# VASANT CHEMICALS LIMITED v. THE MANAGING DIRECTOR, HYDERABAD METROPOLITIAN WATER SUPPLY AND SEWERAGE BOARD AND OTHERS

- **Citation:** [2019] 3 S.C.R. 749
- **Court:** Supreme Court of India
- **Decided:** 2019-02-13
- **Case number:** Civil Appeal Nos. 4616-4617 of 2009
- **Bench:** R. Banumathi, Indira Banerjee
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/vasant-chemicals-limited-v-the-managing-director-hyderabad-metropolitian-water-33606
- **Pages:** 28

## Headnote

Hyderabad Metropolitan Water Supply and Sewerage Act,
1989:
s.55 - Charges towards the use of sewerage cess - Appellant
unit's industrial effluents, after partial treatment at another company,
let into the Water Supply and Sewerage Board's sewer line - Levy
of sewerage cess on the appellant by the Board - Held: Levy of
sewerage cess on the appellant by the Board is in accordance with
s. 55 and Clause 16 of the agreement entered into between the
appellant and the Board - Appellant being occupier of the premises,
though its unit is not directly connected with the Board sewer line,
the industrial effluents of the appellant unit partially treated at JETL
are ultimately let into the Board sewer line which is finally carried
to the Sewerage Treatment Plant - It cannot be said that appellant
is not liable to pay sewerage cess to the Board as it is not directly
letting out sewage effluents into the sewage line of the Board and
that it is carrying its effluents in the tanker, lorries and letting out
in the effluent treatment plant of JETL and thus, not connected with
the sewage system of the Board - Since the sewage of the appellant
is ultimately let into the sewer line of the Board, the appellant cannot
contend that it is covered under proviso to s. 55 - Furthermore,
payment of sewerage surcharges and other charges by JETL cannot
take away the statutory liability of sewerage cess levied on the
appellant's unit which consumes water and lets out the sewage into
the Board sewer system - Payment of sewerage surcharge and other
charges by JETL to the Board will not amount to double levy -
Cess.
Dismissing the appeals, the Court
HELD: 1.1 Section 55 of the Hyderabad Metropolitan
Water Supply and Sewerage Board Act, 1989 contemplates levy
[2019] 3 S.C.R. 749
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of sewerage cess on the occupier of the premises from where
the sewage or industrial effluents, as the case may be, are let
into the sewer facility provided by the Board by any means
whatsoever irrespective of fact whether or not the area is served
by sewerage system of the Board. [Para 11][761-A-B]
1.2 As per the agreement entered into with the Board, the
management of the JETL pays the amount to the Board towards
surcharge for discharging partially treated effluents from JETL
into Board sewer and also for maintenance of the sewerage
system. After the industrial effluents are partly treated at JETL,
the industrial effluents are let into the dedicated pipeline
belonging to the Board system at Balanagar and from there, the
sewage is let into 1000 mm diameter sewage trunk main belonging
to the Board through which the effluents are carried to Sewerage
Treatment Plant (STP) at Amberpet. [Para 13][762-G-H; 763-A]
1.3 The appellant being an occupier of a "non-domestic
premise" having bulk water supply connection from the Board
and "a consumer of water" and eventually discharging sewage
effluents into the sewer line of the Board, the essential ingredients
of Section 55 are thus satisfied. The levy of sewage cess by the
respondent is a statutory levy which the appellant is liable to pay
under Section 55 of HMWS&S Act. Clause 16 of the agreement
provides for payment of sewerage cess in terms of Section 55 of
the Act which inter alia stipulates that the appellant is required
to pay sewerage cess in accordance with Section 55 of the Act.
The sewerage cess of 35% levied by the Board for carrying the
sewage of the acceptable quality through its transmission system
is thus, both statutory and in terms of the agreement between
the appellant and JETL. [Para 16][764-B-C]
1.4 As per Section 54 of the Act, sewage which is likely to
damage or interfere with the free maintenance of the sewerage
system of the Board cannot be passed into the Board sewer and
sewage treatment works. In terms of Section 54 of HMWS&S
Act, Clause 19 is also incorporated in the agreement between
the appellant industry and HMWS&SB, whereby no effluents shall
be discharge

## Text

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VASANT CHEMICALS LIMITED
v.
THE MANAGING DIRECTOR, HYDERABAD
METROPOLITIAN WATER SUPPLY AND SEWERAGE BOARD
AND OTHERS
(Civil Appeal Nos. 4616-4617 of 2009)
FEBRUARY 13, 2019
[R. BANUMATHI AND INDIRA BANERJEE, JJ.]
