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2021 SCC OnLine SC 801

In the Supreme Court of India

(BEFORE D.Y. CHANDRACHUD, VIKRAM NATH AND B.V. NAGARATHNA, JJ.)

Magadh Sugar & Energy Ltd. … Appellant;

Versus
State of Bihar and Others … Respondents.
Civil Appeal No. 5728 of 2021
Decided on September 24, 2021
The Judgment of the Court was delivered by
D.Y. CHANDRACHUD, J.:— Leave granted.
2. This appeal arises out of the judgment of a Division Bench of the Patna High
Court dated 18 September 2017. The High Court declined to entertain the writ petition
instituted by the appellant on the ground that the dispute between the parties is
factual in nature and is suitable for adjudication in terms of the statutory remedy
provided in the Bihar Electricity Duty Act 19481 . The appellant had invoked the writ
jurisdiction of the High Court to challenge the imposition of electricity duty and
penalty on the electricity that it was supplying to Bihar State Electricity Board2 .
Facts of the case
3. The appellant is a sugar mill company operating in Narkatiaganj, Bihar. It is
engaged in the business of manufacture and sale of white crystal sugar. The waste of
sugarcane (bagasse) produced in the process of manufacturing sugar is used for the
production of electricity for its own consumption and the surplus energy is supplied to
BSEB. The appellant has been supplying electricity to BSEB since 6 March 2008.
4. The Bihar Electricity Duty Act 19483 in its initial form empowered the State
Government (the first respondent) to levy electricity duty under Section 3(1) on the
units of energy consumed or sold, excluding the losses of energy in transmission and
transformation at the rates specified by the first respondent. Rates of duty were
specified in the Schedule to the Act. The Bihar Electricity Act was amended in 2002
which led to the deletion of the Schedule and amendment of Section 3(1). The
amendment allowed the first respondent to levy tax on the basis of the units or the
value of energy consumed or sold at rates specified by the State Government by a
notification. Section 3(1) in its current form provides as follows:
“3. Incidence of duty-(1) Subject to the provisions of sub-section (2), there
shall be levied and paid to the State Government, either on the units or on the
value of energy consumed or sold, excluding losses of energy in transmission
and transformation, a duty at the rate or rates to be specified by the State
Government in a notification.
Provided that, the State Government may, by notification, specify different rates
of duty in respect of different categories of consumption or sale of energy.
Provided further that, the rate of duty shall not exceed twenty paise per unit in
case the duty is levied on the basis of units consumed or sold and ten percentum of
the value of the energy consumed or sold in case the duty is levied on the basis of
the value of energy.
(2) No duty shall be leviable on units of energy-
(a) consumed by the Government of India, or sold to the Government of India,
for consumption by that Government.
(b) consumed in the construction, maintenance, or operation of any railway
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company operating that railway, or sold to that Government or any such

railway company for consumption in the construction, maintenance or
operation of any railway.
(c) consumed by the licensee in the construction, maintenance and operation of
his electrical undertaking.
(d) consumed by or sold by any class of persons exempted from payment of duty
under section 9.
(e) consumed by the Damodar Valley Corporation for the generation,
transmission or distribution of electricity by that Corporation.
(f) consumed for any purpose which the state Government may, by notification,
in this behalf declare to be a public purpose and such exemptions may be
subject to such conditions and exemptions if any, as may be mentioned in the
said notification.
(3) when a licensee holds more than one licence, duty shall be payable
separately in respect of each license.”
(emphasis supplied)
5. In pursuance of its power under Section 3(1) of the Act, the first respondent
issued a notification dated 21 October 20024 which stipulated that the rate of duty
applicable on the consumption or sale of electricity would be fixed at six per cent of
the value of energy consumed or sold for any other purposes other than irrigation. The
notification was amended by another notification dated 4 March 20055 which provided
that the rate of duty to be levied on consumption of electrical energy generated by
captive power plants would be six per cent of the value of energy, which shall be
equivalent to the energy tariff as fixed by the BSEB. It is also relevant to note that a
notification dated 14 January 20116 was issued by the first respondent exercising its
powers under Section 9 of the Act7 granting a blanket exemption from payment of
electricity duty on electricity generated by captive plants for self-consumption.
6. The appellant through the Bihar Sugar Mills Association challenged the
notifications dated 21 October 2002 and 4 March 2005 in the High Court by filing a
writ petition8 . The High Court by its judgment dated 16 September 2009 struck down
the notifications and the amendment to Section 3(1) of the Bihar Electricity Act on the
ground that there were no guidelines in the statute or the notifications for construing
the expression ‘value of energy’. The relevant extract of the judgment is reproduced
below:
“19. In view of the above discussion, the amendment of Section 3(1), so far as it
provides for payment of duty “on the value of energy” is liable to be struck down as
there is no guideline provided in the statute as to in which case the duty will
payable calculated on the basis of the value of energy consumed or sold. Similarly
the notification dated 21.10.2002 providing for payment of duty at 6 per centum of
the value of energy is liable to be quashed as there is no guidelines provided for the
ascertaining the value of energy. The subsequent Notification SO no. 14 dated
04.03.2005 is also liable to be struck down on the self-same ground. Since the
amendment as the notification is found to be inoperative, it is obvious that the duty
will be payable as per the schedule which was in vogue by virtue of the Bihar
Electricity (Amendment) Act, 1993.”
7. The first respondent aggrieved by judgment of the High Court filed a special
leave petition9 before this Court. While the matter was pending before this Court, the
first respondent amended the Act through the Bihar Finance Act 2012 with
retrospective effect from 17 October 2002 for defining the term ‘value of energy’.
Consequent to the insertion of Section 2(ee) in the Act, the expression reads as
follows:
“(ee) ‘value of energy’ -
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(i) in case of energy sold to a consumer by a licensee or by any person

