1997 (5) TMI 410
X X X X Extracts X X X X
X X X X Extracts X X X X
....n 49 of the Electricity (Supply) Act, 1948. The Board is also under a statutory mandate to charge price from its customers in such a way that the total revenue received by it in a year is more than its expenditure. Section 59 enjoins the Board to generate profit of at least 3 per cent of the value of the fixed assets of the Board. The State Government may direct the Board to generate even larger profits. Pricing is a matter of policy. It is for the Board and the State to decide the rate at which electricity will be supplied. Under no circumstance, can the Court lay down what should be the proper price and direct the Board to reduce its tariff fixed under Section 49. In effect, what the High Court has done is to direct a loss-making public undertaking to incur further losses by lowering its tariff. By giving this direction, the High Court clearly exceeded its jurisdiction and lost sight of the statutory provisions. We are of the view that the High Court Should not have interfered with the pricing of the electricity sold by the Board on the ground that the liability to pay central excise duty has come to an end on and from 1st October, 1984. Mr. Dave, appearing on behalf of the res....
X X X X Extracts X X X X
X X X X Extracts X X X X
....for March 1978 onwards." On April 6, 1979, the Board revised the electricity charges and framed a fresh uniform tariff by another Notification in exercise of the powers conferred by Section 46 and 49 of the Electricity (Supply) Act. The energy charges for HTS - II i.e. High Tension Service consumers ranged between 22 paise to 26 paise per unit. By Clause 16.4 of the said Tariff Notification, it was provided that duty that had already been levied by the Government of India on generation of power stood merged in the rate of tariff provided in the Schedule to the said tariff. The surcharge of 0.03 paise per unit was abolished. In the Schedule to the tariff applicable to the respondent-Company, no separate charge was shown on account of duty of Central Excise. Thereafter, electricity charges were revised from time to time. For this purpose further Tariff Notification were issued in the year 1981 and again in the year 1983. The Tariff Notification dated 18th September, 1981 starts with the recital that "the State Government hereby frames revised tariff for all categories of consumers served or to be served by the Board and lays down the terms and condition for supply of electricity t....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... power was reserved for the Board to raise tariff in case the Central Government enhanced the duty of excise. It does not follow from this that if the duty was reduced or done away with altogether, the rate of tariff will have to be brought down automatically. On behalf of the respondents, Mr. Dave drew our attention to Section 64-A of the Sale of Good Act which lays down:- "64-A. In contracts of sale, amount of increased or decreased taxes to be added or deducted.- (1) Unless different intention appears from the term of the contract in the event of any tax of the nature described in sub-section (2) being imposed, increased, decreased or remitted in respect of any goods after the making of any contract for the sale or purchase of such goods without stipulation as to the payment of tax where tax was not chargeable at the time of the making of the contract, or for the sale or purchase of such goods tax paid where tax was chargeable at that time,- (a) if such imposition or increase so takes effect that the decreased tax or increased tax, as the case may be, or any part of such tax is paid or is pay....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the contrary did not appear from the terms of the contract. However, the tariff is fixed by exercise of statutory power. It is not fixed as a result of any bargaining by and between the Board and the Consumer. It is a uniform tariff which every consumer will have to pay for the electricity consumed by him. In fact, the consumer has no option but to pay the tariff fixed by the Board in exercise of power conferred by Section 49. It has been contended by Mr. Dave that tariff is nothing but a series of schedules or rates of duties or taxes or a table of rates. The Board has agreed to supply energy to the consumers at certain rates. The contract between the Board and the respondent-Company is for sale of goods (electricity). Section 9 of the Sale of Goods Act provides that the price in a contract to sell may be fixed by the contract or may be left to be fixed in a manner thereby agreed or may even by determined by the course of dealings between the parties. This argument overlooks the fact that the price in the instant case was fixed in exercise of statutory power. It included Central Excise Duty on electricity with effect from 1.3.1978. On 6.4.1979 the Central Excise Duty payable o....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Board. The law laid down by Lord Goddard LJ in Love v. Norman Right (Builders) Ltd., in a case under purchaser tax was applied by this Court in the case of Hindustan Sugar Mills v. State of Rajasthan & Ors. (Supra). After referred to the judgment of Goddard LJ, it was reiterated that the sale price would be the entire price inclusive of excise duty because that would be the consideration payable by the purchaser for the sale of goods. In the instant case, after imposition of Central Excise Duty on production of electricity at the rate of 0.02 paise per unit, the Board did not revise the uniform tariff, but decided to levy a surcharge of 0.03 paise per unit even though the duty payable was only 2 paise per unit. Reasons have been given in justification for surcharge of 3 paise per unit even though the duty levied was only 2 paise per unit which were found valid by the Division Bench of the Patna High Court. On and from 2.6.1979, the surcharge was merged in uniform tariff by a notification issued by the Board. There is no dispute that the uniform tariff was fixed in conformity with the principle contained in section 49 of the Act. Along with other costs incurred by it, the Board al....