SOUTHERN PETROCHEMICAL INDUSTRIES CO. LTD. v. ELECTRICITY INSPECTOR AND E.T.I.0. AND ORS

Citation: [2007] 6 S.C.R. 955

Court: Supreme Court of India

Bench: S.B. SINHA, MARKANDEY KATJU

Case summary

SOUTHERN PETROCHEMICAL INDUSTRIES CO. LTD. v. ELECTRICITY INSPECTOR AND E.T.I.0. AND ORS.pdf

Judgment text

SOUIBERN PETROCHEMICAL INDUSTRIES CO. LTD. v. ELECTRICITY INSPECTOR AND E. T. 1. 0. AND ORS. MAY 15, 2007 [S. B. SINHA AND MARKANDEY KATJU, JJ. ] Tamil Nadu Tax on Consumption or Sale of Electricity Act, 2003- Legislative competence and validity of-Held: State has not overstepped its limits ofpower-Legislative competence of the State and validity of the Act upheld-Also not repugnant to the Electricity (Supply) Act, 1948- Constitution ofIndia, 1950-Articles 14, 248, 254, 288, 366-General Clauses Act, 1897, Section 6. Doctrines: Doctrine of purposive construction-Doctrine of legitimate expectation-Doctrine of promissory estoppel-meaning and applicability of Words & Phrases: "Unless a different intention", "Corresponding': "not withstanding such repeal"-Meaning ofin the context ofTamil Nadu Tax on Consumption or Sale of Electricity Act, 2003 and General Clauses Act, 1897.

"Permanence': "privilege': "goods"-Meaning of The validity of the provisions ofTamil Nadu Tax on Consumption or Sale of Electricity Act, 2003 and/or application thereof in respect ofthe generating companies as also the consumers, were challenged before the Madras High Court in a large number ofwrit petitions. The Division Bench of the Madras High Court negatived the challenge. Hence the present appeals. On behalf of the appellants it was contended that the consumers of electrical energy form a homogenous class and, thus, could not have been discriminated in the matter of grant of exemption; that the equality clause contained in Article 14 of the Constitution oflndia being a basic structure of " the Constitution must in a situation of this nature be enforced and in that ,....

r view of the matter, it was obligatory on the part of the State to treat all the ,, consumers on equal footing; that in view of the fact that Section 14 of the 2003 Act per se is arbitrary, the burden of proof was on the State to show that the classification is a valid classification, and that the validity of the 2003 Act can be read down for the purpose of upholding its constitutionality.

It was also contended that the High Court committed a manifest error in interpreting Sub-sections (1) and (2) ofSection 20 of the 2003 Act together; that they are independent of each other and operate in different fields; that whereas the proviso appended to Section 20(1) of the 2003 Act provides for savings that follow from the repeal of the 1962 Act and the 1939 Act; that Section 20(2) provides for a legal fiction for continuation of certain things as if the Acts of 1962 and 1939 had not been repealed; that Sub"section (I) of Section 20 does not contain any statement which occurs in Section 6 of the General Clauses Act being "unless a different intention appears", and in that view of the matter, all rights and privileges obtained by a consumer in terms of the provisions of the 1939 Act or the 1962 Act are safeguarded. Having regard to the new economic policy, the statute encourages more private participation in the private sector and thereby a literal or narrow ..

interpretation will defeat the same; that in any event, Section 14 should be construed in such a manner so as to make it consistent with Article 14 of the • Constitution of India; and that the 'privilege' is superior to the right and in that view of the matter even ifthe appellants have not acquired any right, they having enjoyed privilege, the same is saved under Clause (b) of Sub-section (1) of Section 20 of the 2003 Act. It was also submitted that the parties have set up their industries relying on the promises made by the State; that the sugar industries have spent about Rs. 745. 64 crores in that behalf and that taking account of this substantial . ,, spin-off, doctrine of promissory estoppel should be attracted in this case and ,. in that view ofthe matter, the State is estopped from demanding the electricity duty from the captive power plants including the appellants.

