the Jiyajeehao Cotton Mills Ltd. v. State of Madhya Pradesh

Judgment

Rc11uara11 DaJ C'Jfllm~r(lr,/ Toi Ojf1ar, C'..clrllttt.-J Sinh4 C. J. Octoitf JJ. this Cturt is the <'llS<' of Ka11hai11alal Lohia v. Com· ir.i-<sio11er of ITU"ome Tax, West Bengal('). In that cas<', this Court has taken the same view and dismissed the appeal as •incompetent.' Tho pri>sent case is a muc·h simpler one, in which there arc no special cireum~tances and in which the facts have not yet he<-n finally determined. It may also he noted that the appellant haa not challenged the vires of the Act or of any other law. We, therefore, think thitt we should dismiss this appeal ae 'incompetent', without oxpressingany opinion on the merits of the controversy. It will be open to tho appollant to take such at.cps as it may Le advised, in pursuing such remedies as may be available to it under the law. The appeal is accordingly dismissed, but in tho circumstances without costs. Appeal dismissed. THE JIYAJEEHAO COTTON MILLS LTD. STATE OF MADHYA PRADESH (B. P. S1NHA, C. J., J. L. KAPua, M. HmAYATULLAH, J.C. SHAH a.nd J. R. MuDHOLKAR, JJ.)

Electricity-Levy of duty-J'roduar, if liabk lo pay duly on ckcricity ronmmd by him&elj-S,.ch Iffy. if ultra vircs the Constitution-Got:tmmenl of India Acl, 1935 (26 Geo. 5 Ch. 2), List II Entry 48H-Con.1titulion of India, /Ml I Entry 81, Liat II, Emry 53-Central PromnCf's and Berar Electricity Duty Act, 1919 (C. P. dJ Berar JO of 1949), as amen<k.d by Madilya Pradeah Taxalion l IJW8 Amc11dment Acl, 1956 (JI. P. 7 of 1956), SB, Z, 8. The appellant mill produced electricity over 100 volts exclusively for its own consumption. It challenged the levy of the electricity duty by the Government of Madhya Pradesh (I) (1962) 2 S. C.R. 839. (1) S.C.R. SUPREMF! COURT REPORTS under the C. P. and Berar Electricity Act, 1949, as amended by the Madhya Pradesh Act 7 of 1956, on the grounds, .firstly that on proper construction of s.

3 of the Act !t was not liable to pay any duty at all as the Table of rates did not prescribe any rate for electrieity consumed by producers and, serondly, the levy of duty on electricity consumed by producer himself being in substance an excise duty could be levied only by the Parliament under Entry Si List I. If it was not an excise duty the levying of it was beyond the competence of the State Legislature in the absence of any appropriate Entry in the List. Held, that on a combined reading of the definition of 'consumer' in s. 2(a) and 'producer' in s. 2(d-l) of the C. P. Berar Act, 10 of 1949, a producer, consuming the electrical energy generated by him is also a consumer as he consumes electrical energy supplied by himself, falls squarely within the Table under s. 3 of the Act prescribing rates of duty payable by · a consumer and is thettfore liable to pay duty thereunder.

Held, futher, that the present Act for levy of duty upon consumption of electric energy was enacted under Entry 45B of the List II of the Government of India Act, 1935, corresponding to Entry 53 of List II of the Constitution where as the levy of duty of excise on manufacture or production of goods hy Parliament is under Entry 84 of List I. The taxable event with respect to a duty of excise is 'manufacture' or 'production' ; and not 'consumption'; the levy upon consumption of electric energy cannot be regarded as duty of excise falling within Entry 84 of List I. Held, also, the language used in the Legislative Entries in the Constitution must be interpreted in a broad way so as to give the widest amplitude of power to the Legislature to legislate and not in a narrow and ptndantic sense. Crvn. APPELLATE JuRISDICTION: Civil Appeal No. 582 of 1960. Appeal from the judgment and order dated Febuary 5, 1959, of the Madhya Pradesh High Court (Gwalior Bench) at Indore in Givil Misc. Case No. II of 1959.

