LexSTATE OF MYSORE versus WEST COAST PAPERS MILLS LTD. & ANR.
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A B c D E F G ·H STATE OF MYSORE v. WEST COAST PAPERS MILLS LTD. & ANR. September 24, 1974 [H. R. KHANNA, M. H. BEG AND V. R. KRISHNA IYER, JJ.] 127 Mysore Electricity (Taxatld11 011 Co11sumptio11) Act,. 1959 (Mysore Act No. 14 of 1959, Sections 2( I), ,3 and sub 0sectio11s (l) and (3) of Sectio11 4- Electricity tax 011 electrical energy lost in tile course of transmission, wlletlrer warranted-Respondent, if liable to pay electricity tax 011 e/ecrica/ e11ergv used by it for ge11er,ati11g further electrical energy. · The respondent company is manufacturing. paper and other products. Since the Mysore Electricity Board was not in a position to supply the entire quantity required by the respondent company, the company started generating electricity. In 1966, the appellants made a demand of Rs. 3,53,953.45 as arrears of electricity tax under the Act from the respondent for the · period from July 1959 to March 19'66. The respondent company filed a writ petition in the High Court challenging the demand notice contending that, (1) it was not liable to pay electricity tax on the quantity of electrical energy Jost in the ·course of transmission, i.e. as a result of transmission ·or transformer 'loss; and (2) some electrical energy was used by it for generation .of further electrical energy and therefore, no electricity tax was payable on the quantity of electrical energy utilised by it for generation of further electrical energy, The High Court decided on· both the points of controversy in favour of the respondent company. This appeal by certificate under article 133( I )(a) has been filed by the appellant. Allowing the appeal with respect to the second contention, HELD: (1). (Per H. R. Khanna and V. R. Krishna Iyer, JJ.) The entire scheme of the Mysore Electricity (Taxation on Consumption) Act 1959 is to tax the consumption of electrical energy. Where some energy is riot co~sumed but ·lost before it reaches the point of consumption, the ques- tion of levy of tax on consumption of such energy would not in the very nature of things arise. The place of consumption is normally at some distance from the place where electrjcal energy is generated. Electrical energy has conse· quently to be transmitted through metal conductors to the place where it is consumed. Such transmission admittedly entails loss of some electrical energy and what is lost can plainly be not available for consumption and as such would not be consumed. To realise tax on aU the electrical energy generated would be tantamount to levying tax on generation or production of· electrical energy and not on its consumption. Such a tax on the generation or produc- tion of electrical energy is plainly not permissible .under the Act. The fact that the consumer happens in the present case to be the same company which generated the elctrical energy would make no .. material difference. [131 B-F] Gokak Mills Ltd. v. Staf>e of Mysore (1969)2 Mysore Law Journal 99, ap- rroyed. Per M .. H. Beg J. (dissellling). No distinction is made anywhere in the Act between consumption for dif- ferent purposes, such as generation, transmission, transformation or utilisation of electricity for any other purpose. One who generates electricity and then transmits and transforms it before utilising it for another purpose may be said to be generating it for several purposes. Spending up ot utilisation of energy for each of the purposes, whether it be generation, or transmission, or. transfor· mation, or, manufacture of some particular commodity, can be said to be a use which must necessarily fall within the ordinary .grammatical or dictionary mean!n~ of the wor~ consumption. The consumption begi'!s immediately after electn~1ty can be s.a1d to be generated. So long a:s energy 1s spent or used up, 128 SUPREME COURT REPORTS [1975] 2 s.c.R. whatever be the process or purpose of such using up1 it will be cons~mption. For n division of consumption into effective consumption and non-effective con· sumptior., there is no warrant in the relevant provisions Of the Act. [134 F·H, 135 F.G, 136 A·D] It may be tha' the electricity tax is imposed upon a pcrso~ only in the charac- ter or capacity of a consumer. It ~oes not follow f~om this that the cha~acter or cap~city of a consumer only begins when energy 1s used up fo~ a particular purpose in whi(;h a consumer is c:onsumer. If he consumes it is ev1d.ent that the charncter of a consumer
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