TaxTMI 
TaxTMI 
2021 (10) TMI 691
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.... The waste of sugarcane (bagasse) produced in the process of manufacturing sugar is used for the production of electricity for its own consumption and the surplus energy is supplied to BSEB. The appellant has been supplying electricity to BSEB since 6 March 2008. 4 The Bihar Electricity Duty Act 1948, "The Act" in its initial form empowered the State Government (the first respondent) to levy electricity duty under Section 3 (1) on the units of energy consumed or sold, excluding the losses of energy in transmission and transformation at the rates specified by the first respondent. Rates of duty were specified in the Schedule to the Act. The Bihar Electricity Act was amended in 2002 which led to the deletion of the Schedule and amendment of Section 3(1). The amendment allowed the first respondent to levy tax on the basis of the units or the value of energy consumed or sold at rates specified by the State Government by a notification. Section 3 (1) in its current form provides as follows: "3. Incidence of duty-(1) Subject to the provisions of sub-section (2), there shall be levied and paid to the State Government, either on the units or on the value of energy consumed or sold, excl....
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.... a notification dated 14 January 2011, SO 1 was issued by the first respondent exercising its powers under Section 9 of the Act, Power of the State Government to grant exemption from the duty payable under this Act. granting a blanket exemption from payment of electricity duty on electricity generated by captive plants for self-consumption. 6 The appellant through the Bihar Sugar Mills Association challenged the notifications dated 21 October 2002 and 4 March 2005 in the High Court by filing a writ petition, CWJC No 13614 of 2006. The High Court by its judgement dated 16 September 2009 struck down the notifications and the amendment to Section 3 (1) of the Bihar Electricity Act on the ground that there were no guidelines in the statute or the notifications for construing the expression 'value of energy'. The relevant extract of the judgment is reproduced below: "19. In view of the above discussion, the amendment of Section 3 (1), so far as it provides for payment of duty "on the value of energy" is liable to be struck down as there is no guideline provided in the statute as to in which case the duty will payable calculated on the basis of the value of energy consumed or sold. Si....
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....d the amendment by invoking the writ jurisdiction, CWJC No 11126 of 2012 of the High Court. The petition is pending. 8 On 3 January 2015, the fourth respondent issued a notice to the appellant for its failure to file returns under Section 6B (1) of the Act, concealment of the sale of electricity of approximately Rs. 56 crores and for raising a demand of electricity duty and penalty of about Rs. 67 crores. The notice was issued on the basis of the report dated 24 December 2014 of the Accountant General (Audit) Bihar. In its reply dated 5 February 2015, the appellant contended that no tax can be levied on the supply of electricity by the appellant to BSEB for the following reasons: (i) Under Section 3 of the Act, tax is levied on the 'value of energy'. Section 2(ee) only brings the sale to a consumer within the ambit of the phrase 'value of energy'; (ii) BSEB is a 'licensee' and not a 'consumer' in view of the definition of 'licensee' provided under Section 2(d) of the Act; and (iii) The resolution dated 12 September 2006 issued by the first respondent announced various incentives for establishment and development of sugar and other allied industries including exemption from p....
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...., CWJC No 17306 of 2014 before the High Court challenging the imposition of electricity duty on its supply of electricity to various electricity boards including BSEB. NTPC was supplying electricity exclusively to the Electricity Boards. On 2 December 2015, the High Court passed an order tagging the writ petitions filed by the appellant and NTPC on the ground that the issue raised in both the petitions was substantially similar. Thereafter, on 20 October 2016, the High Court de-tagged the writ petitions holding that the matters are not similar since NTPC is a power generation company, while the appellant is a company which runs a sugar mill and also generates electricity from molasses. The relevant portion of the order is extracted below: "On an examination of the facts of the present matter as also of the other two writ petitioners in the batch of cases it is found that the other writ petitioners are power generating companies, whereas the petitioner is a Sugar Mill Company which also generates electricity from molasses. Moreover, the case of the petitioner along with the association of Bihar Sugar Mills Association was allowed by this Court by a judgment dated 16.09.2009, by ....
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....old for consumption. In the said circumstances, any sale of electricity which is not a sale for consumption would be beyond the purview of the State Legislature to enact and thus the charging Section 3(1) of the Act has to be read in the said light as levy of electricity duty for consumption or sale for consumption of electricity." Second, the High Court observed that in terms of the provisions of the Bihar Electricity Act, a power generation company is liable to pay duty only if it is selling electricity to the consumer, as defined in the legislation. The High Court held that: "We are also in agreement with the submission of learned counsel for the petitioners on the basis of the provisions of Section 3(1) read with Section 2(b),(d) and ( ee) of the Act. It is evident from the definition of value of energy in Section 2(ee) which is the computation provision brought in by amendment, after the earlier provisions and notifications had been struck down by the Court as providing no guidelines, that it provides for only two type of cases under sub-clause (i) that is, firstly, energy sold to a consumer by a licensee and, secondly, energy sold to a consumer by a person who generates en....
