Judgment Case ID: 3537

Judgment:
Appeal No. 104 of 1970. (From the Judgment and Order dated 23 10 1967 of the Patna High Court in Civil Writ Jurisdiction Case No. 299/66). L.M. Singhvi	 U.P. Singh and S.N. Jha	 for the Appellant. Sarjoo Prasad and U.S. Prasad	 for the Respondent. The Judgment of the Court was delivered by KHANNA	 J. The short question which arises for determi nation in this appeal on certificate by Damodar Valley Corporation against the judgment of Patna High Court dis missing the writ petition filed by the appellant is whether the appellant is liable to pay electricity duty under Bihar Electricity Duty Act		 1948 as amended by Bihar Electricity Duty (Amendment) Act	 1963. The High Court answered the question in the affirmative against the appellant. The appellant is a corporation established under the for the development of the Damodar Valley in the States of Bihar and West Bengal. One of the functions of the appellant is the promotion and operation of schemes for the generation	 transmission and distribution of hydroelectric and thermal electrical energy. Bihar Electricity Duty Act	 1948 (Bihar Act 36 of 1948) (hereinafter referred to as the principal Act) was published in the Bihar gazette; on October 1	 1948. It was an Act for the levy of duty on the sales and consumption of electrical energy in the province of Bihar. Material part of sec tions. 3 and 4	. as they stood before the amendment made in 1963	 read as under: "3. Incidence of duty. (1) There shall be levied and paid to the: State Government on the units of energy consumed or sold	 excluding losses of energy in the transmission and transformation	 a duty at the rates specified in the First Schedule: Provided that no duty shall be leviable on units of energy : (i) . . (ii) . (iii) . (iv) . . 120 (v) consumed by	 or in respect of	 or sold for consumption in any (a) mine	 as defined in the Indian Mines Act	 1923: (b) industrial undertaking; except to the extent specified in the Second Schedule: (vi). (2) . 4. Payment of duty. ( I ) Every licensee shall pay every month to the State Government at the time and in the manner prescribed the proper duty payable under section 3 on the units of energy consumed by him or sold by him to the con sumer. (2) Every licensee may recover from the amount which falls to be paid by the licensee as duty in respect of energy sold to the consumer. (3). . (4) . (4a) . (5) . The principal Act was amended by Bihar Electricity Duty (Amendment) Act	 1963 (Bihar Act 20. of 1963) (hereafter referred to as the amending Act). The amending Act received the assent of the President on December 4	 1963 and was published on December 17	 1963. By section 2 of the amending Act	 new section 3 was substituted for the old section 3. Material part of new section 3 read as under: "3. Incidence of duty.(1) Subject to the provision of sub section (2)	 there shall be levied and paid to the State Government on the units of energy consumed or sold	 excluding losses of energy in transmission and transformation	 a duty at the rate or rates specified in the Schedule. (2) No duty shall be leviable on units of energy (a) . (b) . (c) . (d) . (e) consumed by the Damodar Valley Corporation for the generation	 transmission or distribution of electricity by that Corporation; (f) . (3) . 121 Amendment was also made in the First Schedule of the principal Act. The relevant part of the sched ule read as 'under : THE SCHEDULE (See section 3.) RATES OF DUTY A. For a mine or an industrial under Such rateor rates taking	 save in respect of its not exceeding 2 naya premises used for residential or paisa per unit of office purpose energy as may	 from time to time	 be fixed by the State Govern ment with the previ ous consent of the President	 by order in this behalf". In the writ petition the appellant prayed for quashing three notices dated February 10	 1965 issued by the Superintendent of Commercial Taxes Giridih as also his orders dated March 24 and 29	 1966. By the impugned notices the Superintendent of Commercial Taxes called upon the appellant to show cause as to why penal action under the princi pal Act as amended		 should not be taken against the appellant for having failed to get itself registered under that Act. The appellant was also called upon to apply for registration. By the impugned orders the Superintendent of Commercial Taxes directed. the appellant to pay electricity duty under the: Act as amended. The case of the appellant was that it enjoyed immunity from payment of tax under clause (1) of article 288 of the Constitution. No law satisfying the requirement of clause (2) of article 288	 it was contended	 had been made warranting the levy of such a duty. The High Court repelled this contention	 and we find no sufficient ground to take a different view. Article 288 of the Constitution reads as under: "288(1) Save in so far as the President may by order otherwise provide	 no law of a State in force immediately before the comencement of this Constitution shall impose	 or authorise the imposi tion of	 a tax in respect of any water or electric ity stored	 generated	 consumed	 distributed or sold by any authority established by any existing law made by Parliament for regulating or develop ing any inter State river or river valley. Explanation. The expression 'law of a State in force ' in this clause shall include a law of a State passed or made before the commencement of this Constitution and not previously repealed		 notwithstanding that it or parts of it may not be	 then in operation either at all or in particular areas. (2) The Legislature of a State may by law impose or authorise the imposition of	 any such tax as is mentioned in clause ( 1 )	 but no such law shall have any effect unless it has	 after having been reserved for the consideration of the President	 received his assent; and if any such law provides for the fixation of the rates and other incidents of such tax by means of rules or orders to be made under the law by any authority	 the law shall provide for the previous consent of the President being obtained to the making of any such rule or order. " 10 1003 