INDIAN ALUMINIUM CO. ETC. ETC. versus STATE OF KERALA AND ORS.

Citation: [1996] 2 S.C.R. 23 · Decided: 02-02-1996 · Supreme Court of India · Bench: K. RAMASWAMY · Disposal: Dismissed

Cited by 11 judgment(s) · cites 13 · see the full citation network in Lexace

Judgment (excerpt)

........... 
INDIAN ALUMINIUM CO. ETC. ETC. 
A 
v. 
STATE OF KERALA AND ORS. 
FEBRUARY 2, 1996 
[K. RAMASWAMY AND G.B. PATTANAIK, JJ.] 
B 
Kera/a Electricity Surcharge (Levy and Collection) Act (22 of 
1989)-Duty on supply of electricity-Nature of-Word 'supply' in Section 
3-Should receive liberal interpretation to include sale or consumption of 
electlicity as envisaged in Entry 53 of State list. 
c 
Section I I-Validation-Constitutionality of-Levy and collection of 
surcharg~Section 11 validating levy with retrospective effect--Wl1ether 
provision is an anti-judicial powe1~Held, No-It is not an incursion on 
judicial power of Cowt-Section 11 is a valid piece of legislation as pmt of 
D 
the Act. 
Section 3-1984 Act does not get eclipsed with passing of 1989 Act-
Both the Acts operate harmoniously. 
Constitution of India-Anicle 246, Sch. 7 List II, Entry 53-Taxes on E 
consumption or sale of electricity-Wliether Kerala Electricity surcharge (Levy 
and Collection) Act (22 of 1989) is one under Ently 53 of State List--Held, 
yes. 
The Central Excises and Salt Act, 1944 was amended to impose 
Central Excise duty on electricity being supplied by State Electricity F 
Boards. Consequently, to recoup that loss, the Government of Kerala 
issued an order by which surcharge at the rate of 2.5 paise per unit of 
electricity energy was levied on all supplies of electrical energy made by 
the Kerala State Electricity Board (KSEB) either directly or through 
licencees of Extra High Tension and High Tension consumers. Sub-
G 
sequently when the Government of India withdrew the levy of excise duty 
on electricity, the Government of Kerala in supersession of its order dated 
-
6.4.1979 notified the State Electricity Supply (Kerala State Electricity 
Board and Licencees Area) Surcharge Order, 1984 effective from 1.0.1984. 
Under that order all supplies of electrical energy made by KSEB were 
liable to surcharge though excise duty was discontinued. The consumers H 
23 
24 
SUPREME COURT REPORTS 
[1996] 2 S.C.R. 
A filed writ petitions challenging the validity of the 1984 O_i;der. Pending writ 
petition, on 1.8.1988, the State Government discontinued the levy of sur-
charge by issuing an Ordinance called the Kerala Electricity Duty (Amend-
ment) Ordinance, 1988 which later on became an enactment. The rate of 
electricity duty was 30% of the price of energy which was revised to 10 paise 
B per unit for HT consumers and 6.5 paise per unit for EHT consumers. 
Subsequently the surcharge on the electricity duty of 10 paise per unit was 
discontinued. On 27.9.1988, a Division Bench of the High Court in 
Chakolas Spinning & Weaving Mills Ltd. v. K.S.E. Board, (1988) 2 KLT 680 
issued a writ of mandamus directing refund of surcharge collected from 
those writ petitioners before the High Court while holding that the levy of 
C surcharge is in substance a compulsory exaction intended to enrich the 
State and in effect partakes the character of a tax on electricity and that 
the Government, acting as a delegate under the Kerala Essential Articles 
Control Act, 1986, is not competent to impose any tax. The Kerala State 
Electricity Supply (Kerala State Electricity Board and Licencees Area) 
D Surcharge Order, 1984 was declared ultra vires the power of the State 
Government. This judgment was confirmed by this Court dismissing the 
I 
E 
F 
Special Leave Petition in limine. 
The Governor of Kerala, exercising power under Article 213 of the 
Constitution issued Ordinance called the Kerala Electricity Surcharge 
(Levy and Collection) Ordinance, 1989 which later on became Act 22 of 
1989. Under the Act, the appellants were liable to pay 2.5 paise per unit of 
electrical energy supplied. Writ petition filed by the appellants challenging 
the same were dismissed. The High Court upheld the validity of the Act 
and the Order. Hence these appeals by Special Leave. The appellants 
contended that the Act of 1989 levying tax on supply of electrical energy 
cannot be construed to be one made under Entry 53 of the State List and 
tliat the word 'sale' and 'consumption' of electricity bear different connota-
tions; that the State legislature having enacted the Electricity Duty Act, 
1963, imposing duty on electricity and discontinuing the levy of excise duty 
G and the duty not having been passed on to the public exchequer, the Act 
of 1989 was made only as a colourable device to avoid refund of excise duty 
wrongly collected from the consumers; that the Act is 

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