Hindustan Copper Ltd. versus State of Madhya Pradesh and Ors.

s.3, Explanation (b) - 'Mine' - Levy of electricity duty as regards manufacturing of copper concentrate - Matter remitted to High Court to decide the question as to whether copper concentrate is a mineral and whether the Explanation D applies even though manufacturing process is involved to bring it into existence - Sincf;J the basic question has not been decided by the High Court, the impugned judgment is set aside and the matter is remitted to it for fresh consideration of the question as formulated by Supreme E Court - In the meantime, appellant is directed to pay the current dues, but there shall be no recovery of arrears relating to interest, if any.

¶13

The appellant, a Government company, was engaged F in extraction of copper ore by open cast mining process. Appellant's Mine as well as the processing plant were subjected to uniform electricity duty under the entry relating to 'mines other than captive mines of a Cement Industry' in the table contained in s.3 of the M.P. G Electricity Duty Act, 1949. According to the appellant its activities consisted of two distinct parts: (1), mining which included drilling, blasting and collecting of ore and these activities were carried on in the mining area registered

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434

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HINDUSTAN COPPER LTD. v. STATE OF MADHYA PRADESH AND ORS.

435

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A

under the Mines Act, and (2) the processing, which was A carried on at the Primary Crnsher, Secondary Crusher and Concentrator Plant, situated away from the mine at distances varying -2.5 km to 10 km and separately registered as 'factory' under the Factories Act. The stand of the appellant that as regards the activities (2), the B processing part, it was entitled to lesser rate of duty as was applicable to 'non-domestic and commercial establishments'. The appellant filed a writ petition before the High Court challenging the provisions of s.3 of the M.P. Electricity Duty Act, namely the entry in the Table c (Part B) relating to 'mines other than captive mines of cement industry' and Explanation (b) defining 'mine' and extending the definition ~f 'mine' to its 'factory' activities for the purpose of levying electricity duty thereon. The appellant also filed other writ petitions involving similar D issues. A Division Bench of the High Court dismissed the writ petitions. On appeal the matter was remitted to the High Court for disposal of the writ petitions afresh. The High Court again dism;ssed the writ petitions.

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¶26

In the instant appeal by the Government Company, it was contended for the appellant that the questions were not correctly formulated by the High Court and actual essence of the dispute could not be _covered.

¶27

The court formulated the question as follows:

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"Whether copper concentrate is a mineral and whether Explanation to Part B of the Act applies even though manufacturing process is involved to bring it into existence".

¶32

Allowing the appeal, the Court

¶33

HELD: Since the ·basic question has not been decided by the High Court, the impugnedjudgment is set

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[2008] 16 S.C.R

SUPREME COURT REPORTS

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436

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A aside and the matter is remitted to it for fresh consideration of the question as formulated by this Court. 'l'n the me~ntim'e, the appellant' is directed to pay the clltrent ·dues, but there shall be no recovery of arrears reiating·to 'interest, if any. '[Para S] [446-BlC] .· · · ;

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B . , '' , . ,·. :.;-

¶42

(State of fvT.P. v. Bir/a Jute Manufacturing Company Ltd. 1995 (4) SCC 603 and Hindustan Copper Ltd. v. State of M.P. and Ors. 2004 (12) SCC 408, referred to.

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C CIVIL APPELLATE JURISDICTION : Civil Appeal No. 6725 of 2008.

¶44

From the final Judgment and Order dated 9.2.2005 of the High Court of Madhya Pradesh at Jabalpur in Misc. Petition Nos. 2821 of 1988 & 3827 of 1993 & Writ Petition No. 3103 o of 1994.' · .

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. '

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,, · G.E. Vahanvati, S.G., · Nandini Sen and Deba Prasad Mukherjee for t~e Appellant.

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E SJ<. Dubey, Vikas Upadhyay, Yogesh Tiwari, Nandita Dubey and 8.S. Banthia for the Respondents.

¶48

· The Judgment of the Court was delivPred by

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DR. ARIJIT PASAYAT, J. 1. Leave granted.

¶51

Challenge in this appeal is to the judgmentof a Division Bench of the Madhya Pradesh High Court dismissing the writ petition and miscellaneous petitions filed by the appellant.

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G 3. Factual position as projected by the appellant before the High Court is as follows:

¶54

The appellant is a Government Company. Its 'Malanjakhand Copper Mining & Ore Concentration Project' is situated in H District Balaghat, where it 'is engaged in. extraction of copper

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I

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HINDUSTAN COPPER LTD. v. STATE OF MADHYA PRADESH AND ORS. [DR. ARIJIT PASAYAT, J.]

