Supreme Court of India
VASANT CHEMICALS LIMITEDversusTHE MANAGING DIRECTOR, HYDERABAD METROPOLITIAN WATER SUPPLY AND SEWERAGE BOARD AND OTHERS
- Citation
- 2019 INSC 189
- Decided
- 13 February 2019
- Disposal
- Dismissed
- Bench
- R BANUMATHI
Holding
The levy of sewerage cess on Vasant Chemicals is valid under Section 55 of the HMWS&SB Act and Clause 16 of the agreement; the proviso does not exempt the appellant, and no double levy exists.
Summary
Vasant Chemicals Ltd, an industrial unit that treats its effluents at a common effluent treatment plant (JETL) before discharging them into the Hyderabad Metropolitan Water Supply and Sewerage Board’s (HMWS&SB) sewer line, challenged the Board’s levy of sewerage cess under Section 55 of the HMWS&SB Act. The company argued that its premises were not served by the Board’s sewer system, invoking the proviso to Section 55, and contended that the charges paid by JETL to the Board amounted to a double levy. The Supreme Court held that the appellant, as an occupier consuming bulk water and ultimately discharging effluents into the Board’s sewer system, satisfies all ingredients of Section 55; the proviso only exempts premises that cannot use the Board’s sewer by any means, which does not apply here. The Court also rejected the claim of double taxation, noting that JETL’s payments are contractual and do not relieve the appellant of its statutory liability. Consequently, the appeals were dismissed and the appellant was ordered to pay the arrears of sewerage cess with interest.
Issues considered
- Whether levy of sewerage cess under Section 55 of the Hyderabad Metropolitan Water Supply and Sewerage Act, 1989 is applicable to Vasant Chemicals despite the absence of a direct connection to the Board’s sewer line.
- Whether the proviso to Section 55 exempts the appellant because its premises are not served by the Board’s sewer system.
- Whether the charges paid by JETL to the Board constitute a double levy of sewerage cess on the appellant.
Legislation cited
Subjects
sewerage cessSection 55Hyderabad Metropolitan Water Supply and Sewerage Boardindustrial effluent treatmentcommon effluent treatment plantstatutory levydouble taxationproviso interpretationenvironmental law
Judgment
[2019] 3 S.C.R. 749 749
VASANT CHEMICALS LIMITED A
v.
THE MANAGING DIRECTOR, HYDERABAD
METROPOLITIAN WATER SUPPLY AND SEWERAGE BOARD
AND OTHERS
(Civil Appeal Nos. 4616-4617 of 2009) B
FEBRUARY 13, 2019
[R. BANUMATHI AND INDIRA BANERJEE, JJ.]
Hyderabad Metropolitan Water Supply and Sewerage Act,
1989: C
s.55 – Charges towards the use of sewerage cess – Appellant
unit’s industrial effluents, after partial treatment at another company,
let into the Water Supply and Sewerage Board’s sewer line – Levy
of sewerage cess on the appellant by the Board – Held: Levy of
sewerage cess on the appellant by the Board is in accordance with D
s. 55 and Clause 16 of the agreement entered into between the
appellant and the Board – Appellant being occupier of the premises,
though its unit is not directly connected with the Board sewer line,
the industrial effluents of the appellant unit partially treated at JETL
are ultimately let into the Board sewer line which is finally carried
to the Sewerage Treatment Plant – It cannot be said that appellant E
is not liable to pay sewerage cess to the Board as it is not directly
letting out sewage effluents into the sewage line of the Board and
that it is carrying its effluents in the tanker, lorries and letting out
in the effluent treatment plant of JETL and thus, not connected with
the sewage system of the Board – Since the sewage of the appellant F
is ultimately let into the sewer line of the Board, the appellant cannot
contend that it is covered under proviso to s. 55 – Furthermore,
payment of sewerage surcharges and other charges by JETL cannot
take away the statutory liability of sewerage cess levied on the
appellant’s unit which consumes water and lets out the sewage into
the Board sewer system – Payment of sewerage surcharge and other G
charges by JETL to the Board will not amount to double levy –
Cess.
Dismissing the appeals, the Court
HELD: 1.1 Section 55 of the Hyderabad Metropolitan
Water Supply and Sewerage Board Act, 1989 contemplates levy H
749
750 SUPREME COURT REPORTS [2019] 3 S.C.R.
A of sewerage cess on the occupier of the premises from where
the sewage or industrial effluents, as the case may be, are let
into the sewer facility provided by the Board by any means
whatsoever irrespective of fact whether or not the area is served
by sewerage system of the Board. [Para 11][761-A-B]
B 1.2 As per the agreement entered into with the Board, the
management of the JETL pays the amount to the Board towards
surcharge for discharging partially treated effluents from JETL
into Board sewer and also for maintenance of the sewerage
system. After the industrial effluents are partly treated at JETL,
the industrial effluents are let into the dedicated pipeline
C belonging to the Board system at Balanagar and from there, the
sewage is let into 1000 mm diameter sewage trunk main belonging
to the Board through which the effluents are carried to Sewerage
Treatment Plant (STP) at Amberpet. [Para 13][762-G-H; 763-A]
1.3 The appellant being an occupier of a “non-domestic
D premise” having bulk water supply connection from the Board
and “a consumer of water” and eventually discharging sewage
effluents into the sewer line of the Board, the essential ingredients
of Section 55 are thus satisfied. The levy of sewage cess by the
respondent is a statutory levy which the appellant is liable to pay
under Section 55 of HMWS&S Act. Clause 16 of the agreement
E provides for payment of sewerage cess in terms of Section 55 of
the Act which inter alia stipulates that the appellant is required
to pay sewerage cess in accordance with Section 55 of the Act.
The sewerage cess of 35% levied by the Board for carrying the
sewage of the acceptable quality through its transmission system
F is thus, both statutory and in terms of the agreement between
the appellant and JETL. [Para 16][764-B-C]
1.4 As per Section 54 of the Act, sewage which is likely to
damage or interfere with the free maintenance of the sewerage
system of the Board cannot be passed into the Board sewer and
sewage treatment works. In terms of Section 54 of HMWS&S
G
Act, Clause 19 is also incorporated in the agreement between
the appellant industry and HMWS&SB, whereby no effluents shall
be discharged into the Board’s sewerage system unless such
effluents are treated in accordance with the provisions of the Water
Act, 1974. Admittedly, JETL is neither a consumer of bulk water
H supply nor generating any sewage/industrial effluents of its own.
VASANT CHEMICALS LTD v. MD, HYDERABAD METROPOLITIAN 751
WATER SUPPLY & SEWERAGE BOARD
The effluents of the appellant industry are not of acceptable A
standards for transmission system of the Board. Before the
effluents of the appellant industry are to be let into the sewer
line of the Board, the appellant industry has to get the effluents
treated at its own cost to bring the quality of the effluents to an
acceptable level. After getting partial treatment from JETL, the
B
effluents are let into the said dedicated pipeline which belongs to
the Board at Kukutpally/Balanagar and then they are let into 1000
mm diameter sewage trunk belonging to the Board through which
the effluents are carried to Sewerage Treatment Plant (STP) at
Amberpet measuring a distance of 18.90 kilo meters. The length
of the pipeline from JETL to Amberpet is 29.28 kilo meters. C
Though the appellant’s unit is not directly connected with the
Board sewer line, the industrial effluents of the appellant unit
partially treated at JETL are ultimately let into the Board sewer
line which is finally carried to STP at Amberpet. Thus, the appellant
is liable to pay sewerage cess under Section 55 of the Act. Proviso
D
to Section 55 of the Act contemplates that the sewerage cess
shall not be levied on the occupier of the premises if such
premises is stated to be in an area which is not served by the
sewerage system of the Board. The proviso implies that the
occupier of such premises cannot use the Board sewer by any
means whatsoever. Therefore, the submission of the appellant E
that it is not liable to pay sewerage cess to the Board as it is not
directly letting out sewage effluents into the sewage line of the
Board and that it is carrying its effluents in the tanker, lorries
and letting out in the effluent treatment plant of JETL and thus
not connected with the sewage system of the Board, is wholly
F
untenable. Since the sewage of the appellant is ultimately let into
the sewer line of the Board, the appellant cannot contend that it
is not covered under Section 55 of the Act and that it is covered
under proviso to Section 55 of the Act. [Para 19][765-C-D, F-H;
766-A-D]
