benefits to the Food Processing
Industries in the State.
8. The Commissioner of Industries, Hyderabad shall evolve a separate coding (Bar
Coding) procedure for Food Processing Industries in the State.
9. Operational guidelines for the implementation of the fresh Food Processing
Policy shall be issued separately".
174. So far as the G.O.Ms.No.333 is concerned, thereby the State
Government extended certain concessions and incentives for the members of
food processing Industry and a special provision was also made for food
processing industry. Clause 3(8) of the said G.O. provided that all concessions
except capital subsidy provided under the said policy on food processing unit,
shall be extended to the existing unit treating them as new units. The food
process industries as covered under the said policy, included inter alia the
agriculture and 'allied industries'. Under the category allied industries the cold
storage unit was mentioned. The incentive or the concession, provided for the
reimbursement of cost of power for all eligible units was allowed at the rate of
Rs.1.00/- per unit, as against Rs.0.75 per unit as was provided for the other
eligible industries.
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175. I find that the said G.O.Ms.l\fo.333 is on a different subject, i.e.,
that is the grant of concession in the rate of tariff as fixed by the Electricity
Regulatory Commission. The State Government granted a concession to
different eligible industries at the rate of Rs.0.75 per unit but in respect of the
food processing industries under the policy, under the allied industries, which
covered cold storage unit, those were allowed reimbursement of costs of bill at
the rate of Rs.1.00 per unit. The said G.O.Ms.No.333 is neither on the subject
of duty nor any exemption or concession from the payment of duty is granted.
Based on the said G.O.Ms.No.333, the submission that the cold storage unit
was covered under the allied industries, and therefore it should also be granted
exemption from duty, or based thereon it should also be considered as allied
industries and allowed exemption in Electricity duty also, considering 'as
agriculture consumers', cannot be accepted. Firstly, because in the said G.O.
the food process industries coverage policy, categorized the agriculture and
allied industries, differently. It was under the allied industries that the cold
storage unit was included and not under the agriculture. Further, such
classification is for a specific purpose for which G.O.Ms.No.333 was issued. It
cannot be universally applied, of its own to the subject of duty and its payment
by different category of consumers or for grant of exemption from Electricity
duty. It is for the State imposing duty on licensee, to choose from whom' the
licensee can recover the same duty or part thereof and upon whom it is not to
be levied. It is for the State to grant the exemption to the category of
consumers. It is a policy decision. Section 3-A of the Electricity Duty Act
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provides for the power to grant exemption. But unless such power is exercised
in favour of 'Cold Storages' they cannot claim exemption from payment of duty
based on G.O.Ms.No.333. The petitioners as such cannot claim any benefit
based on G.O.Ms.No.333, for seeking exemption from payment of duty nor for
claiming that they fall under the category of agricultural consumers or allied
industries, for the payment of duty.
176. In M/s. Kalyan Roller Flour Mills Pvt.Ltd. (supra) upon which
Sri Nimmala Satyanarayana placed reliance, the petitioners therein had
challenged the letter of the Central Power Distribution Company of A.P Limited
dated 16.09.2005, cancelling the eligibility certificate issued to the petitioners
therein, for availing power tariff concession/market cess exemption, being
arbitrary and violative of Article 14 of the Constitution. Subsequent to
G.O.Ms.No.333, another G.O.Ms.No.l79 dated 22.06.2005 was issued. The
question which arose for consideration was whether G.O.Ms.No.l79 dated
22.06.2005 superseded G.O.Ms.No.333 dated 14.11.2003 with retrospective
effect and any benefits extended in favour of the petitioners therein under
G.O.Ms.No.333 got cancelled. It was held that G.O.Ms.No.l79 dated 22.06.2005
had no retrospective effect. It could not be said that already extended benefits
under G.O.Ms.No.333 stood cancelled or invalidated.