¶57

437

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ore, by open cast mining process. The appellant has·de$cribed the. process. thus: After drilling and blasting the ore in the open pit mine, the ore in the form of boulders are transported to t~e Primary Crusher (situated at a distance of 2.53 Km from the Mine), where it is crushed into pebbles/pieces. Such crushed ore is then carried on ·a conveyor to a Secondary CriJsher. (situated at about 5 Km· from the mine) for further crushing into smaller pebbles: The small pieces/pebbles are then carried by a conveyor to the Concentrator Plant (situated at 5.5 km from the mine). In the Concentrator Plant, the ore is milled into powder in the Ball Mills. Such powder mixed with water is carried in the form of slurry to floatation cells. 1·n the floatation cells, the slurry is subjected to Froth Floatation Process and the copper concentrate is removed and dried in vacuum Driers and stored in Concentrate Storage Sheds. The tailing pumps are at a distance of 8 km. From the Large quantity of water is required for Concentrator Plant for being used in milling. Water is also required for the factory township. The required water is pumped from the· mines through pumps located at an Intake Well'(situated at a distance of 10 Km from the mine). From the intake well, water is pumped to Water Treatment Plant (situated at a distance of6 km from the mine). ·

A

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· According to the appellant, its activities consist of two distinct parts. First is mining, that is drilling, blasting and collecting of ore which is carried on .at mine pit. This activity is F Cc;irried on in the mine area registered under· the Mines Act, 1952. The second is processing, which is carried on at the Primary Crusher, Secondary Crusher and Concentrator Plant. The processing (manufacturing) part of the activities are carried in the factory area. The Primary Crusher, the Secondary G Crusher, the Ball Mill, the Concentrator Plant, the Tailing Pumps, the intake well and the Water Treatment Plant are situated away from the mine, at distances varying 2.5 KM to 10 KM and are registered separately as a 'Factory' under the provisions of Factories Act, 1948. The open pit mine (mining area) and the H

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438

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SUPREME COURT REPORTS

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[2008) 16 S.C,R.

¶68

A processing.plants/machineries (l=actory area) are all. situated~: in .a.large .tract of lnq takn-Qn mining lease fronl th~; Stte. GQvrnt:li~nt ~ . · · . . . . · .

¶69

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· Tlie M: P .. Electricity ·o·aty Act,. 1949 (in short 'the Act') B enacte.dby-the Stafelegislatunf provides.for le\iy of electricity, ·duty·(in-'short 'the·duty'). on 'sale or consumption of electrical energy: Section 3 6f the Act provides that every distributor of electrical energy and every producer shall pay every month to the State Government at th~ prescribed time_ and- in the c presGribed manner, a duty calculated at the rates specified .(in the Table,. given be,low the Section) ~on the u_nits of electrical energy sold or supplied to a consumer, or consumed by himself for his own purpo.ses or for purposes of his township or colo_ny, during_thepreceding month.Part-:B of the Table prescribes the -- D rate· of electricity duty" on the efectrical energy sold/supplied for - consumption for. different specified purposes, namely domestic, non-domestic & Comriie'rCial: industrial ·a.rid. non-iridustriI: Industrial purpose is ·further divided into four categories, one of which is tor mines other than ca-ptive mines· of a cement E ·industry'' (vide' Energy 3):' The ta.rm 'mine' is defin'ed in ·tne Explanation (b) to Section·3:ofthe'Act, as 'a tnirie-to'Which th-e Mines Act, 1952 applies and includes. the premises· or mac,hinery situated in 'or adjacent to a 'mine ·and 'used for crushing.processing, tating and fransporting,.the.mineral'. Up' F to 3f 12.1.987, ·t~~ duty.was.?0 paise per un!t; fro.m f 1.~1988 to 31.5.1988, the duty was¹ 60 paise per unit; from 1.6.1988 to 30.11.1988 the ·duty .was 61 paise per unit; and from 1.12.1988, the duty was . 75 paise per unit. During the pendency ·of the petition, the Table has been substiiuted providing tor eiectricity G duty,· as a percentage of the electri_city tariff. At.pres-ent., 'the electricity' duty for ,-mines other' than captive mines of cement industry;·is 40°i~ of thelectrlcity tariff. Given below in the form of a comparative Table, the different rates o{duty for different types of iridusfries, ·culled out from Part 'B' of te Tabl io H Section 3 of the Act:

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HINDUSTAN COPPER LTD. v. STATE OF MADHYA 439 PRADESH AND ORS. [DR. ARIJIT PASAYAT, J.]

