# 11 8 DAMODAR VALLEY CORPORATION v. STATE OF BIHAR & ORS

- **Citation:** [1977] 1 S.C.R. 118
- **Court:** Supreme Court of India
- **Decided:** 1976-08-05
- **Case number:** Civil Appeal No. 104 of 1970
- **Bench:** H. R. Khanna, N .L. Untwalia, Jaswant Singh
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/11-8-damodar-valley-corporation-v-state-of-bihar-ors-6894
- **Pages:** 7

## Headnote

Constitlllion of India, 1950c-Art. 288(2)-Scope of.
Bilwr Electricity Duty Act, 1948 (as amended) S. 3(2)(e)-Scope of.
The proviso (v) to s. 3(1) of the B:har Electricity Duly Act, 1948 provided
that no duty shall be Jeviable on units of energy consumed by, or in respect of
or sold for consumption in any mine or industrial undertaking except to th;
extent specified in the Second Schedule.
In 1963 s. 3 or the Act was amencte<t
a'nd a, new s. 3 was substituted for the old s. 3.
Sub-section (2) <,e) of the
new section states that no duty shall be !eviable on unit~ of energy consumed
by the Damodar Valley Corporation for the generation, transmission or distribution, of electridty by that Corporation. Item A of the First Schedule- as
amended in 1963 states that for a mine or an industrial undertaking the duty
Jeviable shall be at such rate or rates not exceeding 2 naya. paise J:!er unit or
energy fixed by the State Government with the previous consent of the President.
The Amendin:; Act received the assent of the President.
In response to notices issued by the Supc~intendcnt of Commercial Taxes
calling upon the appellant to pay electricity duty under the Act as
amended,
the appellant contended that it eniO)'led immunity from payment of tax under
cl. (I) of' Art. 288 of the Om~titution, no law satisfying the requirement of
cl. (2) of Art. 2gs. havin: been made· warranting the levy of such duty.
The Hi:ll Court dismissed the appel!ant"s writ petition.
DismissinJ,? the appeal to this Court,
HELD : ( 1) What is required. by cl. (2) of Art. 288 is that the Jaw made
by the State legislature for impo,ing, or authorising the impQsition of tax mentioned in cl. (I) shall have effect only if (i) after having been reserved for
the consideration of the President, it receives his assent, and (ii) that if sucn
Jaw provides for the fixation of the rates and other incidents of such tax by
means of rul"s or ardors to be made under the law by any authority, the Jaw
shall provide for the previou~ consent of the President beihQI. obtained to the
making of any such rule or order. It is, however, not the effect of that clause
that even if these two requirements are satisfied, the provisions which merely
deal with the mode and manner of the payment of the ta,x should also receive
the assent of the President and that ih the absence of !'ltlch!,assent, the provisions
dealing with the incidence of tax, which have
received
the
assent of the
President, would remain unenforceable. [123 H; 124 A-BJ
(2) The contention of the app•cllant that the amending Act did not con1emplate or contain ahy indication regarding the imposition of electricity duty
upon the appellant is plainly, untenable, for it would have the effect of rendering s. 3(2)(e) to be wholly redundant.
Under pro'VislO (v) to s. 3(1) of the
Principal Act, mines and industrial undertakings were exempt from levy of
duty. This exemption s'tood withdrawn as a result of substitutioh of new s. 3
for the old section by the amending Act.
The new charging s. 3 ( 1) roped in
all industrial undertakings, including the Damodar Valley Corporation, for 1he
purpose of levy of duty.
Section 3(2)(e), introduced by the Amehding Act
of 1963, expressly granted exemption from levy of electricity duty on units
of energv consumed by the appellant for the generation, transmission or dis•ri.
bution cif electricit'V by that Corporation. This provision, co·ntaining exPrP''
reference to the appellant Corporation, clearly warrants the inference that in
resp•cct of units of energy not covered by s. 3(2)(e) the exemption would no'
be available to the appellant.
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DAMODAR VALLEY CORP. v. BIHAR (Khanna, J.)
119
(3) There is no substance in the contention that unless s. 4 of the principal
A.
Act was also re-enacted with the assent cf the Pre•:d·~nt, the liability for pay·
ment cf duty cannot be fastened upon the appellant.