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....ry 2018. Submissions of the Parties 15 We have heard Mr SK Bagaria, learned Counsel appearing on behalf of the appellant sugar mill and Mr Saket Singh, learned Senior Counsel appearing on behalf of the respondent State. On behalf of the appellant, the following submissions have been urged: (i) On a combined reading of Section 3 with Sections 2(b), 2(d) and 2(ee) of the Act, the sale of electricity by a generator to a licensee would not attract the levy of tax for the following reasons: (a) Section 3 of the Act is the charging provision of the statute which states that tax shall be levied either on the units or on the value of the energy consumed or sold; (b) Section 2(ee) defines the phrase 'value of energy' as the charge payable by the consumer to the licensee or by the consumer to the person who generates the energy; (c) Section 2(d) defines the term 'licensee' to include the Bihar Electricity Board; (d) The phrase 'value of energy' states that it is the charge payable by the consumer to either the licensee or the generator. Since the BSEB is a 'licensee' under Section 2(d) of the Act and not a consumer, the sale by the generator of the electricity (the appellant ) t....
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....to enact a law that levies tax on the supply of electricity by the generator to the licensee; and (vii) The facts of the decision in NTPC and the facts giving rise to the writ petition filed by the appellant before the High Court were substantially similar. The High Court erroneously de-tagged the writ petitions and then dismissed the appellant's writ petition while entertaining the writ petition filed by NTPC. 16 On behalf of the respondent, the following submissions have been urged referring to the scheme of the statute: (i) Section 3 has two parts (i) levy of tax on the 'value of energy' consumed; and (ii) levy of tax on the 'units' of energy sold. Under Section 2(ee) which defines the phrase 'value of energy', only a sale to the consumer is included. Though the sale to a licensee is not covered by the first part, it is covered by the second portion of Section 3, which refers to the 'units' of energy sold; (ii) Section 3(2)(c) provides that no duty shall be leviable on the units of energy consumed by the licensee in the construction, maintenance and operation of its electrical undertaking. Section 4 provides that every licensee shall pay duty to the State Government on th....
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....; and (ii) Entry 53 of List II of the Seventh Schedule of the Constitution provides for taxes on consumption or sale of electricity. In terms of the judgement of this Court in State of AP (supra), the meaning assigned to the word 'sale' and 'consumption' would be the same since the very act of sale of electricity means that it is being consumed because electricity can neither be preserved nor stored. Entry 54 of List II dealt (at the material time) with the levy of taxes on the sale or purchase of goods including electricity but excluding newspapers and was subject to provisions of Entry 92-A of List I. The meaning of 'sale' of electricity under Entry 54 would mean the sale for consumption of electricity in view of the decision of this Court in State of AP (supra). Thus, irrespective of the provisions of the Bihar Electricity Act, the first respondent does not have the legislative competence to levy a tax on the sale of electricity that is not for consumption. The appellant is not selling electricity to BSEB for the consumption of BSEB; rather it is BSEB which is distributing electricity for the consumption of the end users. 19 While a High Court would normally not exercise its ....
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....e view that the nature of the controversy requires the exercise of its writ jurisdiction, such a view would not readily be interfered with." (emphasis supplied) The principle of alternate remedies and its exceptions was also reiterated recently in the decision in Assistant Commissioner of State Tax v. M/s Commercial Steel Limited, Civil Appeal No. 5121 of 2021. In State of HP v. Gujarat Ambuja Cement Ltd, (2005) 6 SCC 499 this Court has held that a writ petition is maintainable before the High Court if the taxing authorities have acted beyond the scope of their jurisdiction. This Court observed: "23. Where under a statute there is an allegation of infringement of fundamental rights or when on the undisputed facts the taxing authorities are shown to have assumed jurisdiction which they do not possess can be the grounds on which the writ petitions can be entertained. But normally, the High Court should not entertain writ petitions unless it is shown that there is something more in a case, something going to the root of the jurisdiction of the officer, something which would show that it would be a case of palpable injustice to the writ petitioner to force him to adopt the remedies....
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....above stated class of cases. It is a settled principle that the courts/tribunal will not exercise jurisdiction in futility. The law will not itself attempt to do an act which would be vain, lex nil frustra facit, nor to enforce one which would be frivolous-lex neminem cogit ad vana seu inutilia-the law will not force anyone to do a thing vain and fruitless. In other words, if exercise of jurisdiction by the tribunal ex facie appears to be an exercise of jurisdiction in futility for any of the stated reasons, then it will be permissible for the High Court to interfere in exercise of its jurisdiction. This issue is no longer res integra and has been settled by a catena of judgments of this Court, which we find entirely unnecessary to refer to in detail..." (emphasis supplied) 21 In Union of India v State of Haryana, (2000) 10 SCC 482 the assessing authorities imposed sales tax on the rentals charged for supply of telephones. Writ petitions were filed in the High Court challenging the levy. The writ petitions were dismissed on the ground that an alternative remedy of a statutory appeal was available. An appeal against these orders was filed before this Court. The appeal was allowed ....
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....ascertained, and on these facts, a certain conclusion is reached which is also one of fact. 10. In between the domains occupied respectively by questions of fact and of law, there is a large area in which both these questions run into each other, forming so to say, enclaves within each other. The questions that arise for determination in that area are known as mixed questions of law and fact. These questions involve first the ascertainment of facts on the evidence adduced and then a determination of the rights of the parties on an application of the appropriate principles of law to the facts ascertained. To take an example, the question is whether the defendant has acquired title to the suit property by adverse possession. It is found on the facts that the land is a vacant site that the defendant is the owner of the adjacent. residential house and that he has been drying grains and cloth and throwing rubbish on the plot. The further question that has to be determined is whether the above facts are sufficient to constitute adverse possession in law. Is the user continuous or fugitive? Is it as of right or permissive in character? Thus, for deciding whether the defendant has acquir....