Hyderabad Metropolitan Water Supply and Sewerage Act,
1989:
s.55 - Charges towards the use of sewerage cess - Appellant
unit's industrial effluents, after partial treatment at another company,
let into the Water Supply and Sewerage Board's sewer line - Levy
of sewerage cess on the appellant by the Board - Held: Levy of
sewerage cess on the appellant by the Board is in accordance with
s. 55 and Clause 16 of the agreement entered into between the
appellant and the Board - Appellant being occupier of the premises,
though its unit is not directly connected with the Board sewer line,
the industrial effluents of the appellant unit partially treated at JETL
are ultimately let into the Board sewer line which is finally carried
to the Sewerage Treatment Plant - It cannot be said that appellant
is not liable to pay sewerage cess to the Board as it is not directly
letting out sewage effluents into the sewage line of the Board and
that it is carrying its effluents in the tanker, lorries and letting out
in the effluent treatment plant of JETL and thus, not connected with
the sewage system of the Board - Since the sewage of the appellant
is ultimately let into the sewer line of the Board, the appellant cannot
contend that it is covered under proviso to s. 55 - Furthermore,
payment of sewerage surcharges and other charges by JETL cannot
take away the statutory liability of sewerage cess levied on the
appellant's unit which consumes water and lets out the sewage into
the Board sewer system - Payment of sewerage surcharge and other
charges by JETL to the Board will not amount to double levy -
Cess.
Dismissing the appeals, the Court
HELD: 1.1 Section 55 of the Hyderabad Metropolitan
Water Supply and Sewerage Board Act, 1989 contemplates levy
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of sewerage cess on the occupier of the premises from where
the sewage or industrial effluents, as the case may be, are let
into the sewer facility provided by the Board by any means
whatsoever irrespective of fact whether or not the area is served
by sewerage system of the Board. [Para 11][761-A-B]
1.2 As per the agreement entered into with the Board, the
management of the JETL pays the amount to the Board towards
surcharge for discharging partially treated effluents from JETL
into Board sewer and also for maintenance of the sewerage
system. After the industrial effluents are partly treated at JETL,
the industrial effluents are let into the dedicated pipeline
belonging to the Board system at Balanagar and from there, the
sewage is let into 1000 mm diameter sewage trunk main belonging
to the Board through which the effluents are carried to Sewerage
Treatment Plant (STP) at Amberpet. [Para 13][762-G-H; 763-A]
1.3 The appellant being an occupier of a "non-domestic
premise" having bulk water supply connection from the Board
and "a consumer of water" and eventually discharging sewage
effluents into the sewer line of the Board, the essential ingredients
of Section 55 are thus satisfied. The levy of sewage cess by the
respondent is a statutory levy which the appellant is liable to pay
under Section 55 of HMWS&S Act. Clause 16 of the agreement
provides for payment of sewerage cess in terms of Section 55 of
the Act which inter alia stipulates that the appellant is required
to pay sewerage cess in accordance with Section 55 of the Act.
The sewerage cess of 35% levied by the Board for carrying the
sewage of the acceptable quality through its transmission system
is thus, both statutory and in terms of the agreement between
the appellant and JETL. [Para 16][764-B-C]
1.4 As per Section 54 of the Act, sewage which is likely to
damage or interfere with the free maintenance of the sewerage
system of the Board cannot be passed into the Board sewer and
sewage treatment works. In terms of Section 54 of HMWS&S
Act, Clause 19 is also incorporated in the agreement between
the appellant industry and HMWS&SB, whereby no effluents shall
be discharged into the Board's sewerage system unless such
effluents are treated in accordance with the provisions of the Water
Act, 1974. Admittedly, JETL is neither a consumer of bulk water
supply nor generating any sewage/industrial effluents of its own.
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The effluents of the appellant industry are not of acceptable
standards for transmission system of the Board. Before the
effluents of the appellant industry are to be let into the sewer
line of the Board, the appellant industry has to get the effluents
treated at its own cost to bring the quality of the effluents to an
acceptable level. After getting partial treatment from JETL, the
effluents are let into the said dedicated pipeline which belongs to
the Board at Kukutpally/Balanagar and then they are let into 1000
mm diameter sewage trunk belonging to the Board through which
the effluents are carried to Sewerage Treatment Plant (STP) at
Amberpet measuring a distance of 18.90 kilo meters. The length
of the pipeline from JETL to Amberpet is 29.28 kilo meters.
