SWAROOP VEGETABLE PRODUCTS INDUSTRIES ETCversusSTATE OF U. P. AND OTHERS ETC.

    666
          SWAROOP VEGETABLE PRODUCTS INDUSTRIES ETC,
A
                                            v.
                    STATE OF U. P. AND OTHERS ETC.

                                    August 19, 1983
B
                   [S. MURTAZA FAZAL ALI, A. VARADARAJAN
                              AND M.P. THAKKAR, JJ.J

            U. P. Electricity (Duty) Act, 1952-Sec. 3(1) (a), (b) and (c) and sec. 4(1)
    (a), (b) and (c)-Levy and payment of electricity duty-Interpretation of. Person
    consuming ·electrical energy from own source and also purehasing from another
c   source is liable to pay duty on energy consumedfrom own source.

           U. P. Electricity (Duty) Act, 1952-Notification dated 17.3.1973 under
    sec. 3(4)-Exemption from payment of duty to persons consuming electrical energy
    from own source of generation installed after 2.1.1973-Validity of.

D          The appellants who had their Own source of generation of electrical
    energy (generating machinery having been installed and commissioned before
    2.1.1973) rind 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 consu111ption of energy from his own
    source of supply regardless of whether or not he also purchased electricity from
E   some other source indicated in sec. 3(1) (a) and (b). The appellant contended
    that in view of the user of the expression •another person' in sec. 3(1) (c) and
    sec. 4(1) (c) only those consumers who wholly fell outside the orbit of sec: 3(1)
    (a) and (b) were exigible to electricity duty under sec. 3(1) (c). The appellant
    submitted that under Notification dl.ted March 17, 1973' exemption must be
    granted to all per.:ions having their own source of electricity regardless of the
    date on which the source generation is installed to save it from challenge under
F    Art. 14 of the Constitution of India. In Civil Appeal 1312 the State of U.P.
    challenged the correctness of the decision of the Division Bench.

            Allowing the Appeal No. 1312 and dismis5ing other appeals.

            HELD : The duty was Chargeable in respect of energy consumed by a
G    personJrom his own· source of generation regardl~ss of the fact that he 'also'
     purchased electricity from other source indicated in sec. 3(1) (a) and sec.
     4(1) (a). [671 G]

            On a plain reading of sec. 3(1) (c) it is evident that duty has been levied
     on the energy consumed by a person fron1 his own source of generation without
H    anything more. The fact that the user of electricity from his own source of
     generation purchases electricity from some other source as we11, is an altogether
     irrelevant factor from the stand point of liability imposed by the said pro-
     visions. Be it realized that duty is levied on the consumption of energy. The
                         SWAROOP VEGETABLE V. U.P.                             667

taxing event being the consumption of energy, the source from which the
electricity is acquired would become altogether .irrelevant. Sec. 3(1) as also        A
sec. 4(1) has to be read as a whole and has to be interpret.ed in a harmonious
and meaningful manner. A person having his own source of energy who also
purchas;.;s energy from another source indicated in sec. 3(1) (a) will be covered
by- 3(1) (a) to the extent he purchases electricity from such a source, and wilJ
be equally covered by sec._ 3(1) (c), in so far ·as he consunlCs energy from his
own source of generation. He will he covered by both the provisions read              B
conjointly. The same reasoning applies in the context. of clauses (a) (b) and
(c) of sec. 4(1). There is no rational basis for exonerating a person from
payment of duty m·erely 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]                              c
        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 pros-
 pectively to those consumers who install their own sour~ of generation of
 energy pursuant to the concession being granted under the provision for              D
 exemption. Those who already had their own source of generation of energy
 need no such encouragemement in respect of the source of generation, already
 installed. lf 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 of generation installed 'efter' the date specified in the notification. The
 classification is, therefore, rational, purposeful, as also meaningful, and it is    E
 calculated to effectively serve the real purpose of _granting exemption. Article
 l4 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 pre-
 condition for qualifying the exemp1 ion. [672 G-673 BJ


       State of Uttar Pradesh v. Jageshwar, [1983] SCC 305 referred to.
                                                                                      F
      CIVIL APPELLATE JURISDICTION: 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 8.10.74, 9.11.78, 22.12.78, and 5th                     G
March, 1980 of the Allahabad High Court in Civil Writ Petitions
Nos. 3039/74, 89/76, 760/75, 759/75, 442/76, 2630/77 and 547/75.