who generates energy, means the charges payable by the consumer, to
the licensee or to any person who generates such energy, for the
energy supplied by such licensee or person, as the case may be; but it
shall not include the following charges, namely—
1) Meter charges
(2) Interest on delayed payment
(3) Fuse-off call charges and reconnection charges : Provided that where no
energy has been consumed by a consumer, minimum charges payable by
him shall not deemed to be the value of energy:
Provided further that where the units of energy actually consumed by
a consumer are less than the units of energy for which prescribed
minimum charges are payable, the value of energy shall, in the case of
such consumer, mean the charges for the units of energy actually
consumed by him and not the prescribed minimum charges:
(ii) in case of energy consumed by the person generating such energy, means
the charges payable by any other consumer for such quantum of power to the
Bihar State Electricity Board constituted under section 5 of the Electricity
(Supply) Act, 1948 (Act 54 of 1948) in respect of energy supplied by the
Bihar State Electricity Board within the area where the consumer is located;”
(emphasis supplied)
8. The appellant challenged the amendment by invoking the writ jurisdiction10 of
the High Court. The petition is pending.
9. On 3 January 2015, the fourth respondent issued a notice to the appellant for its
failure to file returns under Section 6B (1) of the Act, concealment of the sale of
electricity of approximately Rs. 56 crores and for raising a demand of electricity duty
and penalty of about Rs. 67 crores. The notice was issued on the basis of the report
dated 24 December 2014 of the Accountant General (Audit) Bihar. In its reply dated 5
February 2015, the appellant contended that no tax can be levied on the supply of
electricity by the appellant to BSEB for the following reasons:
(i) Under Section 3 of the Act, tax is levied on the ‘value of energy’. Section 2(ee)
only brings the sale to a consumer within the ambit of the phrase ‘value of
energy’;
(ii) BSEB is a ‘licensee’ and not a ‘consumer’ in view of the definition of ‘licensee’
provided under Section 2(d) of the Act; and
(iii) The resolution dated 12 September 2006 issued by the first respondent
announced various incentives for establishment and development of sugar and
other allied industries including exemption from payment of electricity duty for
cogeneration for five years.
10. The definition of the term ‘consumer’ has a bearing on the present appeal since
the appellant has argued that the term ‘value of energy’ used in Section 3 for the levy
of tax is not applicable to it because the definition of ‘consumer’ excludes a licensee.
The term ‘consumer’ has been defined in Section 2(b) of the Bihar Electricity Act in
the following terms:
“(b) ‘consumer’ means any person who is supplied with energy but does not
include either a licensee or the ‘distributing licensee’ as described in clause 1(a)
of clause IX of the Schedule to the [3] Indian Electricity Act, 1910 (9 of 1910), or a
person who obtained sanction under section 28 of the said Act.”
(emphasis supplied)
11. The appellant supplies electricity to BSEB which is undertaking the business of
distributing electricity. The appellant is not supplying electricity to any other person.
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Thus, the appellant has submitted that it cannot be charged electricity duty under
Section 3(1) of the Bihar Electricity Act for supplying electricity to a licensee.
12. On 8 February 2015, the Assistant Commissioner of Commercial Tax, Bettial
rejected the objection raised by the appellant and passed an assessment order
confirming the demand of electricity duty and penalty of about Rs. 67 crores on the
following grounds:
(i) It has been conceded by the appellant that it sells electricity in excess of its
consumption. Duty is levied on every sale of electricity; and
(ii) The notification dated 14 January 2011 only exempts the energy generated by a
Generator or Captive Power Plant for self-consumption.
13. Notices of demand dated 14 February 2015 were issued to the appellant
demanding electricity duty and penalty for 2010-2011, 2011-2012 and 2012-2013.
Challenging the notices, the appellant filed a writ petition11 before the High Court
praying for the following reliefs:
“For quashing the notices dated 14.2.2015 issued to the Petitioner raising
demand for payment of duty and further that the Petitioner is not liable to file
return as the provision of Section 6B(1) and 5A of the Act is not attracted in the
case of the Petitioner and was not liable to pay electricity duty on supply of
electricity to the Bihar State Electricity Board.”