Though the appellant's unit is not directly connected with the
Board sewer line, the industrial effluents of the appellant unit
partially treated at JETL are ultimately let into the Board sewer
line which is finally carried to STP at Amberpet. Thus, the appellant
is liable to pay sewerage cess under Section 55 of the Act. Proviso
to Section 55 of the Act contemplates that the sewerage cess
shall not be levied on the occupier of the premises if such
premises is stated to be in an area which is not served by the
sewerage system of the Board. The proviso implies that the
occupier of such premises cannot use the Board sewer by any
means whatsoever. Therefore, the submission of the appellant
that it is not liable to pay sewerage cess to the Board as it is not
directly letting out sewage effluents into the sewage line of the
Board and that it is carrying its effluents in the tanker, lorries
and letting out in the effluent treatment plant of JETL and thus
not connected with the sewage system of the Board, is wholly
untenable. Since the sewage of the appellant is ultimately let into
the sewer line of the Board, the appellant cannot contend that it
is not covered under Section 55 of the Act and that it is covered
under proviso to Section 55 of the Act. [Para 19][765-C-D, F-H;
766-A-D]
1.5 The agreement between the appellant and JETL for
partial treatment of appellant's industrial effluents is the internal
contractual agreement between JETL and the appellant. The
appellant unit is to treat and process the industrial effluents and
bring them down to permissible standard limits in accordance
with the provisions of Water Act, 1974 and Environment Act,
VASANT CHEMICALS LTD v. MD, HYDERABAD METROPOLITIAN
WATER SUPPLY & SEWERAGE BOARD
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1986 relating to discharge and disposal of industrial effluents and
other objectionable effluents into sewers before discharging of
the effluents into the Board sewer. The treated effluents should
also have to conform to the IS specification laid down from time
to time for disposal of effluent into the domestic sewer of the
Board. To discharge their contractual obligation in bringing the
industrial effluents to permissible standard limits, the appellant
unit entered into an agreement with JETL engaging it to treat its
industrial effluents in accordance with the environmental laws in
force. The appellant instead of treating the effluents at its
premises at its own cost engaged JETL for treating its effluents.
Thus, for its convenience, the appellant unit has entered into an
agreement with JETL for treating its effluents and the charges
paid by them to JETL are towards the treatment of effluents and
bring it to permissible standards. Therefore, the function of JETL
is that of an intermediary with whose assistance, the appellant is
discharging its statutory obligation. [Para 23][767-F-H; 768-A-C]
1.6 The sewerage cess aims to recover the cost of treating
the effluents of strength stronger than domestic sewage and to
make the effluents of acceptable quality. In addition to partial
treatment at JETL, the effluents require further treatment and
their transmission to Sewer Treatment Plant (STP) at Amberpet
situated at 18.90 kms from Bala Nagar which requires huge
finance. The maintenance of sewer line is highly essential for
proper transmission of the effluents from JETL to Board's sewer
system at Amperpet where the Board brings down the industrial
effluents to the tolerance limits. It requires huge amount to
maintain the STP treatment of industrial effluents. It also requires
high demand of energy, STP personnel to operate and maintain
the system, skilled and unskilled workers for proper maintenance
of the plant. The respondent-Board unless it collects sewerage
cess and other charges cannot meet the heavy expenditure on
the operation and maintenance of sewerage system. The liability
of the appellant to pay sewerage cess to the Board arises from
the Statute and also by way of an agreement which was agreed
upon by the appellant. There is no merit in the contention of the
appellant unit that its liability has ended upon transferring the
industrial effluents to JETL and that it is not connected to the
Board's sewer line. [Para 25][768-E-H; 769-A-B]
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1.7 The sewerage cess levied under Section 55 is a statutory
levy on the appellant as it satisfies the essential requirements of
Section 55 of the Act. The agreement/contract between the
appellant's unit and JETL does not take away the appellant from
the network of the Board's sewer line and its "use and treatment
of sewerage" of the Board's sewerage system. Where the
appellant's effluents are being eventually sent to the Board's
sewer, the contention of the appellant that its premises are not
served with a sewer line by the Board defies logic and runs
contrary to the object of the Act. Appellant cannot escape from
the statutory levy by taking a technical approach and interpreting
the proviso as a general rule where it is merely a qualifying one.
[Para 27][770-A-C]
1.8 The plea of double levy was rightly rejected by the High
Court inter alia holding that "even assuming for a moment that
the petitioner-company is paying some amounts to the JETL, it
cannot be said that it is towards sewerage cess". [Para 30][771-D]
1.9 So far as the payment by the appellant unit to the Board,
it is the statutory liability of payment of sewerage cess in terms
of Section 55 of HMWS&S Act and Clause 16 of the agreement
which obligates the appellant unit to pay the sewerage cess in
terms of Section 55 of the HMWS&S Act. The appellant having
bulk water supply connection from the Board and being
"consumer of water" and discharging sewage/effluents into the
sewer line of the Board, the payment of sewerage cess by the
appellant unit is the statutory liability under Section 55 of the
HMWS&S Act and Clause 16 of the agreement. Insofar as the
charges paid by the appellant to JETL for the treatment and
processing of its effluents, it is purely contractual pursuant to
the agreement entered into between the appellant unit and JETL
and the earlier agreement. The same cannot be considered to be
in deference to the statutory cess/statutory charge which can only
be levied by the Board. [Paras 33, 34][772-E-G; 773-B]
1.10 Subject to the provisions of Water Act, 1974 and
Environment Act, 1986 and subject to the restrictions of Section
54 of HMWS&S Act and in terms of Rule 4 and other terms and
conditions, Board has the right to permit the 'applicants' seeking
to discharge their trade or industrial effluents into the Board's
VASANT CHEMICALS LTD v. MD, HYDERABAD METROPOLITIAN
WATER SUPPLY & SEWERAGE BOARD
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sewer system and Sewerage Treatment Plant subject to the
imposition of costs. The treatment for letting the trade or industrial
effluents into the Board's sewer shall be subject to such terms
and conditions and in such form of agreement as may be prescribed
in the regulations made by the Board in accordance with these
rules. Having entered into the agreement with the Board on
31.08.2000 and on prior dates, JETL cannot turn around and
challenge the terms and conditions imposed upon it by virtue of
the agreement. [Para 36][774-E-G]
1.11 So far as the various payments made by JETL to the
Board, levy is in terms of Rule 4 of the Sewerage Rules and as
per the contract and is purely contractual between JETL and the
respondent Board for letting partially treated the industrial
effluents of the appellant and other units into the Board's sewer.