    J>. R. Mridu/, G. L. Sanghi, Dr. Praveen Kumar, Praveen Kumar,
and H. K. Puri for the appearing Appellants.                                          H
      S. C. Manchanda, Sobha Dikshit, . Pradeep Misra and Sudhir
[(ulshreshta for t]i.e appearing
                        .. .      .
                                 Respondents.
                                    .     -  '
     668                   SUPREME COURT REPORTS             [1983] 3 s.c.11..
           The Judgment of the Court was delivered by

A·          THAKKAR, J. The main controversy in this group of appeals
     centres aronnd the question whether Electricity Duty on the consump·
     tion. of electrical energy in U ttar 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
B    Central Government. The contention has been raised in the context
     of Section 3(1) and 4(1) of the U. P .. Electricity (Duty) Act, 1852.
     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 leviab!e and payable on electrical
      energy comumed by a person from his own source of generation, such
c     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
i>   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 itsjndgment dated October 8, 1974 upheld the contention that
                 as
     in as much the petitioner company had its own source of genera-
     tion of energy and was also purchasing energy from another source
     indicated in Section 3· (!) (a) and 3 (!) (b), .the petitioner company
E
     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 appea
      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 Shervani 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
G     earlier in Sher vani'~ case was not correct and dismissed the Writ
      Petition filed by M/s 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
H      also purchas~d electricity from some other source indicated in
       Section 3 (I) (a) and (b). In view of this decision of the Full Bench,
       petitions instituted by six other companies raising the identical ques·
      lion w~re dismissed by the High Court of Allahabad. These companies
                SWAROOP VEGETABLES v. U.P. STATE (Thakkar, J.)             669

      have approached this Court by way of six separate appeals by special
      leave granted by this Court.                                               A
-,·        Sections 3 (!)and Section 4(1) of the Act insofar as material
      read thus;-

               "3 .. Levy of Electricity Duty-(!) Subject to the                 B
           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
                                                                                 c
                    premises used for commercial or residential pur-
                    poses, or in or upon any other premises except in
                    the construction, maintenance or operation of
                    his or its works; or
                                                                                 D
                (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         E
                4. Payment of electricity duty and interest there-
                   upon:-

             . (I} The electricity duty shall be paid, in such manner
                     and within such period as may be prescribed, to·            F
                     the State Government.

                     (a) Where the energy is supplied or consumed
                         by a licensee, by the licensee 1
                                                                                 G
                     (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
                                                                                 B
                     (c) Where the energy is consumed by any other
                         person from his own source of generation ;-
                         !>r the person generatin~ such ener@'."
     670                     SUPREME COURT REPORTS              (1983] 3 s.c.R.