14. In the meantime, National Thermal Power Corporation Limited12 had filed a writ
petition13 before the High Court challenging the imposition of electricity duty on its
supply of electricity to various electricity boards including BSEB. NTPC was supplying
electricity exclusively to the Electricity Boards. On 2 December 2015, the High Court
passed an order tagging the writ petitions filed by the appellant and NTPC on the
ground that the issue raised in both the petitions was substantially similar. Thereafter,
on 20 October 2016, the High Court de-tagged the writ petitions holding that the
matters are not similar since NTPC is a power generation company, while the appellant
is a company which runs a sugar mill and also generates electricity from molasses. The
relevant portion of the order is extracted below:
“On an examination of the facts of the present matter as also of the other two
writ petitioners in the batch of cases it is found that the other writ petitioners are
power generating companies, whereas the petitioner is a Sugar Mill Company which
also generates electricity from molasses.
Moreover, the case of the petitioner along with the association of Bihar Sugar
Mills Association was allowed by this Court by a judgment dated 16.09.2009, by
which certain amendments in the Bihar Electricity Duty Act have been struck down
but subsequently on an appeal filed by the State of Bihar in the Supreme Court, the
Supreme Court has remanded the matter to this Court.
For the aforesaid reasons, the present matter shall not be heard along with the
other writ petitions.”
15. On 14 December 2016, the High Court rendered its decision in the writ
proceedings instituted by NTPC, holding that electricity duty cannot be imposed under
Section 3(1) of the Bihar Electricity Act on a power generation company supplying
electricity to a licensee like the Electricity Board. The High Court's decision was
premised on two reasons. First, it relied on the judgment of this Court in State of AP v.
National Thermal Power Corporation Ltd.14 to arrive at the conclusion that it is beyond
the legislative competence of the State to impose a tax on the sale of electricity which
is not a sale for consumption. In this regard, the High Court observed that:
“…the Apex Court has interpreted Entry 53 [of List II of the Constitution] to be
read as taxation on the consumption or sale for consumption of electricity. That
being the position whether the tax levied is under Entry 53 of List II as a tax on
consumption or sale for consumption of electricity, or under Entry 54 of List II as
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taxes on sale or purchase of goods, it will make no difference since the goods which
are to be taxed, that is, ‘electricity’ remains the same under both the circumstances
and the levy can only be on the consumption or sale for consumption of electricity
in terms of what has been laid down by the Apex Court in the NTPC's case (supra).
The distinction between the two entries in respect of electricity has been clarified in
para 23 of the said judgment where it has been said that if the State Legislature
chooses to impose tax on consumption of electricity it will not be possible to do so
under Entry 54, because it does not provide for taxes on consumption whereas
Entry 53 permits the same.
Thus, the charging Section 3(1) of the Act when it speaks of levy of duty on
either units or on the value of energy consumed or sold, has to be similarly read as
the Constitutional Entry 53 providing the power to the State Legislature, to levy
electricity duty either on the unit or on the value of energy consumed or sold for
consumption. In the said circumstances, any sale of electricity which is not a sale
for consumption would be beyond the purview of the State Legislature to enact and
thus the charging Section 3(1) of the Act has to be read in the said light as levy of
electricity duty for consumption or sale for consumption of electricity.”
16. Second, the High Court observed that in terms of the provisions of the Bihar
Electricity Act, a power generation company is liable to pay duty only if it is selling
electricity to the consumer, as defined in the legislation. The High Court held that:
“We are also in agreement with the submission of learned counsel for the
petitioners on the basis of the provisions of Section 3(1) read with Section 2(b), (d)
and (ee) of the Act. It is evident from the definition of value of energy in Section 2
(ee) which is the computation provision brought in by amendment, after the earlier
provisions and notifications had been struck down by the Court as providing no
guidelines, that it provides for only two type of cases under sub-clause (i) that is,