Likewise, charges paid by JETL to the Board cannot be said to
be in lieu of the sewerage cess that the appellant unit is liable to
pay which is a statutory liability. Many industries about fifty units,
apart from the appellant unit, discharge their effluents to the
CETP/JETL. The agreements between JETL and the Board are
purely contractual consciously entered into between the parties.
[Para 37][774-H; 775-A-B]
1.12 JETL lets partially treated effluents into the Board's
sewerage system for further treatment. For further treatment of
sewerage, the effluents are to be taken to Sewerage Treatment
Plant (STP) at Amberpet which is situated at the distance of 08.30
kilometres from Balanagar. It requires huge amount for
transmission of the effluents to Board's sewer system at
Amberpet where the Board brings down the industrial effluents
to tolerance limits. The treatment of industrial effluents requires
high demand of energy, personnel to operate the system and
skilled workers for maintenance of the plant. Unless the Board
collects sewerage charge/sewerage surcharge, the Board cannot
meet the heavy expenditure on the operation and maintenance
of sewerage system. Various other members of JETL who
discharge sewage into JETL which is ultimately let into Board
sewer line, may or may not be consumers of water supply by the
Board. That apart, members of JETL may have their own source
of water supply or they may supplement the supply of water from
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the Board through different sources either by extraction of ground
water or supply through tankers which cannot be quantified by
the Board. In pursuance of the provisions of the HMWS&S Act
and the Sewerage Rules and pursuant to the agreement dated
31.08.2000, the charges are levied on JETL who in turn collects
the charges from its member industrial units who discharge their
effluents into JETL. Therefore, the payments made by JETL to
the Board and the charges in turn collected by JETL from the
appellant and other member units, cannot absolve the appellant
unit from its statutory liability to pay the sewerage cess. There is
no double levy of sewerage cess. [Para 38][775-C-F]
1.13 Levy of sewerage cess being a statutory levy in terms
of Section 55 of HMWS&S Act and Clause 16 of the agreement
which incorporates the statutory levy under Section 55 of
HMWS&S Act, the Single Judge and the Division Bench rightly
recorded concurrent findings upholding the levy. Observing that
the appellant being occupier of the premises, though not directly
connected to the sewer line of the Board, is ultimately letting
into the sewerage system of the Board after partial treatment at
JETL, the High Court was right in holding that the levy of
sewerage cess is in accordance with Section 55 of HMWS&S
Act. The payment of sewerage surcharges and the other charges
by JETL cannot take away the statutory liability of sewerage cess
levied on the occupier of the premises who consumes water and
lets out the sewage into the Board sewer system. The payment
of sewerage surcharge and other charges by JETL to the
respondent-Board will not amount to double levy and the High
Court rightly dismissed the writ petitions and also the review
petitions filed by the appellant. The impugned order does not
suffer from any infirmity warranting interference. The arrears of
sewerage cess, if any, to be paid by the appellant within the
stipulated period with 6% interest with effect from the date cess
fell due, else it shall carry interest at the rate of 12% thereafter.
[Paras 39-40][775-G-H; 776-A-D]
Indian Council for Enviro Legal Action and others v.
Union of India and others (1998) 9 SCC 580; World
Saviors v. Union of India and others (1998) 9 SCC
247; Ultra Tech Cement Ltd. v. State of Maharashtra
VASANT CHEMICALS LTD v. MD, HYDERABAD METROPOLITIAN
WATER SUPPLY & SEWERAGE BOARD
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and another (2011) 13 SCC 497 : [2011] 11 SCR 613
; Romesh Kumar Sharm v. Unon of India and Others
(2006) 6 SCC 510 : [2006] 4 Suppl. SCR 227 - referred
to.
Environmental & Pollution laws in India by Justice T.S.
Doabia (2nd Edn-2010) LexisNexis Butterworths
Wadhwa, Volume 1 p 1054 - referred to.
Case Law Reference
(1998) 9 SCC 580
referred to
Para 13
(1998) 9 SCC 247
referred to
Para 13
[2011] 11 SCR 613
referred to
Para 20
[2006] 4 Suppl. SCR 227
referred to
Para 26
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos.
4616-4617 of 2009.
From the Judgment and Order dated 29.12.2003 of the High Court
of Andhra Pradesh at Hyderabad in Review Petition W.P.M.P. Nos.
33154 & 33158 of 2003.