A. V. Viswanatha Sastri, Rameshwar Nath, 8. N. Andley and P. L. Vohra, for the app~llant. B. Ben, B. K. B. Naidu and I. N. Shroff, for the respondent. Tbe Jiy.jeerao Cotton Mills Lid. Stat< of Madhya Pradesh ·nu J i_7aj1,,ao Collon Mills Ltd. Stau of M odhya Pratl1;ll. M..J"41k"' J, 1961. October 31. The Judgment of the Court was delivered by MunHOLKAR, J.-This is an appeal on a certificate of fitness granted by tho High Court of Madhya Pradesh under Art. 133 (I) (a) of the constitution. The appellant is a textile mill at Gwalior in Madhya Pradesh. It gencrat!',a electricity for the purpose of running its mills and for other purposes connected therewith. It docs not 11ell electrical energy to any person. Under the provisions of the Contra.I Provinces and Berar Electricity Duty Act, 1049 (No. IO ~f 1949)as amended by the llla1lhya Pradesh Taxation Laws Amendment Act, 1956 (Act ~o. 7 of 1956) the Government of Madhya Pradesh levied upon the appellant electricity duty amounting to Rs. 2,78,4li/- for a certain puriod.

The appellant paid it under compulsion and thereafter preferred a writ petition to tho High Court of Madhya Pradesh under Art. 226 of the Constitution in which it challenged the validity of the levy on two grounds. The first ground was that upon a proper construotion of s. 3 of the C. P. & Borar Electricity Duty Act, 19~9 as amended by the Madhya Pradesh Taxation Laws Amendment Act, 1956 the appellant would not he liable to pay any duty at all. Tho second ground was that if the Act permitted tho levy of duty on electricity consumed by tho producer himself it was ultra virea the Constitution because in substance it would be a duty of excise whioh oan be levied only by Parliament under Entry 84 of List I and that even if it was not excise duty it wa.s beyond the competence of the Madhya Pradesh legislature to levy it in the absence of any appropriate entry in List II.

The petition was summarily rejected by the High Court, but upon an application made by the appellant it granted to it certificate of fitness, as already stated. (1) S.O.R. Mr. Viswanatha. Sa.stri has reiterated before us the same grounds which were urged in the High Court. For the purpose of appreciating the first ground it would be useful to reproduce the terms of s. 3 of the Act. The section runs thus : "Le~, of duty on sale or consumption of electrical energy.-Subjeot to the exceptions specified in Section 3-A every distributor of electrical energy and every producer shall pay every month to the State Government at the prescribed iime and in the prescribed manner a duty calculated at t' e rates specified in the Table below on the units of electrical energy sold or supplied to a consumer or consumed by himself or his employees during the preceding month. Table Rates of Duty (i)

Electrical energy supplied for consumption for lights, fans of any other applian- (ii) ces normally connected to a lighting circuit. Electrical energy supplied for purposes other than those specified in item ( i) above. 6 nP. per unit of energy. 1 nP. per unit of energy. This is the charging section. It is not disputed by Mr. Sa.stri that under this provision a producer of electrical energy is made liable to pay duty for the units of electrical energy consumed by himself. He, however, contends that rates of duty have been prescribed in the Table below s. 3 only with respect to electrical energy "supplied for consumption" to others and that no rates have been prescribed with Tk6 Jiyojeerao Colton 31 ills UJ. Stale of Madhya P,adtsh M•dhalka< J. Tiu Jiyajttrao Collc• _ Mub ltd. Slak of Madhya Prad4Jh. M1ufholkar J. 286 SUPREME OOURT REPORTS [1962) SUPP. respect to electrical energy consumed by the producer himself. Section 2(n) of the Act defines "consumer".

The dt>finition, so far as relevant, rune thus: " 'Consumer' means any person who consumes rlectrical energy sold or supplied by distributor of electrical cncrj?y or a pro uccr ................. . 'Producer' as defined s. 2( d-1) of the Act means "a person who generates electrical energy at a voltage exceeding hundred volts for hiA own consumption or for supplyine: to others". If we read the two definitions together, omittinl( the non-essentials, 'consumer' would include "any person who consumes electrical energy supplied by a person who generates eleotrical energy for his own consumption". t ·nder s. 3 a person who gpncratcs elcctricnl energy over hundred volts for his own consumption is liable to pay duty on the units of electrical energy colll!llmed by himself. A producer consuming the electrical energy generated by him is also a. consumer, that is to say, he is a. person who consumes electrical energy supplied by hims<;Jf.