              The original writ Petitioners. who canvass the view that eiectri-
A     city duty is not leviable or payable by a person consuming
      energy from his own source of generation under section 3 (I) (c)
      read with Section 4 (l) (c)of the Act lay great stress on the expression
      'another person' occuring in Section 3 (!) (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
B     3 (l) (a) or 3 (1) (b) are exigible to electricity duty under section 3(1)
      (c). In case a consumer fails 'bath' under Sections 3 (I} (a) and 3 (l}
       (c} or sections 3 (1) (b) and 3 (!) (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 4 (l). In
c     our opinion this submission is altogether untenable and has been
      rightly repelled by the Full Bench of the Allahabad High Court in its
      well considered judgment. On a plain reading of Section 3 (!) (c) it
      is evident that duty has been levied on the energy coosumed by a
      person from his own source of generation without anything more.
    . .There is no rider or qualification engrafted in Section 3 (I) (c) or
D      Section 4 (I} (c). The fact that the us~r 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 impossed by the said provisions. Be it realized that duty is
       levied on the consumption of energy. The taxing event is the con-
E      sumption of energy The source from which tho. electricity is acquired
       is altogether irrelevant. A person having his own source of energy
      who also purchases energy from another source indicaied in Section
     · 3 (!) (a} will be covered by 3 (l) (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
F      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 (I). 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.
G     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
H      clear by the prefactory note and the extract from the statement of
       objects and reasons published jn U. P. Gazette Extraordinary dated
       September I, 1952 which reads as under :
          . SWAROOP VEGETABLES V:U.P. STATE (Thakkar, J·)           671

          "The minimum programme of development which
     this State must carry out within the next three or four              A
     years for the attainment of the objective of a welfare State
     is set out in the Five Year Plan drawn up b"y the Planning
     Commission. This plan provides· for an expenditure of
     13.58 crores of rupees on power development projects.
     Such a huge expenditure cannot be met from our present               B
     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 there-
     fore to be found, the bulk of which can be raised only by
     means of fresh taxation.                                             c
         A tax on the consumption of electrical energy will im-
     pose a negligible burden on the consumer and is a fruitful
     source of additional revenue. · The bill has been so pre-·
     pared as to ensure that the tax payable by a person will             D
     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.
     Gazettee. Extra. dt. September l, 1952."

       How would this object be promoted or served by adopting such       B
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 (I) as also Section 4 (!) has to be
read as a whole and has to be interpreted in a harmonious and
m~aningful manner. To do otherwiSe would be to defeat the legisla-
tive intent which is abundantly clear, whilst at the same time exposing   F
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 con-
                                                                          G
sumed 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 (I) (a) a~d Section 4 (I) (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 electri-      ff
city challenging the correctness of the decision rendered by the Full
Bench must therefore tie dismissed.               ·
                        .SUPllllMB COURT RllPORTS          (1983) 3 s.c.a.

            The next question agitated in five out of the seven appeals
A   comprised in the group (it does not arise in C.A.· 1312;77 and C.A.
     1146/79) arises thus:- The State ofU.P. 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 th~ appeals
B    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 conten-
     tion that exemption could not have been lawfully granted to a person · -
     installing his own source of generation 'after' January 2, 1973 unless
c    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
D    of Article 14 of the Constitution of India. Exemption, (it is argued
     in effect), must be granted to all or to none irre_spective of the 'date
     or 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 discriminatary and violative of Article 14 of the
E     Gonstitution. 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 augmeniing the sources of supply of electri·
F     cal energy ·an incentive needed to he 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 sourco 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
H      of eneri)' need no such encouragement in respect of the source of
       generation already installed. If they wanted to further augment their
       twn source of ~eneration of energy _they would also be entitled to
             SWAROOP VEGETABLES v. U.P. STATE (Thakkar, J.)            673

 exemption in respect of the 'additional' s~urce 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 <)ate of installation has been ,
 made the precondition for qualifying for exemption.                            B
        State of Uttar Pradesh v. Jageshwar(I) on which reliance is
  placed cannot butteress 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             'C
 source of generation prospectively. As against, this those who had
 already acquired their own source for genera.ting 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 augmentaiion of the existing resources by extending the               'B
 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
(C.A. 1312 of 1977) is allowed, the judgement and order of the High            ,E
Court are set aside, and the writ petition giving rise io the said appeal,
is dismissed with costs throughout.                                   •

      The rest of the appeals are dismissed with ~osts.

      All interim orders will stand, vacated.

H.S.K                                 Civil Appeal No. 1312/72 allowed
                                       and all other Appeals dismissed.




    (1) [1983) S.C.C. 3QS,