G.P. Singh, C.J.
1. The question raised in this petition under Article 226 of the Constitution relates to the proper rate of electricity duty chargeable in respect of electrical energy consumed by the petitioner in crushing limestone blocks into small fragments.
2. The petitioner is a Public LimitedCompany. It owns inter alia a cementindustry which is engaged in the activityof manufacturing and sale of cement inthe name and style of M/s. SatnaCement Works. The petitioner's cementfactory is situated at Satna in MadhvaPradesh. The petitioner uses limestoneas raw material for manufacture of cement. The limestoneso used is extracted from the limestonemines of the petitioner which are heldunder a lease granted to it by the Stateof Madhya Pradesh under the Minesand Minerals (Regulation and Development) Act, 1957, as a major Mineral.The mining lease granted to the petitioner covers 10 square kilometerswhich can be used for the sole purposeof setting limestone as raw material formanufacture of cement in its cementfactory. The petitioner has two crushingunits for crushing limestone to manufacture cement. One crushing unit is in thefactory premises and the other is installed in the premises of the mining lease.The limestone blocks of uneven shapesknown as Dhokas extracted from minesare crushed by the crushing units intosmall fragments called gittis. The gittisso obtained are used in the manufactureof cement in the factory of the petitioner.
3. The petitioner consumes electricity for operating the crushing units. The petitioner has to pay electricity duty on the electrical energy consumed in the crushing units. The electrical energy consumed is partly produced by the petitioner and partly purchased in bulk from the Madhya Pradesh Electricity Board. The duty on electrical energy generated and consumed by the petitioner is paid directly to the State Government and the duty on electrical energy purchased from the Electricity Board is paid through the Board to the Government. The electricity duty is charged under the Madhya Pradesh Electricity Duty Act, 1949 as amended by the Madhya Pradesh ElectricityDuty (Amendment) Act, 1978, (Act No. 21 of 1978). This amending Act which increased the rate of duty came into force on 1st October 1978. The petitioner has been, required to pay electricity duty in respect of electrical energy consumed in the crushing unit located in the mining lease area at the rate of 12 paise per unit from September 1978. The main contention of the petitioner in this petition is that the proper rate of duty under the Schedule in Section 3 of the Electricity Duty Act applicable for electrical energy consumed in the crushing unit located in the mining lease area is 3 paise per unit and not 12 paise per unit.
4. Section 3 of the Electricity Duty Act as substituted by the Amending Act of1978, reads as follows:
'3. Low of duty on sale or consumption of electrical energy : Subject 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 time and in the prescribed manner a duty calculated at the rates specified in the Table below on the units of electrical energy sold or supplied to a consumer or consumed by himself for his own purposes or for purposes of his township or colony, during the preceding month.'
The Table which is a part of Section 3 and which contains the rates of duty in so far as relevant reads as follows:
TABLE
Rates of Duty
(1) Electrical energy sold or supplied for consumptionin premises used. -
(a) for business, trade or commercial purposes or forpurposes of professional pursuits other than for flour mills.
8 paise per unit of energy up to 50 units ofenergy sold or supplied in a month.
10 paise per unit for each additional unit sold orsupplied in a month in excess of 50 units but hot in excess of 100 units ofenergy. 12 paise Per unit for each additional unit sold or supplied in a monthin excess of 100 units of energy.
(b) for flour mills
2 paise per unit of energy.
(2) Electrical energy sold or supplied for consumptionin premises of a factory excluding energy supplied for consumption for domesticor non-factory purposes where the connected load
(a) does not exceed 100 HP
1.5 paise per unit of energy.
(b) exceeds 100 HP
3 paise per unit, of energy.. .... .... .... ...
(51 Electrical energy sold or supplied forconsumption in premises and for purposes not covered under items (1) to (4) above.
6.5 paise per unit of energy up to 50 units ofenergy sold or supplied in a month.
7 paise per unit of each additional unit sold orsupplied in a month in excess of 50 units but not in excess of 150 units ofenergy. 12 paise per unit for each additional unit sold or supplied in amonth in . excess of 150 units of energy.
Provided that if the electrical energy supplied for consumption for any one purpose is used either wholly or partly, without the consent of the distributor of electrical energy or producer of electricity, as the case may be, for consumption for any other purpose for which a higher rate of duty is chargeable, the entire energy sold or supplied shall be charged at the highest rate applicable.
