HINDUSTAN COPPER LTD. v. STATE OF MADHYA PRADESH AND ORS

Citation: [2008] 16 S.C.R. 434

Court: Supreme Court of India

Bench: ARIJIT PASAYAT, MUKUNDAKAM SHARMA

Case summary

HINDUSTAN COPPER LTD. v. STATE OF MADHYA PRADESH AND ORS.pdf

Judgment text

[2008] 16 S. C. R. 434 HINDUSTAN COPPER LTD. _. ,. __ -.. f v. STATE OF MADHYA PRADESH AND ORS. (Civil Appeal No. 6725 of 2008) NOVEMBER 19, 2008 [DR. ARIJIT PASAYAT AND DR. MUKUNDAKAM . . ~ . SHARMA, JJ. ] ~ . -- "... Madhya Pradesh Electricity Duty Act, 1949: . s. 3, Explanation (b) - 'Mine' - Levy of electricity duty as regards manufacturing of copper concentrate - Matter remitted to High Court to decide the question as to whether copper concentrate is a mineral and whether the Explanation applies even though manufacturing process is involved to bring it into existence - Sincf;J the basic question has not been decided by the High Court, the impugned judgment is set aside and the matter is remitted to it for fresh fconsideration of the question as formulated by Supreme Court - In the meantime, appellant is directed to pay the current dues, but there shall be no recovery ofarrears relating to interest, if any.

The appellant, a Government company, was engaged in extraction of copper ore by open cast mining process. Appellant's Mine as well as the processing plant were . ysubjected to uniform electricity duty under the entry relating to 'mines other than captive mines of a Cement Industry' in the table contained in s. 3 of the M. P. Electricity Duty Act, 1949. According to the appellant its activities consisted of two distinct parts: (1), mining which included drilling, blasting and collecting of ore and these }. activities were carried on in the mining area registered PRADESH AND ORS. under the Mines Act, and (2) the processing, which was carried on at the Primary Crnsher, Secondary Crusher and Concentrator Plant, situated away from the mine at distances varying -2. 5 km to 10 km and separately registered as 'factory' under the Factories Act.

The stand of the appellant that as regards the activities (2), the processing part, it was entitled to lesser rate of duty as was applicable to 'non-domestic and commercial ~-iestablishments'. The appellant filed a writ petition before the High Court challenging the provisions of s. 3 of the M. P. Electricity Duty Act, namely the entry in the Table (Part B) relating to 'mines other than captive mines of cement industry' and Explanation (b) defining 'mine' and extending the definition ~f 'mine' to its 'factory' activities for the purpose of levying electricity duty thereon. The appellant also filed other writ petitions involving similar issues. A Division Bench of the High Court dismissed the writ petitions. On appeal the matter was remitted to the High Court for disposal of the writ petitions afresh. The ~ subjected all factories· whether they were independent, or associated with mines, to the same rate of duty. The Act was amended by Amending Act No. 21 of 1978.

After such amendment, the Table Under Section 3 prescribed the 'duty' at the rate of 2 paise per unit in regard to factories. In regard to consumers for trade, commerce and business purposes, the rate of duty was 12 paise per unit. Thus, the Act No. 21 of 1978 ---~ prescribed a lower rate of duty for factories when compared to commercial establishments. The Act was again amended by Amending Act No. 21 of 1986 drastically changing the rate of duty, as also the classification. It prescribed a lower rate of duty for non-domestic and commercial purposes at the rate of 15 parse per unit, when compared to certain classes of industries. It classified Factories into four kinds of industries, for levy of differe_n,t rates ofduty, namely, (i) mines other than captive mines of cement industries, (ii) Cement industries including its captive mines, (iii) industries receiving electricity at the' low tension tariff, ' I>- _). - and (iv) other industries.

