M. Karpagavinayagam, J.
1. The question posed before this Court in the above batch of writ appeals and writ petitions is as to whether Tamil Nadu Act 12 of 2003, namely, Tamil Nadu Tax on Consumption or Sale of Electricity Act, 2003 is valid or not?
2. When the batch of writ petitions by the consumers, either individually or by Association or by Corporate Sectors have been filed before the learned single Judge, questioning the validity of the Tamil Nadu Act 12 of 2003, the learned single Judge by the order dated 21.10.2003 dismissed those writ petitions holding that the Tamil Nadu Act 12 of 2003 is valid.
3. The above batch of writ appeals have been filed before this Division Bench challenging the said common order passed by the learned single Judge dismissing those writ petitions in W.P. No. 17223 etc. of 2003. Apart from these writ appeals, a number of writ petitions questioning the validity of the Tamil Nadu Act 12 of 2003 have also been listed before this Division Bench for disposal.
4. The Tamil Nadu Tax on Consumption or Sale of Electricity Act, 2003, that is, the Tamil Nadu Act 12 of 2003 is an Act of the Tamil Nadu Legislative Assembly. The preamble to the Act reads thus:
An Act to consolidate and rationalize the laws relating to the levy of tax on consumption or sale of electricity in the State of Tamil Nadu.
The Act received the assent of the Governor on 17.5.2003 and was published on 19.5.2003 in the Gazette.
5. Section 2 is the definition section. Section 3 is the charging section. In terms of Section 3, every licensee and every person other than a licensee shall pay every month to the Government a tax on the electricity sold or consumed at the rate specified in the said section. Section 4 exempts the sale of energy for consumption to Government, local authority or railway company. Section 5 directs registration of persons, who have installed generating plants for generation of electricity for own consumption. Section 6 provides that licensee may with the previous sanction recover from any person to whom electricity is sold, the electricity taxes, which is to be paid by the licensee in respect of electricity so sold. Section 7 provides for recovery of electricity tax. Section 8 obligates the licensee to keep books of accounts and submit return. Section 9 provides for assessment. Section 10 provides for appeal. Section 11 provides for payment of interest in case of belated payment. Sections 12 and 13 provide the appointment of electricity tax inspecting officers and confer powers on them. Section 14 provides for exemption and reduction of tax. Section 15 provides for conferment of powers on the State Government to frame rules. Sections 17, 18 and 19 provide for offences, compensation, protection to action taken in good faith and penalties. Section 20 provides for repeal and savings. Section 21 directs that the provisions of the Act shall have the effect subject to the provisions of Article 288 of the Constitution.
6. Challenging the validity of the Act 12 of 2003 containing the above provisions and also the common order passed by the learned single Judge, the learned senior counsel appearing for the appellants in separate appeals would make detailed submissions, which could be summed up as follows:
(1) The Tamil Nadu Act 12 of 2003 levying tax on consumption or sale of electricity is invalid for want of assent of the President of India, in view of Article 288(2) of the Constitution of India.
(2) The impugned Act is a colourable piece of legislation for the reason that the State Government and the Electricity Board had already approached the Electricity Regulatory Commission and claimed for fixation of tariff and since the Commission had not acceded to the claim in full, the Government in order to overcome the said situation, has passed the impugned Act, even though the power to fix tariff for electricity exclusively vests with the Commission constituted under the Central Act. On that reason, the Act is liable to be struck down.
(3) The impugned Act is repugnant to Section 29 of the Electricity Regulatory Commissions Act, 1998. The Central Act, 1998 provided for the fixation of tariff for electricity to vest with the Commission. The tariff so fixed should be held to include the entire price payable for the energy. Thus, the impugned State Act which imposes a tax on the sale or consumption of electricity is repugnant to the Central Law. Since the State Act had not received the assent of the President, it is not saved by Article 254(2) of the Constitution. Hence, it is invalid in law.
(4) Under the Tamil Nadu Electricity Taxation on Consumption Act, 1962, some of the appellants were exempted from payment of tax on consumption of self-generated energy. Even though this Act 1962 has been repealed by the present Act, in view of Section 20(2)(a) of the impugned Act, their rights are protected. Therefore, they are entitled to continue the exemption from payment of tax.