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The M.P. Electricity DL1ty Act, 1949 (for short 'the Act') A enacted by the State Legislature provides for levy of electricity duty (for short 'the duty') on sale or consumption of electrical energy, Section 3 of the Act provides that every distributor of electtlcal ehergy and every producer shall pay every month to the Stale Government at the prescribed time and in the B r prescribed manner, a duty calculated at the rates specified (in the iable given below the Section ) on the units of electrical energy sold or supplied to a consumer, or consumed by himself for his own purposes or for purposes of his township or colony, during the preceding month. Part- B of the Table prescribes the c rate of electricity duty on the electrical energy sold/supplied.for consumption for different specified purposes, namely domestic, non-domestic & Commercial, industrial and non- industrial. Industrial purpose is further divided into four categories, one of which is 'for mines other than captive mines of a Cement D industry' (vide Energy 3). The term 'mine' is defined in the _)i.Explanation (b) to Section 3 of the Act, as 'a mine to which the Mines Act, 1952 applies and includes the ·premises or machinery situated in or adjacent to a mine and used for cr.ushing, processing, treating and.transporting the mineral'. Up E to. 31.1~ .. 1987, the duty was 50 paise per unit; from 1.1.1988 to 31.5.1988, the duty was 60 paise per unit; from 1.6.1988 to 30.11.1988 the duty was 61 paise per unit; and from 1.12.1988, the duty was 75 paise per unit. During the pendency of the 1·^{petition, the Table has been substituted providing for electricity F} duty, as a percentage of the electricity tariff. At present, the electricity duty for 'mines other than captive mines of cement industry' is 40% of the electricity tariff. We give below in the form of a comparative Table, the different rates of duty for different types of industries, called out from Part 'B' of the 'Table in G Section 3 of the Act:

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440 SUPREME COU.RT REPORTS [200?] .16 S,.C.R.

¶80

A	SI. No. .	Industry ' .	Period To .1.l,~~ .( ..	1.1.88'to .31..5.88. ?·,;'"·•.^'. :~	1.6.88 to 31.11.88 '^: ,.,., -	From· 11.12.88 ...^, <·,	Present Rate. (%of .. ElectrJcity Tariff) - ...,,.:'
B· c.	(i)	For mines other than· captive mines of a cement industry	^{..50 p..} ^:,. ,.	60p.^... .........	^'61p. .	·75p . ' ... :	-40% l .. .. ; ,,..":',
o.	(ii)'	. For . cement . industries including itscaptiy~ mines ·	10p.	12p.	13p. ' .	..18p. ..	10:5% . ..
E	(iii) '	For industries receiving electricity at low - tension tariff	4p..	3p.	4p. ..	4p.	4% (outof 75NP)·.. 3.5%... (excess· of 75NP)	-t-..:--- \|
F	(iv)	For other	5p.	Sp.	9p·:	12p..	8% ,.
G ·	(v) well 'fact rela in th	For non- Industrial purposes • • • < • Appellant's asthe 'pro ory' have b ting to 'mine eTableco	15p. " - :• mine.to cessing een subj sothert ntained i	18p. .. : • • • which the plant whic ected to a han captiv n Section	19p. .,. ' Mines Ac h have b uniform d e mines 3ofthe A	'19p. ' .. ' '"' t,1952-~ een regi utyunde ofcemen ct.	' 15% •." ,,•,·' ·' I ... ,.:. +·: ., •(. .... • ~ PPlies,as stered. as rthe entry t industry'

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441

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·HINDUSTAN COPPER LTD. v. STATE OF MADHYA PRADESH AND ORS. [DR. ARIJIT PASAYAT, J.]

> ~

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1·

A.

A

·The appellant states that the Act as it originally stood, A subjected all factories· whether they were independent, or associated with mines, to the same rate of duty. The Act was amended by Amending Act No. 21 of 1978. After such amendment, the Table Under Section 3 prescribed the 'duty' at the rate of 2 paise per unit in regard to factories. In regard to B consumers for trade, commerce and business purposes, the rate of duty was 12 paise per unit. Thus, the Act No. 21 of 1978 prescribed a lower rate of duty for factories when compared to commercial establishments. The Act was again amended by Amending Act No. 21 of 1986 drastically changing the rate of c duty, as also the classification. It prescribed a lower rate of duty for non-domestic and commercial purposes at the rate of 15 parse per unit, when compared to certain classes of industries. It classified Factories into four kinds of industries, for levy of differe_n,t rates of duty, namely, (i) mines other than captive mines D of cement industries, (ii) Cement industries including its captive mines, (iii) industries receiving electricity at the' low tension tariff, and (iv) other industries. An eXtended definition of the word 'mine; was also added.