Explanation.-- For the purpose of this section,
(a) 'month' means such period as may be prescribed and till such period is prescribed, the billing month;
(b) 'Premises used for business, trade, commercial purposes or for purpose of professional pursuits' shall include the premises used-
(1) for the purposes of mines to which Mines Act, 1952 (No. 35 of 1952) applies;
(2) for the purposes of industries which do not require raw materials for carrying on the industries but which are carried on for rendering services such as flour mill, repairs workshop and the like and are not registered as factories under the Factories Act. 1948 (No. 63 of 1948);
(c) 'Factory' means a factory registered under the Factories Act, 1948 (No. 63 of 1948); and includes premises used for the purposes of industries which require raw materials for carrying on the manufacturing process and prepare finished goods for sale.'
5. There is no dispute that the duty payable on the electrical energy consumed in the petitioner's crushing unit in the factory premises is chargeable under Clause (2) of the Table at the rate of 3 paise per unit. The petitioner's stand is that the same rate of duty is applicable for electrical energy consumed in the crushing unit in the mining lease area.
6. Clause (1) (a) for the table provides the rate of duty for electrical energy consumed in premises used for business, trade or commercial purposes or for purposes of professional pursuits other than for flour mills. Clause (b) (1) of the Explanation occurring at the foot of the table says that premises used for business, trade, commercial purposes or for purpose of professional pursuits 'shall include the premises used for thepurposes of mines to which Mines Act, 1952 applies'. Clause (1) (a) read with Explanation (b) (1) shows that electricity consumed in premises used for the purposes of mines to which the Mines Act applies is chargeable at the rate of 12 paise per unit. The definition of 'mine' contained in Section 2(1)(j)(x) of the Mines Act includes 'any premises or part thereof in or adjacent to and belonging to a mine, on which any process ancillary to the getting, dressing or preparation for sale of minerals or coke is being carried on'. The respondents' case is that the premises within the mining lease area where the petitioner's crushing unit is located are a mine as the crushing of limestone is a process ancillary to the getting, dressing or preparation for sale of limestone within Section 2(1)(j)(x) of the Mines Act and so the rate of duty chargeable for the electrical energy consumed in this crushing unit is 12 paise per unit in accordance with Clause 1 (a) of the table read with Explanation (b) (1). The stand of the petitioner, on the other hand, is that the electrical energy consumed in the crushing unit in the mining lease area should also be charged under Clause (2) of the table at the rate of 3 paise per unit. It is submitted that Clause (2) of the table has to be read with Explanation (c). which enlarges the definition of 'factory' by including within it 'premises used for the purposes of industries which require raw materials for carrying on, the manufacturing process and prepare finished goods for sale'. It is further submitted that the premises in the mining lease area where the crushing unit is located come within the extended definition of factory being used for the purposes of cement industry which requires limestone as raw material for carrying on the manufacturing process in preparing cement for sale. It is argued that the crushing of limestone in the crushing unit is not a mining operation nor it is a process ancillary to the getting, dressing or preparation for sale of limestone and that it is a process ancillary to the manufacture of cement, In this connection it is pointed out that breaking of limestone into small pieces is the first step in the manufacture of cement. Reference is also made to the decision of the High Court of Australia in Federal Commr. of Taxation v. Broken Hill Pry, Col. Ltd. 120 CLR 240.
