HIGH COURT OF JUDICATURE CHHATTISGARH: BILASPUR DMSION BENCH CORAM : HON’BLE SHRI S.R. NAYAK, OJ & HON'BLE SHRI D.R. DESHMUKH, J. Writ Pewon (T) No. 3447 of 2006 Godawari Powet and lspat Ltd. Having it registered office and Works at Plot No. 428/2, Phase I. industrial its Corporat iEce at Hira rcade. Floor, New Bus Stand. Pandri, Raipur (Chhanisgarh) through Y.C. Rao, Slo Shri Y. Mandali. ed about years‘ Company Secretary, R/o Aani Whar, Raipur (C.G.) VERSUS Area, Silhra. Raipur (C,G.) and having Writ Petition No. 2384 of 2006 Jindal Steel & Power Limited, A' Company incorporated nder Companies Ac. 1956. having is Corporate Oflioe at Jindal Centre 12. Bhikaji Cama Place. New Delhi through Power of Attomey Holder & Genetal Manager, Shri Mahendra Lekhoh'a, S/o Late Riddhikaran Lakhotia, aged about . 5O years, Rlo D-3. Sector -l, Avand Vihar Colony, Raipur (Chhatusgarh) VERSUS . sate of Chhattisgarh through Secretary, Department of Energy, Mamlaya, Dau Kalyan Singh Bhawan, Raipur (Chhath‘sgarh g, r e O A ag 4O v u t ) Chhattisgarh Sate Elechicity Board, Sundar Nagar. P.0. Dangania, Raipur (Chhattisgarh), through is Secremry Writ Petition No. 5440 of 2005 1. PRS ETITIONE The Associated Cement Companies Limited. A Public Limited Company. having is registered omce at Mumbai. Cement House, 121, Maharshi Karve Road. Mumbai. and having one of is Cement Units at Jamui, Dist. Durg (c.G.) 2. H.S. Bhatti. S/o Shri J.S. Bhani. Share Holder of The Associated Cement Companies Limited, Resident of HIG 1/1 075, Housing Board Bhilai, District Durg (C.G.) VER$US ate of Chhath'sgarh, Through J Secretary (Energy). Mantrelaya, D. K.S. ‘Bhawan, Raipur (C.G.) 2. Chhattisgarh State Electicity Board. Sunder Nagar, P.O. Dangania, Raipur (C.G.). Through m Secretary. ,Chief Etechicat Inspector. Govt. of» _ Chhattisgarh. 36/437, Ist hoor, Bairph nzr. Raipur (C.G.) Writ Petition N0. 6394 of 2005 Century Cement, (Prop. Century Texhtes & industies Limited). P.O. Baikundt. District Raipur (C.G.) having its Registered Othce at Century Bhawan, Dr. Annie Basent Road, Mumbai-400025 (Maharashtra) VERSUS 3. PETITIONER J ' 1. State RESPONDENTS of Chhanisgarh'. Through Secretary (Energy), Mantralaya, D. K.S.’ Bhawan. Raipur (C.G.) u '2. Chhath‘sgarh State Electricity Board, Sunder Nagar. P.O. Dangania, Raipur (C.G.), Through its Secretary. 3. Chief Electrical Inspector. Govt. of s , ' PETITIONER Chhattisgarh, 36/437, Ist fioor, Bairon Bazar. Raipur (C.G.) Writ Petition No. 1556 of2006 Grasim lnduwtries Limited Cement Division), a Public Limited Company incorporated Under Companies Act 1956. Having is Registered omce at Birlagram, Nagda, 456 331 (MP) & having Cement Manufacturing in name of “Grasim Cement” at P.O. Grasim Whar. Tahsil Simga. District Raipur (CG) through is authorized signatory \rinod Kumar Mangia, Slo Late Shri T.S. Mangia. p aged 41 years, Occupation — Service, presently working as Sr. Oflioet (Legai), Grasim Cement (A Unit of Grasim industries Ltd.), PO. Grasim Vihar, District Raipur (Chhatisgarh) VERSUS RESPONDENTS 1. State of Chhattisgarh, Through The Secrehry, Department of Energy. Manualaya, Dau Kaiyan Singh Bhawan. Raipur (Chhattisgarh) PETITIONER 2. Chhattisgarh State Electricity Board. Sunder Nagar. P.O. Dangania. Raipur Through its Secretary, Raipur (Chhauisgarh) 3. Chief Electrical inspector. Government of Chhattlsgarh. 36/347, lst floor, Bairen Bazar, Raipur (Chhattisgarh) Writ Petition No. 1851 of 2008 Ultra Tech Cement Limited, A Company incorporated Under the Companies Act, 1956, having its Registered Ofhce at ‘A' \Mng, Ahura centre. 