TATA YODOGAWA LTD Vs. UNION OF INDIA

JUDGEMENT

(1.) The main question in this case is whether generation of electric energy can be subjected to payment of excise duty. Electricity has been included in the tariff item 11E of the Central Excises and Salt Act, 1944 (hereinafter referred to as "the Excise Act") by the Finance Act 19 of 1978. The petitioner has challenged the amendment as ultra vires and has prayed for quashing of the imposition of the additional burden placed on the consumers by the notification, Annexure I, issued by the Bihar State Electricity Board, respondent No. 2.

(2.) The petitioner is a public limited company running a small factory engaged in the production of steel ingots from steel scraps with the help of electric arc furnace. The energy is supplied by the respondent-Electricity Board. Prior to the passing of the Finance Act, 1978, no excise duty was payable for electricity. By Section 36 of the Finance Act, the Excise Act was amended by inclusion of tariff item 11E, which reads as follows : "11E. Electricity 2 paise per kilo watt hour." Pursuant to the amendment, the respondent-Electricity Board issued a notification dated 13th May, 1978 as contained in the impugned Annexure I stating about imposition of the excise duty and levying a surcharge at the rate of 3 paise per unit on electricity consumption by all categories of services except agricultural services with effect from 1st March, 1978.

(3.) Mr. K.D. Chatterjee, for the petitioner, pressed three grounds in support of the writ petition, namely, (i) the imposition of excise duty on electricity is illegal and without jurisdiction ; (ii) the Electricity Board is not authorised to make any demand with retrospective effect ; and (iii) the Board has no power to realise the surcharge at the rate of 3 paise per unit when the rate of excise duty has been fixed at 2 paise per unit only.