Section 3 of the Amending
Act which deals with the incidenoe of duty makes it clear that such dut

## Text

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11 8
DAMODAR VALLEY CORPORATION
v.
STATE OF BIHAR & ORS.
August 5, 1976
[H. R. KHANNA, N .L. UNTWALIA AND JASWANT SINGH, JJ.]
Constitlllion of India, 1950c-Art. 288(2)-Scope of.
Bilwr Electricity Duty Act, 1948 (as amended) S. 3(2)(e)-Scope of.
The proviso (v) to s. 3(1) of the B:har Electricity Duly Act, 1948 provided
that no duty shall be Jeviable on units of energy consumed by, or in respect of
or sold for consumption in any mine or industrial undertaking except to th;
extent specified in the Second Schedule.
In 1963 s. 3 or the Act was amencte<t
a'nd a, new s. 3 was substituted for the old s. 3.
Sub-section (2) <,e) of the
new section states that no duty shall be !eviable on unit~ of energy consumed
by the Damodar Valley Corporation for the generation, transmission or distribution, of electridty by that Corporation. Item A of the First Schedule- as
amended in 1963 states that for a mine or an industrial undertaking the duty
Jeviable shall be at such rate or rates not exceeding 2 naya. paise J:!er unit or
energy fixed by the State Government with the previous consent of the President.
The Amendin:; Act received the assent of the President.
In response to notices issued by the Supc~intendcnt of Commercial Taxes
calling upon the appellant to pay electricity duty under the Act as
amended,
the appellant contended that it eniO)'led immunity from payment of tax under
cl. (I) of' Art. 288 of the Om~titution, no law satisfying the requirement of
cl. (2) of Art. 2gs. havin: been made· warranting the levy of such duty.
The Hi:ll Court dismissed the appel!ant"s writ petition.
DismissinJ,? the appeal to this Court,
HELD : ( 1) What is required. by cl. (2) of Art. 288 is that the Jaw made
by the State legislature for impo,ing, or authorising the impQsition of tax mentioned in cl. (I) shall have effect only if (i) after having been reserved for
the consideration of the President, it receives his assent, and (ii) that if sucn
Jaw provides for the fixation of the rates and other incidents of such tax by
means of rul"s or ardors to be made under the law by any authority, the Jaw
shall provide for the previou~ consent of the President beihQI. obtained to the
making of any such rule or order. It is, however, not the effect of that clause
that even if these two requirements are satisfied, the provisions which merely
deal with the mode and manner of the payment of the ta,x should also receive
the assent of the President and that ih the absence of !'ltlch!,assent, the provisions
dealing with the incidence of tax, which have
received
the
assent of the
President, would remain unenforceable. [123 H; 124 A-BJ
(2) The contention of the app•cllant that the amending Act did not con1emplate or contain ahy indication regarding the imposition of electricity duty
upon the appellant is plainly, untenable, for it would have the effect of rendering s. 3(2)(e) to be wholly redundant.
Under pro'VislO (v) to s. 3(1) of the
Principal Act, mines and industrial undertakings were exempt from levy of
duty. This exemption s'tood withdrawn as a result of substitutioh of new s. 3
for the old section by the amending Act.
The new charging s. 3 ( 1) roped in
all industrial undertakings, including the Damodar Valley Corporation, for 1he
purpose of levy of duty.
Section 3(2)(e), introduced by the Amehding Act
of 1963, expressly granted exemption from levy of electricity duty on units
of energv consumed by the appellant for the generation, transmission or dis•ri.
bution cif electricit'V by that Corporation. This provision, co·ntaining exPrP''
reference to the appellant Corporation, clearly warrants the inference that in
resp•cct of units of energy not covered by s. 3(2)(e) the exemption would no'
be available to the appellant.
[123 A-Bl
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DAMODAR VALLEY CORP. v. BIHAR (Khanna, J.)
119
(3) There is no substance in the contention that unless s. 4 of the principal
A.
Act was also re-enacted with the assent cf the Pre•:d·~nt, the liability for pay·
ment cf duty cannot be fastened upon the appellant.