(5) In terms of the provisions of the Electricity Regulatory Commissions Act, 1998, when the State Government seeks to increase the tax from 5% in the case of tax on sale of energy and above 10 paise per unit in the case of tax on consumption of electricity, it is incumbent on the State Government to get approval of the Commission even though under Section 3 of the impugned Act fixing the rate of tax at the minimum level need not get approval of the Commission. In this case, no approval for seeking to enhance the tax was obtained. Therefore, it is repugnant to the Electricity Regulatory Commissions Act.
(6) In terms of proviso to Section 3(1)(b) of the Act, no tax shall be payable on the sale of electricity to any Electricity Boards. The said provision cannot be restricted only to the Tamil Nadu Electricity Board. The 'Board' has not been defined in the present Act. Therefore, the definition of the 'Board' occurring in the State Electricity Act will have to be taken into account, which would include all Electricity Boards constituted under the Electricity Supply Act, 1948.
(7) The tax on consumption should be actual consumption. It cannot include the maximum/sanctioned demand charges. As such, the tax on consumption cannot be levied on such electricity which is lost in transmission. The tax on consumption of electricity should be based on the electricity consumed and not on the electricity lost in transmission.
7. The learned senior counsel for the appellants would cite the following authorities to substantiate their pleas:
1) Damodar Valley Corporation v. State of Bihar : [1977]1SCR118 ;
2) Surrinder Singh v. Central Government : [1986]3SCR946 ;
3) South India Corporation (P) Ltd. v. Secretary, Board of Revenue, Trivandrum : [1964]4SCR280 ;
4) The State of Punjab v. Jullundur Vegetables Syndicate : [1966]2SCR457 ;
5) Orissa State Warehousing Corporation v. Commissioner of Income Tax : [1999]237ITR589(SC) ;
6) Sultana Begum v. Prem Chand Jain : AIR1997SC1006 ;
7) Deep Chand v. State of U.P. : AIR1959SC648 ;
8) Jagannath Baksh Singh v. State of U.P. : [1962]46ITR169(SC) ;
9) Union of India v. India Fisheries (P) Ltd. : [1965]57ITR331(SC) ;
10) M.P. Cement Manufacturers' Association v. State of M.P. : (2004)2SCC249 ;
11) Sanjeevayya v. Election Tribunal, Andhra Pradesh A.I.R. 1967 S.C. 1211;
12) W.B. Electricity Regulatory Commn. v. Cesc Ltd. : AIR2002SC3588 ;
13) Atiabari Tea Co. Ltd. v. State of Assam : [1961]1SCR809 ;
14) Chitralekha v. State of Mysore : [1964]6SCR368 ;
15) State of Tamil Nadu v. Adhiyaman Educational & Research Institute 1995 Writ L.R. 549 ;
16) T.K.V.T.S.S. Medical Educational & Charitable Trust v. State of T.N. : [1996]2SCR422 ;
17) Hari Shankar v. U.P.S.E. Board : AIR1974All70
18) Bses Ltd. v. Tata Power Co. Ltd. : (2004)1SCC195 ;
19) State of Punjab v. Mohar Singh A.I.R. 1955 S.C. 84;
20) Gujarat University v. Shri Krishna : AIR1963SC703
21) State of W.B. v. Union of India : [1964]1SCR371 ;
22) Bharat Hydro Power Corporation Ltd. v. State of Assam : (2004)2SCC553 ;
23) Haldiram Bhujiawala v. Anant Kumar Deepak Kumar : [2000]1SCR1247 ;
24) The Jiyajeerao Cotton Mills Ltd. v. State of M.P. 1962 Supp. S.C.R. 282.