1.5 The agreement between the appellant and JETL for G
partial treatment of appellant’s industrial effluents is the internal
contractual agreement between JETL and the appellant. The
appellant unit is to treat and process the industrial effluents and
bring them down to permissible standard limits in accordance
with the provisions of Water Act, 1974 and Environment Act,
H
752 SUPREME COURT REPORTS [2019] 3 S.C.R.
A 1986 relating to discharge and disposal of industrial effluents and
other objectionable effluents into sewers before discharging of
the effluents into the Board sewer. The treated effluents should
also have to conform to the IS specification laid down from time
to time for disposal of effluent into the domestic sewer of the
Board. To discharge their contractual obligation in bringing the
B
industrial effluents to permissible standard limits, the appellant
unit entered into an agreement with JETL engaging it to treat its
industrial effluents in accordance with the environmental laws in
force. The appellant instead of treating the effluents at its
premises at its own cost engaged JETL for treating its effluents.
C Thus, for its convenience, the appellant unit has entered into an
agreement with JETL for treating its effluents and the charges
paid by them to JETL are towards the treatment of effluents and
bring it to permissible standards. Therefore, the function of JETL
is that of an intermediary with whose assistance, the appellant is
discharging its statutory obligation. [Para 23][767-F-H; 768-A-C]
D
1.6 The sewerage cess aims to recover the cost of treating
the effluents of strength stronger than domestic sewage and to
make the effluents of acceptable quality. In addition to partial
treatment at JETL, the effluents require further treatment and
their transmission to Sewer Treatment Plant (STP) at Amberpet
E situated at 18.90 kms from Bala Nagar which requires huge
finance. The maintenance of sewer line is highly essential for
proper transmission of the effluents from JETL to Board’s sewer
system at Amperpet where the Board brings down the industrial
effluents to the tolerance limits. It requires huge amount to
F maintain the STP treatment of industrial effluents. It also requires
high demand of energy, STP personnel to operate and maintain
the system, skilled and unskilled workers for proper maintenance
of the plant. The respondent-Board unless it collects sewerage
cess and other charges cannot meet the heavy expenditure on
the operation and maintenance of sewerage system. The liability
G of the appellant to pay sewerage cess to the Board arises from
the Statute and also by way of an agreement which was agreed
upon by the appellant. There is no merit in the contention of the
appellant unit that its liability has ended upon transferring the
industrial effluents to JETL and that it is not connected to the
H Board’s sewer line. [Para 25][768-E-H; 769-A-B]
VASANT CHEMICALS LTD v. MD, HYDERABAD METROPOLITIAN 753
WATER SUPPLY & SEWERAGE BOARD
1.7 The sewerage cess levied under Section 55 is a statutory A
levy on the appellant as it satisfies the essential requirements of
Section 55 of the Act. The agreement/contract between the
appellant’s unit and JETL does not take away the appellant from
the network of the Board’s sewer line and its “use and treatment
of sewerage” of the Board’s sewerage system. Where the
B
appellant’s effluents are being eventually sent to the Board’s
sewer, the contention of the appellant that its premises are not
served with a sewer line by the Board defies logic and runs
contrary to the object of the Act. Appellant cannot escape from
the statutory levy by taking a technical approach and interpreting
the proviso as a general rule where it is merely a qualifying one. C
[Para 27][770-A-C]
1.8 The plea of double levy was rightly rejected by the High
Court inter alia holding that “even assuming for a moment that
the petitioner-company is paying some amounts to the JETL, it
cannot be said that it is towards sewerage cess”. [Para 30][771-D] D
1.9 So far as the payment by the appellant unit to the Board,
it is the statutory liability of payment of sewerage cess in terms
of Section 55 of HMWS&S Act and Clause 16 of the agreement
which obligates the appellant unit to pay the sewerage cess in
terms of Section 55 of the HMWS&S Act. The appellant having E
bulk water supply connection from the Board and being
“consumer of water” and discharging sewage/effluents into the
sewer line of the Board, the payment of sewerage cess by the
appellant unit is the statutory liability under Section 55 of the
HMWS&S Act and Clause 16 of the agreement. Insofar as the
charges paid by the appellant to JETL for the treatment and F
processing of its effluents, it is purely contractual pursuant to
the agreement entered into between the appellant unit and JETL
and the earlier agreement. The same cannot be considered to be
in deference to the statutory cess/statutory charge which can only
be levied by the Board. [Paras 33, 34][772-E-G; 773-B] G
1.10 Subject to the provisions of Water Act, 1974 and
Environment Act, 1986 and subject to the restrictions of Section
54 of HMWS&S Act and in terms of Rule 4 and other terms and
conditions, Board has the right to permit the ‘applicants’ seeking
to discharge their trade or industrial effluents into the Board’s H
754 SUPREME COURT REPORTS [2019] 3 S.C.R.
A sewer system and Sewerage Treatment Plant subject to the
imposition of costs. The treatment for letting the trade or industrial
effluents into the Board’s sewer shall be subject to such terms
and conditions and in such form of agreement as may be prescribed
in the regulations made by the Board in accordance with these
rules. Having entered into the agreement with the Board on
B
31.08.2000 and on prior dates, JETL cannot turn around and
challenge the terms and conditions imposed upon it by virtue of
the agreement. [Para 36][774-E-G]
1.11 So far as the various payments made by JETL to the
Board, levy is in terms of Rule 4 of the Sewerage Rules and as
C per the contract and is purely contractual between JETL and the
respondent Board for letting partially treated the industrial
effluents of the appellant and other units into the Board’s sewer.
Likewise, charges paid by JETL to the Board cannot be said to
be in lieu of the sewerage cess that the appellant unit is liable to
D pay which is a statutory liability. Many industries about fifty units,
apart from the appellant unit, discharge their effluents to the
CETP/JETL. The agreements between JETL and the Board are
purely contractual consciously entered into between the parties.
[Para 37][774-H; 775-A-B]
E 1.12 JETL lets partially treated effluents into the Board’s
sewerage system for further treatment. For further treatment of
sewerage, the effluents are to be taken to Sewerage Treatment
Plant (STP) at Amberpet which is situated at the distance of 08.30
kilometres from Balanagar. It requires huge amount for
transmission of the effluents to Board’s sewer system at
F Amberpet where the Board brings down the industrial effluents
to tolerance limits. The treatment of industrial effluents requires
high demand of energy, personnel to operate the system and
skilled workers for maintenance of the plant. Unless the Board
collects sewerage charge/sewerage surcharge, the Board cannot
G meet the heavy expenditure on the operation and maintenance
of sewerage system. Various other members of JETL who
discharge sewage into JETL which is ultimately let into Board
sewer line, may or may not be consumers of water supply by the
Board. That apart, members of JETL may have their own source
of water supply or they may supplement the supply of water from
H
VASANT CHEMICALS LTD v. MD, HYDERABAD METROPOLITIAN 755
WATER SUPPLY & SEWERAGE BOARD
the Board through different sources either by extraction of ground A
water or supply through tankers which cannot be quantified by
the Board. In pursuance of the provisions of the HMWS&S Act
and the Sewerage Rules and pursuant to the agreement dated
31.08.2000, the charges are levied on JETL who in turn collects
the charges from its member industrial units who discharge their
B
effluents into JETL. Therefore, the payments made by JETL to
the Board and the charges in turn collected by JETL from the
appellant and other member units, cannot absolve the appellant
unit from its statutory liability to pay the sewerage cess. There is
no double levy of sewerage cess. [Para 38][775-C-F]
1.13 Levy of sewerage cess being a statutory levy in terms C
of Section 55 of HMWS&S Act and Clause 16 of the agreement
which incorporates the statutory levy under Section 55 of
HMWS&S Act, the Single Judge and the Division Bench rightly
recorded concurrent findings upholding the levy. Observing that
the appellant being occupier of the premises, though not directly D
connected to the sewer line of the Board, is ultimately letting
into the sewerage system of the Board after partial treatment at
JETL, the High Court was right in holding that the levy of
sewerage cess is in accordance with Section 55 of HMWS&S
Act. The payment of sewerage surcharges and the other charges
by JETL cannot take away the statutory liability of sewerage cess E
levied on the occupier of the premises who consumes water and
lets out the sewage into the Board sewer system. The payment
of sewerage surcharge and other charges by JETL to the
respondent-Board will not amount to double levy and the High
Court rightly dismissed the writ petitions and also the review F
petitions filed by the appellant. The impugned order does not
suffer from any infirmity warranting interference. The arrears of
sewerage cess, if any, to be paid by the appellant within the
stipulated period with 6% interest with effect from the date cess
fell due, else it shall carry interest at the rate of 12% thereafter.