177. It is apt to refer paragraphs 14, 15 and 16 of M/s.Kalyan Roller
Flour Mills Pvt. Ltd. (supra) as under:
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14. When a similar question arose before this Court in G.S. Oils Ltd.,
. Adilabad v. GM, District Industries Centre, Adilabad {2006 (6) ALD
442}, this Court held:
"It is no doubt true that in the light of the clause
referred to supra in G.O.Ms.No.55, the learned Judge
came to the conclusion that giving eligibility certificate as
required under G.O.Ms.No.333 dated 14.11.2003 is
essential for getting the incentives. The writ petitioners
made applications on 29.5.2004, 24.4.2004 and
6.5.2004 respectively. It is not the case of the
respondents that the policy decision promulgated under
G.O.Ms.No.l79 superseding the prior G.Os would have
any retrospective operation. Even otherwise, the
applications were made as per G.Os., the petitioners were
under the fond hope and expectation that they would be
entitled to these incentives and nothing was heard from
the side of the respondents sideas specified in the respective
affidavits filed in support of the writ petitions. In the light
of the view expressed by the Apex Court in
Commissioner of Central Excise v.
M.P.V. & Engineering Industries (2003 (5) SCC 333)
and also in the light of the view expressed by the
learned Judge of this Court in Writ Petition No. 1954 of
2005 dated 30.6.2006 (Sukhjit Starch Mills Limited's
case), which is latter in point of time wherein reliance
was placed on the decision of the Division Bench of this
Court in P.P.R. Industries v. Commissioner of Industries
(1993 APSTJ Volume 17 P.91), this Court is of the
considered opinion that the petitioners are entitled to the
incentives or benefits as per G.O.Ms.No.333 dated
14.11.2003 and G.O.Ms.No.55 dated 5.3.2004 till
the date of issuance of G.O.Ms.No.l79 from the
respective dates of the applications dated 29.5.2004,
24.4.2004 and 6.5.2004 respectively".
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#
Further, in another reported decision in P.P.P. Industries v. Commissioner of
Industries and another {Vol.92 STC 110), it was held:
"The petitioners are entitled to "sales tax holiday" for
a period of five years subject to a ceiling of
Rs.35,00,000 on sales tax during the entire holiday
period. We further hold that restriction or reduction of
such eligibility to the sum of 100 per cent of the capital
investment under clause 6B (ii) of the Manual of
Instructions or the eligibility fixed by the District
Committee or the orders of assessment are illegal and
unenforceable. There will be a consequential direction that
the respondents shall give full effect to the eligibility of the
petitioners in terms of clause 3 of G.O.No. 498 to the
extent mentioned above for the period provided not
exceeding five years and that the respondents shall not
demand or collect sales tax from the petitioners except
after granting the benefits of tax holiday in the amount
and within the period as mentioned above".
From the above, it is seen that firstly G.O.Ms.No. 179 dated 22.6.2005 has
no retrospective effect and the incentives extended earlier under
G.O.Ms.No.333 dated 14.11.2003 do not stand cancelled or become
invalidated. Secondly, the tariff, something like tax holiday, which was
already extended for the sustenance of the existing food processingunits,
cannot be said to have been taken away under G.O.Ms.No. 179. Further, no
invidious discrimination could have been made between the existing and the
fresh food processing units in so far as availing the concessions of tariff at
the rate of Rs.l.75ps. per unit. In fact, the very concept of extending
incentives and eoncessions was for the sustenance of the industry already
existing. The very G.O.Ms.No.333 dated 14.11.2003 was issued after
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making a study of the existing industries and their plight in facing
difficulties in their sustenance and growth as food processing industries.
Therefore, it cannot be said that the existing units are not entitled for the
incentives and concessions made inG.O.Ms.No.333 dated 14.11.2003 or that
the incentives and concessions already extended in favour of the
petitioner stand either cancelled orinvalidated.
15. Learned standing counsel appearing for respondents 2 and 3
strenuously contended that whether any concession is extended as to the
tariff rate to the Food Processing Industry or an eligibility certificate has
been issued by the Industries Department, it is not binding on respondents 2
and 3 and respondents 2 and 3 are bound by the orders issued by the
Electricity Regulatory Commission and unless and until the said
G.O.Ms.No.333 has been approved by the Electricity Regulatory
Commission, the petitioners are not entitled for any such concession etc.
under Section 65 of the Electricity Act, 2003. This aspect need not be gone
into in a writ petition like this. All the instructions issued by the Government
are binding on respondents 2 and 3 and it is for therespondents 2 and 3 to
go and seek ratification or permission from the Electricity Regulatory
Authority in this regard, if necessary.
