Electricity duty recovery from DVC consumers limited; surcharge barred and retrospective amendment struck down as arbitrary.

Consumers of Damodar Valley Corporation electricity were not directly liable for electricity duty under the unamended Bihar Electricity Duty Act, 1948 and the 1949 Rules, because the recovery scheme did not treat them as assessees; prior registration did not change that position. Surcharge under Section 3A was also unrecoverable from consumers, as the statute barred shifting that burden onto them. The retrospective amendment made by Section 5 of the Jharkhand Electricity Duty (Amendment) Act, 2011, which fastened direct liability on all consumers, was held arbitrary and violative of Article 14 because it created an unworkable and unguided recovery framework. The challenge to the remaining provisions of the 2011 Amendment Act was left open.

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Issues: (i) Whether the petitioner-companies consuming electricity from the Damodar Valley Corporation were directly liable to pay electricity duty and could be treated as assessees under the Bihar Electricity Duty Act, 1948 and the Bihar Electricity Duty Rules, 1949. (ii) Whether surcharge under the Bihar Electricity Duty Act, 1948 could be recovered from such consumers. (iii) Whether the retrospective operation of Section 5 of the Jharkhand Electricity Duty (Amendment) Act, 2011, amending Section 4 of the Bihar Electricity Duty Act, 1948, was valid.

Issue (i): Whether the petitioner-companies consuming electricity from the Damodar Valley Corporation were directly liable to pay electricity duty and could be treated as assessees under the Bihar Electricity Duty Act, 1948 and the Bihar Electricity Duty Rules, 1949.

Analysis: The charging provision in Section 3 of the Bihar Electricity Duty Act, 1948 levied duty on energy consumed or sold, but the scheme of recovery was governed by Section 4 and the definition of assessee in Rule 2(b) of the Bihar Electricity Duty Rules, 1949. On the unamended regime, the Damodar Valley Corporation was not a licensee under Section 2(d) of the 1948 Act, and the petitioner-companies, being merely consumers of DVC supply for their own use, did not fall within the statutory category of assessees liable to be proceeded against directly by the State. The earlier registration certificates obtained by them did not alter their legal status. After the Electricity Act, 2003, DVC became a deemed licensee under Section 14, and by virtue of Section 8 of the General Clauses Act, 1897, the reference in the 1948 Act to the earlier licensing regime had to be read in light of the successor enactment.

Conclusion: The petitioner-companies were not directly liable to pay electricity duty to the State and were not assessees under the unamended 1948 Act and the 1949 Rules.

Issue (ii): Whether surcharge under the Bihar Electricity Duty Act, 1948 could be recovered from such consumers.

Analysis: Section 3A imposed surcharge on the person liable to pay duty, but it expressly barred collection of surcharge from consumers. The statutory text therefore excluded consumers from the burden of surcharge and did not permit DVC or the State to shift that liability onto the petitioners.

Conclusion: The petitioners were not liable to pay surcharge.

Issue (iii): Whether the retrospective operation of Section 5 of the Jharkhand Electricity Duty (Amendment) Act, 2011, amending Section 4 of the Bihar Electricity Duty Act, 1948, was valid.

Analysis: The retrospective amendment expanded direct liability so that all consumers could be proceeded against, but the Court found the resulting scheme arbitrary and unworkable. It would expose lakhs of consumers to registration, return filing, assessment, and penal consequences without any coherent administrative basis, and it conferred an unguided power on the State to proceed against either seller or consumer. This offended Article 14 of the Constitution of India.

Conclusion: Section 5 of the Jharkhand Electricity Duty (Amendment) Act, 2011, amending Section 4 of the 1948 Act, was declared arbitrary, ultra vires, and illegal.

Final Conclusion: The writ petitions succeeded in material part: direct recovery of electricity duty from the DVC consumers was disallowed, surcharge was held unrecoverable from them, and the retrospective amendment to Section 4 was struck down, though the Court left open the challenge to the remaining provisions of the 2011 Amendment Act.

Ratio Decidendi: Under the unamended electricity duty regime, consumers of DVC supply could not be directly treated as assessees by the State, and a retrospective amendment that indiscriminately fastened direct liability on all consumers without a workable and non-arbitrary recovery scheme violated Article 14.

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