On behalf of the Respondent-State of Tamil Nadu, it was inter alia contended that the exclusive right of the State Legislature to legislate matters under entries enumerated in List II being exclusive, Entry 53 thereof would not be subservient to Entry 38 of List III of the Seventh Schedule of the Constitution of India; that no material has been placed on record to show that the State Legislature has transgressed its legislative power in covert or "" SOUTHERN PETROCHEMICAL INDUSTRIES CO. LID. '· ELECTRICITY INSPECTOR .

J indirect manner or otherwise over-stepped its limits; that the functions of the State Electricity Regulatory Commission constituted under the 1998 Act refer to a non-taxing entry dealing with general aspects of electricity excluding taxation and, thus, the 1998 Act cannot prevail over Entry 53 of List II of the Seventh Schedule of the Constitution ofIndia and, thus, in that view of the matter Article 254 of the Constitution of India cannot have any application; that an exemption, by its very nature, does not create a right and it is always defeasible and susceptible to be withdrawn; that the doctrine of promissory estoppel will have no application in the instant case as the State cannot be prevented from extending the exemption of electricity tax on consumption under the 2003 Act on the basis thereof or otherwise, inasmuch as there cannot be any estoppel against the exercise of legislative power to repeal any Act and to re-enact it.

The exemption granted under Section 13(1) of the 1962 Act was otherwise subject to cancellation or variation under Section 13(2) thereof. Partly allowing the appeals, the Court HELD: 1. 1. Various entries in the three Lists provide for the fields of legislation. They are, therefore, required to be given a liberal construction ,. inspired by a broad and generalized spirit and not in a pedantic manner. A clear distinction is provided for in the scheme of the Lists of the Seventh Schedule between the general subjects of legislation and heads of taxation. They are separately enumerated. Taxation is treated as a distinct matter for purposes of legislative competence vis-A-vis the general entries. Clauses (1) and (2) of Article 248 of the Constitution of India also manifests the aforementioned nature of the entries of the List, and, thus, the matter relating to taxation has been separately set out.

The power to impose tax ordinarily would not be deduced from a general entry as an ancillary power. In List II, T' entries 1 to 44 form one group providing for the legislative competence of ~ the State on subjects specified therein, whereas entries 45 to 63 form another group dealing with taxation. This Court does not mean to suggest that in regard to the validity of a taxation statute, the same, by itself, would be a determinative factor as in a case where the Parliament may legislate an enactment under several entries, one of them being a tax entry. [Para 55) [987-D-F] -( 1. 2. A bare perusal ofEntry 53 of List II and Entry 38 of List ill, ho~ever, clearly suggests that they are meant to operate in different fields. [Para 56) [987-G) . , 1. 3. Entry 53 does not contain any such restriction and, thus, Clause (3) of Article 254 of the Constitution of India will have no application in the instant case. [Para 58) 1988-B) 1. 4.

Legislative competence of the State of Tamil Nadu to legislate the impugned Act is beyond any dispute. It cannot, therefore, be said that the State's action in enacting the Act suffers from colourable exercise of any power. Thus, it can be safely concluded that the State has not over-stepped its limits of power. ! Para 591 (988-B-Cj 1. 5. Entry 53 of List II provides for a taxation entry; whereas Entry 38 1 of List III provides for a non-taxation entry dealing with general aspects of electricity excluding taxation. The 1998 Act empowers the Commission only to fix the electricity tariff or the charges for consumption of electricity. The legislation made by the State is independent of actual tariff of electricity charges. Tariffwould mean a cartel of commerce and normally it is a book of rates. [Para 61 I (988-G-HI 1. 6. The 2003 Act is, thus, not repugnant to the 1948 Act. (Para 641 (989-D) . , K. C. Gajapati Narayan Deo and Ors. v. The State ofOrissa, (19541 SCR 1; R. S.

