BIHAR STATE ELECTRICITY BOARD AND ANR. versus USHA MARTIN INDUSTRIES AND ANR.

Citation: [1997] SUPP. 1 S.C.R. 279 · Decided: 08-05-1997 · Supreme Court of India · Bench: S.C. SEN, K.T. THOMAS · Disposal: Dismissed After

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Judgment (excerpt)

' 
BIHAR STATE ELECTRICITY BOARD AND ANR. 
A 
v. 
USHA MARTIN INDUSTRIES AND ANR. 
MAY 8, 1997 
(S.C. SEN AND K.T. THOMAS, JJ.] 
B 
Electricity (Supply) Act, 1948: Section 49. 
Tariff-Fixation of-Central Excise duty on electricity abolished-How-
ever, unifonn tariff not reduced-Held: Entire price inclusive of central excise C 
duty would be the unifqmz tariff-Therefore, even if central excise duty is 
abolished, Board not liable to reduce uniform tariff-As there is no agreement 
regarding such reduction S.64-A of Sale of Goods Act, not applicable-Sale 
of Goods Act, 1930, S.64-A. 
Constitlltion of India 1950: Article 226. 
D 
Judicial review-Fixation of price-Held: Fixation of electricity tariff is 
a statlltory power confe"ed on the Electricity Board and State Govern-
ment-Therefore, High Court cannot lay down what sho_uld be the proper 
price and direct the Board to reduce the tariff accordingly-Fixation of tariff E 
is a matter of policy. 
The appellant-Board after imposition of Central Excise Duty on 
production of electricity at the rate of 0.02 paise per unit, did not revise 
F 
the uniform tariff, but decided to levy a surcharge. of 0.03 paise per unit 
even though the duty payable was only 2 paise per unit. Reasons have been 
given in justification for surcharge of 3 paise per unit even though the duty 
levied was only 2 paise per unit, which were found valid by the High Court. 
Subsequently, the surcharge was merged in uniform tariff by a notification 
issued by the Board. Later on the Central Excise Duty on electricity was 
abolished. The High Court held thafthe charge levied by the appellant· G 
Board for supply of electricity to the respondents was excessive as the 
uniform tariff was not reduced _even when the Central Excise Duty on 
electricity was abolished. Being aggrieved the appellant-Board preferred 
the present appeal. 
Allowing the appeal, this Court 
279 
H 
280 
SUPREME COURT REPORTS [1997] SUPP. 1 S.C.R. 
A 
HELD: 1.1. The respondent is the purchaser of electricity. The price 
it pays will include cost of production, profits plus taxes. But the purchaser 
pays nothing but the price. The consideration for the sale of electricity is the 
price charged by the Board. The sale price would be the entire price in· 
clusive of excise duty because that would be the consideration payable by the 
B purchaser for the sale of goods. There is no dispute that the uniform tariff 
was fixed in conformity with the principles contained in Section 49 of the 
Electricity (Supply) Act, 1948. Along with other costs incurred by it, the 
Board also took into account the excise duty payable by the Board. It is not 
the case of the respondent-Company that the Board is making excessive 
profit or any profit at all. The excise duty is only one small item in the total 
C expenditure incurred by the Board for generation of electricity. There is no 
law, which requires the Board to reduce the tariff, if any one of the items of 
expenditure incurred by the Board has been reduced. (288-C-D; G-HJ 
Hindustan Sugar Mills v. State of Rajasthan & Ors., (1978) 4 SCC 271; 
D Parag Ice & Oil Mills v. Union of India, [1978) 3 SCR 293; Rohtas Industries 
Ltd. v. Chairman, Bihar State Electricity Board & Ors., (1984) Supp. SCC 
161, relied on. 
E 
Love v. Norman Right (Builders), Ltd., (1944) 1 All ER 618, referred 
to. 
1.2. The applicability of Section 64-A of the Sale of Goods Act, 1930 
will depend upon the agreement between the parties. No evidence was led 
before the au.thorities below to show that the parties intended that the relief 
of excise duty if abolished or reduced would be passed on to the consumers. 
It was specifically stated in one of the clauses of Tariff Notification, that if 
F the excise duty were enhanced, the tariff would be raised. No provision was 
made for reduction of tariff under any circumstance. The specific provision 
for raising tariff in case of enhancement of excise duty and absence of any 
such provision for reduction of tariff in case of lowering or abolition of 
excise duty go to show that there was no intention on the part of the Board 
G to reduce the tariff in case of lowering or abolition of the excise duty. The 
provision of Section 64-A can only apply if intention to the contrary did not 
appear from the terms of the contract. (286-D-G] 
2.1. Moreover, the tariff is fixed by exercise of statutory power. It is 
not fixed as a result of any bargaining by and between the board and the 
H consumer

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