Case: Swaroop Vegetable Products Industries Etc Vs. State of Uttar Pradesh and Others Etc

2. The view is canvassed on behalf of the consumers of electrical energy that while under Section 3(1) (c) read with Section 4(1) (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 Centralquestion initially came up before a Division Bench of the Allahabad High Court in Sherwani Sugar Syndicate Pvt. Ltd. v. State of U.P. (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 M/s. Deoria Sugar Mills Ltd. also approached the High Court of Allahabad by way of C.M.W.P. 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 Sherwanis Case was not correct and dismissed the Writ Petition filed by M/s Deoria Sugar Mills, taking t he 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 have approached this Court by way of six separate appeals by special leave granted by this Court.

Reasoning:
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. 1312/77 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.The next question agitated in five out of the seven appeals comprised in the group (it does not arise in C.A. 1312/77 and C.A. 1146/79) arises thus:- The State of U.P. issued a notification dated March 17, 1 973 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 be en 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 i n 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 exemption in respect of the additional source o f 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 v. Jageshwar(1) 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 t he plea urged by the writ petitioners in this behalf.