1" Floor, Mahakali Caves Road, Andheri (E). Mumbai (Maharashtra), Having is Cement Plant at Hirmi Cement Works, Hlrrni Dist. Raipur (Chhatiisgarh) Through its Vice President Jitendra Kumar, S/o Shri Vlshwanath Pratap Singh, Aged about 60 years, Rio Hlrmi Cement Works, Hirrni Distt. Raipur (Chhattisgarh) VERSUS sate of Chhattjsgarh. Through The Secretary, Department of Energy. Manhalaya, Dau Kaiyan Singh Bhawan, Raipur (Chhath‘sgarh) Chhattisgarh sma Electricity Board. Sundar Nagar, P.O. Dangania, Raipur Through its Se¢retary, Raipur (Chhattisgarh) Chief Electrical Inspector. Govemment of Chhaiiisgarh, 36/347, lst floor, Bairen B z r. Raipur (Chhatiisgarh) Writ Petition No. 1554 of 2008 Lafarge India Pvt. Ltd.. W Having its Registered Omce at Bakhiawar. 14‘“ Floor. 229 Nariman Point. Mumbai (Maharashtra) Through ils Authorised signatory Mr. Sushi! Kumar Tiwari. m 3§msmP°NQ§hll§ Shte of Chhahisga‘rh through Secretary, (Energy) Mantraiaya, D.K.S. Bhawan, Raipur (Chhamm) ChiefiEiectricai inspector Govemment of Chhath'sgarh. 36/437. lst hoor. Bairan Bear. Raipur (Chhattisgarh) Chhatiisgarh State Electricity Board, Sunder Nagar. P.O. Dangania. Raipur (C.G.),rlhrough h Secretary. m‘ Petition No. 1781 of Egg PETITIONER Ambuja Cement Eastern Ltd., P.O. Rowan, Tahsii Baloda n ar, Dishiot Raipur (C.G.) Through b Authorised Signatory Shri Anoop Kumar Jaiswai. S/o Late Shri Loknath Jaiswai. Aged about 43 years. Omcer (Law), Ambuja Cement Eastern Ltd., P.O. RaWan, Tahsii Baioda Bazar. District Raipur (C.G.) VERSUS B§§PONDENT§ State of Chhattisgarh Through Secretary. (Energy) Mantraiaya. D.K.S. Bhawan, Raipur (Chhath'sgarh)/, *l‘i. q i s ’1 ‘w’f i? , ( tL :M MAD) 2. Chief Electticai Inspector Govemment of Chhattisgarh, 36l437. lst Floor, BairanB r.Ralpur‘(Chhamsgarh) 3. Chhattisgarh State Electricity Board. Sundar Nagar, P.O. Dangania, Raipur (C.G.), through its Secretary. $[g'1 Petitign No,261§ gf goog Bharat Aluminium Co. Ltd., Balconagar, Korba, Dist. Korba (Chhauisgarh) through its President 8- Whole time Director & having is Registered Ofnce at Aluminium Sadan. Core-6, Scope 7, Lodhi Road, New Delhi. PETITIONER VERSUS State of Chhalh'saarh Through Secretary Department of Energy, Mantralaya. Dau Kalyan Singh Bhawan. Raipur (Chhauisgarh) 2. Chief Electrical Inspector Govemment of Chhattisgarh. 36/347. lst Floor, Bairen Bazar. Raipur (Chhaiiisgerh) 3. ’Chhamsgam snare Electricity Board, Sunder Nagar, PD. Dangania, Raipur (Chhaitisgarh). through its Secretary. Writ Pe ' ‘ .2613 of 006 Monnet lspat & Energy Limited, Monnet Marg, Mandir Hasaud, District Raipuc (Chhamem) through Authorized Signatory P. Des, Dy. General Manager (Finance), Mandir Hasaud 8: having its Head once at Mom Buiiding, 3'“ troor, 4, Bhikaji Cama Place, New Delhi. VERSUS RgSPONDENTS 1 . ggrmONER RESPONDENTS 1. sate of Chhattisgarh Through Secretary Department of Energy, Manhalaya, Dau Kalyan Singh Bhawan. Raipur (Chhattisgarh) 2. Chief Electrical Inspector Govemment of Chhattisgarh, 36/347, lst Floor, Bairen Bazar, Raipur (Chhattisgarh) Chhawsgarh State Electricity Board, Sunder Nagar. P.O. Dangania, Raipur (Chhattisgarh), through its Secretary. Writ Petition No.2913 of 2006 PR ETiTiONE M/s. Prakash Industries Limited A‘ Company incorporated under the Companies Act. 1956 having its Registered omce at 15 Km. Stone. Delhi Road, Hissar, (Haryana) & having its sponge iron Piant at Village Kotadabri. Champa, District Janjgir- Champa lhro‘uh ils President (Corporate Affairs) & Power of Attomey Holder Mls. Prakash Industries Ltd.. Champa (Chhattlsgarh) VERSUS 1. smte of Chhatlisgarh Through Secreury, Department of Energy. Mantralaya. Dau Kalyan Singh Bhawan, Raipur (Chhatlisgem) 2. Chief Electrical Inspector Govemment of Chhattisgarh, 36/347, lst Floor, . Bairon Bazar. Raipur (Chhanisgarh) 3. Chhattisgarh State Electricity Board. Sunder Nagar, P.O. Dangania, Raipur (Chhattisgarh), through its Secretary. Writ Petition No.2920 of 29% PETITIONER Chhattisgarh Electricity Co. Ltd., Having its registered office and Plant at industrial Growth Centre. Siltara, Raipur (Chhattisgarh) & having its Head Omce at 125 B, Wing, Mithl Court, Nariman Point. Mumbai-400021 through its Power of Auomey Holder Gopai Ranjan Panigrahi, 8/0 Shri Chinmay Prasad Panigrahi Aged about 30 years, Legal Oincer, Rlo Nilancha Whar, Raipur (Chhattisgarh) VERSUS 1. State of Chhattisgarh Through Secretary. Department of Energy. Mantraiaya. Dau Kalyan Singh Bhawan, Raipur (Chhaitisgarh) Chief Electrical inspector Govemment of Chhattisgarh. 36/347, Ist Fioor. Bairen B r, Raipur (Chhauisgarh) 3. Chhattisgarh sate Electricity Board, Sundar Nagar, P.O. Dangania, Raipur (Chhawsgarh). mrough is Secretary. Wg't Petition &o,z§61 of gm lndsil Energy & Eectrochemiis Limited . Plat No. 114 tc 122. Sector “C". Urla Industrial Atea, Raipur (Chhattisgarh) through its Resident Director & Autharized Signatory Brig. (Retd.) s.N.Vlshnu. Raipur, having is Registered Office at 49, Avanshi Road, Coimbatore 641 037 (TN) VERSUS RTS ESPONDEN 1 . sate of Chhattisgarh Thrwgh Secretary, Department of Energy. Mantralaya. Dau Kalyan Singh Bhawan, Raipur (Chhahisgarh) Chief Electricai Inspectw Govemment of Chhattisgarh. 36I347. lst Floor. Bairen Bazar, Raipur (Chham‘sgarh) PETITIONER 5Chh§$sgarh sate Electricity Board. Sundar Nagar, P.O. Dangania, Raipur (Chhattisgarh), through its Secretary. Writ P.eh'tion No. 3915 of 2006 M/s NALWA Sponge iron Limited. Post Box No.7, Tarairnal, Raigarh District Raigarh (Chhattisgarh) through Authorized Signatory N.K. Sharma, Head (HR & PA) M/s NALWA Sponge Iron Limited. Post Box No.7, Taraimal, Raigarh having its Registered Office at 28, Najafgarh Road. New Delhi. VERSUS 1. State of Chhattisgarh Through Secretary, Department of Energy, Mantralaya. Dau Kalyan Singh Bhawan, Raipur (Chhattisgarh) Assistant Engineer (Electrical Safety) & Assistant Electrical inspector, Government of Chhattisgarh, Raigarh Sub Division. Pt. Lochan Prasad Pandey Archaeologicai Museum Building. Behind O/o Police. Raigarh (CG) - Chhattisgarh State Electn'city Board, Sundar Nagar, P.O. Dangania, Raipur (Chhatisgarh). through its Secretary. shri Bajrang Power & ispat Limited, Village Borjhara, Urla-Guma road‘ Raipur. District Raipur (Chhattisgarh) through its Power of Attomey, Shravan Kumar Goei. General Manager (Project). aged about 40 years, S/o Shri B.P. Goel, having its Registered & Head omce at 522/C, Uria Industrial Area. ' Raipur, Dist. Raipur (Chhattisgarh) VERSUS State of Chhauisgarh Through Secrehry, Department of Energy. Mantralaya. Dau Kaiyan Singn Bhawan. Raipur (Chhattisgarh) Chief Electrical Inspector Govemment of Chhattisgarh; 36/347. lst Floor, Bairen Bazar, Raipur (Chhattisgarh) Chhattisgarh Shte Electricity Board. Sundar Nagar, P.O. Dangania, Raipur (Chhattisgarh), through its Secretary. Writ Petition (T) No.3971 of 2006 PETITIONER RESPONDENTS Jayaswal Neco. Ltd.. Steel Plant Division, Siltara Growm Centre. Through Mr. S.P. Naik, General Manager (Electrical) & Attorney Holder for Jayaswals Neco Ltd. VERSUS State of Chhattisgarh Through Sectetary (Energy), Mantralaya, D. K. S. Bhawan, Raipur (C.G.) Chief Electical inspector Government of Chhattisgarh, 36/347, lst Floor, Bairan nazar, Raipur (C. G.) Chham'sgarh State Electricity Board, Sundar Nagar, P.O. Danganla, Raipur 3. Writ Peu'tion (C) No.3991 of, 2006 1. 