JAYASHREE CHEMICALS LTD v. STATE OF ORISSA — 1992 DIGILAW 102 (ORI)

G. B. PATNAIK, J. ( 1 ) THE petitioner No. 1 is a public limited company and petitioner No. 2 is one of the shareholders of the company. They assail the demand of electricity duty on "delayed payment surcharge" as well as levy and collection of the said duty on "imported power" generated outside the State of Orissa under the Orissa Electricity (Duty) Act, 1961, and have prayed for refund of the duty paid. ( 2 ) THE petitioners assert that the company is engaged in the business of manufacture and sale of caustic soda, chlorine, hydrochloric acid, sodium hydrosulphite, sulphuric acid and sulphur dioxide and has its manufacturing unit at village Ganjam in the district of Ganjam in Orissa. Necessary licence has been issued to the petitioner-company under the Industries (Development and Regulation) Act, 1951, and it has a licensed capacity of production of 16,764 metric tonnes of caustic soda, 13,411 metric tonnes of chlorine, 15,000 metric tonnes of hydrochloric acid, 3,000 metric tonnes of sodium hydrosulphite, 8,400 metric tonnes of sulphuric acid and 5,000 metric tonnes of sulphur dioxide per annum. Electricity is an essential ingredient for the manufacturing activities of the company, which is, in fact, a power-intensive industry. The company has entered into two agreements with the Orissa State Electricity Board (opposite party No. 3) for supply of power, one relating to the caustic soda unit of the company and the other relating to the sodium hydrosulphite unit of the company. The contract demand of the company's caustic soda plant is 11,110 KVA / 10,000 KW equivalent to 10 M. W. The contract demand for the other factory is 3,890 KVA / 3500kw equivalent to 3. 5 M. W. The agreement for supply of power is subject to the Orissa State Electricity Board (General Conditions of Supply) Regulations, 1981. The agreement between the parties provides that if the duty for the comsumption of electricity is not paid within fifteen days from the date of the bill, then an amount described as "surcharge" will be collected from the company for the period of delay in payment of the bill. The relevant clause of the agreement is clause 13 (vi) which is extracted hereinbelow in extenso :---"13. The relevant clause of the agreement is clause 13 (vi) which is extracted hereinbelow in extenso :---"13. The consumer shall (subject to the provisions hereinafter contained) pay to the Engineer every month for the power demand and electrical energy supplied under this agreement, the charges to be ascertained as mentioned below (viz. as per Board's prescribed tariff) for:-power Intensive Industries : xx xx xx (vi) The monthly charges as above together with other charges and surcharges, if any, shall be paid within 15 days from the date of bill. If payment is not made within the said period of 15 days, a surcharge of one-fifteenth part of one per cent per day of delay from the due date, namely from the sixteenth day of the bill shall be levied on the amount remaining unpaid. Payments made by the consumer shall be first adjusted towards such delayed payment surcharge, if any, the balance being adjusted towards arrear miscellaneous charges, arrear charges for supply and current charges respectively. Provided that the above tariff, rates are exclusive of fuel surcharge and / or any other surcharge that may be imported by the supplier from time to time with or without notice. Provided further that the aforesaid tariff rates are also exclusive of Electricity Duty and / or any other levy, tax, cost, toll or duty that may be levied by the State of Orissa and / or any other competent authority from time to time. " a similar clause was there in the agreement dated 19-2-1983 which was clause 7 (vi) which is quoted below in extenso :-"clause 7 (vi)the monthly charges as calculated above together with other charges and surcharges on account of late payments, if any, shall be payable within 15 days from the date of the bill. If payment is not made within the said period of 15 days, late payment surcharge at 2 per cent per month shall be levied pro rata for the period of delay from the due date, namely, from the 16th day of the bill on the amount remaining unpaid, excluding arrears on account of late payment surcharge, if any. Payments made by the consumer shall be first adjusted towards such late payment surcharges, if any, balance being adjusted towards arrear miscellaneous charges, arrear charges for supply and current charges, respectively. Payments made by the consumer shall be first adjusted towards such late payment surcharges, if any, balance being adjusted towards arrear miscellaneous charges, arrear charges for supply and current charges, respectively. Provided that the tariff mentioned above are exclusive of fuel surcharge and / or any other surcharge that may be imposed by the supplier from time to time. Provided further that the aforesaid tariff rates are also exclusive of Electricity Duty and / or any other levy, tax or duty that may be levied under