Date of Judgement:
24.09.2021
Coram:
Justice Dr Dhananjaya Y Chandrachud
Justice Vikram Nath
Justice B V Nagarthana
Parties:
Appellant – M/s. Magadh Sugar & Energy Ltd.
Respondents – The State of Bihar &Ors.
Subject
The existence of an alternate remedy does not by itself bar the High Court from exercising its jurisdiction in certain contingencies.
Legal Provisions:
- Section 2(b) of the Bihar Electricity Duty Act, 1948 - ‘Consumer’ means any person who is supplied with energy but does not include either a licensee or the ‘distributing licensee’ as described in clause 1 (a) of clause IX of the Schedule to the Indian Electricity Act, or a person who obtained sanction under Section 28 of the said Act.
- Section 3(1) of the Bihar Electricity Duty Act, 1984 - There shall be levied and paid to the State Government, either on the units or on the value of energy consumed or sold, excluding losses of energy in transmission and transformation, a duty at the rate or rates to be specified by the State Government in a notification.
- Section 9 of the Bihar Electricity Duty Act, 1948 - Power of State Government to grant exemptions.
Overview
- The appellant herein is a sugar mill company. The waste formed during the manufacturing of sugar is used to produce electricity for own consumption and the excess is supplied to the BSEB (Bihar State Electricity Board). A notification was issued by the 1st Respondent herein which provided that the rate to be levied on consumption of electrical energy generated by captive power plants would be six per cent of the value of energy. The appellant appealed before the High Court.
- The contention of the appellant is that Section 2 (ee) which defines value of energy defines this as energy sold to customer by a licensee. The Act defines ‘customer’ as one who avails the energy but does not include the licensee. Since the appellant is providing electricity to the licensee, which is excluded from the definition of consumer, tax cannot be levied on the same.
- Further, referring to State of AP v. NTPC (2002), the appellant contended that the Court in this case held that sale under Entry 53 of List II of the Seventh Schedule of the Constitution would mean sale for consumption of electricity. However, in this case, it was BSEB which was selling for final consumption. Thus, the first respondent does not have the legislative competence to levy a tax on the sale of electricity that is not for consumption.
- The counsel for respondent contended that Section 3 of the Act had two parts. One with respect to tax on value of energy and the other being tax on units of energy sold. It was argued that though sale to a licensee may not be covered in the first part but it is covered under the second part of Section 3.
- The High Court dismissed the writ petition and held that it would require a factual understanding of the nature of supply of electricity to BSES and this was not question of law and the appellant must exhaust alternative statutory remedy provided in the Act. This gave rise to an appeal before the Supreme Court.
Issue
- Whether the High Court was right in rejecting the writ petition?
Judgement Analysis
- The Court, referring to multiple precedents, reiterated that the existence of an alternate statutory remedy does not ‘ipso facto’ bar the High Court from exercising its writ jurisdiction. Referring to Radha Krishnan Industries v. State of Himachal Pradesh (2021) wherein one of them was part of this suit (Justice D Y Chandrachud) summarized the principles governing the exercise of writ jurisdiction by the High Courts,where alternate remedy is available. The Court in this case reiterated that the High Court’s jurisdiction under Article 226 of the Constitution is wide. It also carved out an exception when alternative remedy was available one of them being when a proceeding is wholly without jurisdiction.
- The present case is not that the respondents have miscalculated the tax duty and penalty thereon. It was alleged that the State does not have the jurisdiction and power to levy tax on its sale. Hence, the High Court in this instance can exercise its writ jurisdiction to entertain the appeal.
- It is also to be noted that this suit was tagged and planned to be heard with the NTPC case where a similar issue was raised. However, it was separated for the reasons that the appellant herein is a sugar mill while the NTPC was a power generation company.
- In Sree Meenakshi Mills Ltd v. Commissioner of Income Tax (1957) what constitutes a question of fact, question of law and a mix of both was explained. The test to be applied for determining a question of law is whether suit before the Court can be adjudicated without reference to the facts and circumstance of the case.
- In the present case, there needs a complete interpretation of Section 3 of the Act to determine whether tax can be levied for supply of electricity to a licensee. There is no need to revisit and assess the facts.
Conclusion
The High Court’s writ jurisdiction under Article 226 of the Constitution is wide and not confined only to hear matters of infringement of fundament rights. Although it is the rule that when alternative reliefs are not extinguished, the Court will not entertain a writ petition,an alternate remedy cannot be a solitary bar on jurisdiction of the High Court of its powers under Article 226 of the Constitution.
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Questions:
1. Which Article in the Constitution confers power on High Courts to issue, to any person or authority, including the government, directions, orders or writs?
2. Whether the writ jurisdiction of High Court only limited for enforcement of fundamental rights? Is the power of theHigh Court to issue a writ wider than that of the Supreme Court?