8. Mr. N.R. Chandran, the learned Advocate General appearing for the State Government and Mr. R. Muthukumaraswamy, the learned Additional Advocate General appearing for the Electricity Board, while refuting the above submissions, would make detailed arguments justifying the reasoning given by the learned single Judge in the common order. The gist of the reply in nutshell is as follows:
The power to tax the sale or consumption of electricity is traceable to Entry 53 of List II of VII Schedule. It is a State list. So, it is sufficient, if the State gets assent of the Governor. The assent of the President is not necessary. The Central Law of 1998 did not provide any power to levy taxation of electricity. The colourable legislation would not apply to the present case, since the power with reference to the levy of tax on sale or consumption of electricity is not referable to any Entry in List I, the Central Act. The question of repugnancy would not arise as both the Central Act and State Act would relate to the different Entries. Though the Act 1962 provides for the exemption which the appellants availed till it is repealed. Section 20 of the Act would not protect the rights and privileges acquired by the appellants as there is an inconsistency between Act 1962 and the present Act. Merely because the claim made by the State Government before the Commission was not acceded to, the State Government cannot be mandated to get the approval of the Commission in the absence of the provisions acquiring the same. With reference to the tax on the maximum or sanctioned demand charges, it is already decided by the learned single Judge that the Board would not impose tax on the sanctioned demand or 90% of the sanctioned demand and tax would be imposed only for the actual recorded energy demand which was consumed.
9. The learned Advocate General and the Additional Advocate General appearing for the State and Electricity Board respectively would cite the following authorities:
1) Damodar Valley Corporation v. State of Bihar A.I.R. 1976 S.C. 1956;
2) Vijay Kumar Sharma v. State of Karnataka : [1990]1SCR614 ;
3) State of West Bengal v. Purvi Communication Pvt. Ltd. : AIR2005SC1849 ;
4) Surrinder Singh v. Central Government : [1986]3SCR946 ;
5) Gajraj Singh v. State Transport Appellate Tribunal : AIR1997SC412 ;
6) State of A.P. v. National Thermal Power Corporation Ltd. : [2002]3SCR278 ;
7) Aphali Pharmaceuticals Ltd. v. State of Maharashtra : 1989(44)ELT613(SC) ;
8) Jiyajeerao Cotton Mills Ltd. v. State of M.P. : AIR1963SC414 ;
9) Indian Aluminium Co. v. State of Kerala : [1996]2SCR23 ;
10) W.B. Electricity Regulatory Commn. v. Cesc Ltd. : AIR2002SC3588 ;
11) Synthetics & Chemicals Ltd. v. State of U.P. : AIR1990SC1927 ;
12) S.S. Bola v. B.D. Sardana : AIR1997SC3127 ;
13) K.S.E. Board v. Indian Aluminium Co. : [1976]1SCR552 ;
14) Godfrey Phillips India Ltd. v. State of U.P. : (2005)194CTR(SC)257 ;
15) Gujarat Ambuja Cements Ltd. v. Union of India 2005 : [2005]274ITR194(SC) ;
16) Gajraj Singh v. State Transport Appellate Tribunal : AIR1997SC412 .
10. We have carefully considered the submissions and also gone through the order of the learned single Judge as well as the citations.
11. Let us now deal with the points one by one.
12. The first submission referred to above would relate to the absence of the assent from the President under Article 288(2) of the Constitution of India read with Section 21 of the impugned Act. The powers of the Parliament and the State Legislature to enact laws are governed by Articles 245 and 246 read with Schedule VII of the Constitution. The Parliament has exclusive jurisdiction to make laws under Article 246(1) with reference to the matters set out in List I of Schedule VII. Similarly, the State Legislatures in terms of Article 246(3) have the exclusive jurisdiction to make the laws with reference to the matters set out in List II of VII Schedule. In terms of Article 246(3) of the Constitution of India, the power to tax the sale or consumption of electricity is traceable to Entry 53 of List II of VII Schedule. Therefore, the power is traceable to a State list.
13. Article 288 of the Constitution would contain two clauses. Article 288(1) reads thus:
Save insofar as the President may by order otherwise provide, no law of a State in force immediately before the commencement of this Constitution shall impose, or authorise the imposition of, a tax in respect of any water or electricity stored, generated, consumed, distributed or sold by any authority established by any existing law or any law made by Parliament for regulating or developing any inter-State river or river-valley.
Thus, the Article 288(1) provides that the State should not impose any tax in respect of any water or electricity stored, generated, consumed, distributed or sold by any authority established by any law for regulating or developing any inter-State river or river-valley.
14. Article 288(2) reads as under:
The Legislature of a State may by law impose, or authorise the imposition of, any such tax as is mentioned in Clause (1), but no such law shall have any effect unless it has, after having been reserved for the consideration of the President received his assent; and if any such law provides for the fixation of the rates and other incidents of such tax by means of rules or orders to be made under the law by any authority, the law shall provide for the previous consent of the President being obtained to the making of any such rule or order.
