Strict construction of electricity duty law barred levy on generator sales to a licensee; assessments were quashed.

Electricity duty could not be levied on a generating company for supply of energy to the Bihar State Electricity Board because the transaction did not fall within the charging and computation scheme of the Bihar Electricity Duty Act, 1948. The Patna HC read the charging provision in light of the constitutional limit that electricity may be taxed only as consumption or sale for consumption, and held that the definitions of "consumer", "licensee" and "value of energy" did not bring a generating company selling to a licensee within the levy. A taxing statute must be strictly construed, and a separate stage-wise levy provision could not expand the charging section. The assessment orders and demand notices were quashed.

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Issues: Whether electricity duty could be levied on a generating company for supply of energy to the Bihar State Electricity Board under the charging and definition provisions of the Bihar Electricity Duty Act, 1948.

Analysis: The charging provision had to be read in the light of the constitutional power to tax electricity only as consumption or sale for consumption. The definition of "consumer", "licensee" and "value of energy" showed that the petitioners, being generating companies selling energy to a licensee and not directly to a consumer, did not fall within the computation scheme for levy. A taxing statute must be strictly construed, and where the case does not clearly fall within the charging provision, no levy can be sustained. The argument that another provision enabling stage-wise levy could enlarge the charging section was rejected.

Conclusion: The petitioners were not liable to electricity duty on the impugned sales to the Bihar State Electricity Board.

Final Conclusion: The assessment orders and demand notices could not be sustained and were quashed.

Ratio Decidendi: A taxing levy cannot be imposed unless the assessee falls squarely within the charging provision as read with the computation provisions, and where the statute does not clearly cover the transaction, the benefit of doubt goes to the assessee.

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