Civil Appeals Nos
1312 of 1976 519 1146 537 and 2639 of 1979
773 and 2032 of 1980
Appeals by Certificate and Special leave Petitions from the Judgment and order dated the 81074 91178 221278 and 5th March
1980 of the Allahabad High Court in Civil Writ Petitions Nos
303974 8976 76075 75975 44276 263077 and 54775
P R Mridul G L Sanghi Dr Praveen Kumar Praveen Kumar and H K Puri for the appearing Appellants
section C Manchanda Sobha Dikshit Pradeep Misra and Sudhir Kulshreshta for the appearing Respondents 668 The Judgment of the Court was delivered by THAKKAR J
The main controversy in this group of appeals centres around the question whether Electricity Duty on the consumption of electrical energy in Uttar Pradesh is payable by a person who has his own source of generation and also purchases electrical energy from a licensee or the Board or the State Government or the Central Government
The contention has been raised in the context of Section 31 and 41 of the U P Electricity Duty Act 1852
The view is canvassed on behalf of the consumers of electrical energy that while under Section 31 c read with Section 41 c of the Act Electricity Duty is indubitably leviable and payable on electrical energy consumed by a person from his own source of generation such duty is not payable by him in case he consumes energy from his own source of generation and also purchases energy from a licensee the Board the State Government or the Central Government
This question initially came up before a Division Bench of the Allahabad High Court in Sherwani Sugar Syndicate Pvt Ltd vs State of UP C M W P No 3039 of 1974
The Division Bench by its judgment dated October 8 1974 upheld the contention that in as much as the petitioner company had its own source of generation of energy and was also purchasing energy from another source indicated in Section 3 1 a and 3 1 b the petitioner company was not liable for payment of duty on the energy generated from its own source of supply
The State of Uttar Pradesh has called into question the legality and validity of this decision by way of an appeal by certificate of fitness granted by the High Court C A No 1312 of 1977
Meanwhile Ms Deoria Sugar Mills Ltd also approached the High Court of Allahabad by way of CMWP No 9990 of 1975 on an identical plea
The matter came up before another Division of the Allahabad High Court
This Division Bench was of the opinion that the decision in Sherwani Syndicate case supra required reconsideration
The matter was therefore referred to a Full Bench
The Full Bench was of the opinion that the view taken earlier in Sherwani s Case was not correct and dismissed the Writ Petition filed by Ms Deoria Sugar Mills taking the view that a user of electricity was liable to pay electricity duty on the consumption of energy from his own source of supply regardless of whether or not he also purchased electricity from some other source indicated in Section 3 1 a and b
In view of this decision of the Full Bench petitions instituted by six other companies raising the identical question were dismissed by the High Court of Allahabad
These companies 669 have approached this Court by way of six separate appeals by special leave granted by this Court
Sections 3 1 and Section 41 of the Act in so far as material read thus 3
Levy of Electricity Duty I Subject to tho provisions herein after contained there shall be levied for and paid to the State Government on the energy a Sold to a consumer by a licensee the Board the State Government or the Central Government or b Consumed by a licensee or the Board in or upon premises used for commercial or residential purposes or in or upon any other premises except in the construction maintenance or operation of his or its works or c Consumed by any other person from his own source of generation a duty hereinafter referred to as electricity Duty  x x x x x x x x x x 4
Payment of electricity duty and interest thereupon 1 The electricity duty shall be paid in such manner and within such period as may be prescribed to the State Government
a Where the energy is supplied or consumed by a licensee by the licensee b Where the energy is supplied by the State Government or the Central Government or is supplied or consumed by the Board by the appointed authority and c Where the energy is consumed by any other person from his own source of generation by the person generating such energy
 670 The original writ Petitioners who canvass the view that electricity duty is not leviable or payable by a person consuming energy from his own source of generation under section 3 1 c read with Section 4 l c of the Act lay great stress on the expression another person  occuring in Section 3 l c and Section 4 1 c of the Act
It is contended that in view of the user of this expression only those consumers who wholly fall outside the orbit of Sections 3 1 a or 3 l b are eligible to electricity duty under section 31 c
In case a consumer fails both  under Sections 3 1 a and 3 1 c or sections 3 1 b and 3 1 c it is so argued such a person would not be exigible to electricity duty
The same argument is urged protanto in the context of clauses a b and c of Section 41
In our opinion this submission is altogether untenable and has been rightly repelled by the Pull Bench of the Allahabad High Court in its well considered judgment
On a plain reading of Section 3 1 c it is evident that duty has been levied on the energy consumed by a person from his own source of generation without anything more
There is no rider or qualification engrafted in Section 3 1 c or Section 4 1 c
The fact that the user of electricity from his own source of generation purchases electricity from some other source as well is an altogether irrelevant factor from the stand point of the liability imposed by the said provisions
Be it realized that duty is levied on the consumption of energy
The taxing event is the consumption of energy The source from which the electricity is acquired is altogether irrelevant