firstly, energy sold to a consumer by a licensee and, secondly, energy sold to a
consumer by a person who generates energy. Since we are not concerned with the
2nd type of case mentioned in sub-clause (ii) with regard to the person generating
energy consuming the same, the only circumstance under which a generation
company like the petitioners or any other person who generates energy would be
liable for payment of electricity duty would be when it sells the energy, to the
consumer itself. The petitioners are evidently not a licensee in the matters in hand,
they are certainly not selling energy to the consumer; rather they are selling it to
the BSEB, which is a licensee under Section 2(d) and which in turn sells the energy
for ultimate consumption.
…
Therefore, even on the ground of the applicability of the charging provision it has
to be held that the charging provision under Section 3(I) read with the definition of
‘consumer’, ‘licensee’ and ‘value of energy’ as provided in the Act cannot be used to
levy any tax on a generating company supplying energy to a licensee like the
Electricity Board as in the present matter, as no tax can be computed in their
cases.”
17. Aggrieved by the judgment of the High Court, the respondents filed special
leave petitions15 before this Court. By an order dated 3 July 2017, the special leave
petitions were summarily dismissed by a two-judge Bench of this Court.
18. By its judgment dated 18 September 2017, the High Court dismissed the writ
petition instituted by the appellant, holding that the liability of the appellant to file
returns would require a factual determination on the nature of the supply of electricity
made to BSEB. It further observed that the appellant should exercise the alternative
statutory remedy provided in the Act. The High Court observed:
“Having considered the contentions we find the question as to whether the
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petitioner itself liable to file the return and what is the nature of supply made by
the petitioner to the Bihar State Electricity Board and the nature of transaction is a
dispute which warrants consideration based on enquiry of facts and once there is a
statutory remedy available to the petitioner we are not inclined to allow this
petition. However, granting liberty to the petitioner to take recourse to the remedy
of appeal we dispose of the writ petition.”
19. The judgment of the High Court has given rise to the present appeal. Notice
was issued on 4 January 2018.
Submissions of the Parties
20. We have heard Mr. SK Bagaria, learned Counsel appearing on behalf of the
appellant sugar mill and Mr. Saket Singh, learned Senior Counsel appearing on behalf
of the respondent State.
21. On behalf of the appellant, the following submissions have been urged:
(i) On a combined reading of Section 3 with Sections 2(b), 2(d) and 2(ee) of the
Act, the sale of electricity by a generator to a licensee would not attract the levy
of tax for the following reasons:
(a) Section 3 of the Act is the charging provision of the statute which states that
tax shall be levied either on the units or on the value of the energy consumed
or sold;
(b) Section 2(ee) defines the phrase ‘value of energy’ as the charge payable by
the consumer to the licensee or by the consumer to the person who generates
the energy;
(c) Section 2(d) defines the term ‘licensee’ to include the Bihar Electricity Board;
(d) The phrase ‘value of energy’ states that it is the charge payable by the
consumer to either the licensee or the generator. Since the BSEB is a
‘licensee’ under Section 2(d) of the Act and not a consumer, the sale by the
generator of the electricity (the appellant) to the licensee (BSEB) is not
covered in the phrase ‘value of energy’ and is not taxable under Section 3 of
the Act;
(ii) BSEB pays electricity duty for the electricity sold by it to consumers, including
the electricity supplied by the company to the Board. The levy of tax on the
electricity supplied by the company would thus amount to double taxation;
(iii) The question of filing a return under Sections 6B(1) and 5A of the Act does not
arise when the appellant is not liable to pay the tax;
(iv) Without prejudice to the above submissions, even if it is conceded that the
State has the power to levy tax on the supply of electricity by the generator to
the licensee under Section 3 of the Act, the Government of Bihar has not
exercised its power since under Section 3, a notification must be issued for
specifying the rate of charge. The notification issued on 21 October 2002 by the
State Government is the only notification providing the rate of duty on
‘consumption or sale of electricity’. The notification states that for the electricity
