DAMODAR VALLEY CORPORATION versus STATE OF BIHAR & ORS.

Citation: [1977] 1 S.C.R. 118 · Decided: 05-08-1976 · Supreme Court of India · Bench: HANS RAJ KHANNA · Disposal: Dismissed

Judgment (excerpt)

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B 
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11 8 
DAMODAR VALLEY CORPORATION 
v. 
STATE OF BIHAR & ORS. 
August 5, 1976 
[H. R. KHANNA, N .L. UNTWALIA AND JASWANT SINGH, JJ.] 
Constitlllion of India, 1950c-Art. 288(2)-Scope of. 
Bilwr Electricity Duty Act, 1948 (as amended) S. 3(2)(e)-Scope of. 
The proviso (v) to s. 3(1) of the B:har Electricity Duly Act, 1948 provided 
that no duty shall be Jeviable on units of energy consumed by, or in respect of 
or sold for consumption in any mine or industrial undertaking except to th; 
extent specified in the Second Schedule. 
In 1963 s. 3 or the Act was amencte<t 
a'nd a, new s. 3 was substituted for the old s. 3. 
Sub-section (2) <,e) of the 
new section states that no duty shall be !eviable on unit~ of energy consumed 
by the Damodar Valley Corporation for the generation, transmission or distri-
bution, of electridty by that Corporation. Item A of the First Schedule- as 
amended in 1963 states that for a mine or an industrial undertaking the duty 
Jeviable shall be at such rate or rates not exceeding 2 naya. paise J:!er unit or 
energy fixed by the State Government with the previous consent of the President. 
The Amendin:; Act received the assent of the President. 
In response to notices issued by the Supc~intendcnt of Commercial Taxes 
calling upon the appellant to pay electricity duty under the Act as 
amended, 
the appellant contended that it eniO)'led immunity from payment of tax under 
cl. (I) of' Art. 288 of the Om~titution, no law satisfying the requirement of 
cl. (2) of Art. 2gs. havin: been made· warranting the levy of such duty. 
The Hi:ll Court dismissed the appel!ant"s writ petition. 
DismissinJ,? the appeal to this Court, 
HELD : ( 1) What is required. by cl. (2) of Art. 288 is that the Jaw made 
by the State legislature for impo,ing, or authorising the impQsition of tax men-
tioned in cl. (I) shall have effect only if (i) after having been reserved for 
the consideration of the President, it receives his assent, and (ii) that if sucn 
Jaw provides for the fixation of the rates and other incidents of such tax by 
means of rul"s or ardors to be made under the law by any authority, the Jaw 
shall provide for the previou~ consent of the President beihQI. obtained to the 
making of any such rule or order. It is, however, not the effect of that clause 
that even if these two requirements are satisfied, the provisions which merely 
deal with the mode and manner of the payment of the ta,x should also receive 
the assent of the President and that ih the absence of !'ltlch!,assent, the provisions 
dealing with the incidence of tax, which have 
received 
the 
assent of the 
President, would remain unenforceable. [123 H; 124 A-BJ 
(2) The contention of the app•cllant that the amending Act did not con-
1emplate or contain ahy indication regarding the imposition of electricity duty 
upon the appellant is plainly, untenable, for it would have the effect of render-
ing s. 3(2)(e) to be wholly redundant. 
Under pro'VislO (v) to s. 3(1) of the 
Principal Act, mines and industrial undertakings were exempt from levy of 
duty. This exemption s'tood withdrawn as a result of substitutioh of new s. 3 
for the old section by the amending Act. 
The new charging s. 3 ( 1) roped in 
all industrial undertakings, including the Damodar Valley Corporation, for 1he 
purpose of levy of duty. 
Section 3(2)(e), introduced by the Amehding Act 
of 1963, expressly granted exemption from levy of electricity duty on units 
of energv consumed by the appellant for the generation, transmission or dis•ri. 
bution cif electricit'V by that Corporation. This provision, co·ntaining exPrP'' 
reference to the appellant Corporation, clearly warrants the inference that in 
resp•cct of units of energy not covered by s. 3(2)(e) the exemption would no' 
be available to the appellant. 
[123 A-Bl 
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DAMODAR VALLEY CORP. v. BIHAR (Khanna, J.) 
119 
(3) There is no substance in the contention that unless s. 4 of the principal 
A. 
Act was also re-enacted with the assent cf the Pre•:d·~nt, the liability for pay· 
ment cf duty cannot be fastened upon the appellant. 
Section 3 of the Amending 
Act which deals with the incidenoe of duty makes it clear that such duty has 
to be paid on the units of energy consumed or sold and at the rate or rates 
specified in the schedule. As the duty is to be levied on the units of energy 
consumed or sold, it would f'ollow that the duty would have to be paid by the 
conwmer or seller as the case

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