WITH
Civil Appeal Nos. 4618-4619 of 2009.
 V. Giri, Gourab Banerji, Guru Krishna Kumar, Sr. Advs.,
Ms. S. Suman Mund, Krishna Kumar, Mrs. D. Bharathi Reddy, Ms. Raka
Chatterjee, S. P. Mukherjee, Sudhakar Reddy, K. Parameshwar,
M. V. Mukunda, Advs. for the appearing parties.
The Judgment of the Court was delivered by
R. BANUMATHI, J. 1. These appeals arise out of the judgment
dated 29.10.2003 passed in the Writ Petition Nos.4917 and 5044 of 2000
and order dated 29.12.2003 passed in review petition by the High Court
of Andhra Pradesh at Hyderabad dismissing the writ petitions as well as
the review petitions holding that the levy of sewerage cess levied on the
appellant by the respondent-Board is in accordance with Section 55 of
the Hyderabad Metropolitan Water Supply and Sewerage Act, 1989
(HMWS&S Act) and Clause 16 of the agreement entered into between
the appellant and the Board.
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2. The facts giving rise to these appeals are that the appellant-M/
s Vasant Chemicals Limited which is an amalgamation of three companies
is engaged in the manufacture and export of dye intermediates and other
organic chemicals in their units at Jeedimetla Industrial Estate, Ranga
Reddy District, Hyderabad. The effluents of the appellant industry and
other industries were not of acceptable standards to be let into the sewer
line of the Board and required treatment and therefore, the industrial
units in Jeedimetla Estate decided to establish the Common Effluent
Treatment Plant (CETP). Hence, under the joint efforts of all the chemical
units and other industries including the appellant, a company was formed
namely M/s Jeedimetla Effluents Treatment Limited (JETL) in the year
1987 to get the effluents treated at their own cost to bring the quality of
the effluents to an acceptable level. The appellant and the other industrial
units made investment by way of shares in the said company towards its
capital. According to the appellant, it has invested to the extent of more
than 29% of the shares in JETL towards its equity.
3. After treating the effluents to sewer standards as prescribed
under the Water (Prevention and Control of Pollution) Act, 1974 (Water
Act, 1974) and the Environment (Protection) Act, 1986 (Environment
Act, 1986) between 1988 and 1995, JETL was discharging the treated
waste water/effluents into the open drains/nalas in Jeedimetla Area.
After discussion with Hyderabad Metropolitan Water Supply and
Sewerage Board (HMWS&SB-the Board) and the Government of
Andhra Pradesh and APPCB, a dedicated pipeline was laid from the
premises of JETL to connect to the sewerage system of HMWS&SB
which is located at a distance of about 10.38 kilometers at Balanagar at
an estimated cost of Rs.346 lakhs. For the said dedicated pipeline, JETL
paid an amount of Rs.75,00,000/- as its contribution and the balance
amount was contributed by the Board and the Government of Andhra
Pradesh. The pipeline became operational on 31.01.1998. As per the
direction of APPCB, the industries in IDA Jeedimetla are discharging
their industrial effluents to JETL, which in turn partially treat effluents
and let into the dedicated pipeline connecting JETL and sewer line at
Board's sewer at Kukatpalli, Balanagar and then carried to Sewerage
Treatment Plant (STP) at Amberpet.
4. The appellant has obtained bulk water supply connection from
the respondent-HMWS&S Board and the Board accorded sanction for
supply of 36,200 gallons water per day @ Rs.12 per kilo litre to the
VASANT CHEMICALS LTD v. MD, HYDERABAD METROPOLITIAN
WATER SUPPLY & SEWERAGE BOARD [R. BANUMATHI, J.]
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appellant-Industry. An agreement was entered into by the appellant with
the respondent-Board on 27.04.1995 stipulating the terms and conditions
of supply of water and the payments required to be made in terms thereto.
The agreement provides that HMWS&SB will supply water to the
appellant industry and water charges will be levied for the supply of
water as per the agreement. Clause 16 of the agreement inter alia
provided for payment of sewerage cess and that the appellant is liable to
pay a sewerage cess in accordance with Section 55 of the HMWS&S
Act. Clause 17 of the agreement obligates the appellant to avail the
sewer facility provided by the HMWS&SB if the premises of the appellant
is located at a distance of less than thirty-five meters from the sewer
line of the HMWS&SB.