energy that is consumed or sold for any purpose other than irrigation, the rate of
duty shall be six per centum of the ‘value of energy’. However, the definition of
the term value of energy only includes supply to the consumer;
(v) There is no dispute on facts. BSEB is a licensee and not a consumer. If power is
exercised without jurisdiction, then the rule of alternate remedy will not apply
(relied on Raza Textiles Ltd. v. ITO16 , State Trade Corporation of India Ltd. v.
State of Mysore17 and Radha Kishan Industries v. State of Himachal Pradesh18 ).
Since the power exercised by the State under Section 3 of the Act to levy
electricity duty on sale of electricity by the appellant to BSEB is a jurisdictional
issue, the rule of alternate remedy would not apply;
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(vi) A Constitution Bench of this court in State of AP (supra) held that Entry 53 of
List II of the Seventh Schedule which deals with ‘Taxes on consumption or the
sale of electricity’ must be read as ‘Taxes on consumption or sale for
consumption of electricity’. Since the appellant does not sell the electricity to
BSEB for consumption but rather for distribution, such sale cannot be taxed in
view of the interpretation of Entry 53 rendered in State of AP (supra). Thus, the
State does not have the legislative competence to enact a law that levies tax on
the supply of electricity by the generator to the licensee; and
(vii) The facts of the decision in NTPC and the facts giving rise to the writ petition
filed by the appellant before the High Court were substantially similar. The High
Court erroneously de-tagged the writ petitions and then dismissed the
appellant's writ petition while entertaining the writ petition filed by NTPC.
22. On behalf of the respondent, the following submissions have been urged
referring to the scheme of the statute:
(i) Section 3 has two parts (i) levy of tax on the ‘value of energy’ consumed; and
(ii) levy of tax on the ‘units’ of energy sold. Under Section 2(ee) which defines
the phrase ‘value of energy’, only a sale to the consumer is included. Though the
sale to a licensee is not covered by the first part, it is covered by the second
portion of Section 3, which refers to the ‘units’ of energy sold;
(ii) Section 3(2)(c) provides that no duty shall be leviable on the units of energy
consumed by the licensee in the construction, maintenance and operation of its
electrical undertaking. Section 4 provides that every licensee shall pay duty to
the State Government on the ‘units of energy consumed or sold by him’. Section
4A provides that duty shall be leviable ‘at each point in a series of sales of
energy’. If Section 3 is read in a restricted manner by excluding the ‘units’ of
energy sold in the definition, then it would render Sections 3(2)(c), 4 and 4A of
the Act redundant;
(iii) Section 4A(2) states that the amount of duty paid at ‘each preceding stage of
sale’ shall be adjusted at the subsequent stage. Therefore, levy of tax on the sale
by the generator to the licensee would not amount to double taxation;
(iv) The Patna High Court in the judgment rendered in NTPC interpreted Section 3
only with reference to the definition clauses and the statute was not read as a
whole. The judgment constrained itself to the interpretation of the phrase ‘value
of energy’ and no reference was made to the phrase ‘unit of energy’; and
(v) The Constitution Bench of this Court in State of AP (supra) read Entry 53 of List
II to include ‘Tax on sale’ to mean ‘Tax on sale for consumption’ on the ground
that the electricity can neither be stored nor preserved, and thus, there can be
no sale except for its consumption. In view of the above reasoning, Entry 53
must purposively be construed to include the sale by the generator to a licensee
for eventual consumption. The judgment does not exclude the sale to the
‘intermediary distributor’ for eventual consumption.
Analysis
23. The rival submissions fall for our consideration. The High Court in the judgment
impugned in the appeal declined to entertain the writ petition on two counts : (i) the
appellant has an alternate statutory remedy under Section 9A of the Act; and (ii) the
dispute involves questions of fact which are not amenable to the writ jurisdiction of
the High Court.
24. The appellant has challenged the imposition of electricity duty and penalty,
inter alia, on primarily two grounds:
(i) The first respondent is only empowered to levy tax on the value of energy
consumed or sold under Section 3(1). Section 2(ee) defines ‘value of energy’ as
the energy sold to a consumer by a licensee or by any other person. The
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definition of consumer under Section 2(b) specifically excludes a licensee while