The above Article 288(2) provides that the Legislature of a State may by law impose any such tax mentioned in Clause (1), provided it received the assent of the President. In substance, the above article provides that there cannot be a law imposing tax on water or electricity dealt with by an authority regulating or developing any inter-State river or river-valley when the law gets assent of the President.
15. Admittedly, the impugned Act, namely, Tamil Nadu Act 12 of 2003 had not obtained the assent of the President. It means, the impugned Act cannot seek to levy tax on sale or consumption of electricity by any authority regulating or developing any inter-State river or river-valley.
16. Let us now quote Section 3 of the Act, which reads thus:
Tax on the consumption or sale of electricity.--(1) Save as otherwise provided in this Act, every licensee and every person other than a licensee shall pay every month to the Government in the prescribed manner, a tax on the electricity sold or consumed during the previous month at the rates specified hereunder--
(a) In the case of licensees other than captive generating plants, the rate shall be not less than 5% and nor more than 10% of the net charge, as may be notified by the Government:
Provided that no tax shall be paid on sale of electricity for agricultural purposes and but service connections;
(b) In the case of licensees who are captive generating plants, the rate shall be not less than 10 paise and not more than 20 paise per unit of electricity on the consumption for own use; and shall be not less than 5% and not more than 10% on the net charge on the sale of surplus electricity as may be notified by the Government:
Provided that no tax shall be paid on the sale of electricity to the Board.
(c) In the case of a person other than a licensee, the rate shall be not less than 10 paise and not more than 20 paise per unit of electricity on the consumption for own use as may be notified by the Government.
(2) The Government may pay such amount as may be prescribed as collection charge to every person collecting electricity tax under this section;
Provided that such amount shall not exceed one percent of the electricity tax collected by such person.
The reading of Section 3 would indicate that it is a charging section which is general and seeks to levy tax on sale or consumption of electricity from any licensee or any person other than the licensee.
17. The said law would not be enforceable against any authority contemplated by Article 288(1) of the Constitution. In other words, it is only when they seek tax from those authorities, as provided under Section 21 of the impugned Act, the State Government has to obtain assent.
18. This is clear from the reading of Section 4 of the Act. Section 4 reads thus:
Electricity sold for consumption to Government, local authority or Railway Company not liable to Tax.-- Notwithstanding anything contained in this Act, no electricity tax shall be payable under Section 3, on the sale of electricity, by a licensee to--
(a) any Government for consumption by that Government, save in respect of premises used for residential purposes;
(b) (i) any local authority, save in respect of premises used for residential purposes;
(ii) Railway administration as defined in the Railways Act, 1989, save in respect of premises used for residential purposes.
The above Section 4 would provide that the electricity sold for consumption to Government, local authority or railway government not liable to tax. Section 4 thus exempts the Government from taxation liability.
19. Since the Tamil Nadu was meant to cover all persons other than the Government, Railways and authorities dealing with the development of inter-State river, the Act has exempted the Government and Railways in terms of Section 4.
20. Once the said Article 288 of the Constitution of India makes a provision for granting an exemption, it is clear that it will be applicable only to those authorities who fall within the category entitled to exemption. Article 288, in fact, gives an immunity to an authority established by a law made by Parliament for regulating or developing any inter-state river or river- valley from being taxed in respect of any water or electricity stored, generated, consumed, distributed or sold by such an authority. This immunity is specific and directed only in favour of such authority as referred to in Article 288 of the Constitution.
21. In this context, it would be better to quote Article 286 of the Constitution:
Restrictions as to imposition of tax on the sale or purchase of goods.--(1) No law of a State shall impose, or authorise the imposition of, a tax on the sale or purchase of goods where such sale or purchase takes place--
(a) outside the State; or
(b) in the course of the import of the goods into, or export of the goods out of, the territory of India.
(2) Parliament may by law formulate principles for determining when a sale or purchase of goods takes place in any of the ways mentioned in Clause (1).