5. The appellant made representations between 1998 and February,
2000 stating that levy of sewerage cess was illegal and contrary to the
provisions of HMWS&S Act as the appellant is not discharging its
effluents into the sewerage system of the Board. According to the
appellant, the Board insisted upon payment of the arrears and sought
payment of the sewerage cess for the period January, 1998 to March,
2000 and sought certain amount towards water cess from 1st January,
1998 to February, 2000 vide two notices dated 25.01.2000. Aggrieved
thereby, the appellant filed writ petitions in WP(C) No.4917/2000 and
WP(C) No.5044/2000 challenging the notices levying of water cess and
sewerage cess respectively. The writ petitions were dismissed by the
High Court by the common judgment dated 29.10.2003 upholding the
levy of sewerage cess by holding that such levy is in terms of Section 55
of HMWS&S Act. The High Court held that though the appellant's
premises is not directly connected to the sewer line of the Board, the
industrial effluents of the appellant are being carried to JETL and after
partial treatment at JETL, the same is let into the sewerage system of
the Board. It was further observed that as per Section 55 of the
HMWS&S Act, the occupier of the premises from where the sewerage
or effluents are let into the sewer facility provided by the Board by any
means, has to pay the sewerage cess irrespective of the fact that whether
or not the area is served by sewerage system of the Board. The High
Court pointed out that this statutory liability is incorporated in Clause 16
of the agreement as per which the appellant has to pay sewerage cess
along with water cess @ 20% of the water charges. The High Court
dismissed the writ petitions vide judgement dated 29.10.2003 holding
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that the demand notices are not arbitrary and that do not suffer from any
legal infirmities.
6. The appellant filed review petitions being Review MP No.33154/
2003 in WP(C) No.4917/2000 and Review MP No.33158/2003 in WP(C)
No.5044/2000 before the High Court which came to be dismissed vide
order dated 29.12.2003 on the ground that the judgment dated 29.10.2003
does not suffer from any error apparent on the face of the record.
7. Mr. V. Giri, learned senior counsel for the appellant submitted
that since the premises of the appellant industry is situated in the area
not served by the sewage system of the Board and in terms of proviso to
Section 55 of the HMWS&S Act, no sewerage cess is leviable. It was
contended that since the appellant is covered under proviso to Section
55 of the HMWS&S Act, the statutory liability cannot be imposed on the
appellant on the basis of Clause 16 of the agreement. Without prejudice
to the above contentions, it was urged that under the agreement dated
31.08.2000 between the JETL and the Board, various charges are levied
on JETL which are in effect sewerage cess and therefore, there cannot
be double levy for the same service/same taxable event which is
impermissible under the law. It was contended that the various documents
produced and the contentions raised by the parties in the review petitions
were not considered by the High Court and the High Court erred in
dismissing the review petitions.
8. Reiterating the above submissions, on behalf of JETL, Mr. Guru
Krishna Kumar, learned senior counsel submitted that under the
agreement dated 31.08.2000, five different kinds of charges are levied
on JETL by the Board namely:- (i) capital contribution (clause 4); (ii)
sewerage connection charges (clause 4); (iii) charges towards
maintenance of sewer line (clause 28); (iv) sewerage maintenance and
sewerage treatment charges (clause 28); and (v) sewerage surcharge
for effluents above a certain level (clause 29) and those charges though
not christened as sewerage cess, they are in effect sewerage cess in
terms of Section 55 of HMWS&S Act. It was further contended that
various charges levied on JETL by virtue of the agreement dated
31.08.2000 correspond to the sewerage cess under Section 55 of
HMWS&S Act and levy of sewerage cess on the appellant for the same
act of discharging of the same sewage, would therefore amount to a
double levy on the industrial units.
VASANT CHEMICALS LTD v. MD, HYDERABAD METROPOLITIAN
WATER SUPPLY & SEWERAGE BOARD [R. BANUMATHI, J.]
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9. On behalf of the respondent Board, learned senior counsel Mr.
Gourab Banerji submitted that the appellant industry, obtaining bulk water
supply from the Board and discharging sewage into the sewer line of the
Board, is liable to pay sewerage cess under Section 55 of the HMWS&S
Act. It was submitted that since after partial treatment at JETL, the
effluents are let into the sewer line of the Board through which the
effluents are carried to Sewerage Treatment Plant (STP) at Amberpet
for further treatment, the appellant is connected to the sewerage system
of the Board and is liable to pay sewerage cess under Section 55 of the
HMWS&S Act. It was contended that Clause 16 of the agreement
incorporates the levy under Section 55 of the HMWS&S Act and the
Rules and Regulations thereunder and as per the terms of the agreement
also, the appellants are liable to pay sewerage cess. Insofar as the plea
of double taxation, it was submitted that the JETL was not a party to the
writ petitions filed by the appellant and the subsequent writ petition in
WP(C) No.17381/2004 filed by the JETL inter alia challenging the
sewerage surcharge under various agreements was already dismissed
for default by the High Court.
10. We have carefully considered the submissions and perused
the impugned judgment and materials on record. The following points
arise for determination in these appeals:-
(i) Whether the appellant is right in contending that the appellant
unit is not connected to the sewerage system of the Board and
so the levy of sewerage cess on the appellant under Section
55 of HMWS&S Act is not sustainable?
(ii) Whether the appellant is right in contending that since the
appellant's unit is not served by a sewerage system of the
Board, as per proviso to Section 55 of HMWS&S Act, no
sewerage cess can be levied?
(iii) Whether the charges collected from JETL under the
agreement dated 31.08.2000 is in effect, sewerage cess in
terms of Section 55 of HMWS&S Act, thereby amounting to
double levy of sewerage cess/charge for the same service/
same taxable amount?