Joshi, Sales Tax Officer, Gujarat and Ors. , v. Ajil Mills Limited and Anr. , [19771 4 SCC 98; Raja Jagannath Baksh Singh v. State ofUttar Pradesh, AIR (1962) SC 1563 and MP. Vidyut Karamchari Sangh v. MP. Electricity Board, (200419 SCC 755, relied on. Mis. Universal Imports Agency and Anr. v. The Chief Controller of Imports and Exports aud Ors. , (1961) 1 SCR 305; Shri Ram Prasad (Deceased) By His Legal Representative v. The State ofPunjab, (196613 SCR 486; State of Punjab v. Harnek Singh, (2002) 3 SCC 481; State ofA. P. v. y National Thermal Power Corpn. Ltd. and Ors. , (2002] 5 SCC 203; BSES Ltd. ( v. Tata Power Co. Ltd. and Ors. , (2004) 1 SCC 195; MRF Ltd, Kottayam v. Assistant Commissioner (Assessment) Sales Tax and Or;;. , (20061 8 SCC 702; State ofPunjab v. Nestle India Ltd. andAnr. , (20041 6 SCC 465; Madan Mohan Pathak and Anr. v. Union ofIndia and Ors. , (19781 2 SCC 50; Orissa State Electricity Board and Anr. v. IP/ Steel Ltd. and Ors.

, (1995] 4 SCC 320 and State ofMysore v. West Coast Papers Mills Ltd. and Anr. , (197513 SCC 448, referred to. r 2. 1. It is no doubt true that Section 18 of the 1962 Act as also Section 21 of the 2003 Act provided that they would be subject to the provisions of SOUTHERN PETROCHEMICAL INDUSTRIES CO LTD. v. ELECTRICITY INSPECTOR 959 I -J. Article 288 of the Constitution of India. It deals with exemption from taxation by States in respect of water or electricity in certain cases. Clause (2) of the said Article mandates that when a State makes a law for imposition oftax and if any such law provides for fixation of the rates and other incidents of tax, the assent of the President would be required. [Para 651 [989-E-FI 2. 2.

A plain reading of Clause (2) of Article 288 of the Constitution of India raises no doubt that the application thereof was meant to be only in respect of the river valley authorities like Damodar Valley Corporation constituted in the year 1948 by the Damodar Valley Corporation Act, 1948. [Para 661 [989-G-HI 2. 3. It may be true that in a case of this nature, it was not necessary to lay down a clear provision of applicability of Article 288 of the Constitution of India, but then it must have been done ex maori cautela (by way ofabundant caution). Only because a provision of the Constitution has been mentioned in the Act, the same, would not necessarily mean that the same is required to be taken into consideration for the purpose of judging the constitutionality thereof. The provisions, it is trite, are to be read in their entirety. The same have to be read so as to give effect to the provisions contained in Article 287 of the Constitution of India.

It is meant to be acted upon in the context of the heading of Part XII of the Constitution of India and not for dealing with situation of the nature prevalent in the instant case. [Para 671 [990-D-FI 2. 4. The State Electricity Board has been given the exemption under the 2003 Act which by itselfwould not mean that those who purchase electrical energy from them would also be so exempted. Had that been so, the same could have been explicitly provided for. The principle ofconstruction of statute, that the exemption provisions would be attracted only when requisite conditions precedent therefor are satisfied, would apply in a case of constitutional interpretation also. [Para 681 (990-G-HJ 2. 5. The expression "subject to" stated that the same would imply that the provisions ofArticle 288 ~ill have to be complied with.

It is no doubt true that ordinarily the expression "subject to" conveys the idea of a provision yielding place to another provision or other provisions subject to which it is made. But,. keeping in view the nature ofexemption granted, the subject matter and nature of the recipient of such exemption, in our opinion, Article 288 has no application in the instant case. [Para 70) [991-B-C) Damodar Valley Corporation v. State ofBihar and Ors. , [1976) 3 SCC ~... -- 710; Surinder Singh v. Central Government and Ors. , AIR (1986) SC 2166; South India Corporation (P) Ltd. v. Secretary, Board ofRevenue, Trivandrum and Anr. , AIR (1964) SC 207; Ashok Leyland Ltd v. State ofTamil Nadu & Anr. , [2004] 3 SCC 1 and S. N. Chandrashekar and Anr. v. State ofKarnataka and Ors. , [2006] 3 SCC 208, relied on. 3. 1. The issue that the 2003 Act was in violation of the equality clause contained in Article 14 of the Constitution oflndia was not raised before the High Court.