law from time to time. " an identical provision is there in the Orissa State Electricity Board (General Conditions of Supply) Regulations, 1981. The petitioners assert that in accordance with the aforesaid provisions in the agreement as well as in the General Conditions of Supply Regulations, the Board collects the purported delayed payment surcharge if any bill remains unpaid for a period of 15 days from the date of submission of the bill. But the challenge is that no duty is leviable on the said delayed payment surcharge. It is the further case of the petitioner that on account of shortage of power in the State, the Board has been importing power from the neighbouring States and has been offering the same to the different consumers including the petitioner-company and since the petitioner-company was not getting the normal supply of power generated in Orissa, it was constrained to consume the imported power at a prohibitively high rate, thereby suffering a huge loss. The petitioners' case is that the electricity duty is levied under the authority of the Orissa Electricity (Duty) Act, 1961, and the said Act was amended by Orissa Ordinance 1 of 1986 which was replaced by Orissa Act 9 of 1986. Prior to its amendment, the State of Orissa was collecting electricity duty under the Orissa Electricity (Duty) Act, 1961, both in respect of delayed payment surcharge as well as in respect of the power supplied to the company by the Board after procurring the same from sources outside the State. Under the 1961 Act, the rate of duty on imported power was much higher and though there was no statutory backing for charging such higher rate, but it was by an executive action of the State or its delegated authority of the Board. The Act was amended by an Ordinance which was later on replaced by Orissa Act 9 of 1986. The Act was amended by an Ordinance which was later on replaced by Orissa Act 9 of 1986. The amended Act conferred power retrospectively on the State to levy and collect electricity duty on the power imported from outside with effect from 17-1-1986 and, therefore, the petitioners' case in a nutshell is that the State had no power to levy duty in respect of the imported power until December, 1985, and consequently, such levy is ultra vires Article 265 of the Constitution. It is alleged that even though the State had no power to levy on such imported power, but the levy was being made since 1984 and such levy according to the petitioners up to December, 1985 is without jurisdiction. The petitioners assert that during the said period a total sum of Rs. 36,58,491. 49 paise had been paid towards duty on the imported power. So far as the delayed payment surcharge is concerned, the petitioner's case is that though it is described as surcharge, but in substance, it partakes the character of an interest. The petitioners further aver that the agreement between the parties contained an arbitration clause and disputes with regard to delayed payment surcharge have been referred to arbitration for the period 5th of July, 1967 to 31st of March, 1981. According to the petitioners such levy of delayed payment surcharge is ultra vires Section 3 of the Orissa Electricity (Duty) Act and Article 265 of the Constitution. The petitioners aver that the purported levy of electricity duty made by the State Government as delayed payment surcharge is without jurisdiction and ab initio void. On the aforesaid averments, the petitioners assail the legality of the demand made and collected on both the counts in the present writ application. ( 3 ) OPPOSITE parties 1 and 2 have filed a counter affidavit being sworn to by the Deputy Secretary to Government, Department of Energy. The stand taken in the counter affidavit is that the delayed payment surcharge had in fact been provided in the agreement between the parties and the manner of its realisation has been notified in exercise of power conferred in Ss. 49 and 59 of the Electricity (Supply) Act. The stand taken in the counter affidavit is that the delayed payment surcharge had in fact been provided in the agreement between the parties and the manner of its realisation has been notified in exercise of power conferred in Ss. 49 and 59 of the Electricity (Supply) Act. So far as the duty on imported power is concerned, the case of the State is that when the appropriate authority in exercise of powers under S. 22-B of the Indian Electricity Act restricted the supply of power to different industries including the petitioner-company, it is the petitioner-company which approached the Board to supply power by importing it from the neighbouring State on payment of charges fixed for such supply. The acceptance of the rate for supply of imported power is done through exchange of letters. The Board supplied power to the petitioner-company on the request of the petitioner. It has been further averred that the petitioners' contention that there is no authority to collect duty on consumption of "outside power" is not correct, inasmuch as Section 3 (1) of the Orissa Electricity (Duty) Act, 