USHA MARTIN BLACK LTD Vs. UNION OF INDIA

JUDGEMENT

(1.) The petitioners have impugned the surcharge on electricity under the Notification in Aunexure-2 and the revised rate as mentioned in Annexure-4 levied on account of imposition of Central Excise Duty on electricity generation The question whether generation of electricity can be subjected to payment of excise duty was raised in M/s. Tata Yodogawa Ltd. v. Union of India, 1985 PLJR 673 : 1986 BLJ 451, and was answered by me in the affirmative and since this decision is challenged as incorrect, the present writ application is being heard by Division Bench.

(2.) The petitioner-Company runs a factory and is receiving electric energy from the State Electricity Board, respondent No. 2 as per the agreement dated the 20th December, 1966, Annexure-1. By Section 36 of the Finance Act, 1978 a new entry being Item No. 11-E was inserted in the First Schedule to the Central Excises and Salt Act, 1944 (hereinafter referred to as 'the Excise Act'), whereby excise duty at the rate of 2 paise per unit on electricity per kilowatt hour was imposed. As a result thereof the Electricity Board levied the impugned surcharge by the Notification dated 13-5-1978 at the rate of 3 paise per unit on electricity consumption by all categories of services excepting agricultural services The petitioner's bills were consequently prepared at the higher rate. By another Notification, Annexure-4, issued in 1979 the rate of electricity was revised and the new rate was fixed by taking into account the excise duty. The petitioners have challenged both these Notifications.

(3.) Mr. N. K. Prasad, the learned Cousel of the Petitioners, has contended fhat the Parliament is not empowered to levy excise duty on generation of electricity and the insertion of the Item No. 11-E in the Schedule to the Excise Duty is ultra vires and the consequent enhancement of the electric charges by the Electricity Board must be struck down as illegal and void in the eye of law. Alternatively, it has also been urged that the Electricity Board was not entitled to impose additional burden at the rate of 3 paise per unit when it had to pay excise duty at the rate of 2 paise only.