Electricity duty on self-generated consumption and date-based exemption classification upheld as a rational incentive measure.

Electricity duty was held leviable on consumption from a person's own source of generation even where the same person also purchased electricity from another source, because the taxable event was consumption and the source of acquisition was irrelevant. The charging provisions were read harmoniously so that a consumer could fall within more than one clause to the extent applicable. The notification limiting exemption to generating sources installed after 2 January 1973 was also upheld under Article 14, as the date-based classification was a rational, prospective incentive to promote new generation and address power shortage. The challenge failed and the consumers' appeals were dismissed.

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Issues: (i) whether electricity duty under the U.P. Electricity (Duty) Act was leviable on energy consumed from a person's own source of generation where that person also purchased electricity from another source; (ii) whether the notification granting exemption only to sources of generation installed after 2 January 1973 was invalid under Article 14 of the Constitution of India.

Issue (i): whether electricity duty under the U.P. Electricity (Duty) Act was leviable on energy consumed from a person's own source of generation where that person also purchased electricity from another source.

Analysis: The charging provisions were read as imposing duty on consumption of electricity from one's own source of generation without any qualification that the consumer must be wholly outside the other charging clauses. The source from which electricity was acquired was held to be irrelevant once the taxable event was consumption. The provisions were interpreted harmoniously so that a consumer could fall within more than one clause to the extent applicable.

Conclusion: Electricity duty was payable on energy consumed from a person's own source of generation even if that person also purchased electricity from another source, and this was in favour of Revenue.

Issue (ii): whether the notification granting exemption only to sources of generation installed after 2 January 1973 was invalid under Article 14 of the Constitution of India.

Analysis: The exemption was upheld as a prospective incentive intended to promote industrial production and ease power shortage. The classification based on the date of installation was treated as rational and purposeful, because those already having a source of generation did not require the same inducement as those who ed new sources after the notification.

Conclusion: The classification in the notification was valid and did not violate Article 14, and this was against the assessee.

Final Conclusion: The challenge to liability on self-generated consumption failed, and the exemption-based challenge under Article 14 also failed, so the State's appeal succeeded and the consumers' appeals were dismissed.

Ratio Decidendi: Electricity duty is attracted by the consumption of energy from one's own source of generation, and a prospective exemption based on the date of installation is constitutionally valid if it rests on a rational and purposive classification.

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