An eXtended definition of the word 'mine; was also added. The appell~nt is aggrieved by the said extended definition of 'mine' the effect of which is to _make processing a part of mining and the prescription of a higher rate of duty for 'mines' (that is composite activity of mining and processing), while . . prescribing a lesser rate for other categories of industries. The appellant contends that- the extended definition of 'mine' in 1· Explanation (b) contained in the Table under Secti0n 3 results in dissimilar treatment to similar subjects, by prescribing different rates for different factories. It was contended that the definition has the effect of categorizing factories registered under the Factories Act into two categories (a) those which are adjacent to a mine and l_. Jsed for crushing, processing, treating A. and transporting the mineral; and (b) other factories.

It was also submitted that classification of factories into two categories based on their proximity or otherwise to a mine is unreasonable and irrational having no connection with the \·· ~ object sought to be achieved by the Act. fhe nature of sale, supply and consumption of electrical eherg·y· fo both classes of factories is in all respects similar and there is no reasonable justification to prescribe a higher rate. of duty to factories adjacent to a mine by including them under the extended definition of 'mine·· In . the absence of a further definition of the expression 'adjacent to the mines' is vague and ambiguous leading to discriminatc;>ry treatment by the Authorities implementing the Act and, therefore, fnvalid. Lastly, it was con. tended that its. processing plant, thatis,. thePrimary Crusher, the Secondary Crusher, the Ball Mill, the Coneentrator Plant, the Tailing Pumps, ttie. lntake.

w~ll and-the water"treatment;plant is not situated 'adjacent' to its mine and th~refore could. not be treated as 'mine' for the purpose of levy o_f electrici. ty'duty. . . Feeling aggrieved by the extended definition. of 'mine' in Explanation (b) to Section 3 of the Act and feeling aggrieved by the. inclusion of its 'Processing factory'within the 'mine' for . __ purposes of levy of electricity duty, the appellant ffled the writ . petition on 19. 7. 1988 before the High 'Court for the following reliefs: ·(a) to declare the provisions of Section 3 of the M. P. Electricity Duty Act, 1949, that is the entry' in theTaole (Part B), relating to 'mines other than captive mines of cement :industry' and the Explanation (b) defining 'mine' :as uncbnstitutional.

(b) as a consequence, to direct the respondents to' treat the petitioner's processing unit (Primary Crusher, th·e Secondary Crusher, the Ball Mill, the Concentrator Plant, the Tailing Pumps, the Intake Well and the Water Treatment Plant), as not included under the definition of 'min. e' but included in the category of 'non-domestic and commercial establishmentsi for purposes of imposition of electricity duty ·at the lower rate prescribed as 12 paise/15 paise per 1Jnit based . on its consumption; and (c) to direct the refund of the excess duty collected. . . . v .. -+ Another writ petition i. e. M. P. No. 3827 of 1993 was filed. This petition reiterated the grounds raised in M. P. No. 2821 of 1988. It was filed seeking the following reliefs, as a derhand was issued by claiming Rs. 78,58,877/- towards electricity duty in respect of electricity consumed by it: (i) to declare that the provisions of M. P.

Electricity Duty (Amendment)Act, 1986 in so far as it defines 'mine' so as to ~ include the factories in the mines is ultra vires Articles 14 and 19 of the Constitution. (ii) to quash the demand notice dated 30. 11. 1992 demanding Rs. 78;58,877/- as arrears of electricity duty (iii) a direction to respondents to treat the factories of the appellant as 'other industries' classified under Part B of the Table under Section 3. of the Act and accordingly charge electricity duty at the rate of 12 paise per unit. •. t-- As a revenue recovery notice was issued under Section 146 oqhe M. P. Land Revenue Code demanding payment of Rs. 78,58,877/- as arrears of electricity d~ty, without considering the representation given by it in regard to the earlier demand dated 30. 11. 1992, writ petition WP 3103 of 1994 was filed seeking the following reliefs: (i) to declare the provisions of the M. P. Electricity Duty (Amendment) Act, 1986. in so far as it defines 'mine' so as to --r .

include factories in the ;mines' as ultra vires Articles 14 and 19 of the Constitution of India. (ii) to quash the demand notice issued under the M. P. Land Revenue Code. (iii) to direct the respondents to treat the factory of the . +.. appellants as 'other in. dustries' as classified in the Table under Section 3 of the Act and charge electricity duty at the rate of 12 paise per unit. · . (iY) to declare that the plants of the appellants are not liable + .. _ to pay duty the rate applicable to 'mines'. It is· to be noted that earlier a Division Bench of the High Court by a common order dated a:10. 1997 dismissed the writ petitions filed by the appellant reiying ori a decision ofthis Court . s in State of M. P. v. Bir/a Jute Manufacturing Company Ltd. (1995 (4) sec 603). The said judgment was.. set aside by this ~- Court in Hindustan Copper Ltd. v. State ofM. P. and Ors. (2004 (12) sec 408) and the matter was remitted. to the High Court.