1961 clearly contemplates that the duty should be levied for and paid to the State Government on the energy consumed by a consumer computed on the basis of the rate charged therefor by the licensee, by the Board or by any Government referred to in clause (c) of Section 2 at the rate specified. Therefore, if a consumer consumes energy he has to pay electricity duty irrespective of source of generation of power or its availability. According to the opposite parties, the subsequent amendment merely amplifies or clarifies the power to levy of the duty and it is not correct that for the first time only by the amended Act, the State Government was conferred with the power for levy of duty on imported power. So far as the delayed payment surcharge is concerned, the stand of the State Government is that Regulation 4 (x) of the O. S. E. B. General Tariff Regulations, 1973, and the clarification of the State Government clearly provide for collection of such delayed payment surcharge and the dispute relating to levy of such duty on delayed payment surcharge had been referred to the Special Arbitration Tribunal in respect of the period 5-7-1967 to 31-3-1981 and the matter has been finalised. For the period subsequent to 31-3-1981 namely commencing from 1-4-1981, the petitioner-company has not raised any dispute before any arbitrator. The Government in the Irrigation and Power Department have also issued a clarification indicating that the delayed payment surcharge levied by the Board is within the ambit of surcharge defined in Section 2 (g) (v) of the Orissa Electricity (Duty) Act. In this view of the matter, it is contended that the duty levied and collected on delayed payment surcharge is within the competence and authority of the State Government and, therefore, there has been no infirmity in raising the demand and making the collection. ( 4 ) ON behalf of the petitioners a rejoinder affidavit has been filed more or less reiterating the earlier stand. ( 5 ) THUS the dispute raised by the petitioners is not with regard to the liability to pay the delayed payment surcharge, but it is regarding the liability to pay electricity duty on such delayed payment surcharge. It is to be noticed that from January, 1986, the Board has discontinued collection of any electricity duty on delayed payment surcharge. For the period 5-7-1967 till 31-3-1981, the dispute with regard to duty on delayed payment surcharge had been referred to a Special Arbitration Tribunal and, therefore, is outside the purview of this petition. The present application, therefore, is in respect of the dispute subsequent to 31-3-1981 till December, 1985, whereafter the Board itself has discontinued the collection of duty on such delayed payment surcharge. ( 6 ) WE would take up the legality of the levy of duty on delayed payment surcharge first. The electricity duty is leviable pursuant to the power under Section 3 of the Orissa Electricity (Duty) Act, 1961. Under the said Act, a duty has to be levied on the energy consumed by a consumer and the computation of the same is made on the basis of the rate charged therefor. The duty in question is levied and paid to the State Government. The aforesaid Act of 1961 was amended by an Ordinance called Orissa Ordinance 1 of 1986 which was later on replaced by Orissa Act 9 of 1986. In view of the dispute relating to the period up to 31st of December, 1985, the same is governed by the Orissa Electricity (Duty) Act of 1961. The aforesaid Act of 1961 was amended by an Ordinance called Orissa Ordinance 1 of 1986 which was later on replaced by Orissa Act 9 of 1986. In view of the dispute relating to the period up to 31st of December, 1985, the same is governed by the Orissa Electricity (Duty) Act of 1961. Section 3 of the said Act as it stood prior to its amendment of 1986 ran thus :-"3. Electricity duty on energy supplied to consumers.- (1) There shall be levied for and paid to the State Government on the energy consumed by a consumer, a duty (hereinafter referred to as the 'electricity duty') computed on the basis of the rate charged therefor by a licensee, by the Board or by any Government referred to in clause (c) of Section 2 at the rates specified hereunder :- (a) Where the rate charged is calculated on the energy consumed in a month the electricity duty shall be computed at the rate of-- (i) fifteen per cent of the rate charged for the first one thousand units or part thereof; (ii) for the next ninety-nine thousand units or part thereof, twenty-five per cent of the rate charged if the energy has been consumed only for the purposes of irrigation, and thirty per cent in other cases; and (iii) forty per cent of the rate charged for the remainder. (b) In case where the rate charged is the minimum charge electricity duty shall be computed at the rates specified in clause (a) on the basis of units actually consumed. (c) In case of two-part tariff the electricity duty shall be computed in respect of the fixed charge at the rate of fifteen per cent of the fixed charge, if the energy has been consumed