Case: Rajasthan State Electricity Board Vs. Associated Stone Industries

Plaintiff-Respondent 1 is a registered public limited company. It is engaged in excavating stones from the collieries and thereafter converting them into slabs by cutting and polishing. The Rajasthan State Government levied electricity duty under the provisions of the Act. A notification dated 26-3-1962 was issued by the State under Section 3(3) of the Act granting exemption from tax on the energy consumed by a consumer in any industry in the manufacture, production, processing or repair of goods and by or in respect of any mine as defined in the Indian Mines Act,a notification was issued on 2-3-1963 superseding the aforesaid notification dated 23-3-1962, remitting the electricity duty on the energy consumed in electrochemical industry and in electric furnaces of electrothermo industries and reducing such duty on the energy consumed in other industries in the manufacture, production, processing or repair of goods, from 3 naye paise per unit to 1 naya paise per unit. Further one more notification was issued on 1-11-1965 superseding the earlier two notifications mentioned above and fixing duty at 5 paise per unit as the rate at which electricity duty shall be computed. However, by clause (c) of the said notification, the State of Rajasthan reduced the duty on the energy consumed in industries other than those mentioned in clause (a) of the notification in the manufacture, production, processing or repair of goods to 1 paise per unit. The same was later on enhanced to 2 paise by notification dated 5-3-1979The defendant issued three notices dated 30-6-1972, 21-12-1973 and 30-11-1974 asking the plaintiff to pay electricity duty at the full rate of 0.05 per unit holding that the plaintiff was not entitled either for exemption of electricity duty or to a reduced rate of duty. Hence the plaintiff filed the suit for injunction restraining the defendant from realising the electricity duty as per the demands made in the said notices. The trial court dismissed the suit. The plaintiff filed the appeal in the Court of the District Judge at Kota. The learned District Judge allowed the appeal reversing the judgment and decree of the trial court and passed the decree in favour of the plaintiff. The defendant filed the second appeal in the High Court of Judicature for Rajasthan at Jaipur Bench, Jaipur. The learned Single Judge of the High Court dismissed the appeal confirming the judgment and decree passed in favour of the plaintiff. Hence the defendant has filed this appeal challenging the validity and correctness of the said judgment and decree passed by the High Court

Court's reasoning:
In conclusion, it is said that if any operation in the course of manufacture is so integrally connected with the further operations which result in the emergence of manufactured goods and such operation is carried on with the aid of power, the process in or in relation to the manufacture must be deemed to be one carried on with the aid of power. Pumping out water, excavation of stones and cutting and polishing them into slabs cannot be said to be integrally connected in the manufacturing ofin view what is stated above, we find it difficult to accept the view of the learned Judge that the energy consumed for pumping out water from the mines should be held to be a part of the manufacturing process of the whole industry and the business carried out by the plaintiff. It is also not possible to accept that excavation of stones and thereafter cutting and polishing them into slabs resulted in any manufacture of goods. On the basis of evidence, the trial court found that there are two separate electric metres; one for pumping out water whenever required, the other for the workshop to which the stones excavated are carried. The trial court also concluded that the electricity consumed for pumping out water was not consumed in the manufacturing business of the plaintiffIn the light of what is stated above, we are of the considered opinion that the energy consumed for pumping out water from a mine cannot be accepted as the energy consumed by a consumer in any industry in the manufacture, production, processing or repair of goods so as to claim exemption or reduced rate of duty by the plaintiff by virtue of the aforementioned two notifications dated 2-3-1963 and 1-11-1965.