1. /m\\ 193 \ (C. G.), through iB Secrehry. Writ Peh'tian (T) No.4604 of 2006 PETI'HONER M/s.IND SYNERGY LIMITED A Company incorporated under the Companies Act. 1956 having “s Registered omce at 1O Daga Layout, North Ambazhari road, Nagpur- 440 O33 (Maharashtra) r& having its steel & power Plant at Village Kotmar, District Raigarh \ftiiage Kotmar, District Raigarh through is Genera! Manager HRD&Admn.). VERSUS RESPONDENTS 1. State of Chhatttsgarh Through Secretary, Department of Energy. Mantralaya, Dau Katyan Singh Bhawan. Raipur (Chhattisgarh) 2. Chhatttsgarh State Elechicity Board. V, Sunder Nagar, P.O. Dangania, Raipur (Chhattisgarh), through its Secretary. 3. Assistant Engineer (Electrical Safety) 8: Assistant Electrical inspector, govt. of Chhattisgarh. Raigarh Sub-Division, Pt. Lochan Pasad Pandey Archeologicat Musuem Building, Behind olo Supdt. 0f Police. Raigarh (Chhattisgarh). 4 Writ Petition (T) No. 4854 of 2006 Vandana Global Limited, Silara industrial Area, Phase-ll Siltara, Raipur (Chhattisgarh) through its Power of Attomey Holder Saurabh Kumar Bajpai, Slo Shri Raj Kumar Krishna Kumar Bajpai. aged 37 years. R/o D—5. Pariiat Extension, Nehru Nagar. Bilaspur (Chhattisgarh) having its registered Ohioe at 'Vandana Bhawan", MG. Road. Raipur (Chhattisgarh) %RSQS 1. State of Chhattisgarh Through Secretary, Department of Energy, Mantraiaya. Dau Kaiyan Singh Bhawan, Raipur (Chhatiisgarh) @ 10 Chief Electn'cal Inspector Govemment of Chhattisgarh, 36/347, lst Floor, Bairen Bazar. Raipur (Chhattisgarh) 3. Chhattisgarh Shte Electicity Board, Sundar Nagar, P.O. Dangania, Raipur (Chhattisgarh). through its Secretary. Writ ggg'tion in Neg gg‘i o: g00§ PETITIQNER Madhya Bharat papers Ltd., At Village Birghani, Post. Champa, Dist. Janigir-Champa (Chhaosgarh) through its Commercial Manager & having is Registered Oflice at Village Birghani, Post. Champa. Dist. Janjgir-Champa (Chhaltisgarh). LEB§LJ§ PETITIONER 1. sate of Chhath'sgarh Through Secretary, Department of Energy. Mantalaya. Dau Kalyan Singh Bhawan, Raipur (Chhattisgarh) 2. Chief Electrieal inspector Govemment of Chhattisgerh, 36/347, let Floor, .Byron Bazar, Raipur (Chhattisgarh) 3. Chhattisgarh Shte Electricity Board, Sunder Nagar. P.O. Dangania. Raipur (Chhanisgarh), through its Secretary. 4. Accounts Oil‘rcer, Chhattisgarh State Electricity Board, Janigir. Distt. Janigir- Champa (Chhattisgarh). Writ Petition iC) No. 5468 of 2006 M/s Real lspat & Power Limited, A Company incorporated under Companies Act. 1956, having its ofhce at Vrindhavan, Near Holy Hearts School, Civil Lines, Raipur, through its Director Umesh Agrawal, S/o T.C. Agrawal. Aged about 43 years, Rio « Opp. Telephone Exchange, Civil Lines. Raipur (Chhattlsgarh) VERSUS RESPONDENTS 1. sate uf Chhattisgarh Through Secretary. Department of Energy. D.K.S. Bhawan. Mantraiaya. Raipur(C.G.) ‘ Chhattisgarh State Electricity Board, Through its Secretary Sunder Nagar. P.O. Dangania, Raipur (CG) Present: Shri AM. Singhvi. Shri Jayant Bhushan. Shri Ravindra Shrivasmva, Shri Manindra Shrivastava, learned Sr. Advocates with Shri Sanjeev K. Kapoor. Shri Anubhav Singhvi, Shri Ashish Shrivastava. Shri Amrito Das, Shri Prem Francis and Shri Sanjay K. Agrawa! 8: Shri Vishnu Koshta. learned Advocates for the petitioners. Shri Ravish Agrawal. ieamed Advocate Generai with Shri Prashant Mishra. ieamed Additional Advocate General and Shri Utkarsh Vanna, leamed Deputy Govt. Advocate for the respondents I State. Shri A. S. Gaharwar, leamed Standing Counsel for respondents / Chhattisgarh. State Electricity Board. O R D E R (Passed on [Sttbecegnben 2006) The following oral order of the Court was passed by S.R. NAYAK, CJ . In this batch of writ petitions, the constitutional validity of Section 3 (1-a) of the Chhattisgarh Upkar (Sanshodhan) Adhiniyam, 2004 (hereinafter called as "the Act”) has been challenged. For the sake of convenience. the relevant portion of the amended Section 3 of the Act is quoted hereinbelow : “3. Levy of Enemy Development Cess : (1) Subject to the exceptions as specifiedvin Section 4. every distributor of electrical energy shall payto the State Government at the prescribed time and in the prescribed manner an energy development f3” I cess at the rate of five paisa per unit on the total unis of electrical energy sold or supplied to a consumer or consumed by himself or his employees during any month. l (1-a) Every producer of electrical energy shall pay to the State Govemment an energy development cess at the rate of ten palsa per unit on the electncal energy sold or supplied to a consumer or consumed by himself or his employees by his captive power unit or diesel or other generator set of more than 100 Kilowatt capacity during any month : Provided, that ..................... " (2) Legislative History: The Legislature of the erstwhile undivided sate of Madhya Pradesh enacted the M.P. Upkar Adhiniyam, 1981 (hereinafter called as “the 1981 Adhiniyam") for levy inter aiia of energy development cess. Sub-Section (1) of Section 3 of the 1981 Adhiniyam which was the charging Section, read as under : r “ subject to the exceptions specitied in Section 4, every distributor of electrical energy shall pay to the State Government at the prescribed time and in the prescribed manner an energy development cess at the rate of one paisa per unit on the total unis of electrical energy sold or supplied to a consumer or consumed by himself or his employees during any month ..... “ Section 3 (1) of the 1981 Adhiniyam thus imposed on every distributor of electrical, energy an energy development cess ® .1 paisa per unit on ‘the total units ofelectn'cal energy sold or suppfed b a consumeror consumed by himself or his employees during any month'. On the reorganisation of the Shte of Madhya Pradesh and formation of the State of Chhattisgarh on 01-11-2000, the entire Adhiniyam was adopted by the State of Chhmsgam and was renamed as Chhattisgarh Upkar Adhiniyam, 1981. (3) State of Madhya Pmdesh had enacted an amendment to Madhya Ptadesh Upkar Adhiniyam. 1981 in the year 2001 by which Section 3 (2) was added. Under this sub-Section (2) every producer producing electrical energy by his captive power unit was liable to pay to the state Govemment an energy development cess at the rate of 20 paise per unit on the total units of electrical energy produoed whether for sale or supply to a consumer or for consumption by himself or his employees during any month. The constitutional validity of the above amendment was assailed and ultimately in the case of M.P. Cement Manufacturers Association Vs. State of M.P. & others 1, the Hon'ble Supreme Court struck down the amendment by holding that the energy development cess was a tax and it was levied essentially on production of electricity and not on sale or consumption of electricity and, therefore, it would not fall within the ambit of Entry 53 or List u or rh'Schedule and thus would be invalid on the ground of lack of legislative competence. a (4) After the above judgment of the Hon'ble Supreme Court, the State of Chhattisgarh introduced the impugned levy by adding sub-Section (1 -a) in Section .3 of the Act which is already extracted above. By way of these writ petitions, the petitioners who are the producers of electrical energy by their Captive Power Units have assailed the validity of sub-Section (1 -a) of the Act and the demands raised under the impugned provision. (2004) 2 SOC - 249. Arguments : (5) We have heard Shri A.M. Singhvi. Shri Ravindra/ Shrivashva. shri Manindra shrivastava, Ieamed sr. Advocates. Shri Sanjay K. Agrawal. Shri mshnu Koshta, leamed Advoates on behalf of the petitioners; Shri Ravish Agrawal, leamed Advocate General, Shri