M/S MAGADH SUGAR & ENERGY LTD. versus THE STATE OF BIHAR & ORS.

Citation: [2021] 9 S.C.R. 284 · Decided: 24-09-2021 · Supreme Court of India · Bench: D.Y. CHANDRACHUD · Disposal: Appeal(s) allowed

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Judgment (excerpt)

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SUPREME COURT REPORTS
[2021] 9 S.C.R.
M/S MAGADH SUGAR & ENERGY LTD.
v.
THE STATE OF BIHAR & ORS.
(Civil Appeal No. 5728 of 2021)
SEPTEMBER 24, 2021
[DR. DHANANJAYA Y CHANDRACHUD, VIKRAM NATH
AND BV NAGARATHNA, JJ.]
Constitution of India: Art. 226 – Writ jurisdiction of High
Court under – Exercise of – Dispute involving question of facts –
Amenability to writ jurisdiction of the High Court – On facts,
appellant company produced electricity for its own consumption
and the surplus energy was supplied to the Bihar State Electricity
Board (BSEB) – Issuance of notice to appellant demanding electricity
duty and penalty on electricity that it was supplying to BSES – Writ
petition by appellant challenging the imposition – Set aside by the
High Court holding that the dispute between the parties is factual
in nature and that the appellant should exercise alternate remedy
provided in the 1948 Act – On appeal, held: Existence of an
alternative remedy does not by itself bar the High Court from
exercising its jurisdiction in certain contingencies – In view of the
law on the rule of alternate remedy, the High Court can exercise its
writ jurisdiction if the order of the authority is challenged for want
of authority and jurisdiction, which is a pure question of law – Test
for the determination of a question of law is whether the rights of
the parties before the court can be determined without reference to
the facts of the case – Petitions challenged the power/jurisdiction
of the State Government to levy tax on sale of electricity to Electricity
Boards – Issues raised are questions of law which require a
comprehensive reading of the Electricity Act, and no adjudication
of facts is required – Thus, is amenable to the writ jurisdiction of
the High Court – High Court erred in declining to entertain the writ
petition – Judgment of the High Court is set aside – Bihar Electricity
Duty Act, 1948.
Art. 226 – Writ Jurisdiction of High Court – Exercise of, in
presence of alternative remedy – General Principles.
[2021] 9 S.C.R. 284
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Allowing the appeal, the Court
HELD: 1. The High Court would normally not exercise its
writ jurisdiction under Article 226 of the Constitution if an effective
and efficacious alternate remedy is available, the existence of an
alternative remedy does not by itself bar the High Court from
exercising its jurisdiction in certain contingencies. [Para 19][300-
E-F]
2. It is not the case of the appellant that the respondents
have miscalculated the duty and penalty imposed on it. The
appellant submitted that the State Government does not have
the power to levy tax on its sale of electricity to BSEB. Thus, the
plea strikes at the exercise of jurisdiction by the Government.
In view of the law on the rule of alternate remedy, the High Court
can exercise its writ jurisdiction if the order of the authority is
challenged for want of authority and jurisdiction, which is a pure
question of law. [Para 22][304-A-B]
3. There is no dispute about the nature of the transaction
between the appellant and BSEB. The appellant in the instant
case is a sugar mill that also produces electricity. The writ petition
filed by the appellant was dismissed by the impugned judgment.
The petitions challenged the power of the State Government to
levy tax on sale of electricity to Electricity Boards. [Para 23][304-
C-D]
4. The test to be applied for the determination of a question
of law is whether the rights of the parties before the court can be
determined without reference to the factual scenario. In the instant
case, the High Court was entrusted with the determination of
the meaning of the phrases used in Section 3 of the Act to
determine if the supply of electricity by the appellant would fall
within its ambit. There is no adjudication on facts required here.
[Para 23][305-E-F]
5. The issues raised by the appellant are questions of law
which require, upon a comprehensive reading of the Bihar
Electricity Act, a determination of whether tax can be levied on
the supply of electricity by a power generator (which also
manufacture sugar) supplying electricity to a distributor; and
whether the first respondent has the legislative competence to
M/S MAGADH SUGAR & ENERGY LTD. v. THE STATE OF
BIHAR & ORS.
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SUPREME COURT REPORTS
[2021] 9 S.C.R.
levy duty on the sale of electricity to an intermediary distributor.
The question of whether the appellant is liable to file returns
under Sections 6(B)(1) and

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