[Paras 39-40][775-G-H; 776-A-D] G
Indian Council for Enviro Legal Action and others v.
Union of India and others (1998) 9 SCC 580; World
Saviors v. Union of India and others (1998) 9 SCC
247; Ultra Tech Cement Ltd. v. State of Maharashtra
H
756 SUPREME COURT REPORTS [2019] 3 S.C.R.
A and another (2011) 13 SCC 497 : [2011] 11 SCR 613
; Romesh Kumar Sharm v. Unon of India and Others
(2006) 6 SCC 510 : [2006] 4 Suppl. SCR 227 - referred
to.
Environmental & Pollution laws in India by Justice T.S.
B Doabia (2 nd Edn-2010) LexisNexis Butterworths
Wadhwa, Volume 1 p 1054 - referred to.
Case Law Reference
(1998) 9 SCC 580 referred to Para 13
C (1998) 9 SCC 247 referred to Para 13
[2011] 11 SCR 613 referred to Para 20
[2006] 4 Suppl. SCR 227 referred to Para 26
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos.
D 4616-4617 of 2009.
From the Judgment and Order dated 29.12.2003 of the High Court
of Andhra Pradesh at Hyderabad in Review Petition W.P.M.P. Nos.
33154 & 33158 of 2003.
WITH
E Civil Appeal Nos. 4618-4619 of 2009.
V. Giri, Gourab Banerji, Guru Krishna Kumar, Sr. Advs.,
Ms. S. Suman Mund, Krishna Kumar, Mrs. D. Bharathi Reddy, Ms. Raka
Chatterjee, S. P. Mukherjee, Sudhakar Reddy, K. Parameshwar,
M. V. Mukunda, Advs. for the appearing parties.
F
The Judgment of the Court was delivered by
R. BANUMATHI, J. 1. These appeals arise out of the judgment
dated 29.10.2003 passed in the Writ Petition Nos.4917 and 5044 of 2000
and order dated 29.12.2003 passed in review petition by the High Court
G of Andhra Pradesh at Hyderabad dismissing the writ petitions as well as
the review petitions holding that the levy of sewerage cess levied on the
appellant by the respondent-Board is in accordance with Section 55 of
the Hyderabad Metropolitan Water Supply and Sewerage Act, 1989
(HMWS&S Act) and Clause 16 of the agreement entered into between
the appellant and the Board.
H
VASANT CHEMICALS LTD v. MD, HYDERABAD METROPOLITIAN 757
WATER SUPPLY & SEWERAGE BOARD [R. BANUMATHI, J.]
2. The facts giving rise to these appeals are that the appellant-M/ A
s Vasant Chemicals Limited which is an amalgamation of three companies
is engaged in the manufacture and export of dye intermediates and other
organic chemicals in their units at Jeedimetla Industrial Estate, Ranga
Reddy District, Hyderabad. The effluents of the appellant industry and
other industries were not of acceptable standards to be let into the sewer
B
line of the Board and required treatment and therefore, the industrial
units in Jeedimetla Estate decided to establish the Common Effluent
Treatment Plant (CETP). Hence, under the joint efforts of all the chemical
units and other industries including the appellant, a company was formed
namely M/s Jeedimetla Effluents Treatment Limited (JETL) in the year
1987 to get the effluents treated at their own cost to bring the quality of C
the effluents to an acceptable level. The appellant and the other industrial
units made investment by way of shares in the said company towards its
capital. According to the appellant, it has invested to the extent of more
than 29% of the shares in JETL towards its equity.
3. After treating the effluents to sewer standards as prescribed D
under the Water (Prevention and Control of Pollution) Act, 1974 (Water
Act, 1974) and the Environment (Protection) Act, 1986 (Environment
Act, 1986) between 1988 and 1995, JETL was discharging the treated
waste water/effluents into the open drains/nalas in Jeedimetla Area.
After discussion with Hyderabad Metropolitan Water Supply and
Sewerage Board (HMWS&SB-the Board) and the Government of E
Andhra Pradesh and APPCB, a dedicated pipeline was laid from the
premises of JETL to connect to the sewerage system of HMWS&SB
which is located at a distance of about 10.38 kilometers at Balanagar at
an estimated cost of Rs.346 lakhs. For the said dedicated pipeline, JETL
paid an amount of Rs.75,00,000/- as its contribution and the balance F
amount was contributed by the Board and the Government of Andhra
Pradesh. The pipeline became operational on 31.01.1998. As per the
direction of APPCB, the industries in IDA Jeedimetla are discharging
their industrial effluents to JETL, which in turn partially treat effluents
and let into the dedicated pipeline connecting JETL and sewer line at
Board’s sewer at Kukatpalli, Balanagar and then carried to Sewerage G
Treatment Plant (STP) at Amberpet.
4. The appellant has obtained bulk water supply connection from
the respondent-HMWS&S Board and the Board accorded sanction for
supply of 36,200 gallons water per day @ Rs.12 per kilo litre to the
H
758 SUPREME COURT REPORTS [2019] 3 S.C.R.
A appellant-Industry. An agreement was entered into by the appellant with
the respondent-Board on 27.04.1995 stipulating the terms and conditions
of supply of water and the payments required to be made in terms thereto.
The agreement provides that HMWS&SB will supply water to the
appellant industry and water charges will be levied for the supply of
water as per the agreement. Clause 16 of the agreement inter alia
B
provided for payment of sewerage cess and that the appellant is liable to
pay a sewerage cess in accordance with Section 55 of the HMWS&S
Act. Clause 17 of the agreement obligates the appellant to avail the
sewer facility provided by the HMWS&SB if the premises of the appellant
is located at a distance of less than thirty-five meters from the sewer
C line of the HMWS&SB.