Section 3 of the Amending
Act which deals with the incidenoe of duty makes it clear that such duty has
to be paid on the units of energy consumed or sold and at the rate or rates
specified in the schedule. As the duty is to be levied on the units of energy
consumed or sold, it would f'ollow that the duty would have to be paid by the
conwmer or seller as the case may be. Siction 4 of the principal Act merely
provides for the manner a'nd mode of payment of the duty. [123 F-G]
s;
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 104 of 1970.
(From the Judgment and Order dated 23-10-1967 of the Pa'.na
High Court in Civil Writ Jurisdiction Case No. 299/66).
L. M. Singhvi, U. P. Singh and S. N. !ha, for the Appellant.
Sarjoo Prasad and U. S. Prasad, for the Respondent.
The Judgment of the Court was delivered by
KHANNA, J.
The short question which arises for determination in
this appeal on certificate by Damodar ,Valley Corporation against the
judgment of Patna High Court dismissing the writ petition filed by
the appellant is whet_her the appellant is liable to pay electricity duty
under Bihar Electricity Duty Act,, 1948 as amended by Bihar Electricity Duty (Amendment) Act, 1963. The High Court answered the
question in the affirmative against the appellant.
Th.: appellant is a corporation established under the
Damodar
Valley Corporation Act, 1948 for the development of the Damodar
Valley in the States of Bihar and West Bengal.
One of the functions
of the appellant is the promotion and operation of schemes for the
generation, transmission and distribution of hydroelectric and thermal
electrical energy.
Bihar Electricity Duty Act, 1948 (Bihar Act 36
of 1948) (11ereinafter referml to as the principal Act) WM published
in the Bihar gazette on October 1, 1948. It was an Act for the levy
of duty on the sales and consumption of electrical energy
in
the
province of Bihar.
Material part of sections 3 and -4-,, as they stood
before the amendment made; iii 1963, read as under :
"3. Incidence of duty.-(1) There shall be levied and
i::aid to the State Government on the units of energy consumed or sold, excludingi losses of energy in the transmission and
transformation, a duty at the rates specified in
the First
Schedule :
Provided that no duty
shall be Jeviable on units
of
energy:-
(i)
(ii)
(iii)
(iv)
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SUPREME COURT REPORTS
[1977) 1 S.C.R.
( v) consumed by, or in respect of, or sold for consumption in any-
(vi)
(2) ..
( a) mine, as defined in the Indian Mines Act, 1923 :
( b) industrial undertaking;
except to the extent specified in the Second
Schedule:
4. Payment of duty.-(1) Every licensee shall pay every
month to the State Government at the
time
and in the
manner prescribed the proper duty payable under section 3
on the units of energy consumed by him or sold by l1im to
the consumer.
(2) Every licensee may recover from the amount which
falls to be paid by the licensee as duty in respect of energy
sold to the consumer.
(3)
(4)
(4a)
(5)
"
..
The principal Act was amended by Bihar Electricity Duty (Amendment) Act, 1963 (Bihar Act 20 of 1963) (hereafter referred to as
the amending Act).
The amending Act received the assent of the
President on December 4, 1963 and was published on December 17,
1963. By section 2 of the amending Act, new section 3 was substituted for the old section 3.
Material part of new section 3 read
as
under :
"3. Incidence of duty.-(l) Subject to the provision of
sub-section (2), there shall be levied and paid to the State
Government on the units of energy consumed or sold. excluding losses of energy in transmission and transformation,
a duty at the rate or rates specified in. the Sc he du le.
(2) No duty shall be leviable on units of energy-
(a)
(b)
(c)
(d)
(e)
(f)
(3)
consumed by the Damodar Valley Corporation for
the generation, transmission or dis'ribution of electricity by that Corporation;
"
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DAMODAR VALLEY CORP. v. BIHAR (Khanna,!.)
121
Amendment was also made in the First Schedule of the principal Act.
A
The relevant part of the schedule read as under
"
THE SCHEDULE
(See section 3.)
RATES OF DUTY
A. For a mine or an industrial undertaking, save in respect of its
premises
used for
residential
or office purposes.
Such rate or rates not exceeding 2 naya ~
Paise per unit of energy as may, from
time to time, be fixed by 11-.e State Government with the previous consent of thej
President, by order in this behalf".b,
In the writ petition the appellant prayed for quashing three notices
dated February 10, 1965 issued by the Superintendent of Commercial
Taxes Giridih as als9 his orders dated March 24 and 29, 1966. By
the impugned notices the Superintendent of Commercial Taxes called
upon the appellant to show cause as to why penal action under the
principal Act as amended,, should not be taken against the appellant
for having failed to get itself registered under that Act.