(3) Any law of a State shall, insofar as it imposes, or authorises the imposition of,--
(a) a tax on the sale or purchase of goods declared by Parliament by law to be of special importance in inter-State trade or commerce; or
(b) a tax on the sale or purchase of goods, being a tax of the nature referred to in Sub-clause (b),Sub-clause(c) orSub-clause(d) of clause(29-A) of Article 366, be subject to such restrictions and conditions in regard to the system of levy, rates and other incidents of the tax as Parliament may by law specify.
22. Thus, it is clear that this Article imposes a total ban against a State from imposing any tax on the purchase outside a State. This prohibition is absolute. Whereas under Article 288 of the Constitution, the State is not prevented from enacting a law, but it is made clear that the law shall not have any effect against the authority mentioned in Article 288 of the Constitution of India unless it receives the assent of the President. Thus, the purpose of the article is to give protection only in respect of the authorities generated, consumed, etc. of the electricity as referred to under Article 288. Therefore, as correctly held by the learned single Judge, the appellants, who are not such authorities described in the article, cannot take umbrage under the said article and consequently, they cannot resist the enforcement of Act 12 of 2003. Hence, the first submission would fail.
23. The second and third submissions may be dealt with together. The second submission is that the impugned Act is a colourable exercise of power. The third submission is that the impugned Act is repugnant to the Central Act, 1998.
24. The colourable legislation is one, which is attempted to by a Legislature to pass a law under the pretext of a subject within its jurisdiction but on scrutiny being found not within its jurisdiction but falling within the jurisdiction of the other.
25. In this case, the Central Act 1998 was meant to provide for establishment of the Regulatory Commission at the Centre and State levels. Section 29 of the Act deals with the power of the Commission to fix tariff. The purpose of establishment of the Commission is to give effect to the common minimum action plan for power. By the aforesaid Act, the tariff which was hitherto fixed under the Electricity Supply Act by the Electricity Board, was taken over and directed to be fixed by the Commission. This law relating to electricity is referable to Entry 38 of List III, namely the concurrent subject. In other words, Entry 38 is not a taxing entry. As a matter of fact, there is no taxing power in List III. The Central Law of 1998 did not provide for any power to levy taxation on electricity. As indicated above, the power to tax on sale or consumption of electricity is specifically found in Entry 53 of List II (State List).
26. The tariff to be fixed by the Commission related only to the price for the energy to be supplied by the licensees. In these circumstances, the question of the said tariff including the taxation would not arise. On the other hand, if we examine the impugned Act and in particular, the charging section found in Section 3, it would be clear that the levy contemplated is a tax on the sale or consumption of electricity which is exactly the same subject found in Entry 53 of List II.
27. Under the Act 12 of 2003, the term 'tariff' has been defined in Section 2(14) of the Act. This means, a tariff leviable on consumption as fixed by the Commission. The tax is levied on the tariff. Therefore, it cannot be treated as a part of the tariff.
28. In this context, it would be worthwhile to refer to the observation made by the Supreme Court in S.S. Bola v. B.D. Sardana : AIR1997SC3127 , which clearly explains what is the meaning of a colourable legislation:
Colourable legislation is one where the legislature has no power to legislated on an item either because it is not included in the List of the respective Entries in the Seventh Schedule to the Constitution in respect of which it has competence to enact the law, or on account of limits imposed either in Part III of the Constitution relating to fundamental rights or any other power under the Constitution or in violation of the principle of basic structure of the Constitution. If on an examination of the Act, the Court finds that the legislature has travelled beyond its power or competence or in transgression of the limits imposed by the Constitution itself, such an enactment is called colourable legislation. In other words, it has a refernce to the legislative incompetence and not to the power of the legislature as such. If the legislature enacts the law in the pretext of the exercise of the legislative power though actually it does not possess such power, the legislation to that extent either is void or become voidable on a declaration to that effect by a Constitutional Court. It would, therefore, be said that the Legislature enacts the law in purported colourable exercise of its power.
29. In the light of the above observation, it can be safely concluded that in the instant case, the law in question is with reference to the subject tax on sale or consumption of electricity which is squarely within Entry 53 of List II and not referable to any Entry in List I and as such, the question of colourable legislation does not arise.