Only in one of the civil appeals, prayer was made for urging additional ground and the same having been directed, additional ground has t'· been taken to urge the said question. A ground taken, however, must be based on a factual foundation. For attracting Article 14, necessary facts were required to be pleaded. The foundational facts as to how Section 14 of the 2003 Act would be discriminatory in nature have not been stated at all. The Government ofTamil Nadu has also not been given any opportunity to meet the said contention. [Para 71) (991-D-EJ 3. 2. It is now trite that such factual foundation, unless is apparent from the statute itself, cannot be permitted to be raised and that too for the first time before this Court. [Para 72) [91Jl-F) ~ 3. 3. Furthermore, in the matter of taxation, the State is given wide ' discretion and is allowed to pick and choose objects for taxation and exempt! on. [Para 74) (992-B) 3. 4.

This Court does not think that it is advisable to go into the said question. [Para 75) [992-B) 3. 5. In absence of necessary pleadings and grounds taken before the High Court, it cannot be said that only because Section 13 of the repealed Act is inconsistent with Section 14 of the 2003 Act, the same would be r arbitrary by reason of being discriminatory in nature and ultra vires Article 14 of the Constitution of India on the premise that charging section provides for levy of tax on sale and consumption of electrical energy, while the exemption provision purports to give power to exempt tax on "electricity sold for consumption" and makes no corresponding provision for exemption oftax on electrical energy self-generated and consumed. [Para 76) [992-C-D) >- State ofA. P. v. National Thermal Power Corpn. Ltd. and Ors. , (2002) 5 SCC 203; BSES Ltd. v. Tata Power Co. Ltd. and Ors. , (2004) l SCC 195 and Orient Weaving Mills (P) Ltd. v.

The Union ofIndia, (1962) Supp 3 SCR 481, SOUTHERN PETROCHEMICAL INDUSTRIES CO. LTD. v. ELECTRICITY INSPECTOR 96J relied on. :. 4. 1. The doctrine of purposive construction can be taken recourse to provided there exists any ambiguity. If this Court has to agree with the submission in this regard it has to not only ignore the words "for consumption" occurring immediately after the word "sold" but also ignore the word "by" occurring immediately after the word "consumption". This Court has to give a new meaning which would amount to judicial legislation. There is no need therefor as thereby the taxation provision would be given a new dimension, by reason whereof not only exemption provisions will have to be understood in the context of sale ofelectricity but also consumption thereof. (Para 791 (993-B-CJ 4. 2.

It is one thing to say that where the words or expressions in a statute are ph1inly taken from an earlier statute in pari materia, which have received judicial interpretation, it must be presumed that the Parliament was aware thereof and intended to be followed in latter enactment But, it is another thing to say that it is necessary or proper to resort to or consider the earlier legislations on the subject only because the consolidating Act re-enacts in an orderly form the various statutes embodying the law on the subject (Para 811 [993-FI "r l 4. 3. The words "consolidate and amend" furthermore often occur in a statute in repealing provision. Such a statute is not intended to alter the law. (Para 821 (993-GI 4. 4. There is no constitutional or statutory embargo that a consolidating Act must also be an amending Act. When different terms are used in the new Act, it would not be proper for the Court to refer to the provisions ofa repealed statute. [Para 85] (995-AI 4. 5.

The distinction between consolidating statute and other statutes is no longer valiwIt is only in certain exceptional situations that the language used in the earlier Act can be resorted to. [Para 861 (995-B) The Union ofIndia v. The Mahindra Supply Co. , AIR (1962) SC 256, relied on. - '. ELECTRICITY INSPECTOR 965 -_{ or an acquired right Nature ofsuch a right would depend upon and also vary from statute to statute. [Para 120[ [1006-B, C[ J. Srinivasa Rao v. Govt. ofA. P. and Anr. , (2006) 13 SCALE 27; H. V. Mathai v. Subordinate Judge, Kottayam and Ors. , [1969f 2 SCC 194; S. Sundaram Pillai v. V. R. Pattabiraman, [1985[ 1 SCC 591 and Swedish Match AB v. Securities & Exchange Board, India, [2004[ 11 SCC 641, relied on. Stroud's Judicial Dictionary, 2nd Edition, Volume I, page 355; "Statutory Interpretation - A Code" by F. A. R. Bennion, Third Edition, page 229 and Maxwell on the Interpretation a/Statutes, 12th edition, page 18, referred to. ·{ 6. 1.