Appellant's statutory liability to pay sewerage cess and
Re: contention: Appellant is covered by the proviso to Section
55 of the Act
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11. Section 55 of the HMWS&S Act contemplates levy of
sewerage cess on the occupier of the premises from where the sewage
or industrial effluents, as the case may be, are let into the sewer facility
provided by the Board by any means whatsoever irrespective of fact
whether or not the area is served by sewerage system of the Board.
Section 55 of HMWS&S Act reads as under:-
"55. Charges towards the use of sewerage cessEvery occupier of both domestic and non-domestic premises shall
pay to the Board at the rate not exceeding thirty five percent of
the bill charging for the water consumed or at such rate as may
be prescribed by rules, to defray the capital cost of sewerage and
sewage treatment works undertaken by the Board and the
operation and maintenance of the sewerage system from time to
time:
Provided that no such charges shall be levied in any premises
situated in the areas which are not served by the sewerage system
of the Board."
12. Admittedly, the appellant industry has obtained sanction for
bulk water supply connection from the Board for the supply of 36,200
gallons of water per day @ Rs.12/- per kilo litre for the manufacture of
dye and other chemicals. In terms of the sanction of water supply to the
appellant, an agreement was entered into with the respondent-Board on
27.04.1995 stipulating the conditions and the payments required to be
made in terms thereto. The agreement provides for payment of sewerage
cess in accordance with Section 55 of the HMWS&S Act. Clause 16 of
the agreement mandates the Board to collect sewerage cess from the
appellant-industry in terms of Section 55 of the HMWS&S Act. Clause
17 of the agreement makes it obligatory on the part of the appellant to
avail the facility of the Board if it is located within thirty-five meters
from the Board's sewerage system. Clauses 16 and 17 read as under:-
"Clause 16. In accordance with the provisions of Section 55 of
the HMWSSA Act, 1989, the consumer shall pay sewerage cess
along with water charges at the rate of 20% of the water charges
or such other rates as may be prescribed and determined by the
Board from time to time.
Clause 17. It shall be obligatory on the part of the consumer to
avail the sewers facility provided by the Board if the premises of
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the consumers are located at a distance less than 35 metres away
from the Board sewer line to any point of the boundary of the
consumer premises."
13. Appellant industry and other industrial units are producing
chemicals, bulk pharmaceuticals and dye intermediates causing heavy
pollution. In order to comply with the provisions of Water Act, 1974, the
industrial effluents discharged by the appellant industry and others are
to be treated otherwise the industrial units will be violating various laws
governing the treatment and disposal of sewage including protection of
environment. The issue pertaining to pollution, discharge of effluents in
the State of Andhra Pradesh including the industrial region of Jeedimetla
was the subject matter of a proceeding before this Hon'ble Court being
Writ Petition (C) No.1056 of 1990, in the matter of Indian Council for
Enviro/legal Action and Others. In the said proceedings, a joint action
plan was proposed by the CPCB, New Delhi and APPCB and a common
effluent treatment plant was ordered to be set up. As the industries
were sending their untreated effluents into the sewer, directions were
given that the A.P. Pollution Control Board would not accept the effluents
unless these conform to the standards prescribed by the Board vide
Indian Council for Enviro Legal Action and others v. Union of India
and others, (1998) 9 SCC 580. Similar problem arose in the case of
World Saviors v. Union of India and others (1998) 9 SCC 247. In
order to comply with the provisions of the Water Act, 1974 and the
Environment Act, 1986 and in order to carry the industrial sewage to the
Board's sewer trunk, a dedicated pipeline to the extent of 10.38 kilo
meters from JETL to Kukatpally and Sanathnagar Main Line was laid.
The cost of laying the pipeline is stated to be Rs.346 lakhs out of which
contribution of the JETL was Rs.75 lakhs and the balance amount was
contributed by the Board and the Government of Andhra Pradesh. This
dedicated pipeline became operational from 31.01.1998. The pipeline
from JETL to Balanagar is a dedicated pipeline used exclusively by the
JETL. As per the agreement entered into with the Board, the management
of the JETL pays the amount to the Board towards surcharge for
discharging partially treated effluents from JETL into Board sewer and
also for maintenance of the sewerage system. After the industrial
effluents are partly treated at JETL, the industrial effluents are let into
the dedicated pipeline belonging to the Board system at Balanagar and
from there, the sewage is let into 1000 mm diameter sewage trunk main
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belonging to the Board through which the effluents are carried to
Sewerage Treatment Plant (STP) at Amberpet.
14. "A 'trunk sewer' is one which bears the same relation to an
entire sewer system that the trunk of a tree bears to its branches, or the
main stream of a river bears to its tributaries. It is sometimes called a
'trunk line sewer,' an 'intercepting sewer,' or a 'trunk line intercepting
sewer". "Ref: Environmental & Pollution laws in India by Justice T.