A person having his own source of energy who also purchases energy from another source indicated in Section 3 1 a will be covered by 3 1 a to the extent he purchases electricity from such a source and will be equally covered by Section 3 1 c insofar as he consumes energy from his own source of generation
He will be covered by both the provisions read conjointly
The same reasoning applies in the context of clauses a b and c of Section 4 1
There is no rational basis for exonerating a person from payment of duty merely because he has his own source of generation and he also purchases electricity from some other source
In fact it will be irrational to do so and it would give rise to an anachronism
Why make him pay only if he generates his own energy and why exempt him altogether merely because he also  purchases from some other source  Duty is levied as a measure of taxation in order to raise additional revenue as is made abundantly clear by the prefactory note and the extract from the statement of objects and reasons published in U P Gazette Extraordinary dated September 1 1952 which reads as under 671 The minimum programme of development which this State must carry out within the next three or four years for the attainment of the objective of a welfare State is set out in the Five Year Plan drawn up by the Planning Commission
This plan provides for an expenditure of 1358 crores of rupees on power development projects
Such a huge expenditure cannot be met from our present resources
It is however essential for the welfare of the people that the expenditure should be incurred and that noting should be allowed to stand in the way of the progress of the plan
Additional resources have therefore to be found the bulk of which can be raised only by means of fresh taxation
A tax on the consumption of electrical energy will impose a negligible burden on the consumer and is a fruitful source of additional revenue
The bill has been so prepared as to ensure that the tax payable by a person will be related to the quantity of electricity consumed by him
The bill is being introduced with the above object
Vide Statement of Objects and Reasons published in U P Gazette
Extra
September 1 1952
 How would this object be promoted or served by adopting such an irrational course  The taxing event being the consumption of energy the source from which the electricity is acquired would become altogether irrelevant
Section 3 1 as also Section 4 1 has to be read as a whole and has to be interpreted in a harmonious and meaningful manner
To do otherwise would be to defeat the legislative intent which is abundantly clear whilst at the same time exposing the provision to the charge of being irrational and arbitrary by placing such an unwarranted construction thereon
The Full Bench of the Allahabad High Court was therefore perfectly justified in taking the view that duty was chargeable in respect of energy consumed by a person from his own source of generation regardless of the fact that he also  purchased electricity from some other source indicated in Section 3 1 a and Section 4 1 a
The appeal preferred by the State being Appeal No 131277 will therefore have to be allowed and the appeals preferred by the consumers of electricity challenging the correctness of the decision rendered by the Full Bench must therefore be dismissed
672 The next question agitated in five out of the seven appeals comprised in the group it does not arise in CA 131277 and CA 114679 arises thus The State of UP issued a notification dated March 17 1973 whereby in exercise of powers under sub section 4 of Section 3 of the Act a person consuming energy from his own source of generation installed after  January 2 1973 was exempted from payment of electricity duty
The appellants in the appeals before us are persons who have their own source of generation of electricity
The generating machinery was however installed and commissioned by them before  January 2 1973
It is their contention that exemption could not have been lawfully granted to a person installing his own source of generation after  January 2 1973 unless exemption was also granted to the persons consuming electricity from their own source of generation installed prior  to January 2 1973
In other words the argument is that exemption must be granted to all persons having their own source of electricity regardless of the date on which the source of generation is installed in order to be able to successfully face the challenge from the platform of Article 14 of the Constitution of India
Exemption it is argued in effect must be granted to all or to none irrespective of the date of installation of the equipment for generation of electricity to save the provision from the peril of being held as unconstitutional by reason of its being discriminatory and violative of Article 14 of the Constitution
This argument has been rightly negatived by the High Court for the very good reason that the Notification ex facie made it abundantly clear that exemption was being granted having regard to the need to promote industrial production generally and to the prevailing acute power shortage in the State
 It is evident that in view of the felt need for augmenting the sources of supply of electrical energy an incentive needed to be provided by way of granting exemption to those who installed their own source of generation of energy
As acute shortage of power was being experienced there was a need to encourage the consumers to acquire their own source of energy with a view to reduce or lessen the burden on the existing sources of electricity generation
Obviously this purpose can be achieved only by granting the exemption prospectively to those consumers who install their own source of generation of energy pursuant to the concession being granted under the provision for exemption
Those who already had their own source of generation of energy need no such encouragement in respect of the source of generation already installed