According to the High Court following questions arose for consideration: "(i) Whether prescribing different rates of tax for processing plant and machinery adjacent to a mine ('factory' falling within the extended definition of 'mine'), and other factories is discriminatory and arbitrary and therefore violative of Articles 14 and 19 of the Constitution of India. . ·(ii) Whether definition of the word 'mine'. in Explanation (b) in the Table under Section. 3 of the . Act, gives ~nguided 1 discretion to Authority· under the Act to decide what is 'adjacent to a mine' and therefqre invalid. (iii) Whether use of the words 'adjacent to a mine' would mean only the premises or machinery abutting to or ·,· adjacent the mine, and not premises or the plant/machinery situated at a distance of about 2. 5 to 6 KM. . , · 1· (iv) Whether the State had applied different yardsticks in charging duty to petitioner and in charging d. uty to Bhilai Steel, Balco, Manganese Ore India Ltd. and .

thereby practiced discrimination. " , I . . , · The High Court answered the questions by holding that tl;le writ petitions were without merit. . . . 4. In support of the appeal. learned. counsei.. f6r' the ·H PRADESHAND ORS. [DR. ARIJIT PASAYAT, J. ] ~· -+ appellant submitted that the real issues were not considered by the High Court and· the questions formulated for determination did not cover the actual issues . and disputes involved. 5. Learned counsel for the respondents on the other hand 8 submitted that the basic issues were formulated by the High Court for determination. . . 6. The Act was ,~m. ended by the M. P. Electricity Duty (Amendment) Act, 198Q (in short the 'Amendment Act'). Different rat~s of duty ar~ provided in Part B. In the said Part, Clause (4) relates to the mines other than the captive mines of cement factory and the rate is ~O paise per unit of energy. The Explanation defines 'mines' as follows: . ""Mine" means a mine to which the Mines Act, 1952 (No.

35 o of 1952) applies and includes the premises or machinery situated in or adjacent to a mine and used for crushing, processing, treating or transporting the mineral. " 7. It was submitted that the entry relating to mines refers to processing, treating or transporting the mineral. According to learned Solicitor General the stress is on the expression 'mineral'. It was pointed out that the appellant is manufacturing "copper concentrate" which is not a mineral and it is not doing "mining" so far as it is covered by Clause 7 for other industries not covered under the above categories where the rate is 5 paise per unit of energy. Essentially the submis$ion is that the explanation only relates to mining or minerals. What is excisable is "copper concentrate" because there is a process of manufacturing involved. It is seen that the points 3 and 4 formulated by the High Court for determination are really ~ I relevant.

But the points have not been correctly formulated to -+ cover the actual essence of the dispute. The correct question would be as follows: "Whether copper concentrate is a mineral and whether 446 SUPREtAE COURT REPORTS [2008) 19 S. C. R Explanation to· Part B of the Act1applies 'even though +- . manufacturing process is involved to bring it ·into existence". 8. Since this basic question has not been dedded by··the .. High Court, we set aside the impugned judgment and remit the 8 matter to it for fresh· consideration of the above question. The . parties shall be permitted to place materials in support of their respective standswithin a month from today. Since the matter is. pending·since·long it would be appropriate for the High Court to disp9se of the matter early, preferably within four months from the date of receipt of this . erder. ~In the meantime, the appellantisdirectedto pay the current dues, but there·shall be no '. recovery of arre~rs relating to interest, if. any.

The appeal is allowed~ R. P. Appeal allo'wed. '-,J _, . l- -.