16. For all the above reasons, the impugned proceedings dated
16.9.2005 are liable to be set aside as arbitrary and illegal and they are
accordingly set aside. The writ petition is allowed. No order as tocosts."
RNT, J
#
178. Learned counsel for the petitioners placed reliance in Madhava Hi
Tech Cold Storage (P) Limited (supra) to contend that when there was no
manufacturing process in cold storage unit, it cannot be termed as industry.
179. In Madhava Hi-Tech Coid Storage (P) Limited (supra) the
order of penalty was passed under Section 10-A of the Central Sales Tax Act,
1956 (in short 'the CST ActO by the Assistant Commercial Tax Officer in respect
of machinery brought for installation of cold storage from other States by
furnishing declarations in form 'C' which were incorporated in the Certificate of
Registration under the CST Act and the same Was challenged. The point that
arose for consideration was, whether the authority was right in imposing the
penalty on the petitioners therein. The further question was whether purchase
of machinery by using the 'C' forms would amount to false representation and
whether there was any processing of items stored in cold storage. Section 8
(3) (1) (b) of the CST Act provided that the goods referred to in sub-section (1)
(b) are goods of the class or classes specified in the certificate of registration of
the registered dealer purchasing the goods as being intended for resale by him
or subject to any rules made by the Central Government in that behalf for use
by him in the manufacture or processing of goods for sale or in the tele
communications network or in mining or in the generation or distribution of
electricity or any other form of power. Section 10 of the CST Act provided for
penalty if any person, after purchasing any goods for any of the purposes
specified in clause (b) or clause (c) or clause (d) of sub-section (3) or
subsection (6) of section 8 fails, without reasonable excuse, to make use of the
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WP No. 16619 of 2022 & Batch
goods for any such purpose. In that case it was argued that since an element
of processing of goods was involved due to storage of products referred to in
'C' forms, the action of the authorities in imposing penalty was not proper, as
there was no false representation. The Division Bench of this Court, placing
reliance on the judgment of the Hon'ble Apex Court in Chowgule (supra) did
not accept the contention that the storage of item in a cold storage undergoes
processing and as such, the petitioner therein was held not entitled for
exemptions/benefits. It was further held that the same shall not make the
assessee eligible for utilization of'C' forms, and hence use of'C' forms knowing
that there was no manufacturing process in cold storage unit, the order of
penalty did not warrant interference.
180. Reliance was placed on the judgment in Madhava Hi-Tech Cold
Storage (P) Limited (supra) to contend that, there is no processing in cold
storage of the items stored. What I find is that, that was a case in the context
of Section 8 (3) and Section 10 (d) of the CST Act, which provisions are not
attracted to the present case. Evne if it be taken that there is no processing as
this term was considered in Madhava Hi-Tech Cold Storage (P) Limited
(supra), it cannot be held here that for the purpose of the Electricity Duty Act
and the notification / G.O.Ms.No.7, they would become agricultural consumers.
and exempted from payment of electricity duty.
181. Reliance placed on the judgment of the Delhi Cold Storage
Private Limited is also misconceived. This is also in the context of
Section 2 (7) (c) of the Finance Act, 1973, as to whether the assessee company
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running a cold storage can be held to be an industrial company. In the said
case, it was held that the word 'processing ' was understood as an action that
brings forth some change or alteration of the goods or material which was
subjected to the act of processing. The processing involves bringing into
existence a different substance from what the material was at the
commencement of the process. The interpretation of the word 'processing' was
to find out if the cold storages were covered or not covered under the
provisions of the Finance Act and the CST Act. In the present case, nothing has
been placed before this Court that for categorization of the cold storage as
commercial / industrial / agriculture there should be processing of goods. The
processing of goods is not the criteria brought to the notice of this Court for
making the categorization of industrial and commercial category on one hand
and the domestic and agriculture units on the other hand for the purposes of
electricity duty. The duty is imposed on all kinds of category of consumers, but
exemption is granted for payment on certain category of consumers. In the
absence of any such criteria pointed out, that unless there is processing, the
category of cold storage would fall within the category of agriculture, the
contention based on the aforesaid judgment cannot be accepted.