30. Similarly, the contention of repugnancy is also baseless. The question of repugnancy would arise only when both the laws are enacted on the same entry. The question of repugnancy between one law and another would arise only if both the laws of the Parliament and the State Legislature are referable to an Entry in List III. As indicated above, the Central Law is referable to Entry 38 List III while the State Law falls under Entry 53 List II. In these circumstances, no question of repugnancy would arise.
31. Let us now come to the fourth submission. This would relate to the saving of exemption already granted. Prior to the impugned Act, there were two enactments, namely, Electricity Duty Act, 1939 and Tamilnadu Electricity Taxation and Consumption Act, 1962. The Electricity Duty Act, 1939 imposed tax on sale of electricity without any provision for exemption. The Consumption Act, 1962, which levies tax on consumption of electricity, provides for the exemption. The appellants had availed exemption till the passing of the impugned Act in terms of which both the Duty Act and the Consumption Act had been repealed.
32. It is contended that though this Act has been repealed, in view of Section 20(1) of this Act, namely, Act 12 of 2003, by the saving clause, the exemption granted will continue to enure to the benefit of the grantees, despite the repeal. On the other hand, it is argued on behalf of the Government that if they are able to show that the new Act is inconsistent with the repealed enactments or that the exemption orders issued under the repealed enactments cannot be deemed to have been issued under the new enactment, such orders will not continue to be in operation.
33. There is no dispute in the fact that the Duty Act, 1939, which provided for tax on sale of electricity, did not contain any provision for exemption. Only the Consumption Act, 1962, which imposed tax on consumed, provided for exemption.
34. However, Section 14 of the new Act contemplates exemption only with reference to the tax on the sale of electricity for consumption and not on the tax on consumption of electricity. Section 14 reads thus:
Exemption and reduction of tax.--The Government may, by notification, make an exemption or reduction in rate in respect of the electricity tax payable under this Act on electricity sold for consumption by or in respect of any--
(i) institution or class of person;
(ii)place of public worship, public burial or burning ground or other place for the disposal of the dead;
(iii) premises declared by the State Government to be used exclusively for purposes of public charity;
(iv) vessel whether seagoing or inland.
35. Now, it is relevant to quote Section 20, which reads as follows:
Repeal and savings.--(1) The Tamil Nadu Electricity Duty Act, 1939 and the Tamil Nadu Electricity (Taxation on Consumption) Act, 1962 is hereby repealed.
Provided that such repeal shall not affect--
(a) the previous operation of the said Acts or anything duly done or suffered thereunder;
(b) any right, privilege, obligation or liability, acquired, accrued or incurred under the said Act.
(c) any penalty, forfeiture or punishment incurred in respect of any offence committed against the said Acts;
(d) any investigation, legal proceeding (including assessment proceeding) or remedy in respect of any such right, privilege, obligation, liability, forfeiture or punishment as aforesaid and any such investigation, legal proceeding or remedy may be instituted, continued or enforced and any such penalty, forfeiture or punishment may be imposed as if this Act had not been passed;
(2) Notwithstanding such repeal,--
(a) anything done or any action taken or purported to have been done or taken including any rule, notification, inspection order or notice made or issued or any direction given under the repealed laws, shall so far as it is not inconsistent with the provisions of this Act, be deemed to have been come or taken under the corresponding provisions of this Act;
(b) any duty levied under the repealed Tamil Nadu Electricity Duty Act, 1939 and the rules made thereunder during the period prior to the commencement of this, but not collected, may be recovered in the manner provided under the repealed Act and rules made thereunder;
(c) any tax levied under the repealed Tamil Nadu Electricity (Taxation on Consumption) Act, 1962 and the rules made thereunder during the period prior to the commencement of this Act, but not collected, may be recovered in the manner provided under the repealed Act and the rules made thereunder.
(3) For the removal of doubts it is hereby declared that nothing in Sub-section (1) shall be constituted as preventing any person from claiming refund of any tax or duty paid by him in excess of the amount due from him under the repealed Acts and the rules made thereunder.
36. The above Section 20, which is the repealed provision, contains three sub-sections. Sub-section (1) protects the rights, privileges etc. acquired or accrued under the repealed enactments. Sub-section 2(a) provides for continuation of such rules, notifications etc. issued under the repealed laws in so far as it is not inconsistent with the provisions of the new laws and such orders can be deemed to be done under the corresponding provisions of the new Act. Sub-section (2) of Section 20 would make it clear that it is only such of those notifications, orders issued under the repealed Act, which are consistent with the new Act that would continue in force and only the said orders, Rules, notifications can be deemed to have been issued under the corresponding provisions of the new Act.