5. The appellant made representations between 1998 and February,
2000 stating that levy of sewerage cess was illegal and contrary to the
provisions of HMWS&S Act as the appellant is not discharging its
effluents into the sewerage system of the Board. According to the
D appellant, the Board insisted upon payment of the arrears and sought
payment of the sewerage cess for the period January, 1998 to March,
2000 and sought certain amount towards water cess from 1st January,
1998 to February, 2000 vide two notices dated 25.01.2000. Aggrieved
thereby, the appellant filed writ petitions in WP(C) No.4917/2000 and
WP(C) No.5044/2000 challenging the notices levying of water cess and
E sewerage cess respectively. The writ petitions were dismissed by the
High Court by the common judgment dated 29.10.2003 upholding the
levy of sewerage cess by holding that such levy is in terms of Section 55
of HMWS&S Act. The High Court held that though the appellant’s
premises is not directly connected to the sewer line of the Board, the
F industrial effluents of the appellant are being carried to JETL and after
partial treatment at JETL, the same is let into the sewerage system of
the Board. It was further observed that as per Section 55 of the
HMWS&S Act, the occupier of the premises from where the sewerage
or effluents are let into the sewer facility provided by the Board by any
means, has to pay the sewerage cess irrespective of the fact that whether
G or not the area is served by sewerage system of the Board. The High
Court pointed out that this statutory liability is incorporated in Clause 16
of the agreement as per which the appellant has to pay sewerage cess
along with water cess @ 20% of the water charges. The High Court
dismissed the writ petitions vide judgement dated 29.10.2003 holding
H
VASANT CHEMICALS LTD v. MD, HYDERABAD METROPOLITIAN 759
WATER SUPPLY & SEWERAGE BOARD [R. BANUMATHI, J.]
that the demand notices are not arbitrary and that do not suffer from any A
legal infirmities.
6. The appellant filed review petitions being Review MP No.33154/
2003 in WP(C) No.4917/2000 and Review MP No.33158/2003 in WP(C)
No.5044/2000 before the High Court which came to be dismissed vide
order dated 29.12.2003 on the ground that the judgment dated 29.10.2003 B
does not suffer from any error apparent on the face of the record.
7. Mr. V. Giri, learned senior counsel for the appellant submitted
that since the premises of the appellant industry is situated in the area
not served by the sewage system of the Board and in terms of proviso to
Section 55 of the HMWS&S Act, no sewerage cess is leviable. It was C
contended that since the appellant is covered under proviso to Section
55 of the HMWS&S Act, the statutory liability cannot be imposed on the
appellant on the basis of Clause 16 of the agreement. Without prejudice
to the above contentions, it was urged that under the agreement dated
31.08.2000 between the JETL and the Board, various charges are levied
on JETL which are in effect sewerage cess and therefore, there cannot D
be double levy for the same service/same taxable event which is
impermissible under the law. It was contended that the various documents
produced and the contentions raised by the parties in the review petitions
were not considered by the High Court and the High Court erred in
dismissing the review petitions. E
8. Reiterating the above submissions, on behalf of JETL, Mr. Guru
Krishna Kumar, learned senior counsel submitted that under the
agreement dated 31.08.2000, five different kinds of charges are levied
on JETL by the Board namely:- (i) capital contribution (clause 4); (ii)
sewerage connection charges (clause 4); (iii) charges towards F
maintenance of sewer line (clause 28); (iv) sewerage maintenance and
sewerage treatment charges (clause 28); and (v) sewerage surcharge
for effluents above a certain level (clause 29) and those charges though
not christened as sewerage cess, they are in effect sewerage cess in
terms of Section 55 of HMWS&S Act. It was further contended that
various charges levied on JETL by virtue of the agreement dated G
31.08.2000 correspond to the sewerage cess under Section 55 of
HMWS&S Act and levy of sewerage cess on the appellant for the same
act of discharging of the same sewage, would therefore amount to a
double levy on the industrial units.
H
760 SUPREME COURT REPORTS [2019] 3 S.C.R.
A 9. On behalf of the respondent Board, learned senior counsel Mr.
Gourab Banerji submitted that the appellant industry, obtaining bulk water
supply from the Board and discharging sewage into the sewer line of the
Board, is liable to pay sewerage cess under Section 55 of the HMWS&S
Act. It was submitted that since after partial treatment at JETL, the
effluents are let into the sewer line of the Board through which the
B
effluents are carried to Sewerage Treatment Plant (STP) at Amberpet
for further treatment, the appellant is connected to the sewerage system
of the Board and is liable to pay sewerage cess under Section 55 of the
HMWS&S Act. It was contended that Clause 16 of the agreement
incorporates the levy under Section 55 of the HMWS&S Act and the
C Rules and Regulations thereunder and as per the terms of the agreement
also, the appellants are liable to pay sewerage cess. Insofar as the plea
of double taxation, it was submitted that the JETL was not a party to the
writ petitions filed by the appellant and the subsequent writ petition in
WP(C) No.17381/2004 filed by the JETL inter alia challenging the
sewerage surcharge under various agreements was already dismissed
D
for default by the High Court.
10. We have carefully considered the submissions and perused
the impugned judgment and materials on record. The following points
arise for determination in these appeals:-
E (i) Whether the appellant is right in contending that the appellant
unit is not connected to the sewerage system of the Board and
so the levy of sewerage cess on the appellant under Section
55 of HMWS&S Act is not sustainable?
(ii) Whether the appellant is right in contending that since the
F appellant’s unit is not served by a sewerage system of the
Board, as per proviso to Section 55 of HMWS&S Act, no
sewerage cess can be levied?
(iii) Whether the charges collected from JETL under the
agreement dated 31.08.2000 is in effect, sewerage cess in
G terms of Section 55 of HMWS&S Act, thereby amounting to
double levy of sewerage cess/charge for the same service/
same taxable amount?
Appellant’s statutory liability to pay sewerage cess and
Re: contention: Appellant is covered by the proviso to Section
55 of the Act
H
VASANT CHEMICALS LTD v. MD, HYDERABAD METROPOLITIAN 761
WATER SUPPLY & SEWERAGE BOARD [R. BANUMATHI, J.]
11. Section 55 of the HMWS&S Act contemplates levy of A
sewerage cess on the occupier of the premises from where the sewage
or industrial effluents, as the case may be, are let into the sewer facility
provided by the Board by any means whatsoever irrespective of fact
whether or not the area is served by sewerage system of the Board.
Section 55 of HMWS&S Act reads as under:-
B
“55. Charges towards the use of sewerage cess—
Every occupier of both domestic and non-domestic premises shall
pay to the Board at the rate not exceeding thirty five percent of
the bill charging for the water consumed or at such rate as may
be prescribed by rules, to defray the capital cost of sewerage and C
sewage treatment works undertaken by the Board and the
operation and maintenance of the sewerage system from time to
time:
Provided that no such charges shall be levied in any premises
situated in the areas which are not served by the sewerage system D
of the Board.”
12. Admittedly, the appellant industry has obtained sanction for
bulk water supply connection from the Board for the supply of 36,200
gallons of water per day @ Rs.12/- per kilo litre for the manufacture of
dye and other chemicals. In terms of the sanction of water supply to the E
appellant, an agreement was entered into with the respondent-Board on
27.04.1995 stipulating the conditions and the payments required to be
made in terms thereto. The agreement provides for payment of sewerage
cess in accordance with Section 55 of the HMWS&S Act. Clause 16 of
the agreement mandates the Board to collect sewerage cess from the
appellant-industry in terms of Section 55 of the HMWS&S Act. Clause F
17 of the agreement makes it obligatory on the part of the appellant to
avail the facility of the Board if it is located within thirty-five meters
from the Board’s sewerage system. Clauses 16 and 17 read as under:-
“Clause 16. In accordance with the provisions of Section 55 of
the HMWSSA Act, 1989, the consumer shall pay sewerage cess G
along with water charges at the rate of 20% of the water charges
or such other rates as may be prescribed and determined by the
Board from time to time.
Clause 17. It shall be obligatory on the part of the consumer to
avail the sewers facility provided by the Board if the premises of H
762 SUPREME COURT REPORTS [2019] 3 S.C.R.
A the consumers are located at a distance less than 35 metres away
from the Board sewer line to any point of the boundary of the
consumer premises.”