182. Learned counsel for the petitioners placed reliance in Central Bank
of India (supra) the judgment of the Debts Recovery Appellate Tribunal,
Mumbai, to contend that there it was held that the definition of 'Agriculture' and
'Agricultural purposes', in Punjab Agricultural Credit Operations and
Miscellaneous Provisions (Banks) Act, 1978, shall include the storage of food
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products and also the transport and the acquisition of implements and
machinery in connection with any such activity.
1S3. In the present case, any such definition of 'agriculture' and
agricultural purposes' to include the storage of food products and also the
transport and acquisition of implements and machinery in connection with such
activity could not be shown neither under the Electricity Act nor the Electricity
Duty Act to contend that the cold storage would no fall under the category of
'agricultural consumers'. Consequently, the reliance placed in the judgment of
Guru Nanak Cold Storage and Ice Factory (supra) is misconceived.
184. Learned counsel for the petitioners further placed reliance in the
case of Krishna Poultry Farm (supra) to contend that the cold storage are
allied agro industrial activities, but the Court finds that there regulation 80 (5)
(1) of O.E.R.C Distribution (Condition of Supply) Code, 2004, while categorizing
the Agro Industrial Consumers, included therein, the category relating to supply
of power for Pisciculture, Horticulture, Floriculture, Sericulture and other allied
agricultural activities including animal husbandry, poultry and cold storage, i.e.,
temperature controlled storage where flowers, fruits, vegetables, meat, fish and
food etc., can be kept fresh or frozen until it was needed. That was basically a
case, where the petitioner farm was reclassified as 'commercial' category
instead of 'agro industrial category', which was questioned with further
direction to revise the assessed amount without any notice regarding
reclassification, as per Regulation 82 of the Code 2004. The petitioner's farm
therein was an agricultural unit actively associated with poultry farming. The
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said judgment is also not applicable, for the reason that the supply of power to
the cold storage, was included specifically under Regulation 80 (5) (i) of the
Code in the category of 'agro industrial consumers', for which the petitioner
therein had entered into an agreement under which the energy charges were
fixed as applicable to the consumer under 'agro industrial' category. In the
present case, it has not been shown that the cold storages are included under
allied agro industrial activities for the purposes of duty under the Electricity
Duty Act. The inclusion by G.O.Ms.No.333, dated 14.11.2003, for a specified
period, was only for the purposes of grant of concession from tariff and that
too, there, the cold storage unit was under allied industries and not under
agriculture.
185. In Tutjabhavani Cold Storage Pvt. Ltd. (supra) upon which the
learned counsel for the petitioners placed reliance to contend that the cold
storages for agricultural products fall under the 'agricultural' category. There,
for the purposes of tariff, the categorization of cold storage was made by the
Regulatory Commission in the tariff order in two categories; (a) Cold Storages
for Agriculture Products - processed or otherwise covered under the category
Agriculture-others (excluding agriculture pump sets); and (b) Cold storages for
all other purposes to be covered under Industrial category. In the present case.
any such categories of . cold storages in the tariff order of the APERC, could not
be placed before this Court.
186. In M/s. Odisha Cold Storage Association (supra) on which
learned counsel for the petitioners placed much reliance, the issue was whether
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there was justification for covering the cold storage units in the category of
Regulation 138 (f) of the OERC Distribution (Conditions of Supply) Code 2019.
The .Regulatory Commission held that it was empowered with the authority to
make revision in the matter of classification of consumers under Regulation
IMo.203 of the Code 2019. The prayer of the petitioner therein to categorize the
cold storages under Regulation 138 (f) instead of 138 (g) of the Code 2019 was
found to be devoid of merit and accordingly, was rejected with the clarification
that the Commission will have no objection if any further subsidy/incentive is
, provided to the cold storages by the Government of Odisha. This cannot be of
any help to the petitioners in this case to support the,submission advanced.