37. However, in this case, as indicated above, there is an exemption as provided in Section 14 only with reference to the tax on the sale of electricity and not on the tax on consumption of electricity. Thus, it is clear that there is clear inconsistency between the Acts that have been repealed and the repealing Act of 2003. In these circumstances, in view of Section 20(2)(a) of the impugned Act, the exemption orders would cease to be valid on the coming into force of the new Act. Hence, the appellants cannot take advantage of Section 20(1) of the Act.
38. The next submission would relate to the failure of the State Government to get the approval of the Regulatory Commission, while increasing the tax from 5% in the case of tax on sale of electricity and above 10 paise per unit in the case of tax on consumption of electricity.
39. It is pointed out by the learned senior counsel appearing for the appellants that though the Act as such, as per Section 3 of the Act fixing the rate of tax at the minimum level need not get approval of the Commission. The State Government has to get the approval of the Commission when the Government seeks to enhance the tax, or otherwise, it would be repugnant to the Central Act.
40. As correctly pointed out by the counsel for the appellants themselves, the provisions of the impugned Act, particularly the charging section, i.e. Section 3 do not contemplate approval of the Commission for the State Government to issue a Notification fixing the rate of tax within the minimum and the maximum contemplated by the Act.
41. The impugned Act is a law relating to tax on sale or consumption of electricity, which is a subject wholly falling within the purview of the State Legislature under Entry 53 List II of the VII Schedule of the Constitution. It is well established rule that the tax law would have to be construed with reference to the provisions contained therein and there cannot be any interference or addition to the said provisions unless the language of the Act contemplated such addition. Therefore, even assuming that the Commission has not approved some claims, in the absence of any provision either in the impugned Act or in the Electricity Regulatory Commissions Act indicating the requirement to consult the Commission or to obtain the approval, there is no question of the State Government requiring to get the approval of the Commission for enhancement of the rate of taxes.
42. In this context, it would be better to refer to some of the observations made by the Supreme Court in the following authorities:
(i) In Aphali Pharmaceuticals Ltd. v. State of Maharashtra : 1989(44)ELT613(SC) , it is held thus:
The High Court accepted the submission that it provided a self-contained definition of 'patent and proprietary medicines' for the purpose of the main Act and severed the connection between the provisions of the Drugs Act as was contemplated in earlier Explanation I, and consequently one need not look to the Drugs Act at all for its interpretation and the Schedule was thence to be interpreted as it existed along with that self-containing definition in Explanation I. In doing so, the position that Patent and Proprietary medicines' means 'any medicinal preparation' which very 'Medicinal preparation' includes all drugs which are a remedy or prescription etc. as defined in Section 2(g) of the Act. So a reference to the Drugs Act was still necessary. No doubt this is an inclusive definition. To enlarge its denotation a specific provision to include Ayurvedic preparations containing self-generated alcohol which are not capable of being consumed as ordinary alcoholic beverages was necessary. That having not been done by the Explanation itself, it was not permissible to include it by the Circular. The Explanation I could not have been in conflict with the provisions of the Act and the Circular could not have been in conflict with the Explanation, the Schedule, the Rules and the Act. (ii) In Godfrey Phillips India Ltd. v. State of U.P. : (2005)194CTR(SC)257 , it is observed as follows:
Under the three lists of the Seventh Schedule to the Indian Constitution a taxation entry in a legislative list may be with respect to an object or an event or may be with respect to both. Article 246 makes it clear that the exclusive powers conferred on Parliament or the States to legislate on a particular matter includes the power to legislate with respect to that matter. Hence, where the entry describes an object of tax, all taxable events pertaining to the object are within that field of legislation unless the event is specifically provided for elsewhere under a different legislative head. Where there is the possibility of legislative overlap, courts have resolved the issue according to settled principles of construction of entries in the legislative lists. (iii) In Gujarat Ambuja Cements Ltd. v. Union of India : [2005]274ITR194(SC) , it is held as under:There is a distinction between the object of tax, the incidence of tax and the machinery for the collection of the tax. The distinction is important but is apt to be confused. Legislative competence is to be determined with reference to the object of the levy and not with reference to its incidence or machinery.... The substance of the impugned Act must be looked at to determine whether it is in pith and substance within a particular entry whatever its ancillary effect may be. ... Where the encroachment is ostensibly ancillary but in truth beyond the competence of the enacting authority, the statute will be a colourable piece of legislation and constitutionally invalid. ... Apart from passing the test of legislative competency, the Act must be otherwise legally valid and would also have to pass the test of constitutionality in the sense that it cannot be in violation of the provisions of the Constitution nor can it operate extraterritorially.