S. Doabia (2nd Edition-2010) published by LexisNexis Butterworths
Wadhwa, Volume 1 at page no.1054." Graphic description of the
sewerage connection is as under:-
15. As per Section 55 of the HMWS&S Act, the following essential
ingredients are to be satisfied for levy of sewerage cess:-
1. There has to be an occupier domestic or non-domestic premise;
2. There should be consumption of water by such occupier;
3. The rate to be charged would be up to 35% of bill for water
consumed or at such rate as may be prescribed by rules; and
4. The amount collected is towards:- (a) defraying capital cost of
sewerage and sewerage treatment works undertaken by the
VASANT CHEMICALS LTD v. MD, HYDERABAD METROPOLITIAN
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Board; and (b) for operation and maintenance of sewerage
system from time to time.
16. The appellant being an occupier of a "non-domestic premise"
having bulk water supply connection from the Board and "a consumer
of water" and eventually discharging sewage effluents into the sewer
line of the Board, the essential ingredients of Section 55 are thus satisfied.
The levy of sewage cess by the respondent is a statutory levy which the
appellant is liable to pay under Section 55 of HMWS&S Act. Clause 16
of the agreement provides for payment of sewerage cess in terms of
Section 55 of the Act which inter alia stipulates that the appellant is
required to pay sewerage cess in accordance with Section 55 of the
Act. The sewerage cess of 35% levied by the Board for carrying the
sewage of the acceptable quality through its transmission system is thus
both statutory and in terms of the agreement between the appellant and
JETL.
17. Contention of the appellant is that it is not liable to pay sewerage
cess to the Board as it is not letting out the sewage effluents to the
sewage system of the Board but is carrying the effluents in the tanker,
lorries and letting it out in the effluent treatment of JETL and thus is not
connected with the sewage line of the Board. Mr. V. Giri, learned senior
counsel for the appellant contended that the appellant industry is not
connected with sewerage system of the Board and therefore, levy of
sewerage cess under Section 55 of the HMWS&S Act is not sustainable.
Drawing our attention to the finding of the High Court "that there is no
sewerage line of HMWS&SB connecting the appellant's premises
to the sewerage system of HMWS&SB.....", the learned senior counsel
for the appellant submitted that since there is no sewer or drainage line
connecting the appellant industry, proviso to Section 55 of the HMWS&S
Act applies and no sewerage cess is leviable. It was further submitted
that even assuming that the dedicated pipeline from JETL for carrying
its treated effluents to the sewerage system of the Board at Balanagar
is a "sewerage system of the Board" which is more than two kilo
meters from the premises of the appellant industry, JETL is separately
paying the surcharge and the appellant is not connected with the sewerage
system and therefore, there cannot be levy of sewerage cess on the
appellant under Section 55 of the HMWS&S Act.
18. As pointed out earlier, admittedly, the appellant has obtained
bulk water supply connection from the Board for supply of 36,200 gallons
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of water per day @ Rs.12/- per kilo litre. It is also admitted that the
appellant is discharging its industrial effluents into the Board sewer line.
The appellant being an occupier of the premises who is consuming water
and discharging sewage into the sewerage system of the Board, in terms
of Section 55 of the HMWS&S Act, is liable to pay sewerage cess.
Though the pipeline from JETL to Kukutpally/Balanagar is stated to be
the dedicated pipeline, as pointed out earlier, this was laid at the cost of
Rs.346 lakhs, out of which, JETL has paid only Rs.75 lakhs. The rest of
the cost was borne by the Board and the Government of Andhra Pradesh.
It is pertinent to note that Clause 4 of the agreement dated 31.01.1998
between JETL and the Board categorically stipulates that the dedicated
pipeline from JETL to Kukutpally/Balanagar belongs to the Board.
19. As per Section 54 of the Act, sewage which is likely to damage
or interfere with the free maintenance of the sewerage system of the
Board cannot be passed into the Board sewer and sewage treatment
works. In terms of Section 54 of HMWS&S Act, Clause 19 is also
incorporated in the agreement dated 27.04.1995 between the appellant
industry and HMWS&SB. As per Clause 19 of the agreement, no
effluents shall be discharged into the Board's sewerage system unless
such effluents are treated in accordance with the provisions of the Water
Act, 1974. Clause 19 reads as under:-
"19. No effluent shall be discharged into the Board sewer unless
such effluent is treated in accordance with the provisions of Water
(Prevention and Control of Pollution) Act, 1974 relating to
discharge and disposal of industrial effluents and other
objectionable effluents. Further, the treatment shall also conform
to the IS specification laid down from time to time for disposal of
effluent into the domestic sewer of the Board."
Admittedly, JETL is neither a consumer of bulk water supply nor
generating any sewage/industrial effluents of its own. The effluents of
the appellant industry are not of acceptable standards for transmission
system of the Board. Before the effluents of the appellant industry are
to be let into the sewer line of the Board, the appellant industry has to
get the effluents treated at its own cost to bring the quality of the effluents
to an acceptable level.