The doctrine of promissory estoppel would undoubtedly be applicable where an entrepreneur alters his position pursuant to or in furtherance of the promise made by a State to grant inter alia exemption from payment of - taxes or charges on the basis of the current tariff. Such a policy decision on .. the part of the State shall not only be expressed by reason of notifications issued under the statutory provisions but also under the executive instructions. Appellants had undoubtedly been enjoying the benefit of payment of tax in respect of sale/consumption of electrical energy in relation to the co-generating power plants. [Para . 35) [1010-A, BJ 'f I 6. 2. Unlike an ordinary estoppel, promissory estoppel gives rise to a cause ofaction. It indisputably creates a right It also acts on equity. However, its application against constitutional or statutory provisions is impermissible in law. [Para 136) [1010-C[ 6. 3. Doctrine of promissory estoppel also preserves a right.

A right would be preserved when it is not expressly taken away but in fact has expressly been preserved. In view ofthe application of doctrine of promissory estoppel in the case of the appellants, their right is not destroyed and in that .. , view of the matter although the Scheme under the impugned Act is different ) from the 1939 Act and the 1962 Act and furthermore in view ofthe phraseology used in Section 20(1) of the 2003 Act, right of the appellants cannot be said to have been destroyed. The legislature in fact has acknowledged that right to be existing in the appellants. [Paras 144 and 145) [1014-B, C[ Mis. A. P. Steel Re-Rolling Mill Ltd. v. State ofKera/a & Ors. , (2006) 14 SCALE 162; State ofBihar and Ors. v. Project Uchcha Vidya, Sikshak Sangh and Ors. , (2006) 2 SCC 545; Mahabir Vegetable Oils (P) Ltd. and Anr. v. State ofHaryana and Ors. , [2006] 3 SCC 620; State ofPunjab v. Nestle India ~ ltd. and Anr. , (20041 6 SCC 465; Motilal Padampat Sugar Mills Co. Ltd. v. '\......

- State ofU. P. , 1197912 SCC 409; Kasinka Trading v. Union ofIndia, (199511 SCC 274; MRF Ltd. , Kottayam v. Asst. Commissioner (Assessment) Sales Tax and Ors. , [20061 8 SCC 702 and Madan Mohan Pathak and Anr. v. Union of India and Ors. , (197812 SCC 50, referred to. 7. Legitimate expectation is now considered to be a part of principles of natural justice. If by reason of the existing state of affairs, a party is given to understand that the other party shall not take away the benefit without complying with the principles of natural justice, the said doctrine would be applicable. The legislature, indisputably, has the power to legislate but where : the law itself recognizes existing right and did not take away the same expressly or by necessary implication, the principles of legitimate expectation of a substantive benefit may be held to be applicable. ! Para 1471 [1014-F, GI .. Rv North and East Devon Health Authority, ex parte Coughlan, (2001) 1 QB 213, Lord Woolf; R v.

Home Secretary, ex parte Hindley, (2001) 1 AC 410; R (on the application ofBibi) v. London Borough ofNewham, (2001) EWCA Civ 607 and Barratt v. Howard, (2000) FCA 190, referred to. 8. The maximum demand in a month means the highest value of the energy delivered at the point ofsupply ofthe consumer during any consecutive " -,.... _ qualify as sales within the meaning of the Sales of Goods Act, 1930 for the purpose of levy of sales tax. " While noticing the said case, it has been held: "I 05. The amendment introduced fiction by which six instances of transactions were treated as deemed sale of goods and that the said definition as to deemed sales will have to be read in every provision of the Constitution wherever the phrase tax on sale or purchase of goods occurs. This definition changed the law declared in the ruling in Gannon Dunkerley & Co. only with regard to those transactions of ;,~ deemed sales. In other respects, law declared by this Court is not neutralised.