only for the purposes of irrigation and at the rate of twenty-five per cent of the fixed charge in other cases; and in respect of the unit charged at the rates specified in clause (a ). (d) In the case of unmetered supply or surcharge the electricity duty shall be computed at the rate of fifteen per cent of the periodical charge or surcharge, as the case may be. (d) In the case of unmetered supply or surcharge the electricity duty shall be computed at the rate of fifteen per cent of the periodical charge or surcharge, as the case may be. (e) In case where the rate charged is based on maximum demand the electricity duty shall be computed in accordance with clause (a) and for the purpose of such computation the rate charged per unit shall be arrived at by dividing the rate charged in respect of a month by the number of units consumed in that month : provided that where such maximum demand is related to a period of one year, electricity duty as computed under the preceding clause shall be re-computed at the close of the year on the basis of the average rate charged per unit which shall be arrived at by dividing the total rate charged in respect of the year by the total number of units consumed during that year; and if the electricity duty so re-computed is more than the amount paid in respect of the year on account of electricity duty the difference shall be paid by the consumer within a month from the date of receipt of a demand notice issued in that behalf or if the amount paid is in excess of the duty so re-computed the excess amount shall be refunded to the consumer within one month from the date of completion of the re-computation. " section 4 of the Act provided that the amount of electricity duty levied under Section 3 on the energy consumed by a consumer or any other person shall be payable by and be collected and recovered from the consumer or such person in the manner provided therein. The expression "rate charged" in Section 3 has been defined in Section 2 (g) of the Act. Under S. 2 (g) (v) any surcharge on the rates whether imposed by the licensee, Board, the State Government or the Central Government is not included within the expression "rate charged". The question, therefore, arises is as to what is the authority of the Board to levy duty on delayed payment surcharge? Under S. 2 (g) (v) any surcharge on the rates whether imposed by the licensee, Board, the State Government or the Central Government is not included within the expression "rate charged". The question, therefore, arises is as to what is the authority of the Board to levy duty on delayed payment surcharge? The petitioners' case is that this delayed payment surcharge is nothing but an interest for making the delay in payment and, therefore, cannot be held to be a part of surcharge so as to be liable for leviable of duty thereon, whereas the stand of the State Government is that it is a part of the rate as it is a surcharge on the rate and, therefore, this being a part of the rate, duty would be leviable on the same as the duty under Section 3 (1) is levied on the rate charged. In the context of the dispute between the parties, the first and foremost question that arises for consideration is as to what is the nature of the impost called "delayed payment surcharge"? From the terminology used and on a plain grammatical meaning being given, it would mean an extra payment for not paying the rate charged for consumption of electricity in time. The question as to what is the nature of levy on delay in making the payment of duty came up for consideration before their Lordships of the Supreme Court in the case of Adoni Ginning Factory v. Secretary, Andhra Pradesh Electricity Board, Hyderabad, (1979) 4 SCC 560 . Their Lordships observed that such a levy was not meant to be a penalty, but was a provision for interest by way of compensation for delayed payment. The provision of liability to pay delayed payment surcharge in the Andhra case which was under consideration before their Lordships of the Supreme Court, as noted in the judgment, is somewhat similar to the case in hand. If such levy is held to be in the nature of an interest by way of compensation for delay in making the payment, then it cannot partake the character of rate as contended by the opposite parties so as to enable the opposite parties to levy duty on the same under Section 3 (1) of the 1961 Act. If such levy is held to be in the nature of an interest by way of compensation for delay in making the payment, then it cannot partake the character of rate as contended by the opposite parties so as to enable the opposite parties to levy duty on the same under Section 3 (1) of the 1961 Act. Under Section 3 (1) duty can be levied on the energy consumed by a consumer, which is computed on the basis of the rate charged therefor. Since the delayed payment surcharge has been held by us to an interest by way of compensation for making the delay in payment of the rate charged, and obviously, therefore, is not a part of the rate charged itself, there is no authority for