Prashant Mishra, Ieamed Addl‘. Advocate General on behalf of the State of Chhatlisgarh and Shri A.S. Gaharwar, learned Standing Counsel for Chhattisgarh State Electricity Board. (6) The sum and substance of the contentions raised by leamed counsel for the petitioners before us while assailing the constitutional validity of the impugned provision are the foilowing : (i) that the impugned provisionjis ultra vires the legislative competence of the Shte Legislature under Entry 53 of List Ii of 7‘” Schedule of the Constitution of India. inasmuch as the tax is on production of electrical energy and not on sale or supply of electrical energy ; (ii) that the impugned provision is a piece of colourable legislau'on and the Shte of Chhattisgarh has enoroached upon the exclusive field of legislation assigned to the Parliament under Entry 84 of Listl ; Gii) that there is a difference between a tax and oess; levy of cess presupposes availability of a benetit and as such there is an implicit requirement of nexus between the levy and the beneht for the availability of which cess is sought to be levied :though the scheme of levy of cess is expressly reinforced in Section 3, as amended, to reilect the legislah've intention that the cess is not to be levied as part of common burden depending upon the capacity to pay and for augmentation of revenue, but the purpose aswell as the basis of cess is quantinable, identinable and 15 measurable benem as enumerated under sub-Sections (2) and (3) 0f Section 3, the utilization of energy development fund is designedly and purposely lelt at the discretion of the executive and, therefore, it cannot be regarded as a tax ; (Iv) that the impugned levy is discriminatory and violative of Article 14 of the Constitution inasmuch as a hostile discrimination is meted out to only a sub-class of class of producers, nameiy. Captive Power Producers and leaving the Independent Power Producers untouched by imposition and this differential treatment meted out to two sub-classes of the same class of producers tantamounts to an invidious discrimination and (v) that the impugned levy is quite contrary to the National Electricity Policy. National Tariff Policy, Report of the Task Force and the Recommendation of the Chhattisgarh State Electricity Regulatory Commission. )~ \x, (7) Shri Ravish Agrawal, leamed Advocate General and Shri A.S. Gaharwar, leamed Standing Counsel for Chhattisgarh State Electricity Board while supporting the constitutional validity of the impugned provision and the demands raised thereunder would point out that in the case of M.P. Cement Manufacturers Association (Supra 1) taxing event was generation of electricity, whereas, under the provision impugned in this batch of writ petitions taxing event is sale or suppiy of electricity. Leamed Advocate General would point out that in the case of M.P. Cement Manufacturers Association (Supra 1) the Hon'ble Supreme Court declared the statute impugned therein as unconstitutional being oubide the legislative competence of the Madhya Pradesh State so far as levy of cess on generation of electricity was concemed', whereas AX}? 16 Chhattisgarh Legislature by amending 1981 Adhiniyam and inserting Section 3 (1 -a) has removed the very basis which Ied to quashing of the earlier amendment made by the Madhya Pradesh Legisiature in the year 2001. Leamed Advocate General would submit that the impugned levy of cess is on the sale and consumption of electricity generated by a Captive Power Plant and not on generation of electricity ibelf. (8) Having heard leamed counsel for the parties, the only question that arises for our consideration is whether the impugned provision is invalid on any permissible ground. (9) ln