Each one ofthe sub-clauses of Article 366(29-A) introduced by the Forty-sixth Amendment was a result of ruling of this Court which was sought to be neutralised or modified. Sub-clause (a) is the outcome of New India Sugar Mills Ltd. v. CST and Vishnu Agencies (P) Ltd. v. CTO. Sub-clause (b) is the result of Gannon Dunkerley & Co. Sub-clause (c) is the result of K. L. Johar and Co. v. CTO. Subclause (d) is consequent to A. V. Meiyappan v. CCT. Sub-clause (e) is the result of CTO v. Young Mens Indian Assn. (Regd. ). Sub-clause (f) is the result of Northern India Caterers (India) Ltd. v. Lt. Governor '( of Delhi, and State of Punjab v. Associated Hotels of India Ltd. I06. In the background of the above, the history prevailing at the time of the Forty-sixth Amendment and pre-enacting history as seen in the Statement of Objects and Reasons, Article 366(29-A) has to be interpreted.

Each fiction by which those six transactions which are not otherwise sales are deemed to be sales independently operates only in that sub-clause. ,. _ 107. While the true scope of the amendment may be appreciated by 1' overall reading ofthe entirety ofArticle 366(29-A), deemed sale under each particular sub-clause has to be -determined only within the parameters ofthe provisions in that sub-clause. One sub-clause cannot be projected into another sub-clause and fiction upon fiction is not permissible. As to the interpretation of fiction, particularly in the sales tax legislation, the principle has been authoritatively laid down in Bengal Immunity Co. Ltd. v. State ofBihar, SCR at p. 647: y The operative provisions of the several parts of Article 286, namely, clause (l)(a), clause (l)(b), clause (2) and clause (3) are manifestly SOUTHERN PETROCHEMICAL INDUSTRIES CO. LTD. " ELECTRICITY INSPECTOR [S. B. SINHA, I. JJQ2J . .

r-i intended to deal with different topics and, therefore, one cannot be projected or read into another. (S. R. Das, Actg. CJ. ) We can also see pp. 720 and 721 (N. P. Bhagwati, J. ). " It was categorically held therein: "75. In our opinion, the essence of the right under Article 366(29- A)(d) is that it relates to user of goods. It may be that the actual delivery of the goods is not necessary for effecting the transfer of the right to use the goods but the goods must be available at the time ,,:r of transfer, must be deliverable and delivered at some stage. It is assumed, at the time of execution of any agreement to transfer the right to use, that the goods are available and deliverable. If the goods, or what is claimed to be goods by the respondents, are not deliverable at all by the service providers to the subscribers, the question of the right to use those goods, would not arise.

" It was furthermore held that only because the Board keeps itself ready for supply of electrical energy, the same by itself would not mean that there had been deliverable goods and the goods have been delivered. _J 163. We are not concerned with the user of the goods and, therefore, deliverability of the goods is not in question. 164. It may be that electricity has been considered to be 'goods' but the same has to be considered having regard to the definition of "goods" contained in Clause (12) ofArticle 366 ofthe Constitution of India. When this Court held electricity to be 'goods' for the purpose of application of sales tax laws and other tax laws, in our opinion, the same would have nothing to do with the construction of Entry 53 of List II of the Seventh Schedule of the r Constitution of India. 165. Supply does not mean sale. A' fortiori it does not also mean consumption. 166. A 'goods' may be a tangible property or an intangible one.

It would become goods provided it has the attributes thereof having regard to (a) its utility; (b) capable of being bought and sold; and (c) capable of transmitted, transferred, delivered, stored and possessed. 167. Strong reliance has been placed by Mr. Andhyarujina on a decision [2007] 6 S. C. R. of this Court in Mis. Northern India Iron & Steel Co. v. State of Haryana and Anr. , [1976] 2 SCC 877 wherein it has been held: "l0. Coming to the question of duty, we have no hesitation in an outright rejection of the extreme contention put forward on behalf of the appellants that no duty is liviable at all on the demand charge. But it is clear, and this was fairly conceded to by the Solicitor Generai appearing for the State of Haryana, that the amount of duty payable will be on the actual amount of demand charge realisable from the consumer after the proportionate reduction under clause 4(f) of the tariff. 11.