7. A perusal of Clause. (1) and (2) of the table contained in Section 3 of the Electricity duty (as amended by M. P. Act No. 21 of 1978). Act along with the Explanation in the table goes to show that the intention is to provide a low rate of duty for electrical energy consumed in a factory registered under the Factories Act and premises used for the purposes of industries which require raw materials for carrying on the manufacturing process in preparing finished goods for sale. The definition of 'factory' as contained in Explanation (c) in the table includes such premises. In one sense, consumption Of electrical energy in a factory or any such premises, is consumption for business, trade or commercial purposes, falling under Clause (1) of the table. But as the rate of duty for electrical energy consumed in premises of a factory includ-ng premises used for the purpose of industries which require raw materials lor carrying on the manufacturing process is specifically dealt with in Clause (2), the general provisions of Clause. (I) are not applicable to such cases. The purpose behind CIause (2) in providing a low rate of duty is obviously to encourage industries which use raw materials for carrying on manufacturing business. As already seen the definition of factory as gi'ren in Explanation (c) extends the meaning of factory by including in the definition 'premises used for the purposes of industries which require raw materials for carrying on the manufacturing process and preparing finished goods for sale.' The last sixteen words in this definition beginning with 'which require' and ending with 'for sale' qualify the word 'industries' and not the word 'premises'. In other words, it is not necessary for any premises to come within the extended definition that they be used for carrying on the manufacturing process and preparing finished goods for sale. All that is necessary is that the premises should be used for the purposes of an industry which requires raw materials for carrying on the manufacturing process and prepares finished goods for sale. The industry in the instant case is the cement manufacturing industry. This industry requires raw materials for carrying on the manufacturing process in preparing finished goods for sale. If any premises are used for this industry, they will fall within the extended definition of factory, eventhough the manufacturing process is not carried on there. It is also not necessary that the promises falling within the extended definition be registered as a factory. Directing our attention to the crushing unit in the mining lease area. we find that the purpose of crushing limestone for converting Dhokas into gittis is for the purposes of the cemont industry. The gittis obtained after crushing Dhokas are sent to the factory premises where they are used for manufacture of cement. In this connection it is to be taken notice of that the first step in the manufacture of cement is the breaking of the raw material i.e. limestone into small pieces, (see Text Bonk of Inorganic Chemistry for students of Indian Union p. 417, by Dr. Singh, Dr. Saxena & Singh; New Encyclopaedia Britannica Macropaedia, Vol. III. P. 1076). The crushing unit which is installed in the mining lease area is thus used for the purposes of cement industry and falls within the extended definition of factory as contained in Explanation (c) of the table. Therefore, the rate of duty applicable to the electrical energy consumed in the crushing unit would be as given in Clause (2) of the table which applies when electrical energy is sold or supplied for consumption in premises of a factory.
8. Let us now examine if. as contended by the learned counsel for the respondents, Clause (1) of the table read with Explanation (b) (1) can be applied for electrical energy consumed in the crushing unit in the mining lease area. Cl, (1) read with the Explanation will' Cover cases where electrical energy is. consumed in premises used for the purposes of mines to which Mines Act applies. The question is whether the purpose of crushing Dhokas into gittis for which electrical energy is consumed in the crushing unit is a purpose of the mine. It is true that the definition of; mine under Section 2(1)(j)(x) of the Mines Act covers premises belonging to a mine on which any process ancillary to the get ting, dressing or preparation for sale of minerals or of coke is being carried on. The difficulty, however, is that the crushing of Dhokas into gittis is not for preparation for sale of mineral for the gittis are not sold and, indeed, cannot: be sold under the terms of the lease. They are used by the petitioner in its factory. Further, the process of crushingDhokas into gittis cannot be described as ancillary to getting or dressing the mineral which in the instant case is limestone. In Federal Commr. of Taxation v. Broken Hill Pry. Co. Ltd., 120 CLR 240 (supra) the High Court of Australia by a majority decision (Barwick, C. J. McTiernan and Menzies, JJ.) laid down that the concept of mining operation cannot be extended to what is merely the treatment of the mineral recovered for the purposes of better utilisation of that mineral. Illustrating this it was observed:
'Thus to crush bluestone in stone crushing plant so that it can be used for road making, or to fashion sandstone so that it becomes suitable for building a wall or a town bali is not. as we see it, a mining operation. Nor would cutting of diamonds or opals which have been recovered by mining operations fall within the description of mining operation'. (P. 273).