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B

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The appell~nt is aggrieved by the said extended definition of 'mine' the effect of which is to make processing a part of mining and the prescription of a higher rate of duty for 'mines' (that is composite activity of mining and processing), while . . prescribing a lesser rate for other categories of industries. The appellant contends that- the extended definition of 'mine' in Explanation (b) contained in the Table under Secti0n 3 results in dissimilar treatment to similar subjects, by prescribing different rates for different factories. It was contended that the definition has the effect of categorizing factories registered under the Factories Act into two categories (a) those which are adjacent to a mine and l.Jsed for crushing, processing, treating and transporting the mineral; and (b) other factories. It was also submitted that classification of factories into two categories based on their proximity or otherwise to a mine is unreasonable and irrational having no connection with the

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SUPREME COURT REPORTS [2008] 16 \·· S.C.R. ~

¶98

442

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A object sought to be achieved by the Act. fhe nature of sale, supply and consumption of electrical eherg·y· fo both classes of factories is in all respects similar and there is no reasonable justification to prescribe a higher rate. of duty to factories adjacent to a mine by including them under the extended B definition of 'mine·· In .the absence of a further definition of the expression 'adjacent to the mines' is vague and ambiguous leading to discriminatc;>ry treatment by the Authorities implementing the Act and, therefore, fnvalid. Lastly, it was con.tended that its.processing plant, thatis,.thePrimary Crusher, c the Secondary Crusher, the Ball Mill, the Coneentrator Plant, the Tailing Pumps, ttie.lntake.wll and-the water"treatment;plant is not situated 'adjacent' to its mine and threfore could. not be treated as 'mine' for the purpose of levy o_f electrici.ty'duty. . .

¶100

Feeling aggrieved by the extended definition. of 'mine' in D Explanation (b) to Section 3 of the Act and feeling aggrieved by the.inclusion of its 'Processing factory'within the 'mine' for purposes of levy of electricity duty, the appellant ff led the writ petition on 19.7.1988 before the High 'Court for the following reliefs:

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·(a) to declare the provisions of Section 3 of the M.P. Electricity Duty Act, 1949, that is the entry' in theTaole (Part B), relating to 'mines other than captive mines of cement :industry' and the Explanation (b) defining 'mine' :as uncbnstitutional.

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(b) as a consequence, to direct the respondents to' treat the petitioner's processing unit (Primary Crusher, th·e Secondary Crusher, the Ball Mill, the Concentrator Plant, the Tailing Pumps, the Intake Well and the Water Treatment Plant), as not included under the definition of 'min.e' but included in the G category of 'non-domestic and commercial establishmentsi for purposes of imposition of electricity duty ·at the lower rate prescribed as 12 paise/15 paise per 1Jnit based .on its consumption; and

¶106

(c) to direct the refund of the excess duty collected. . . .

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v

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HINDUSTAN COPPER LTD. v. STATE OF MADHYA 443 PRADESH AND ORS. [DR. ARIJIT PASAYAT, J.]

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Another writ petition i.e. M.P. No.3827 of 1993 was filed. This petition reiterated the grounds raised in M.P. No. 2821 of 1988. It was filed seeking the following reliefs, as a derhand was issued by claiming Rs.78,58,877/- towards electricity duty in respect of electricity consumed by it:

¶113

(i) to declare that the provisions of M.P. Electricity Duty -~^{(Amendment)Act, 1986 inso far asit defines 'mine' so as to} include the factories in the mines is ultra vires Articles 14 and 19 of the Constitution.

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A

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B

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(ii) to quash the demand notice dated 30.11.1992^c demanding Rs.78;58,877/- as arrears of electricity duty

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(iii) a direction to respondents to treat the factories of the appellant as 'other industries' classified under Part B of the Table under Section 3. of the Act and accordingly charge electricity duty at the rate of 12 paise per unit.

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D

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As a revenue recovery notice was issued under Section 146 oqhe M.P. Land Revenue Code demanding payment of Rs.78,58,877/- as arrears of electricity d~ty, without considering the representation given by it in regard to the earlier demand dated 30.11.1992, writ petition WP 3103 of 1994 was filed seeking the following reliefs:

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(i) to declare the provisions of the M.P. Electricity Duty --r .^{(Amendment) Act, 1986 .inso far as it defines 'mine' so as to} include factories in the ;mines' as ultra vires Articles 14 and 19 of the Constitution of India.

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(ii) to quash the demand notice issued under the M.P. Land Revenue Code.