The Table prescribes rates of duty payable with respect to electrical energy snpp)iP,d for consumption and, therefore, the lovy on the appellant fa.118 squarely within the Table under s. 3 of the Act and ~f/s. Viswanat ha Sastri's argument is devoid of substanct>. It is difficult to sec how the levy of duty upon consumption of · electrical energy can be regarded as duty of excise foiling within Entry 84 of List I. Under that Entry what is permitted to Parliament is levy of duty of excise on manufacture or production of goods (other than those excepted expressly by that rntry). The taxable event with respect to a duty of excise is "manufacture" or "production". Herc the taxable event is not production or generation of electrical energy but its consumption. If producer generates electrical · energy and stores it up, he would not be required to pay any duty under the Act. It is only when he sells it or consumes it that he would be rendered liable to pay the duty prescribed by the Act.

The Central Provinces and Berar Electricity Act was enacted under Entrv 48B •>f List II of the Government of India . .\ct, 1935. The relevant portion of that Entry read thus : "Taxes on the consumption or sale of electricity .. :r ·····"Entry 53 of List II of the Constitution :iti to the same effect. The argument of Mr. Sastri is that the word "consumption" shoulu be accorded the meaning which it had under the various Act, including the Indian Electricity Act, 1980. Under that Act and under the various Provincial and State Act, consumption of electricity mean, according to him, consumption by persons other than producers and that both in the Government of India Act and under the Constitution the word 'consumption' must be deemed to have been used in the same sense. The Acts in question deal only with a certain aspect of the topic "electricity", and not with all of them. Therefore, in those Acts the word "consumption" may have a limited meaning, as pointed out by learned counsel.

But the word "c9nsumption" has a wider meaning. It means also "use up" "spend" etc. The mere fact that a series of Jaws were concerned only with a certain kind of use of electricity, that is consumption of electricity by pers0ns other than the producer cannot justify the conclusion that the British Parliament in using the word "consumption" in Entry 48B and the Constituent Assembly in Entry ;j3 of List II wanted to limit the meaning of "consumption" in the same way. The language used in the legislative entries in the Constitution must he interpreted in a broad way so as to give the widest amplitude of power to the legislature to lagislate ~lld not in a narrow and pedantic sense, We Tht .Tiyajttrao Cotton Mills ltd. Stale of ,1fadhya Pradesh 1\1 udholkar J. 19111 n, Jiyajtnao Collon Id ills Ltd. cannot, therefore, accept either of the two grounds urged by Mr. Viswanatha S&stri challenging th(• vires of the Act. Stott of Madhµ PtaJule MudholkM J. 111111 The appeal fails and is dismissed with costs.

App,·al diami .. ed. IN THE MATTER OF MR. 'A' AN ADVOCATE (B. P. SINHA, c. J., K. SUJIBA RAO, J. c. SHAH, RAOHU11AR DAYAL and J. R. MUDHOLKAR, JJ.) Proft83ional Miaconduct-Adoocate on Record writing Uttcra wliciting bri•f•-lf guilty of profuaional miacondud- Unlrulhful comlucl in court-Defect of character-Puniahment-- Supremt Cou•I Ru lea, 19a0 (aa amended), 0. IV A, r. 2. Mr. A, an Advocate on Record of this Court, wrote letters soliciting clients. One of such letters, a post-card was addres.ed to the Law Minister of Maharashtra and ended as follows,- "You might have got an Advocate on Record in this Court but I would like to place my services at your disposal if you so wish and agree,,. To the Registrar of this Court he admitted having written the post-card, but before the Tribunal stoutly denied having don' so. The Tribunal found on evidence that the Advocate had written the post-card.

When the matter came up before the court, the Advocate at lint denied having written the post-card but on being pressed by the court to make a true statement admitted that he had writren the postcard and had admitted that before the Registrar. lldd, that it is against the etiquette of the Bar and its professional ethics to •olicit briefs from clients and an Advocate who docs so must be guilty of gTOSily unprofessional cond1:ct. Th•rc can be no doubt in the instant case that the Advocate concerned had written the post-card soliciting bri.Cs. It makes no diffcronce whether he did •o in ingorance of this elementary rule of the profession or in disregard of it, since his conduct in court showed that he had no regard for truth and, consequently, he deserved no •ympathy of the court and must be suspended.