levy of duty thereon under S. 3 (1) of the Act as it stood prior to its amendment which is the relevant provision for deciding the dispute for the period in question. Further under the Act, the rate charged is on the basis of consumption, whereas the delayed payment surcharge is for default in payment of the rate charged. Therefore, both cannot have the same concept. Consequently, since duty is leviable only on the rate charged, the conclusion is irresistible that the duty cannot be levied on default or delay in paying the rate charged. In the case of Cape Brandy Syndicate v. Inland Revenue Commr. , (1921) 1 KB 64, Towlatt, J. stated thus :---"in a Taxing Act one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used. " their Lordships of the Supreme Court in the case of The Commissioner of Income-tax, Madras v. The Ajax Products Ltd. , AIR 1965 SC 1358 , accepted the aforesaid principle and observed : -". . . . . the subject is not to be taxed unless the changing provision clearly imposes the obligation. Equally important the rule of construction is that if the words of a statute are precise and unambiguous, they must be accepted as declaring the express intentions of the legislature. . . . . . . . . the subject is not to be taxed unless the changing provision clearly imposes the obligation. Equally important the rule of construction is that if the words of a statute are precise and unambiguous, they must be accepted as declaring the express intentions of the legislature. . . . . " if Section 3 of the Orissa Electricity (Duty) Act, 1961 is construed bearing in mind the aforesaid rules of construction and in view of our conclusion that the delayed payment surcharge is not the rate charged but is in the nature of an interest paid as compensation, there would be no other option than to hold that duty is not leviable on such delayed payment surcharge. The learned Additional Government Advocate could not point out any other authority under which the duty in question could be levied. In the aforesaid premises, we are of the considered opinion that duty was not leviable on the delayed payment surcharge and such levy and collection is, therefore, wholly unauthorised and consequently, the petitioners are entitled to refund of such duty levied and collected on the delayed payment surcharge for the period 198l till 1985. The contention of Mr. Mohanty appearing for the petitioners, therefore must succeed. ( 7 ) SO far as the duty on imported power is concerned, it however, stands on a different footing, Undisputedly, the Board imports power from outside the State and supplies the same to different consumers including the petitioner-company pursuant to the request made by it. The Orissa Act 9 of 1985 clearly provided for levy of duty on the imported energy. According to Mr. Mohanty, the learned counsel for the petitioners, the said Act provided for computation of the duty on the imported power, but in the absence of a provision in the charging section, the provision for computation will not authorise the levy and it is for that reason, the Legislature introduced the Orissa Ordinance 1 of 1986 and later on replaced the same by Orissa Act 9 of 1986. According to learned Addl. Government Advocate, the subsequent Act was merely in the nature of an explanatory one and it was not passed because under the earlier Act there had been no power to levy. According to the learned Addl. According to learned Addl. Government Advocate, the subsequent Act was merely in the nature of an explanatory one and it was not passed because under the earlier Act there had been no power to levy. According to the learned Addl. Government Advocate, if S. 3 (1) of the Orissa Electricity (Duty) Act, 1961 is read with Orissa Act 9 of 1985, then it must be held that power to levy on imported power was there in the State. It is further argued that since the duty is levied on the consumption, there would be no justification to deny such levy when the consumption of power is made out of energy not generated by the Board or any other licensee, but generated by a neighbouring State. Having considered the relevant provisions of the Act referred to earlier and having considered the rival submissions at the Bar, we find sufficient force in the contention of learned Addl. Government Advocate and we are not persuaded to accept the submission of Mr. Mohanty for the petitioners. In the aforesaid premises, we unhesitatingly reject the submission of Mr. Mohanty for the petitioners and accept the contention raised on behalf of the opposite parties and hold that there was no illegality in the levy of duty on the imported power even prior to the promulgation of Ordinance 1 of 1986. The second submission of Mr. Mohanty for the petitioners, therefore, fails. ( 8 ) IN the result, therefore, the writ application is allowed in part as indicated above so far as the question relating to levy of duty on "delayed payment surcharge" is concerned. There will, however, be no order as to costs. ( 9 ) D. M. PATNAIK, J. :- I agree. Application partly allowed.