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(iii) to direct the respondents to treat the factory of the appellants as 'other in.dustries' as classified in the Table under Section 3 of the Act and charge electricity duty at the rate of 12 paise per unit. ·

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444 SUPREME COURT REPORTS

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[2008] .16 S.C.R.

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A . (iY) to declare that the plants of the appellants are not liable to pay duty the rate applicable to 'mines'.

¶132

It is· to be noted that earlier a Division Bench of the High

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Court by a common order dated a: 10.1997 dismissed the writ petitions filed by the appellant reiying ori a decision ofthis Court

¶134

.s in State of M.P. v. Bir/a Jute Manufacturing Company Ltd. (1995 (4) sec 603). The said judgment was .. set aside by this Court in Hindustan Copper Ltd. v. State of M.P. and Ors. (2004 (12) sec 408) and the matter was remitted.to the High Court.

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C According to the High Court following questions arose for consideration:

¶138

"(i) Whether prescribing different rates of tax for processing plant and machinery adjacent to a mine

¶139

D ('factory' falling within the extended definition of 'mine'), and other factories is discriminatory and arbitrary and therefore violative of Articles 14 and 19 of the Constitution of India .

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. ·(ii) Whether definition of the word 'mine'. in Explanation (b) in the Table under Section.3 of the .Act, gives ~nguided

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1 discretion to Authority· under the Act to decide what is 'adjacent to a mine' and therefqre invalid.

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(iii) Whether use of the words 'adjacent to a mine' would mean only the premises or machinery abutting to or

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F ·,· adjacent the mine, and not premises or the plant/machinery situated at a distance of about 2.5 to 6 KM. . ,

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(iv) Whether the State had applied different yardsticks in charging duty to petitioner and in charging d.uty to Bhilai Steel, Balco, Manganese Ore India Ltd. and .thereby practiced discrimination."

¶146

, I

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. .,

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The High Court answered the questions by holding that tl;le

¶149

writ petitions were without merit. . . .

¶150

In support of the appeal. learned. counsei .. f6r' the

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445

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HINDUSTAN COPPER LTD. v. STATE OF MADHYA PRADESHAND ORS. [DR. ARIJIT PASAYAT, J.]

¶155

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appellant submitted that the real issues were not considered A by the High Court and· the questions formulated for determination did not cover the actual issues .and disputes involved.

¶157

Learned counsel for the respondents on the other hand submitted that the basic issues were formulated by the High Court for determination.

¶158

8

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The Act was ,m.ended by the M.P. Electricity Duty (Amendment) Act, 198Q (in short the 'Amendment Act'). Different rats of duty ar~ provided in Part B. In the said Part, Clause (4) relates to the mines other than the captive mines of cement factory and the rate is ~O paise per unit of energy. The Explanation defines 'mines' as follows:

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. ""Mine" means a mine to which the Mines Act, 1952 (No.35 o of 1952) applies and includes the premises or machinery situated in or adjacent to a mine and used for crushing, processing, treating or transporting the mineral."

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It was submitted that the entry relating to mines refers to processing, treating or transporting the mineral. According to learned Solicitor General the stress is on the expression 'mineral'. It was pointed out that the appellant is manufacturing "copper concentrate" which is not a mineral and it is not doing "mining" so far as it is covered by Clause 7 for other industries not covered under the above categories where the rate is 5 paise per unit of energy. Essentially the submis$ion is that the explanation only relates to mining or minerals. What is excisable is "copper concentrate" because there is a process of manufacturing involved. It is seen that the points 3 and 4 formulated by the High Court for determination are really relevant. But the points have not been correctly formulated to cover the actual essence of the dispute. The correct question would be as follows:

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"Whether copper concentrate is a mineral and whether H

¶168

446 SUPREtAE COURT REPORTS [2008) 19 S.C.R

¶169

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A Explanation to· Part B of the Act¹ applies 'even though manufacturing process is involved to bring it ·into existence".

¶171

Since this basic question has not been dedded by··the .. 8 High Court, we set aside the impugned judgment and remit the matter to it for fresh· consideration of the above question. The . parties shall be permitted to place materials in support of their respective standswithin a month from today. Since the matter is.pending·since·long it would be appropriate for the High Court C to disp9se of the matter early, preferably within four months from the date of receipt of this .erder. In the meantime, the appellantisdirectedto pay the current dues, but there· shall be no '.recovery of arrers relating to interest, if.any. The appeal is allowed~ D R.P. Appeal allo'wed.

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Hindustan Copper Ltd. v. State of Madhya Pradesh and Ors.

Case brief

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Hindustan Copper Ltd. v. State of Madhya Pradesh and Ors.

Case brief

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