13. Appellant industry and other industrial units are producing
chemicals, bulk pharmaceuticals and dye intermediates causing heavy
B pollution. In order to comply with the provisions of Water Act, 1974, the
industrial effluents discharged by the appellant industry and others are
to be treated otherwise the industrial units will be violating various laws
governing the treatment and disposal of sewage including protection of
environment. The issue pertaining to pollution, discharge of effluents in
the State of Andhra Pradesh including the industrial region of Jeedimetla
C was the subject matter of a proceeding before this Hon’ble Court being
Writ Petition (C) No.1056 of 1990, in the matter of Indian Council for
Enviro/legal Action and Others. In the said proceedings, a joint action
plan was proposed by the CPCB, New Delhi and APPCB and a common
effluent treatment plant was ordered to be set up. As the industries
D were sending their untreated effluents into the sewer, directions were
given that the A.P. Pollution Control Board would not accept the effluents
unless these conform to the standards prescribed by the Board vide
Indian Council for Enviro Legal Action and others v. Union of India
and others, (1998) 9 SCC 580. Similar problem arose in the case of
World Saviors v. Union of India and others (1998) 9 SCC 247. In
E order to comply with the provisions of the Water Act, 1974 and the
Environment Act, 1986 and in order to carry the industrial sewage to the
Board’s sewer trunk, a dedicated pipeline to the extent of 10.38 kilo
meters from JETL to Kukatpally and Sanathnagar Main Line was laid.
The cost of laying the pipeline is stated to be Rs.346 lakhs out of which
F contribution of the JETL was Rs.75 lakhs and the balance amount was
contributed by the Board and the Government of Andhra Pradesh. This
dedicated pipeline became operational from 31.01.1998. The pipeline
from JETL to Balanagar is a dedicated pipeline used exclusively by the
JETL. As per the agreement entered into with the Board, the management
of the JETL pays the amount to the Board towards surcharge for
G discharging partially treated effluents from JETL into Board sewer and
also for maintenance of the sewerage system. After the industrial
effluents are partly treated at JETL, the industrial effluents are let into
the dedicated pipeline belonging to the Board system at Balanagar and
from there, the sewage is let into 1000 mm diameter sewage trunk main
H
VASANT CHEMICALS LTD v. MD, HYDERABAD METROPOLITIAN 763
WATER SUPPLY & SEWERAGE BOARD [R. BANUMATHI, J.]
belonging to the Board through which the effluents are carried to A
Sewerage Treatment Plant (STP) at Amberpet.
14. “A ‘trunk sewer’ is one which bears the same relation to an
entire sewer system that the trunk of a tree bears to its branches, or the
main stream of a river bears to its tributaries. It is sometimes called a
‘trunk line sewer,’ an ‘intercepting sewer,’ or a ‘trunk line intercepting B
sewer”. “Ref: Environmental & Pollution laws in India by Justice T.
S. Doabia (2nd Edition-2010) published by LexisNexis Butterworths
Wadhwa, Volume 1 at page no.1054.” Graphic description of the
sewerage connection is as under:-
C
D
E
F
15. As per Section 55 of the HMWS&S Act, the following essential
ingredients are to be satisfied for levy of sewerage cess:-
1. There has to be an occupier domestic or non-domestic premise;
2. There should be consumption of water by such occupier; G
3. The rate to be charged would be up to 35% of bill for water
consumed or at such rate as may be prescribed by rules; and
4. The amount collected is towards:- (a) defraying capital cost of
sewerage and sewerage treatment works undertaken by the
H
764 SUPREME COURT REPORTS [2019] 3 S.C.R.
A Board; and (b) for operation and maintenance of sewerage
system from time to time.
16. The appellant being an occupier of a “non-domestic premise”
having bulk water supply connection from the Board and “a consumer
of water” and eventually discharging sewage effluents into the sewer
B line of the Board, the essential ingredients of Section 55 are thus satisfied.
The levy of sewage cess by the respondent is a statutory levy which the
appellant is liable to pay under Section 55 of HMWS&S Act. Clause 16
of the agreement provides for payment of sewerage cess in terms of
Section 55 of the Act which inter alia stipulates that the appellant is
required to pay sewerage cess in accordance with Section 55 of the
C Act. The sewerage cess of 35% levied by the Board for carrying the
sewage of the acceptable quality through its transmission system is thus
both statutory and in terms of the agreement between the appellant and
JETL.
17. Contention of the appellant is that it is not liable to pay sewerage
D cess to the Board as it is not letting out the sewage effluents to the
sewage system of the Board but is carrying the effluents in the tanker,
lorries and letting it out in the effluent treatment of JETL and thus is not
connected with the sewage line of the Board. Mr. V. Giri, learned senior
counsel for the appellant contended that the appellant industry is not
E connected with sewerage system of the Board and therefore, levy of
sewerage cess under Section 55 of the HMWS&S Act is not sustainable.
Drawing our attention to the finding of the High Court “that there is no
sewerage line of HMWS&SB connecting the appellant’s premises
to the sewerage system of HMWS&SB…..”, the learned senior counsel
for the appellant submitted that since there is no sewer or drainage line
F connecting the appellant industry, proviso to Section 55 of the HMWS&S
Act applies and no sewerage cess is leviable. It was further submitted
that even assuming that the dedicated pipeline from JETL for carrying
its treated effluents to the sewerage system of the Board at Balanagar
is a “sewerage system of the Board” which is more than two kilo
G meters from the premises of the appellant industry, JETL is separately
paying the surcharge and the appellant is not connected with the sewerage
system and therefore, there cannot be levy of sewerage cess on the
appellant under Section 55 of the HMWS&S Act.
18. As pointed out earlier, admittedly, the appellant has obtained
H bulk water supply connection from the Board for supply of 36,200 gallons
VASANT CHEMICALS LTD v. MD, HYDERABAD METROPOLITIAN 765
WATER SUPPLY & SEWERAGE BOARD [R. BANUMATHI, J.]
of water per day @ Rs.12/- per kilo litre. It is also admitted that the A
appellant is discharging its industrial effluents into the Board sewer line.
The appellant being an occupier of the premises who is consuming water
and discharging sewage into the sewerage system of the Board, in terms
of Section 55 of the HMWS&S Act, is liable to pay sewerage cess.
Though the pipeline from JETL to Kukutpally/Balanagar is stated to be
B
the dedicated pipeline, as pointed out earlier, this was laid at the cost of
Rs.346 lakhs, out of which, JETL has paid only Rs.75 lakhs. The rest of
the cost was borne by the Board and the Government of Andhra Pradesh.