Section 2(d) defines a licensee to include the BSEB. Since, the appellant is
supplying electricity to the licensee which is not the consumer, tax cannot be
levied under Section 3(1) of the Act; and
(ii) Entry 53 of List II of the Seventh Schedule of the Constitution provides for taxes
on consumption or sale of electricity. In terms of the judgment of this Court in
State of AP (supra), the meaning assigned to the word ‘sale’ and ‘consumption’
would be the same since the very act of sale of electricity means that it is being
consumed because electricity can neither be preserved nor stored. Entry 54 of
List II dealt (at the material time) with the levy of taxes on the sale or purchase
of goods including electricity but excluding newspapers and was subject to
provisions of Entry 92-A of List I. The meaning of ‘sale’ of electricity under Entry
54 would mean the sale for consumption of electricity in view of the decision of
this Court in State of AP (supra). Thus, irrespective of the provisions of the Bihar
Electricity Act, the first respondent does not have the legislative competence to
levy a tax on the sale of electricity that is not for consumption. The appellant is
not selling electricity to BSEB for the consumption of BSEB; rather it is BSEB
which is distributing electricity for the consumption of the end users.
25. While a High Court would normally not exercise its writ jurisdiction under
Article 226 of the Constitution if an effective and efficacious alternate remedy is
available, the existence of an alternate remedy does not by itself bar the High Court
from exercising its jurisdiction in certain contingencies. This principle has been
crystallized by this Court in Whirpool Corporation v. Registrar of Trademarks, Mumbai19
and Harbanslal Sahni v. Indian Oil Corporation Ltd.20 . Recently, in Radha Krishan
Industries v. State of Himachal Pradesh21 a two judge Bench of this Court of which one
of us was a part of (Justice DY Chandrachud) has summarized the principles governing
the exercise of writ jurisdiction by the High Court in the presence of an alternate
remedy. This Court has observed:
“28. The principles of law which emerge are that:
(i) The power under Article 226 of the Constitution to issue writs can be
exercised not only for the enforcement of fundamental rights, but for any
other purpose as well;
(ii) The High Court has the discretion not to entertain a writ petition. One of the
restrictions placed on the power of the High Court is where an effective
alternate remedy is available to the aggrieved person;
(iii) Exceptions to the rule of alternate remedy arise where (a) the writ petition
has been filed for the enforcement of a fundamental right protected by Part III
of the Constitution; (b) there has been a violation of the principles of natural
justice; (c) the order or proceedings are wholly without jurisdiction; or
(d) the vires of a legislation is challenged;
(iv) An alternate remedy by itself does not divest the High Court of its powers
under Article 226 of the Constitution in an appropriate case though ordinarily,
a writ petition should not be entertained when an efficacious alternate remedy
is provided by law;
(v) When a right is created by a statute, which itself prescribes the remedy or
procedure for enforcing the right or liability, resort must be had to that
particular statutory remedy before invoking the discretionary remedy under
Article 226 of the Constitution. This rule of exhaustion of statutory remedies is
a rule of policy, convenience and discretion; and
(vi) In cases where there are disputed questions of fact, the High Court may
decide to decline jurisdiction in a writ petition. However, if the High Court is
objectively of the view that the nature of the controversy requires the exercise
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of its writ jurisdiction, such a view would not readily be interfered with.”
(emphasis supplied)
26. The principle of alternate remedies and its exceptions was also reiterated
recently in the decision in Assistant Commissioner of State Tax v. Commercial Steel
Limited22 . In State of HP v. Gujarat Ambuja Cement Ltd.23 this Court has held that a
writ petition is maintainable before the High Court if the taxing authorities have acted
beyond the scope of their jurisdiction. This Court observed:
“23. Where under a statute there is an allegation of infringement of fundamental
rights or when on the undisputed facts the taxing authorities are shown to have
assumed jurisdiction which they do not possess can be the grounds on which the
writ petitions can be entertained. But normally, the High Court should not entertain
writ petitions unless it is shown that there is something more in a case, something
going to the root of the jurisdiction of the officer, something which would show that
it would be a case of palpable injustice to the writ petitioner to force him to adopt
the remedies provided by the statute. It was noted by this Court in L. Hirday Narain
v. ITO [(1970) 2 SCC 355 : AIR 1971 SC 33] that if the High Court had entertained
a petition despite availability of alternative remedy and heard the parties on merits
it would be ordinarily unjustifiable for the High Court to dismiss the same on the
ground of non-exhaustion of statutory remedies; unless the High Court finds that