The High Court of Australia went a step further in North Australian Cement Limited v. Commr. of Taxation, (1969} 43 Aus LJ 303 where a learned single Judge (Menzies, J.) held that the winning of limestone in an open cut working by a manufacturer of cement for use in making cement is not a mining operation upon a mining property. We are not prepared to go that far for in the Indian law mining operation, will cover any activity by which a mineral is extracted or secured and it need not be a hazardous or perilous operation. For example, extraction of sand and gravel deposited on surface involves mining operation (Bhagwan Dass v. State of U. P., AIR 1976 SC 1393. We have, however, no hesitation, in accepting the proposition laid down in Federal Commr. of Taxation v. Broken Hill Pry. Co. Ltd. (supra) that the concept of mining operation will not cover what is merely the treatment of the mineral recovered for the jbetter utilisation of that mineral. Applying this principle, we are unable to hold that the process of crushing limestone Dhokas into gittis for being used for manufacture of cement can be described as mining operation or a process ancillary to getting or dressing or preparation for sale of the mineral limestone within. Section 2(3)(x) of the Mines Act. It is, therefore, not possible to accept the contention of the respondents that the electrical energy consumed in the crushing unit in the mining lease area can be charged with duty at the rate mentioned in Clause (1) (a) of the table in Section 3 of the Electricity Duty Act.
9. The respondents were not justified in charging the petitioner duty at the rate of 12 paise per unit for electrical energy consumed in the crushing unit in the mining lease area for which the correct rate of duty is 3 paise per unii as provided in Clause (2) of the table in Section 3.
10. Learned counsel for the petitioner advanced one more contention that electrics energy consumed in September should not be charged at the rate enhanced by the Amending Act. It is submitted that the liability to pay the duty arose when the electrical energy was consumed and as the increase in the rate of duty by the Amending Act 1978, which came into force on 1st October. 1978, applied to the electrical energy consumed after that date, the petitioner is not liable to pay the increased rate for September. We are unable to accept this conttention. The relevant provision is Section 3 of the Amending Act which we have already quoted. The duty payable every month, according to Section 3, is on the electrical energy consumed during the preceding month. The rate of duty, however, must apply in accordance with the table in force in the month when the duty is paid. The new section along with the table started speaking from 1st October when it was brought into force by a notification. The duty payable in the, month of October in accordance with this table was at the rate specified in the table on the units of electrical energy consumed 'during the preceding month' i.e. the month of September and on this basis the electrical energy consumed in September became chargeable to the rate of duty as in force from the month of October.
11. The petitioner has prayed for the refund of duty paid in excess. The petitioner paid duty at the rate of 12 paise per unit for the period between September 1978 and May 1979. From the month of June 1979, the petitioner started depositing duty at the rate of 3 paise per unit. The respondents, however, did not accede to the petitioner's contention and demanded the excess amount of duty. The petitioner then filed the present writ petition. On a motion for interimstay, we passed the following order on 16th July 1981 :
'The petitioner shall so on depositing the electricity duty at the rate of 12 paise per unit. In case the petition is ultimately decided in favour of the petitioner, the duty paid in excess of 3 paise per unit will be refunded. Shri Tamas-kar. Govt. Advocate, and Shri Jaiswal, counsel for the Electricity Board give undertaking that the same will be refunded. The petitioner is allowed to pay the arrears of duty in excess of 3 paise per unit in three monthly instalments Within three months.'
We were informed that in pursuance of this order, the petitioner paid the duty in excess of 3 paise per unit for the period from June 1979 to June 1980 in three instalments. The petitioner has also paid duty thereafter as directed by us at the rate of 12 paise per unit during the pendency of this petition. The petitioner is clearly entitled to refund of the amount of duty paid in excess of 3 paise per unit from September 1978 lip to date. Learned counsel for the petitioner prayed for grant of interest on the amount to be refunded. We do not however, think that it would be just and proper to allow interest on the excess amount which the petitioner deposited without any protest though under mistake i.e. for the period from September 1978 to May 1979. But the petitioner is entitled to get interest at the rate of 6 per cent on the excess amount of duty deposited thereafter in accordance with the interim order of this Court from the date of deposit till refund of the amount.
12. The petition is allowed. We declare that the duty for electrical energy consumed from September 1978 in the crushing unit located in the mining lease area was payable at the rate of 3 paise per unit under Clause (2) of the table in Section 3 of the Madhya Pradesh Electricity Duty Act, as amended by Act No. 21 of 1978. We further direct the State Government to refund the duty paid or recovered in excess of 3 paise per unit directly or through the Electricity Board for the period from September 1978 up to date in respect of the electrical energy consumed in the said crushing unit, with interest at 6 per cent from the date of recovery till payment in respect of the excess for the period fromMay 1979 up to date. The petitioner shall also be entitled to the costs of this petition. Counsel's fee Rs. 500, if certified. Security amount be refunded to the petitioner.