Section 3 of the Duty Act says that there shall be levied and paid to the State Government on the energy supplied by the Board to a consumer a duty to be called the electricity duty, computed at the rates indicated in the various clauses of sub-section (I) of Section 3. The expression used in the various clauses is where the energy is supplied to a particular type of consumer, then the rate of duty will be as specified therein. On the basis of the said expression the argument put forward on behalf of the appellant was that the duty could be levied only on the energy charges for the actual amount of energy supplied. Such an argument is too obviously wrong to be accepted. Reading the clauses as a whole it would be seen that the duty is chargeable on the price of energy supplied in a month. The price of energy in a two-part tariff system would mean and include the energy charge as also the demand charge.

This is made further clear by the manner ofcalculation provided in Rule 3 ofthe Punjab Electricity (Duty) Rules, 1958. Sub-rule(! ) says: The duty under clauses (iii) and (iv) of sub-section(! ) of Section 3 of the Act shall be calculated on the price of the energy recoverable at the net rate of the Board which will include the demand charge when the supply is governed by a two-part tariff. " In that case, no term like "net energy" existed. 168. We may notice that this Court in West Coast Papers Mills Ltd, (supra), held that no tax can be invoked on transmission loss stating: "7. We have set out the relevant provisions of the Act, and it would appear therefrom that electricity tax is payable on the units of energy SOUTHERN PETROCHEMICAL INDUSTRIES CO. LTD. •·. ELECTRICITY INSPECTOR [S. B SISHA. J ] J025 ---<; consumed.

The one question with which we are concerned in this appeal is whether electricity tax is payable in respect of the electrical energy which is lost in transmission as a result of transmission loss or transformer loss. So far as this question is concerned, we are of the view that no tax is payable on the electricity so lost. The entire scheme of the Act is to tax the consumption of electrical energy. Where some energy is not consumed but lost before it reaches the point of consumption, the question of levy of tax on consumption of such energy would not in the very nature of things arise. The place of consumption of electrical energy is normally at some distance from . ) the place where electrical energy is generated. Electrical energy has consequently to be transmitted through metal conductors to the place where it is consumed.

Such transmission admittedly entails loss of some electrical energy and what is lost can plainly be not available for consumption and as such would not be consumed. If a person, for example, generates I00 units of electrical energy and loses I0 units in the process of transmission from the point of generation to the point of consumption, he would in the very nature of things be able to supply only 90 units of electrical energy to the consumers. The tax which would be payable on the electrical energy consumed in such 'r a case would be only for 90 units and not I00 units. To hold otherwise and to realise tax on 100 units ofelectrical energy would be tantamount to levying tax on the generation or production of electrical energy and not on its consumption. Such a tax on the generation or production of electrical energy is plainly not permissible under the Act.

The fact that the consumer happens in the present case to be the same Company which generated the electrical energy would, in our opinion, make no material difference. " 169. Our attention has been drawn to a simple bill, from a perusal T' whereof it appears that although permitted MD was 350 KVA, the recorded demand being 144 KVA, electricity tax was charged only on the basis of 144 KVA and not on the basis of 350 KVA. Keeping in view the fact that the maximum demand postulates something other than actual delivery ofelectricity, the question of imposition of any tax thereupon does not arise. The decision of this Court in Mis. Northern India Iron & Steel Co. (supra) did not assign any reason. The said decision did not take into consideration the provisions of Article 366 (12) of the Constitution of India or the effect of Entry 53 of List II of the Seventh Schedule of the Constitution of India.

It has also not been taken into consideration that the State cannot impose tax only because the State Electricity Board would be entitled to levy tax on certain services. It would bear repetition to state that the concept of tariff and tax is different. Whereas tariff would include a list ofcharges, the tax must be on actual basis. It is also not the case nor can it be that imposition of tax on actual sale or consumption of electrical energy was impossible keeping in view of the particular fact situation. As noticed hereinbefore, two different meters are installed; one, for the purpose of actual consumption of electrical energy and another being a trivector, the same merely records the maximum demand. 170. A decision, as is well known, is an authority for what it decides and not what can logically be deduced therefrom. A decision is not an authority on a point which has not been considered. 171.

For the reasons aforementioned, we are of the opinion that the impugned judgment cannot be sustained which is set aside accordingly. The appeals are allowed to the extent mentioned hereinbefore. No costs. GN. Appeal partly allowed.