If they wanted to further augment their own source of generation of energy they would also be entitled to 673 exemption in respect of the additional  source of generation installed after  the date specified in the notification
The classification is therefore rational purposeful as also meaningful and it is calculated to effectively serve the real purpose of granting exemption
Article 14 cannot be invoked in a situation like this to successfully assail that part of the notification where by the date of installation has been made the precondition for qualifying for exemption
State of Uttar Pradesh vs Jageshwar1 on which reliance is placed cannot buttress the view canvassed by the writ petitioners having regard to the fact that exemption was granted with a view to encouraging consumers of electricity to become self sufficient hence forth and with the end in view to lessen the burden on the other source of generation prospectively
As against this those who had already acquired their own source for generating electricity were in need of no retroactive encouragement by way of concession or exemption for doing what they had already done
There would have been no augmentation of the existing resources by extending the exemption to them
Under the circumstances we are of the opinion that the High Court was fully justified in repelling the plea urged by the writ petitioners in this behalf
In the result the appeal preferred by the State of Uttar Pradesh CA 1312 of 1977 is allowed the judgement and order of the High Court are set aside and the writ petition giving rise to the said appeal is dismissed with costs throughout
The rest of the appeals are dismissed with costs
All interim orders will stand vacated
HSK Civil Appeal No 131272 allowed and all other Appeals dismissed


Summary:
The appellants who had their own source of generation of electrical energy generating machinery having been installed and commissioned before 211973 and were also purchasing electrical energy from another source challenged the correctness of the decision of a Full Bench of the High Court reversing the decision of a Division Bench and holding that a user of electricity was liable to pay electricity duty on consumption of energy from his own source of supply regardless of whether or not he also purchased electricity from some other source indicated in sec
31 a and b
The appellant contended that in view of the user of the expression another person  in sec
31 c and sec
41 c only those consumers who wholly fell outside the orbit of sec
31 a and b were exigible to electricity duty under sec
31 c
The appellant submitted that under Notification dated March 17 1973 exemption must be granted to all persons having their own source of electricity regardless of the date on which the source generation is installed to save it from challenge under article 14 of the Constitution of India
In Civil Appeal 1312 the State of UP challenged the correctness of the decision of the Division Bench
Allowing the Appeal No 1312 and dismissing other appeals  HELD The duty was chargeable in respect of energy consumed by a person from his own source of generation regardless of the fact that he also  purchased electricity from other source indicated in sec
31 a and sec
41 a
671 G On a plain reading of sec
31 c it is evident that duty has been levied on the energy consumed by a person from his own source of generation without anything more
The fact that the user of electricity from his own source of generation purchases electricity from some other source as well is an altogether irrelevant factor from the stand point of liability imposed by the said provisions
Be it realized that duty is levied on the consumption of energy The 667 taxing event being the consumption of energy the source from which the electricity is acquired would become altogether irrelevant
31 as also Sec
41 has to be read as a whole and has to be interpreted in a harmonious and meaningful manner
A person having his own source of energy who also purchases energy from another source indicated in sec
31 j a will be covered by 31 a to the extent he purchases electricity from such a source and will be equally covered by sec
31 c in so far as he consumes energy from his own source of generation
He will be covered by both the provisions read conjointly
The same reasoning applies in the context of clauses a b and c of sec
There is no rational basis for exonerating a person from payment of duty merely because he has his own source of generation and he also purchases electricity from some other source
In fact it will be irrational to do so and it would give rise to an anachronism
Why make him pay only  if he generates his own energy and why exempt him altogether merely because he also  purchases from some other source  670 D H As acute shortage of power was being experienced there was a need to encourage the consumers to acquire their own source of energy with a view to reduce or lessen the burden on the existing sources of electricity generation
Obviously this purpose can be achieved only by granting the exemption prospectively to those consumers who install their own source of generation of energy pursuant to the concession being granted under the provision for exemption
Those who already had their own source of generation of energy need no such encouragement in respect of the source of generation already installed
If they wanted to further augment their own source or generation of energy they would also be entitled to exemption in respect or the additional  source of generation installed after  the date specified in the notification
The classification is therefore rational purposeful as also meaningful and it is calculated to effectively serve the real purpose of granting exemption
Article 14 cannot be invoked in a situation like this to successfully assail that part of the notification whereby the date of installation has been made the precondition for qualifying the exemption
672 G 673 B State of Uttar Pradesh vs Jageshwar  referred to