It is pertinent to note that Clause 4 of the agreement dated 31.01.1998
between JETL and the Board categorically stipulates that the dedicated
pipeline from JETL to Kukutpally/Balanagar belongs to the Board. C
19. As per Section 54 of the Act, sewage which is likely to damage
or interfere with the free maintenance of the sewerage system of the
Board cannot be passed into the Board sewer and sewage treatment
works. In terms of Section 54 of HMWS&S Act, Clause 19 is also
incorporated in the agreement dated 27.04.1995 between the appellant D
industry and HMWS&SB. As per Clause 19 of the agreement, no
effluents shall be discharged into the Board’s sewerage system unless
such effluents are treated in accordance with the provisions of the Water
Act, 1974. Clause 19 reads as under:-
“19. No effluent shall be discharged into the Board sewer unless E
such effluent is treated in accordance with the provisions of Water
(Prevention and Control of Pollution) Act, 1974 relating to
discharge and disposal of industrial effluents and other
objectionable effluents. Further, the treatment shall also conform
to the IS specification laid down from time to time for disposal of
effluent into the domestic sewer of the Board.” F
Admittedly, JETL is neither a consumer of bulk water supply nor
generating any sewage/industrial effluents of its own. The effluents of
the appellant industry are not of acceptable standards for transmission
system of the Board. Before the effluents of the appellant industry are
to be let into the sewer line of the Board, the appellant industry has to G
get the effluents treated at its own cost to bring the quality of the effluents
to an acceptable level. After getting partial treatment from JETL, the
effluents are let into the said dedicated pipeline which belongs to the
Board at Kukutpally/Balanagar and then they are let into 1000 mm
diameter sewage trunk belonging to the Board through which the effluents H
766 SUPREME COURT REPORTS [2019] 3 S.C.R.
A are carried to Sewerage Treatment Plant (STP) at Amberpet measuring
a distance of 18.90 kilo meters. The length of the pipeline from JETL to
Amberpet is 29.28 kilo meters. Though the appellant’s unit is not directly
connected with the Board sewer line, the industrial effluents of the
appellant unit partially treated at JETL are ultimately let into the Board
sewer line which is finally carried to STP at Amberpet. In the light of
B
this admitted factual position, the appellant is liable to pay sewerage
cess under Section 55 of the Act. Proviso to Section 55 of the Act
contemplates that the sewerage cess shall not be levied on the occupier
of the premises if such premises is stated to be in an area which is not
served by the sewerage system of the Board. The proviso implies that
C the occupier of such premises cannot use the Board sewer by any means
whatsoever. Therefore, the contention of the appellant that it is not liable
to pay sewerage cess to the Board as it is not directly letting out sewage
effluents into the sewage line of the Board and that it is carrying its
effluents in the tanker, lorries and letting out in the effluent treatment
plant of JETL and thus not connected with the sewage system of the
D
Board, in our view, is wholly untenable. Since the sewage of the appellant
is ultimately let into the sewer line of the Board, the appellant cannot
contend that it is not covered under Section 55 of the Act and that it is
covered under proviso to Section 55 of the Act.
20. Placing reliance upon Ultra Tech Cement Ltd. v. State of
E Maharashtra and another, (2011) 13 SCC 497, learned senior counsel
for the appellant contended that when a particular cess is leviable under
an enactment and the said enactment exempts a specific class of persons
from paying the said cess, the State Government cannot make the lessee
liable to pay the said cess on the ground that the agreement was entered
F into under a different enactment. Placing reliance upon paras (12) and
(20) of the said judgment, it was contended that there is no sewer or
drainage line connecting the appellant’s units or any other industry in
Jeedimetla Effluent Treatment Limited to the sewerage system of
HMWS&SB and neither the appellant nor other industries discharge
their sewage into the sewer line of the Board and, therefore, the
G appellant’s unit is covered under proviso to Section 55 of the HMWS&S
Act. The learned senior counsel further contended that any fiscal
extraction is required to be constructed strictly in accordance with the
provisions of the charging section and even if a clause for such payment
is incorporated into the agreement as the agreement is subject to the
H provision of the relevant charging section.
VASANT CHEMICALS LTD v. MD, HYDERABAD METROPOLITIAN 767
WATER SUPPLY & SEWERAGE BOARD [R. BANUMATHI, J.]
21. The above argument proceeds on the presumptive footing as A
if the appellant’s unit is covered under proviso to Section 55 of the
HMWS&S Act. Proviso to Section 55 of HMWS&S Act states that no
charge would be levied in any premises situated outside the sewage
system/not served by the sewerage system of the Board. It has to be
seen whether the appellant is right in contending that the appellant industry
B
is not connected with the sewerage line of the Board and that no sewage
of the appellant is let into the sewerage system of the Board and therefore,
the appellant is covered under proviso to Section 55 of HMWS&S Act.
22. In the process of letting out effluents, two things are involved
namely – (i) the treatment of industrial effluents to bring down the contents
of the effluents to an agreed specification on one part; and (ii) the C
transmission of those partially treated industrial effluents through the
sewerage system of the Board. Parties have entered into various
agreements and there are three sets of agreements which are as under:-
S. No. Parties Date of
Agreement D
1. M/s. Vasant Chemicals Ltd. and 27.04.1995
HMWS&S Board
2. M/s. Vasant Chemicals Ltd. and 22.01.1996
Jeedimetla Effluent Treatment Ltd.
(JETL) E
3. Jeedimetla Effluent Treatment Ltd. 31.01.1998
(JETL) and HMWS&S Board and
31.08.2000
23. Let us now consider the effect of the agreement between the F
appellant and JETL on the statutory liability of the appellant under Section
55 of the Act. The agreement between the appellant and JETL for partial
treatment of appellant’s industrial effluents is the internal contractual
agreement between JETL and the appellant. The appellant unit is to
treat and process the industrial effluents and bring them down to
permissible standard limits in accordance with the provisions of Water G
Act, 1974 and Environment Act, 1986 relating to discharge and disposal
of industrial effluents and other objectionable effluents into sewers before
discharging of the effluents into the Board sewer. The treated effluents
should also have to conform to the IS specification laid down from time
H
768 SUPREME COURT REPORTS [2019] 3 S.C.R.
A to time for disposal of effluent into the domestic sewer of the Board. To
discharge their contractual obligation in bringing the industrial effluents
to permissible standard limits, the appellant unit entered into an agreement
dated 22.01.1996 with JETL engaging it to treat its industrial effluents in
accordance with the environmental laws in force. The appellant instead
of treating the effluents at its premises at its own cost engaged JETL for
B
treating its effluents. Thus, for its convenience, the appellant unit has
entered into an agreement with JETL for treating its effluents and the
charges paid by them to JETL are towards the treatment of effluents
and bring it to permissible standards. Therefore, the function of JETL is
that of an intermediary with whose assistance, the appellant is discharging
C its statutory obligation.
24. Admittedly, the appellant’s industrial effluents are carried to
JETL in closed tankers and after partial treatment at JETL, let into the
Board’s sewer line. Admittedly, the effluents of the appellant’s unit are
not of acceptable standards for transmission through the sewer line of
D the Board and therefore, the appellant’s industry and other industries
have to get the effluents treated at their own cost to bring the quality of
the effluents to an acceptable level by treating the same to some extent.
The sewerage cess of 35% levied by the Board is for carrying the
sewerage of acceptable quality through its sewer line and further treating
it at STP at Amberpet.
E
25. The sewerage cess aims to recover the cost of treating the
effluents of strength stronger than domestic sewage and to make the
effluents of acceptable quality. In addition to partial treatment at JETL,
the effluents require further treatment and their transmission to Sewer
Treatment Plant (STP) at Amberpet situated at 18.90 kms from Bala
F Nagar which requires huge finance. The maintenance of sewer line is
highly essential for proper transmission of the effluents from JETL to
Board’s sewer system at Amberpet where the Board brings down the
industrial effluents to the tolerance limits. It requires huge amount to
maintain the STP treatment of industrial effluents. Further, it requires
G high demand of energy, STP personnel to operate and maintain the
system, skilled and unskilled workers for proper maintenance of the plant.
The respondent-Board unless it collects sewerage cess and other charges
cannot meet the heavy expenditure on the operation and maintenance of
sewerage system. The liability of the appellant to pay sewerage cess to
the Board arises from the Statute and also by way of an agreement
H which was agreed upon by the appellant. There is no merit in the
VASANT CHEMICALS LTD v. MD, HYDERABAD METROPOLITIAN 769
WATER SUPPLY & SEWERAGE BOARD [R. BANUMATHI, J.]
contention of the appellant unit that its liability has ended upon transferring A
the industrial effluents to the respondent-JETL and that it is not connected
to the Board’s sewer line. As discussed earlier, the partially treated
effluents of the appellant’s unit are ultimately let into the sewer line
provided by the Board which is being carried to Amberpet STP for further
treatment and discharge. After partial treatment at JETL, when appellant’s
B
effluents are let into the Board’s sewage system, the appellant is not
justified in contending that it is not connected to the sewer line of the
Board and hence, covered under the proviso to Section 55 of the Act.
26. It is well-settled that the normal function of a proviso is to
except something out of the enactment. While considering the
interpretation of the proviso, in Romesh Kumar Sharma v. Union of C
India and others, (2006) 6 SCC 510, this Court held as under:-
“12. “10. The normal function of a proviso is to except something
out of the enactment or to qualify something enacted therein which
but for the proviso would be within the purview of the enactment.