187. Another order, upon which reliance was placed by the learned
counsel for the petitioner is Tamil Nadu Electricity Regulatory Commission with
respect to the tariff order issued by it and the same is also of no help to the
petitioners inasmuch as it is for the Regulatory Commission to consider on what
category, of consumers what tariff was to be imposed.
Conclusions:
188. To sum up:
1. The tariff and the duty are different. The tariff is rate/cost. The tariff
is schedule of standard prices or charges for specified services provided to the
type or types of electricity consumers, as specified in the tariff order.
2. The tax which is charged on sale or consumption of electricity is the
electricity duty. The tariff will not include the electricity duty/tax as its
component. Both of them are different and independent.
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3. The determination of tariff is different and imposition of duty is
different. The electricity Act and the APED Act and the functions there under of
APERC and the State respectively under the respective Acts are independent
acts and they operate in different fields.
4. In determination of tariff, if subsidy is granted to the agriculture
consumers, the Government pays the amount to the licensee on account of
such subsidy, the burden is not placed upon the other category of consumers.
The Government pays and compensates the licensee. It cannot be said that
the burden of subsidy to agriculture consumers goes on to the industrial or
commercial consumers. It cannot be termed as cross subsidy.
5. The State has the power to impose duty and fix its rate which it
derives from Section 3 of APED Act, as amended, which Act itself is referable to
Entry 53 in the Second List of Seventh Schedule of the Constitution of India.
6. The only limitations on the power of the State in levying tax for sale
and consumption of electricity are to be found under Entry 53 of List-II and in
the Constitution. So far as the notification is concerned, the only limitation on
the State while determining the duty would be the limitation fixed by the APED
Act and the constitutional provisions.
7. The State has also power to grant exemption under Section 3A of
APED Act. Consequently, grant of exemption from duty to domestic consumers
to a certain extent and exemption in full to the agriculture consumers is within
its jurisdiction and power and there is no question of any arbitrary exercise on
that count.
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8. The impugned notification by the State is within the power conferred
by the legislature; the APED Act and it also does not violate the legislative field,
governed by APED Act, since imposition of duty is only on the sale and
consumption of the electricity.
9. The classification of the consumers of electric energy into industrial.
commercial, domestic and agriculture is not under challenge. The petitioners
having not established that all the category of consumers stand on equal
footing, the challenge on the ground of violation of Article 14 of the
Constitution of India that the equals cannot be treated unequally, is
unsustainable. Equal treatment in the matter of imposition of duty, equally on
all or at equal rate would, amount to violation of the equality clause, as
unequals cannot be treated equally.
10. The consumers of the electricity have to pay the tariff as determined
by APERC and in addition, they are also liable for payment of the duty on sale
or consumption of the electricity, subject to grant of exemption under Section
,3A of the APED Act, if there is sanction under Section 7 of the APED Act.
11. The object of the impugned notification is augmentation of revenue.
Duty would go to the public exchequer for various purposes. The notification is
not for realizing the subsidy amount from the industrial and commercial
consumers, but the grant of subsidy has been cited as one of the reasons.
amongst so many, due to which there is burden on the State Government and
to meet the expenses to augment the revenue, the notification has been issued.
The primary object is not to realize the subsidy amount granted while
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determination of tariff, but is to augment the revenue for various reasons to
meet the expenditures. It cannot be said to be a colourable exercise of power.
12. The burden on the industrial and commercial consumers may be
there because of rise in the duty rate, compared to previously, when it was only
6 paise and now it is Re.l/-, but that is the consequence flowing from the
exercise of the power by the State Government within its legislative and
executive field flowing from APED Act which Act itself is under the Constitution
within the legislative field. Merely because of such burden, it cannot be said
that the imposition of duty or increase in the rate is either colourable exercise
of power or it interferes with the field of regulation and control. In such
matters, the motive becomes irrelevant, if the exercise of power is within the
legislative and executive competence. There is source of power and there is no
transgression of such power.