The appellant
was also called upon to apply for registration.
By the impugned
orders the Superintendent of Commercial Taxes directed the appellant
to pay electri_<;_ity duty unde~ the Act as amended.
The case of the
appellant was that it enjoyed immunity from payment of tax under
clause ( 1) of article 288 of the Constitution.
No law satisfying the
requirement of clause' (2) .of article 288, it was contended, had been
made warranting the levy o1i. such a duty.
The High Court repelled
this contention, and we find no sufficient ground to take a different
view.
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Article 288 of the Constitution reads as under :
"288(1) Save in so far as the President may by order
otherwise provide, no law of a State in force immediately
before the comencement of this Constitution shall impose,
or authorise the imposition of, a tax in respect of any water
or electricity stored, generated, consumed, distributed or s0ld
by any authority established by any existing law made
by Parliament for regulating or developing any inter-State
river or river-valley.
Explanation.-The expression 'law of a State in force' in
this clause shall include a Jaw of a State passed or made
before the commencement of this Constitution and not previously repealed,, notwithstanding that it or parts of it !nay
not be then in operation either at all or in particular areas.
(2) The Legislature of a State may by law impose, or
authorise the imposition of, any such tax as is mentioned in
clause ( 1), but no such law shall have any effect unless it has,
after having beenl reserved for the consideration ·of the
President, received his assent; and if any such law provides
for the fixation of the rates and other incidents of such tax
by means of rules or orders to be made under the law by any
authority, the law shall provide for the previous consent of
the President being obtained to the making of
any
such
rule or order."
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SUPREME COURT REPORTS
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.
Article 288 grants exemption from tax under any law of a State
1~ r~spect of any water or elctricity stored,
generated,
consumed,
d1stn buted or sold by any authority established by any existing law
?r any law .made bJ: Parliament for regulating or developing
any
mter-State nver or nver-valley, except in certain
cases.
According
to clause (.1) of the1 article, this exemption would not be available in
respect of such tax imposed under any law of a State in force immediately before the commencement of the Constitution ifi the President
~y order so. provides.
Although the principal ACt is a pre-Constitution law, bemg an Act of 1948, no order was admittedly made
by
the President withdrawing the exemption in respect of the appellant
from levy of such tax under the principal Act.
Indeed, there was
no question of issue of any such order because the principal Act did
not provide for the imposition of electricity duty upon a corporation
like the appellant.
Clause (v) of the proviso to sub-section ( 1) of
section 3 of the principal Act expressly stated that no duty shall be
leviablc on units of energy consumed by, or in respect of, or sold for
consumption in any mine, as defined in the Indian Mines Act,
or
industrial undertakings, except to the extent specified in the Second
Schedule.
The appellant is admittedly an industrial undertaking, and
as such, was not liable to pay electricity duty under the principal
Act.
The case of the respondents: is that the bar td Lhe levy of the said
duty was removed and the levy of the duty on the appellant was put
on a sound legal basis as a result of the amendment made in the
principal Act by the amending Act of 1963. The amending Act, we
find, satisfies the requirements of clause (2) of article 288.
According to thac clause, the legislature of a State may by Jaw impose, or
authorise the imposition of, any tax mentioned in clause ( 1) of that
article,
but no such law shall have any effect unless it has,
after
having been reserved for the consideration of the President, received
his assent; and if any such Jaw provides for the fixation of the rates
and other incidents of such tax by means of rules or orders tO'
be
made under the law by any authority,. the law shall provide for the
previous consent of the President being obtained to the making of
any such rule or order.
The amending Act of 1963, as already mentioned, received the assent of the President before its
publication.
The exemption which was granted to mines and industrial oodertakings from payment of electricity duty under the principal Act was
withdrawn under the amending Act, except to some extent with
which we are not concerned.
The new schedule, substituted for the
old schedule by the amending Act, prescribed the rates of duty for
mines and industrial undertakings, and it was provided that the rate
of duty shall be such rate or rates not exceeding 2 naye paise pe11
unit of energy as may, from time to time, be fixed by the State Government with the previous consent of the President, by order in this
behalf.