As was stated in Mullins v. Treasurer of Surrey (1880) 5 QBD D
170 (referred to in Shah Bhojraj Kuverji Oil Mills and Ginning
Factory v. Subbash Chandra Yograj Sinha AIR 1961 SC 1596
and Calcutta Tramways Co. Ltd. v. Corpn. of Calcutta AIR
1965 SC 1728, when one finds a proviso to a section the natural
presumption is that, but for the proviso, the enacting part of the E
section would have included the subject-matter of the proviso.
The proper function of a proviso is to except and to deal with a
case which would otherwise fall within the general language of
the main enactment and its effect is confined to that case. It is a
qualification of the preceding enactment which is expressed in
terms too general to be quite accurate. As a general rule, a proviso F
is added to an enactment to qualify or create an exception to
what is in the enactment and ordinarily, a proviso is not interpreted
as stating a general rule. ‘If the language of the enacting part of
the statute does not contain the provisions which are said to occur
in it you cannot derive these provisions by implication from a G
proviso. …’ said Lord Watson in West Derby Union v.
Metropolitan Life Assurance Society 1897 AC 647. Normally,
a proviso does not travel beyond the provision to which it is a
proviso. It carves out an exception to the main provision to which
it has been enacted as a proviso and to no other……”
H
770 SUPREME COURT REPORTS [2019] 3 S.C.R.
A 27. The sewerage cess levied under Section 55 of the HMWS&S
Act is a statutory levy on the appellant as it satisfies the essential
requirements of Section 55 of the Act. The agreement/contract between
the appellant’s unit and JETL does not take away the appellant from the
network of the Board’s sewer line and its “use and treatment of
sewerage” of the Board’s sewerage system. Where the appellant’s
B
effluents are being eventually sent to the Board’s sewer, the contention
of the appellant that its premises are not served with a sewer line by the
Board defies logic and runs contrary to the object of the Act. The
appellant, being an occupier of non-domestic premises, is consuming the
water provided by the Board, generating the industrial effluents and using
C the Board’s sewer to release them after partial treatment. In such an
admitted position, the appellant cannot escape from the statutory levy by
taking a technical approach and interpreting the proviso as a general
rule where it is merely a qualifying one. As the appellant eventually lets
out its effluents to the Board’s sewerage system, the appellant is not
right in contending that it is covered under proviso to Section 55 of the
D
Act.
28. Re: Contention – Levy of double taxation:- Learned senior
counsel for the appellant contended that even assuming that the dedicated
pipeline of JETL which connects to the sewerage system of the Board
at Balanagar is construed to be “Sewer”, any levy of sewerage cess is
E applicable only to JETL and JETL under its agreement with HMWS&SB,
is paying surcharges and sewerage charges to HMWS&SB by collecting
the said amount from the appellants and other industries for the said
taxable event. It was submitted that under Section 55 of HMWS&S
Act, the sewerage cess is collected for the – (i) to defray capital cost of
F sewerage; (ii) for sewage treatment works undertaken by the Board;
and (iii) for operation and maintenance of the sewerage system. It is
contended that under its agreement dated 31.08.2000 with the Board,
JETL is paying various charges like - (i) sewerage connection charges;
(ii) charges towards maintenance of sewer line; (iii) sewerage
maintenance and water treatment charges; and (iv) sewerage surcharge
G for effluents above a certain level. It was contended that various charges
paid by JETL to the Board is in essence “sewerage cess”, though it is
collected under different head “sewerage surcharge”.
29. Taking us through Clause 4 of the agreement with Board dated
31.08.2000, Mr. Guru Krishna Kumar, learned senior counsel appearing
H
VASANT CHEMICALS LTD v. MD, HYDERABAD METROPOLITIAN 771
WATER SUPPLY & SEWERAGE BOARD [R. BANUMATHI, J.]
for JETL submitted that under agreement dated 31.08.2000, various A
charges are collected and it additionally provides for levy of surcharge
also. It is contended that even though these charges may not be christened
as a sewerage cess, they are in effect correspond to the essentials of
“sewerage cess” in Section 55 and a levy of cess from the appellant
for the same act of disposal of the sewage would therefore amount to a
B
double levy on the industrial units. The learned senior counsel submitted
that sewerage cess cannot be exacted from the appellant because it is
already been paid by JETL. It was urged that various charges levied on
JETL are excessive arbitrary apart from the fact that there is a double
levy.
30. As rightly contended by learned senior counsel for the C
respondent-Board, the plea of double payment of sewerage cess was
never raised in the writ petition filed by the appellant; but it was raised
by way of oral submission before the High Court and thereafter, by way
of review petition. The plea of double levy was rightly rejected by the
High Court inter alia holding that “even assuming for a moment that D
the petitioner-company is paying some amounts to the JETL, it cannot
be said that it is towards sewerage cess”.
31. As pointed out by the learned senior counsel for the respondent-
Board, JETL never sought to implead itself as a party respondent in the
writ petition filed by the Board. It is also pertinent to point out that one E
Mr. G.K.B. Chowdary who was then the Managing Director of the
appellant-group of companies, was also the Managing Director of JETL.
It passes one’s comprehension as to why JETL whose Managing Director
is the same as the Managing Director of the appellant Group of
Companies had not taken any step to get themselves impleaded in the
writ petition before the High Court and raise the plea of double taxation. F
32. In the Supreme Court, notice was ordered on 07.07.2004 and
permitted the appellant to implead JETL as party respondent. It was
thereafter, JETL filed writ petition in WP(C) No.17381/2004 (24.09.2004)
inter alia for various reliefs:- (i) That clauses 28 and 29 of the agreement
dated 10.06.2003 between the petitioner company Jeedimetla Effluent G
Treatment Limited and HMWS&SB as shylockin and unconscionable,
usurious, exorbitant, unconstitutional, ultra vires the powers of the
HMWS&SB; and (ii) That the action of the HMWS&SB in collecting
various charges under Clause 4 of the agreement and other charges
levied upon JETL. The said writ petition that kept pending for many H
772 SUPREME COURT REPORTS [2019] 3 S.C.R.
A years came to be dismissed by the High Court’s order dated 21.12.2015
for non-prosecution. JETL has also filed WP(C) No.20117/2017
challenging the enhancement of sewerage surcharge and the said writ
petition is also said to have been dismissed on 25.06.2014.-
33. Since, elaborate arguments were advanced regarding
B “excessive and arbitrary levy on JETL” as well as the plea of “double
levy of sewerage cess”, we have also considered the matter on merits.
Based on three sets of agreements between the parties, there are three
kinds of payments as under:-
a) Payment of sewerage cess by the appellant to the Board in
C terms of Section 55 of the HMWS&S Act and Clause 16 of
the agreement dated 27.04.1995;
b) Payment of treatment and processing service charges by the
appellant unit to JETL as stipulated in Clause 19 of the
agreement between the appellant and JETL dated 01.04.2000;
D and
c) Various charges paid by JETL to the Board pursuant to the
agreement dated 31.08.2000 and the earlier agreements.
So far as the payment by the appellant unit to the Board, it is the
statutory liability of payment of sewerage cess in terms of Section 55 of
E HMWS&S Act and Clause 16 of the agreement which obligates the
appellant unit to pay the sewerage cess in terms of Section 55 of the
HMWS&S Act. The appellant having bulk water supply connection
from the Board and being “consumer of water” and discharging sewage/
effluents into the sewer line of the Board, the payment of sewerage
F cess by the appellant unit is the statutory liability under Section 55 of the
HMWS&S Act and Clause 16 of the agreement.