factual disputes are involved and it would not be desirable to deal with them in a
writ petition.”
27. The above principle was reiterated by a three-judge Bench of this Court in
Executive Engineer v. Seetaram Rice Mill24 . In that case, a show cause
notice/provisional assessment order was issued to the assessee on the ground of an
unauthorized use of electricity under Section 126(1) of the Electricity Act 2003 and a
demand for payment of electricity charges was raised. The assessee contended that
Section 126 was not applicable to it and challenged the jurisdiction of the taxing
authorities to issue such a notice, before the High Court in its writ jurisdiction. The
High Court entertained the writ petition. When the judgment of the High Court was
appealed before this Court, it held that the High Court did not commit any error in
exercising its jurisdiction in respect of the challenge raised on the jurisdiction of the
revenue authorities. This Court made the following observations:
“81. Should the courts determine on merits of the case or should they preferably
answer the preliminary issue or jurisdictional issue arising in the facts of the case
and remit the matter for consideration on merits by the competent authority?
Again, it is somewhat difficult to state with absolute clarity any principle governing
such exercise of jurisdiction. It always will depend upon the facts of a given case.
We are of the considered view that interest of administration of justice shall
be better subserved if the cases of the present kind are heard by the courts
only where they involve primary questions of jurisdiction or the matters
which go to the very root of jurisdiction and where the authorities have
acted beyond the provisions of the Act.
82. It is argued and to some extent correctly that the High Court should not
decline to exercise its jurisdiction merely for the reason that there is a statutory
alternative remedy available even when the case falls in the above stated class of
cases. It is a settled principle that the courts/tribunal will not exercise jurisdiction
in futility. The law will not itself attempt to do an act which would be vain, lex nil
frustra facit, nor to enforce one which would be frivolous-lex neminem cogit ad vana
seu inutilia-the law will not force anyone to do a thing vain and fruitless. In other
words, if exercise of jurisdiction by the tribunal ex facie appears to be an
exercise of jurisdiction in futility for any of the stated reasons, then it will
be permissible for the High Court to interfere in exercise of its jurisdiction.
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This issue is no longer res integra and has been settled by a catena of judgments of
this Court, which we find entirely unnecessary to refer to in detail…”
(emphasis supplied)
28. In Union of India v. State of Haryana25 the assessing authorities imposed sales
tax on the rentals charged for supply of telephones. Writ petitions were filed in the
High Court challenging the levy. The writ petitions were dismissed on the ground that
an alternative remedy of a statutory appeal was available. An appeal against these
orders was filed before this Court. The appeal was allowed and the matter was
remanded back to the High Court for determination since it involved a question of law
on whether the supply of telephones amounted to sale.
29. It is not the case of the appellant that the respondents have miscalculated the
duty and penalty imposed on it. The appellant contends that the State Government
does not have the power to levy tax on its sale of electricity to BSEB. Thus, the plea
strikes at the exercise of jurisdiction by the Government. In view of the law discussed
above on the rule of alternate remedy, the High Court can exercise its writ jurisdiction
if the order of the authority is challenged for want of authority and jurisdiction, which
is a pure question of law.
30. The appellant is admittedly a sugar mill producing electricity from bagasse (a
by-product of sugar production). The electricity that is produced is used for running
the mill and the excess is sold to BSEB. There is no dispute about the nature of the
transaction between the appellant and BSEB. The petition before the High Court was
initially tagged with the petition filed by NTPC since it involved similar issues.
However, it was subsequently de-tagged and heard separately on the ground that the
appellant in this case is a sugar mill that also produces electricity, while NTPC is a
power generation company. The writ petition filed by the appellant was dismissed by
the impugned judgment. Both the petitions - filed by the appellant and NTPC before
the High Court challenged the power of the State Government to levy tax on sale of
electricity to Electricity Boards. A three judge Bench of this court in Sree Meenakshi
Mills Ltd. v. Commissioner of Income Tax26 succinctly explained the tests for the
identification of questions of fact, questions of law and mixed questions of law and
facts. Justice T. L. Venkatarama Aiyar writing for the Bench observed that:
“9. [..] To take an illustration, let us suppose that in a suit on a promissory note
the defence taken is one of denial of execution. The court finds that the disputed