SCI/76 122 Article 288 grants exemption from tax under any law of a State in respect of any water or electricity stored	 gener ated	 consumed	 distributed or sold by any authority estab lished by any existing law or any law made by Parliament for regulating or developing any inter State river or river valley	 except in certain cases. According to clause (1) of the article	 this exemption would not be available in respect of such tax imposed under any law of a State in force immediately before the commencement of the Constitu tion if the: President by order so provides. Although the principal Act is a pre Constitution law	 being an Act of 1948	 no order was admittedly made by the President with drawing the exemption in respect of the appellant from levy of such	 tax under the principal Act. Indeed	 there was no question of issue of any such order because the principal Act did not provide for the imposition of electricity duty upon a corporation like the appellant. Clause (v) of the proviso. to sub section (1 ) of section 3 of the principal Act expressly stated that no duty shall be leviable on units of energy consumed by	 or in respect of	 or. sold for con sumption in any mine	 as defined in the Indian Mines Act	 or industrial undertakings	 except to the extent specified in the Second Schedule. The appellant is admittedly an industrial undertaking	 and as such	 was not liable. to pay electricity duty under the principal Act. The case of the respondentS is that the bar to the levy of the said duty was removed and the levy of the duty on the appellant was	 put on a sound legal basis as a result of the amendment made. in the principal Act by the amending Act of 1963. The amending Act	 we find	 satisfies the require ments of clause (2) of article 288. According to that clause	 the legislature of a State may by law impose	 or authorise the imposition of	 any tax mentioned in clause (1) of that article	 but no such law shall have any effect unless it has	 after having been reserved for the consider ation of the President	 received his assent; and if any such law provides for the fixation of the rates and other inci dents of such tax by means of rules or orders to. be made under the law by any authority		 the law shall provide for the previous consent of the President being obtained to the making of any such rule or order. The amending Act of 1963	 as already mentioned	 received the assent of the President before its publication. The exemption which was granted to mines and industrial undertakings from payment of elec tricity duty under the principal Act was withdrawn under the amending Act	 except to some extent with which we are not concerned. The new schedule	 substituted for the old sched ule by the amending Act	 prescribed the rates of duty for mines and industrial undertakings	 and it was provided that the rate of duty shall be such rate or rates not exceeding 2 naya paise per unit of energy as may	 from time to time	 be fixed by the State Government with the previous consent of the President	 by order in this behalf. It has been argued by Dr. Singhvi on behalf of the appellant that the scheme of article 288 is to grant general exemption from the levy of tax in respect of any water or electricity stored	 generated	 consumed	 distributed or sold ' by any authority established by any	 existing 123 law or any law made by Parliament for regulating or develop ing any inter State river or river valley. If any law made by a State legislature	 according to the submission	 seeks the imposition of any such tax	 such law should contain clear indication to that effect before it receives the assent of the President. The amending Act of 1963	 :ac cording to the learned counsel	 did not contain any such indication. This contention	 in our opinion	 is wholly devoid of force. Under proviso (v) to section 3(1) of the principal Act	 mines and industrial undertakings were exempt from levy of duty. This exemption stood withdrawn as a result of	 substitution of new section 3 for the old sec tion by the amending Act. The new charging section 3 (1 ) roped in all industrial undertakings	 including the Damodar Valley Corporation	 for the purpose of levy of duty. Clause (e) of sub section (2) of new section 3 which was introduced by the amending Act of 1963. expressly granted exemption from levy of electricity duty on units of energy consumed by the appellant corporation for the generation	 transmission or distribution of electricity by that corporation. This provision. containing express reference to the appellant corporation	 clearly warrants the inference that in respect of units of energy not covered by clause (e) of sub section (2) of section 3 the exemption would not be available to the appellant. The contention advanced on behalf of the appel lant that the amending Act did not contemplate or contain indication regarding the imposition of electricity duty upon the appellant is plainly untenable	 for it would have the effect of Tendering clause (e) of sub section (2) of sec tion 3 to be wholly redundant. The courts	 it is well settled	 should be loath to accept an argument which would have the effect of rendering redundant the provision of a statute. Lastly	 it has been argued that though there has been an amendment of section 3 of the principal Act by its substitu tion by a new section under the amending Act of 196.3	 there has been no amendment of section 4 with the assent of the President. As such	 no liability to pay electricity duty can be fastened upon the appellant. This submission too is bereft of force. Section 3	 as inserted by the 'amending Act of 19 '63	 is the charging section. According to clause (1) of that section	 subject to the provision of sub section (2)	 there shall be: levied and paid to the State Government on the: 'units of energy consumed or sold	 excluding losses of energy in transmission and transformation	 a duty at the rate or rates specified in the Schedule. The section thus deals with the incidence of duty	 and makes it clear that such duty h.as. to be paid on the units of energy consumed or sold and at the rate or rates specified in the schedule. It is further made clear by the section that the duty is to be levied and paid to the State Government. As the duty is to. be levied on the units of energy consumed or sold	 it would follow that the duty would have to be paid by the consumer or seller		 as the case may be. Section 4 of the principal Act merely provides for the manner and mode of payment of the duty	 and we find no substance in the conten tion that unless section 4 of the principal Act was also re enacted with the assent of the President	 the liability for payment of duty cannot be fastened upon the appellant. 