It has been argued by Dr. Singhvi on behalf of the appellant that
the scheme of article 288 is to grant general exemption from the levy
of tax in respect of any water or electricity stored, generated, consumed, distributed or sold by any autilority established by any existing
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DAMODAR VALLEY CORP. v. BIHAR (Khanna, !.)
123
-~aw or any !aw mad~ by Parliament for regulating or developing any
A
mter-State nver or nver-valley. If any law made by a State legislature, according to the submission, seeks the imposition of any such
tax, such law should contain clear indication to that effect before it
nceives the assent of the President.
The amending; Act of
1963,
.according to the learned counsel, did not contain any such indication.
This contention, in our opinion, is wholly devoid of force.
Under
proviso ( v) to section 3 ( 1) of the principal Act, mines and industrial
B
;undertakings were exempt from levy of duty. This exemptfon stood
withdrawn as a result 0£ substitution of new section 3 for the
old
:section by the amending Act.
The new charging section 3 ( 1) roped
in all industrial undertakings, including the Damodar Valley Corporation, for the purpose of levy of duty.
Clause (e) of sub-section (2)
·of new section 3 which was introduced by the amending Act of 1963,,
expressly granted exemption from levy of electricity duty on units of
C
·energy consumed by the appellant corporation for
the
generation,
transmission or distribution of electricity by that corporation.
This
provision, containing express reference to the appellant corporation,
dearly warrants the inference that in respect of units of energy not
·covered by clause (e) of sub-section (2) o( section 3 the exemption
would not be availablelto the appellant.
The contention advanced on
behalf of the appellant that the amending Act did not contemplate
D
or contain indication regarding the imposition of electricity duty upon
ihe appellant is plainly untenable, for it would have the
effect of
rendering clause (e) of sub-section (2) of section 3 to be wholly
redundant.
The courts, it is well-settled, should be loath to accept
an argument which would have the effect of rendering redundant the
provision of a statute.
Lastly, it has been argued that though there has been an amendment of section 3 of the principal Act by its substitution by a new
section under the amending Act of 1963, there has been no aniendment of section 4 with the assent of the - President.
As such,, no
liability to pay electricity duty can be fastened upon the appel!ant.
This submission too is bereft of force.
Section 3, as inserted by the
amending Act of 1963, is the charging section.
According to clause
(1) of that.section, subject to the provision of sub-section (2), there
shall be levied and paid to the State Government on the units
of
·energy consumed or sold, excluding losses of energy in transmission
and transformation, a duty at the rate or rates specified in the Schedule.
The section thus deals with the incidence of duty, and makes
it clear that such duty 11as to be paid on the units of .energy consumed or sold and at the rate or rates specified in the schedule. It is
further made clear by the section that the duty is to be levied and
paid lo the State Government.
As the duty is to be levied on the
units of energy consumed or sold, it would follow that the duty would
liave to be paid by the consumer or seller,, as the case may be.
Section 4 of the prindpal Act merely provide$ for the manner and mode
of payment of the duty, and we find no substance in the contenti?n
that unless section 4 of the principal Act was also re-enacted with
the assent of the President, the liability for payment of duty cannot
be fastened upon the appe1!ant.
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SUPREME COURT REPORTS
[1977] 1 S.C.R.
What is required by clause (2) of article 288 is that the law
made by the State legislature for imposing or authorising the imposition of tax mentioned in clause ( 1) shall have effect only if after
having been reserved for the consideration of the President, it receives
his assent. Another requirement of that clause is that if such law
provides for the fixation of the rates and other incidents of such tax
by means of rules or orders to be made under the law by any authority, the law shall provide for the previous consent of the President
being o15tained tci the making of any_ such rule or order. It is, however, not the effect of that Clause that even if the above mentioned
two requirements are satisfied, the provisions which merely deal with
the mode and manner of the payment of the aforesaid tax should
also receive the assent of the President and that in the absence of
such assent,. the provisions dealing with the incidence of tax, which
have received the assent of the President, would remain unenforceable.
Some other aspects were also dealt with by the High Court, but
in the light of the view we have taken in the matter, it is not necessary
to deal with those aspects.
The appeal consequently fails and is dismissed but in the circumstances without costs.
P.B.R.
Appeal dismissed.