13. The rate of duty from 6 paisa kWh to Re.l/- lies in the domain of the
Executive to fix. Such determination is made on consideration of various
factors. In the present case, such enhancement has been made after 18 years.
and considering the rates in different States, it can be said that the petitioners
have not been able to substantiate their submission that the rate is
unreasonable and excessive. It is not for this Court in exercise of the writ
jurisdiction to interfere with such increase in the rate of duty being a policy
decision, based on reasons.
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14. The G.O.Ms.No.7, Energy (Power-Ill) Department, dated
08.04.2022, does not suffer from vices of colourable exercise of power nor from
violation of Article 14 of the Constitution of India.
15. The petitioners-Ferro Alloys industries admittedly are the industrial
and commercial consumers. Their claim for different rates for them is in effect
and substance the claim for granting exemption under Section 3A of the APED
Act. No such exemption having been granted by the Government in their
favour, it cannot be claimed in these writ petitions that they are not liable for
making the payment of the electricity duty at the rate fixed, for the industrial
and commercial consumers category.
16. The petitioners of cold storages, in the absence of their classification
as agriculture consumers, and as nothing has been brought on record to show
that they fail within the category of agriculture consumers, they cannot be held
entitled for exemption from payment of duty at par the agriculture consumers.
as in their cases any exemption under Section 3A of the APED Act, in favour of
the cold storages, petitioners, has also not been granted.
17. The demand made by the Licensees from the petitioners/consum ers
has the sanction of the State Government under Section 7 of the APED Act to
the extent of 6 paise kWh in G.O.Ms.No.277, Energy 7 Forests (PR.I (I)
Department, dated 09.12.21994.
18. Consequently, there is no other sanction order after G.O.Ms.No.7,
dated 08.04.2022, permitting the licensees to recover from the consumers /
petitioners in excess of 6 paisa. Any demand in excess of 6 paise kWh from the
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■ petitioners by the 'licensees' being without previous sanction of the Government
is without jurisdiction and unsustainable and to that extent, i.e., beyond 6 paisa
kWh.
189. Accordingly, this Court holds as under:
raj Point No.A fl') and f2^:
The G.O.Ms.No.7, dated 08.04.2022, does not suffer from vice of
colourable exercise of power, nor violative of Article 14 of the Constitution of
India.
(b) Point No.B:
The licensees can recover duty from the petitioners / consumers only @
6 paisa kWh under the sanction order under G.O.Ms.No.277, dated 09.12.1994,
and not in excess thereof. There is no other previous sanction of the State
Government for any amount of duty now imposed on licensees, in excess of 6
paisa kWh.
(c) Point No.C:
The petitioners / Alloy Industries have to pay the same duty as in Point
No.B (supra), unless they are granted exemption under the statutory
provisions.
(d) Point No.D:
The petitioners / Cold Storage industries failed to establish that they are
agricultural consumers. Consequently, they are not exempted from payment of
duty, in terms of Point B (supra).
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190. In the result,
i) the challenge to the impugned G.O.Ms.No.7, Energy (Power-Ill)
Department, dated 08.04.2022, fails. The Writ Petitions are dismissed to
that effect.
ii) The demand notices by licensees to the petitioners in excess of @ 6
paise kWh, to the extent of excess, cannot be enforced.
iii)It is clarified that the petitioners shall have to pay duty @6 paise kWh,
subject to any other previous sanction of State Government under
Section 7 of APED Act for the rate of duty in excess of 6 paisa kWh.
iv)The petitioners / consumers are granted liberty to file applications before
their respective licensees for refund or adjustment of the excess amount
~ of the duty, if paid by them, in excess of 6 paisa kWh, upon which, the
respective licensees shall proceed accordingly.
v) All the writ petitions are allowed in part in the aforesaid terms.
191. No order as to costs.
Pending miscellaneous petitions, if any, shall stand closed in
consequence.
RAVI NATH TILHARI, 3
Date: 15.09.2023
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LR copy to be marked
B/o
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