43. In the light of the above observations, it has to be concluded that the provisions of the impugned Act do not contemplate any such approval of the Commission for the State Government for enhancing the rate of taxes within the minimum and the maximum contemplated by the Act. Hence, this point also would fail.
44. The next point would relate to the terms of proviso to Section 3(1)(b) of the Act. Under this provision, no tax shall be payable on the sale of electricity to any Electricity Boards and that the said provision cannot be restricted only to Tamil Nadu Electricity Board.
45. It is contended that the word 'Board' has not been defined in the present Act and in the circumstances, the definition of the 'Board' occurring in the Electricity Supply Act will have to be taken into account, which would include all the Electricity Boards constituted under the Electricity Supply Act, 1948.
46. It is true that the word 'Board' has not been defined in the impugned Act. The said word has been defined in the Electricity Supply Act. It means, the State Electricity Boards are constituted under the Electricity Supply Act. It therefore appears that the sale of electricity to the State Electricity Boards will not be taxable.
47. Challenging the exemption granted to the Board as discriminatory would not be a valid ground to challenge the validity of the Act. The Electricity Board stands in a different footing from the other generating units as it is a State as per Article 12 of the Constitution. Further, this Act grants exemption for the sale of electricity for agricultural purposes and house service connections also. The Government as per this Act has also issued a Notification exempting the tax for domestic purposes.
48. It is submitted that as a matter of fact, no tax is levied on the supply of electricity by the private generating unit to the Board. The tax is levied only on the portion of electricity consumed for their own use at a rate prescribed under the Act. So, this point also is devoid of merit.
49. The next submission is that the tax on consumption should be actual consumption only and it cannot include the maximum/sanctioned demand charges and the tax on consumption cannot be levied on such electricity, which is lost in transmission.
50. As a matter of fact, as pointed out by the learned Advocate General, the learned single Judge has considered this issue and held that the tax is on actual consumption only.
51. There are two types of consumption, one is Low Tension consumers and another is High Tension consumers. In the case of Low Tension consumers, electricity charges are collected on the basis of the electricity consumed by the consumer, which is recorded in the meter. In the case of High Tension consumers, the tariff charges are based on two part tariff. Firstly, energy charges based on the meter reading and secondly, demand charges. In the case of High Tension consumers, they seek sanction for the load depending on the machinery. The Board after considering the application, sanctions the claim. This is called sanctioned demand. After the sanction, the Board creates proper infrastructure to enable the Board to supply the electricity through their Sub-stations.
52. With regard to the High Tension connections, a twin tariff system is adopted, one rate as per KVA for each unit consumed, the other rate is on permitted demand as per KVA. It is pointed out that as per the definition of maximum demand, the same is determined on the energy delivered at a point of supply. Even though the tariff is collected on the permitted demand, the tax is levied only on the maximum demand, that is, on the energy consumed.
53. Now, it is submitted by the learned Advocate General that the maximum demand is what is really consumed by them as against the permitted demand and therefore, the taxes are imposed only on the demand charges and it is based on actual consumption.
54. This statement by the learned Advocate General has been recorded by the learned single Judge himself in paragraph 40 of his order. Therefore, it cannot be contended that the levy is not valid.
55. In view of the discussion made above, we do not find any reason to hold that the order of the learned single Judge upholding the validity of the Act 12 of 2003 would suffer from any infirmity. In our view, the reasonings given by the learned single Judge in his order are perfectly justified.
56. Hence, all the writ appeals and the writ petitions are dismissed. Consequently, connected WAMPs., WVMPs and WPMPs. are closed. No costs.