india, the doctrine of “power to tax” is embodied in Article 265 of the Constitution. The Legislature is omnipotent in the exercise of the taxing prerogative. however, subject to the provisions of the Constitution. The right to impose taxes and to determine the circumstances under which they will be done is always a privilege of the concemed Legislature. Atticle 265 mandates that no tax shall be levied or collected except by the authority of law. The power to ax is an incident of sovereignty. Apart from the limitation by the division of the taxing power between the union and the State Legislatures by the relevant entries in the Legislative Lists, the taxing power of either Legislature is subkcted to certain limitations imposed by the Constitution. For example. the taxing power of a Legislature must not contravene Article 13 as heid in Kunnathat Thathunni Moopil Nair Vs. State of Kerala z ; it must not deny equal protection of the laws as guaranteed under Article 14 as heid in State of Kerala Vs. Kutty Naha, Haji K. Haji K 3; and it must not be discriminatory or arbittary as heid in Ayurveda Pharmacy Vs. State of 2. AIR 1961 SC 552 : 3. AIR 1969 SC 378; @ 17 Tamil Nadu ‘ ; Regional Transport Ofticer — Cum — Taxing Authority, Rourkela Vs. Steel Authority of India 5 ; it must not constitute an unreasonable restriction upon the right of business guaranteed under Article 19 (1) (g) as held in Chandrakanth Krishnarao Pradhan Vs. Jasjit Singh ‘ . Apart from these constitutional limitations on the law making power of the ooncemed Legislature. the other limihtions on the axing power of the Legislature can be culled out from the provisions of Alticles 27, 285, 286, 287 and 289. (10) A power conferred on the Legislature to levy tax must be widely construed. lt must include the power to impose a hx and select the articles or commodities for the exercise of such power; it must likewise include the power to tix the iate and prescribe the machinery for the recovery of tax including provisions necessary to prevent evasion of tax. The Legislature can also appoint authorities for collecting taxes and may prescribe the procedure for determining the amount of taxes payable by) ‘_ any person. All these provisionsrare subsidiary to the main power to levy a ax. Nevertheless. all this is subject to the constitutional limitations‘as pointed out supra. Therefore, it becomes necessary that even tax statutes have to satisfy the test of reasonabieness prescribed by Article 19(6) and the fundamental right of equality before law guaranteed by Article 14 of the Constitution. ln tax' matters. the State is allowed to pick and choose districts. objects, persons, methods and even rates of taxation if it doesso reasonably, as held by the Supreme Court in Balaji Vs. ITO 7 ; B. Basavalingappa Vs. State of Kamataka '. The entries in the 4. (1989)8APSTJ-179 (SC) = AIR 1989SC 1230,’ 5. 1995 Suppl. (4) SCC 165; 6. AIR 1962$C 204; 7. (1961) 43 ITR-393 (SC) ; 8. (1985) 5QSTC-1, 6 (Kan) A? 18 Legislative Lists of the Constitution were not powers but were only fields of legislation and therefore the widest imporhnce and signincance should be given to the language used by the Legislature in various entries. in interpreting the nscal statutes. we must also remember the provisions in a tiscai statute are not to be so construed as to fumish a chance of escape and a means of evasion as held by the Full Bench of the Kamamka High Court in c. Arunachalam Vs. CIT ’ . A Full Bench of Andhra Pradesh High Court in Shri Lakshmi Venkateswara Trading Co. Vs. State of A.P. ‘o , has opined that the power to tax includes the power to pick and choose objects and persons for the purpose of taxation and to grant exemptions.