124 What is required by clause (2) of article 288 is that the law made by the State legislature for imposing or authorising the imposition of tax mentioned in clause (1) shall have effect only if after having been reserved for the consideration of the President	 it receives his assent. Another requirement of that clause is that if such law provides for the fixation of the rates and other incidents of such tax by means of rules or orders to be made under the law by any authority	 the law shall. provide for the previ ous consent of the President being obtained to the making of any such rule or order. It is	 however	 not the effect of that Clause that even if the above mentioned two require ments are satisfied	 the provisions which merely deal with the mode and manner of the payment of the aforesaid tax should also receive the assent of the President and that in the absence of such assent	 the provisions. dealing with the incidence of tax	 which have received the assent of the President	 would remain unenforceable. Some other aspects were also dealt with by the High Court	 but in the light of the view we have taken in the matter	 it is not necessary to deal with those aspects. The appeal consequently fails and is dismissed but in the circumstances without costs. P.B.R. Appeal dis missed.

Summary:
The proviso (v) to section 3(1) of the Bihar Electricity Duty Act	 1948 provided that no duty shall be leviable on units of energy consumed by	 or in respect of	 or sold for con sumption in any mine or industrial undertaking except to the extent specified in the Second Schedule. In 1963 section 3 of the Act was amended and a new section 3 was. substituted for the old section 3. Sub section (2)(e) of the new section states that no duty shall be leviable on units of energy consumed by the Damodar Valley Corporation for the generation	 trans mission or distribution of electricity by that Corporation. Item A of the First Schedule	 as amended in 1963 states that for a mine or an industrial undertaking the duty leviable shall be at such rate or rates not exceeding 2 naya paise per unit of energy fixed by the State Government with	 the previous consent of the president. The Amending Act re ceived the assent of the President. In response to notices issued by the Superintendent of Commercial Taxes calling upon the appellant to pay elec tricity duty under the Act as amended	 the appellant contended that it enjoyed immunity from payment of tax under cl. (1) of article 288 of the Constitution	 no law satisfying the requirement of cl. (2) of article 288. having been made. warranting the levy of such duty. The High Court dismissed the appellant 's writ petition. Dismissing the appeal to this Court	 HELD: (1) What is required by cl. (2) of article 288 is that the law made by the State legislature for imposing	 or authorising the imposition of tax mentioned in cl. (1) shall have effect only if (i) after having been reserved for the consideration of the President	 it receives his assent	 and (ii) that if such law provides for the fixation of the rates and other incidents of such tax by means of rules or orders to be made under the law by any authority	 the law shall provide for 	the previous consent of the	 President being obtained to the making of any such rule or order. It is	 however	 not the effect of that clause that even if these two requirements are satisfied	 the provisions which merely deal with the mode and manner of the payment of the tax should also receive the assent of the President and that in the absence of such	 assent	 the provisions dealing with the incidence of tax	 which have received the assent of the President	 would remain unenforceable. [123 H; 124 A B] (2) The contention of the appellant that the amending Act did not contemplate or contain any indication regarding the	 imposition of electricity duty upon the appellant is plain ly	 untenable	 for it would have the effect of rendering section 3(2)(e) to be wholly redundant. Under proviso (v) to section 3(1) of the Principal Act	 mines and industrial undertakings were exempt from levy of duty. This exemption stood with drawn as a result of substitution of new section 3 for the old section by the amending Act. The new charging section 3(1) roped in all industrial undertakings	 including the Damodar Valley Corporation	 for the purpose of levy of duty. Section 3(2)(e)	 introduced by the Amending Act of 1963	 expressly granted exemption from levy of electricity duty on units of energy consumed by the appellant for the	 generation	 transmission or distribution of electricity by that Corpora tion. This provision	 containing express reference to the appellant Corporation	 dearly warrants the inference that in respect of units of energy not covered by section 3(2)(e) the exemption would not be available to the appellant. [123 A B] 119 (3) There is no substance in the contention that unless section 4 of the principal Act was also re enacted with the assent of the President	 the liability for payment of duty cannot be fastened upon the appellant. Section 3 of the Amending Act which deals with the incidence of duty makes it clear that such duty has to	 be paid on the units of energy consumed or sold and at the rate or rates specified in the schedule. As the duty is to be levied on the units of energy consumed or sold	 it would follow that the duty would have to be paid by the consumer or seller as the case may be. Section 4 of the. principal Act merely provides for the manner and mode of payment of the duty. [123 F G]