signature is unlike the admitted signatures of the defendant. It also finds that the
attesting witnesses who speak to execution were not, in fact, present at the time of
the alleged execution. On a consideration of these facts, the court comes to the
conclusion that the promissory note is not genuine, Here, there are certain facts
which are ascertained, and on these facts, a certain conclusion is reached which is
also one of fact.
10. In between the domains occupied respectively by questions of fact and of
law, there is a large area in which both these questions run into each other, forming
so to say, enclaves within each other. The questions that arise for determination in
that area are known as mixed questions of law and fact. These questions involve
first the ascertainment of facts on the evidence adduced and then a determination
of the rights of the parties on an application of the appropriate principles of law to
the facts ascertained. To take an example, the question is whether the defendant
has acquired title to the suit property by adverse possession. It is found on the
facts that the land is a vacant site that the defendant is the owner of the adjacent.
residential house and that he has been drying grains and cloth and throwing
rubbish on the plot. The further question that has to be determined is whether the
above facts are sufficient to constitute adverse possession in law. Is the user
continuous or fugitive? Is it as of right or permissive in character? Thus, for
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deciding whether the defendant has acquired title by adverse possession the court
has firstly to find on an appreciation of the evidence what the facts are. So far, it is
a question of fact. It has then to apply the principles of law regarding acquisition of
title by adverse possession, and decide whether on the facts established by the
evidence, the requirements of law are satisfied. That is a question of law.”
31. The test that is to be applied for the determination of a question of law is
whether the rights of the parties before the court can be determined without reference
to the factual scenario. In this case, the High Court was entrusted with the
determination of the meaning of the phrases used in Section 3 of the Act to determine
if the supply of electricity by the appellant would fall within its ambit. Unlike a dispute
on the execution of a promissory note or a plea of adverse possession, there is no
adjudication on facts required here. There is also no dispute on the nature of the
transaction involved.
32. The issues raised by the appellant are questions of law which require, upon a
comprehensive reading of the Bihar Electricity Act, a determination of whether tax can
be levied on the supply of electricity by a power generator (which also manufactures
sugar) supplying electricity to a distributor; and whether the first respondent has the
legislative competence to levy duty on the sale of electricity to an intermediary
distributor in view of the decision of this Court in State of AP (supra). The question of
whether the appellant is liable to file returns under Sections 6B(1) and 5A of the Act is
directly related to the issue of whether the sale of electricity by the appellant to BSEB
falls under the charging provisions of Section 3(1). The questions raised by the
appellant can be adjudicated without delving into any factual dispute. Thus, the
present matter is amenable to the writ jurisdiction of the High Court.
33. We are of the considered view that the High Court made an error in declining to
entertain the writ petition and it would be appropriate to restore the proceedings back
to the High Court for a fresh disposal. In order to facilitate the decision on remand, we
have recorded the broad submissions of the parties on merits but leave the matter
open for a fresh evaluation by the High Court. We accordingly allow the appeal and set
aside the judgment of the High Court dated 18 September 2017 arising out of CWJC
No 4300 of 2015. The writ petition is restored to the file of the High Court for fresh
determination. The appeal is disposed of in the above terms with no order as to costs.
34. The appellant had filed an application27 for amendment of the cause title since
pursuant to a merger the right to contest the appeal survived with Magadh Sugar and
Energy Ltd, the application is allowed.
35. Pending application, if any, are disposed of.
———
1 “Bihar Electricity Act” or “the Act”
2
“BSEB”
3 “The Act”
4 SO 137
5 SO 14
6 SO 1
7 Power of the State Government to grant exemption from the duty payable under this Act.
8 CWJC No 13614 of 2006
9
Consequent to the grant of special leave, it was converted to Civil Appeal No 2570 of 2010.
10 CWJC No 11126 of 2012
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11 CWJC No 4300 of 2015

12 NTPC
13 CWJC No 17306 of 2014
14 (2002) 5 SCC 203; referred to as “State of AP”
15 SLP (C) No 17231-17238 of 2017
16 (1973) 1 SCC 633
17 AIR 1963 SC 548

18 2021 SCC OnLine SC 334

19 (1998) 8 SCC 1
20 (2003) 2 SCC 107

21 2021 SCC OnLine SC 334

22 Civil Appeal No. 5121 of 2021
23 (2005) 6 SCC 499

24 (2012) 2 SCC 108

25 (2000) 10 SCC 482
26 AIR 1957 SC 49

27 IA No 75651 of 2021

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