Electricity duty and surcharge cannot be levied on welfare-based employee supply treated as maintenance service, not a sale.

Under the Bihar Electricity Duty Act, a company was held not liable for electricity duty where it was not a licensee, its own generation was negligible and confined to captive use, and electricity supplied to employees was only a welfare service with maintenance charges rather than sale consideration. The employee arrangement did not create a seller-buyer relationship or a direct statutory duty to the State. For the same reason, surcharge under Section 3A could not be imposed because it applies only to a licensee or a person otherwise liable to duty under Section 4. Recovery proceedings and bank-account attachment for surcharge were therefore unsustainable, and the recovered amount was directed to be refunded.

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Issues: (i) whether the petitioner-company was liable to pay electricity duty under Section 4 of the Bihar Electricity Duty Act, 1948; (ii) whether the petitioner-company was liable to pay surcharge under Section 3A of the Bihar Electricity Duty Act, 1948 and whether the attachment of its bank accounts for recovery of surcharge was valid.

Issue (i): whether the petitioner-company was liable to pay electricity duty under Section 4 of the Bihar Electricity Duty Act, 1948.

Analysis: Section 3 of the Act creates the incidence of duty on units of energy consumed or sold, while Section 4 identifies the persons liable to pay it. The petitioner-company was not a licensee. Its own generation was found to be negligible and only for captive use, so it did not fall within the class of persons generating energy for own use or sale under Section 4(4). Its supply of electricity to employees was held to be part of a service arrangement in the nature of a welfare measure, with the amount recovered being maintenance charges and not consideration for sale. There was no seller-buyer relationship between the company and its employees. The arrangement with the licensee also did not create a direct statutory liability on the company to pay duty to the State.

Conclusion: the petitioner-company was not liable to pay electricity duty to the State Government.

Issue (ii): whether the petitioner-company was liable to pay surcharge under Section 3A of the Bihar Electricity Duty Act, 1948 and whether the attachment of its bank accounts for recovery of surcharge was valid.

Analysis: Section 3A makes surcharge payable only by a licensee or any other person liable to pay duty under Section 4. Since the petitioner-company was neither a licensee nor a person liable to pay duty under Section 4, it did not come within the charging provision for surcharge. The amounts recovered from employees were not treated as sale proceeds, and the licensee could not recover surcharge from the consumer contrary to the statutory scheme. As the company had no liability to surcharge, the proceedings for its recovery and the consequential attachment orders could not stand.

Conclusion: the petitioner-company was not liable to pay surcharge and the attachment orders were invalid.

Final Conclusion: the writ petition succeeded, the recovery proceedings and attachment orders were quashed, and the amount recovered from the company's bank account was directed to be refunded.

Ratio Decidendi: where electricity supplied by an employer to employees is merely a welfare service and the amount recovered is only a maintenance charge, the transaction is not a sale; consequently, surcharge under a provision limited to persons liable to pay duty cannot be levied on the employer.

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