34. Insofar as the charges paid by the appellant to JETL for the
treatment and processing of its effluents, it is purely contractual pursuant
to the agreement entered into between the appellant unit and JETL dated
01.04.2000 and the earlier agreement dated 22.01.1996. As pointed out
G
earlier, the appellant unit is obligated to treat and process the industrial
effluents and bring them down to permissible standard limits in accordance
with the provisions of the Water Act, 1974 and Environment Act, 1986
before they are let into the sewer line of the Board. To discharge its
statutory as well as contractual obligation, the appellant unit has entered
H
VASANT CHEMICALS LTD v. MD, HYDERABAD METROPOLITIAN 773
WATER SUPPLY & SEWERAGE BOARD [R. BANUMATHI, J.]
into agreement with JETL for the treatment and processing of appellant’s A
effluents before being let into Board’s sewer line. Payment of charges
by the appellant to JETL is purely contractual between the parties and
the same cannot be considered to be in deference to the statutory cess/
statutory charge which can only be levied by the Board. In this regard,
the High Court has rightly observed that assuming that the appellant is
B
paying some amount to JETL, the same cannot be termed as “sewerage
cess”.
35. So far as payment of charges by JETL to the respondent
Board, the same is governed by the terms and conditions of the agreement
between JETL and the Board dated 31.08.2000. JETL’s contention is
two fold: - (i) levy of various charges under the agreement is arbitrary C
and exorbitant; and (ii) double levy of sewerage cess. The gist of the
terms and conditions of the contract dated 31.08.2000 between JETL
and the Board and various charges levied are as under:-
1. Clause 4 specifically stipulated that JETL shall be charged
towards overall proportionate sewerage maintenance and D
sewerage treatment charges being incurred by the Board from
time to time on the overall sewerage system of the Board;
2. In terms of Clause 4, the Board has levied sewerage connection
charges @ Rs.4/- per litre for the discharge into the Board
sewer (6 equal installments of Rs.23.34 lakhs each by 10th of E
each month) – Total Rs.140.04 lakhs;
3. Clause 18 stipulates that no treated effluent shall be discharged
by JETL unless the same is treated in accordance with the
provisions of the Water and the Air Acts and the various upper
limits of the parameters of the treated industrial effluents shall F
be within the permissible standard limits prescribed; Further,
Clauses 22 to 24 give the Board the right to reject effluents of
JETL if they are not found to be consistent with the prescribed
parameters;
4. In terms of Clause 28, an amount of rupees one lakh per month G
is to be paid by JETL towards maintenance of the sewer line.
Additionally, JETL has to pay sewerage maintenance and
sewerage treatment charges @ Rs.6 per thousand litres of
treated effluents;
H
774 SUPREME COURT REPORTS [2019] 3 S.C.R.
A 5. Further, as per Clause 29, a surcharge was also levied on JETL
for permitting industrial effluents beyond the limits prescribed
on two important parameters viz. Chemical Oxygen Demand
(COD) and Total Dissolved Solids (TDS); Each parameter/
COD and TDS will be considered independent for levy the
surcharge.
B
36. In terms of Rule 4 of Sewerage Rules, the Board shall charge
on the applicants seeking to discharge the trade or industrial effluents
etc. Rule 4 reads as under:-
“Sewerage and Industrial Effluents-
C 4. The Board shall charge on applicants seeking to discharge their
trade or industrial effluents, sullage drain, sewer (other than storm
sewer or combined sewer) of a private party, State Government,
Central Government, or local body or local authority, into Board
sewers, towards the special treatment cost of such sewage and
D the charges shall be as fixed by the Board from time to time,
depending upon the nature of such sewage and cost of treatment
involved to bring the same within tolerance limits of effluent
standards etc. The installation and maintenance of required meters
for measuring the volume of effluents shall be insisted at the cost
of the applicants, by the board.”
E
Subject to the provisions of Water Act, 1974 and Environment
Act, 1986 and subject to the restrictions of Section 54 of HMWS&S Act
and in terms of Rule 4 and other terms and conditions, Board has the
right to permit the ‘applicants’ seeking to discharge their trade or
industrial effluents into the Board’s sewer system and Sewerage
F Treatment Plant subject to the imposition of costs. The treatment for
letting the trade or industrial effluents into the Board’s sewer shall be
subject to such terms and conditions and in such form of agreement as
may be prescribed in the regulations made by the Board in accordance
with these rules. Having entered into the agreement with the Board on
G 31.08.2000 and on prior dates, JETL cannot turn around and challenge
the terms and conditions imposed upon it by virtue of the agreement.
37. So far as the various payments made by JETL to the Board,
levy is in terms of Rule 4 of the Sewerage Rules and as per the contract
and is purely contractual between JETL and the respondent Board for
letting partially treated the industrial effluents of the appellant and other
H
VASANT CHEMICALS LTD v. MD, HYDERABAD METROPOLITIAN 775
WATER SUPPLY & SEWERAGE BOARD [R. BANUMATHI, J.]
units into the Board’s sewer. Likewise, charges paid by JETL to the A
Board cannot be said to be in lieu of the sewerage cess that the appellant
unit is liable to pay which is a statutory liability. It is pertinent to note
that many industries about fifty units, apart from the appellant unit,
discharge their effluents to the CETP/JETL. The agreement dated
31.08.2000 and the earlier agreements between JETL and the Board
B
are purely contractual consciously entered into between the parties.
38. JETL lets partially treated effluents into the Board’s sewerage
system for further treatment. As discussed earlier, for further treatment
of sewerage, the effluents are to be taken to Sewerage Treatment Plant
(STP) at Amberpet which is situated at the distance of 08.30 kilometres
from Balanagar. It requires huge amount for transmission of the effluents C
to Board’s sewer system at Amberpet where the Board brings down the
industrial effluents to tolerance limits. As pointed out earlier, the treatment
of industrial effluents requires high demand of energy, personnel to
operate the system and skilled workers for maintenance of the plant.
Unless the Board collects sewerage charge/sewerage surcharge, the D
Board cannot meet the heavy expenditure on the operation and
maintenance of sewerage system. Various other members of JETL
who discharge sewage into JETL which is ultimately let into Board sewer
line, may or may not be consumers of water supply by the Board. That
apart, members of JETL may have their own source of water supply or
they may supplement the supply of water from the Board through different E
sources either by extraction of ground water or supply through tankers
which cannot be quantified by the Board. In pursuance of the provisions
of the HMWS&S Act and the Sewerage Rules and pursuant to the
agreement dated 31.08.2000, the charges are levied on JETL who in
turn collects the charges from its member industrial units who discharge F
their effluents into JETL. Therefore, the payments made by JETL to
the Board and the charges in turn collected by JETL from the appellant
and other member units, cannot absolve the appellant unit from its
statutory liability to pay the sewerage cess. We find no merit in the
contention that there is double levy of sewerage cess.
G
39. Levy of sewerage cess being a statutory levy in terms of
Section 55 of HMWS&S Act and Clause 16 of the agreement which
incorporates the statutory levy under Section 55 of HMWS&S Act, the
learned Single Judge and the Division Bench rightly recorded concurrent
findings upholding the levy. Observing that the appellant being occupier
H
776 SUPREME COURT REPORTS [2019] 3 S.C.R.
A of the premises, though not directly connected to the sewer line of the
Board, is ultimately letting into the sewerage system of the Board after
partial treatment at JETL, the High Court was right in holding that the
levy of sewerage cess is in accordance with Section 55 of HMWS&S
Act. The payment of sewerage surcharges and the other charges by
JETL cannot take away the statutory liability of sewerage cess levied
B
on the occupier of the premises who consumes water and lets out the
sewage into the Board sewer system. The payment of sewerage
surcharge and other charges by JETL to the respondent-Board will not
amount to double levy and the High Court rightly dismissed the writ
petitions and also the review petitions filed by the appellant. The impugned
C order does not suffer from any infirmity warranting interference.
40. In the result, these appeals are dismissed. The arrears of
sewerage cess, if any, to be paid by the appellant within a period of eight
weeks from today with 6% interest with effect from the date cess fell
due. If the arrears are not paid within the stipulated period of eight weeks,
D it shall carry interest at the rate of 12% thereafter.
Nidhi Jain Appeals dismissed.
E
F
G
H
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