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Ritu Bahri, J.—Challenge in this petition, is to the sales instructions No. 7/2010 dated 16.07.2010 (Annexure P-7), issued by respondent No. 2, imposing electricity duty charges; sales circular dated 08.02.2008 (Annexure P-6) and condition No. 5 in Sales Instructions dated 12.05.2006 (Annexure P-5). The petitioner-company has been manufacturing high quality cold rolled stainless steel coils of all sizes in its Industrial Unit, Hisar, since 1991. The company has taken electricity connection from Dakshin Haryana Bijli Vitran Nigam Ltd., Hisar-respondent No. 2 and its sanctioned load is 3071.67 KW with sanctioned contract demand of 3400 KVA. In the month of September, 2011, Dakshin Haryana Bijli Vitran Nigam (DHBVNL) and its parent body namely Haryana Vidyut Prasaran Nigam Ltd. (for short ''HVPNL) did not have adequate electricity. Therefore, the petitioner-company decided to purchase electricity from Indian Energy Exchange, New Delhi (IEX), for which, ''no objection certificate'' (Annexure P-2) was obtained from HVPNL. For the period from 02.10.2013 to 01.11.2013, the petitioner-company consumed 655400 electricity units, out of which, 256896 units were purchased from Indian Energy Exchange, New Delhi, as per bill dated 10.11.2013 (Annexure P-3) issued by DHBVNL. Similarly w.e.f. 02.11.2013 to 01.12.2013, the petitioner-company consumed 681600 electricity units, out of which, 363168 units were purchased from Indian Energy Exchange, New Delhi, as per bill dated 10.12.2013 (Annexure P-4). However, respondent No. 2 has charged electricity duty as mentioned in the electricity bills (Annexures P-3 and P-4). The bills do not provide break-up of electricity duty charged on the electricity supplied by respondent No. 2 and the electricity purchased by the petitioner-company through Open Access System. The petitioner has no grievance for payment of electricity duty on the electricity, which is purchased within the State of Haryana and supplied to its unit. But, the subject matter of challenge in this petition is the electricity duty, which is being imposed on the consumption of electricity, which is being provided to the petitioner-company through Open Access System.
As per Sales Instruction No. 34/2006 dated 12.05.2006 (Annexure P-5), certain charges are imposed on energy sourced through open access. The levy of electricity duty has been made under clause 5 of the said Instructions, which reads as under:--
"5. Electricity Duty - Electricity Duty shall be applicable on the power contracted and drawn."
These instructions were followed by a Sales Circular dated 08.02.2008 (Annexure P-6), whereby following charges were to be imposed on the customers, who were purchasing energy through short term open access:--
"(a) Surcharge/Additional Surcharge,
(b) Metering,
(c) Wheeling Charges.
(d) Distribution Losses.
(e) Charges for Energy Drawl in Excess of Scheduled Energy under Open Access.
(f) Monthly Minimum Charges.
(g) Others."
Subsequently, vide Sales Instruction dated 16.07.2010 (Annexure P-7), directions were issued that electricity duty shall be charged on all such consumers. In these instructions reference, has been made to two circulars i.e. condition No. 5 of circular No. 34/2006 dated 12.05.2006 (Annexure P-5) and Sales Circular No. 8/2008 dated 08.02.2008 (Annexure P-6). As per the Sales Instruction dated 16.07.2010 (Annexure P-7), direction was given that electricity duty shall be charges in respect of the above said two circulars. As far as Sales Circular No. 8/2008 dated 08.02.2008 (Annexure P-6) , it does not contain any condition for imposing electricity duty. Finally, reference has been made to a letter/order dated 25.03.2010 (Annexure P-9), issued by the Haryana Electricity Regulatory Commission, whereby respondent No. 2 has been repeatedly advised not to issue any circular, which has financial implication, without prior approval of the Commission. The petitioner approached the office of respondent No. 2 for seeking clarification, as to on what basis they are charging electricity duty on the energy purchased from Open Access System by the petitioner Ultimately, vide communication memo dated 10.09.2013 (Annexure P-10) issued by respondent No. 4, it has been clarified that electricity duty is leviable on the energy supplied by the Nigam/licensee to a consumer and also on the energy received through open access by a consumer in the State of Haryana.
Mr. Sanjeev Sharma, learned Senior Counsel has opened his argument by making reference to the judgment delivered by the Constitutional Bench of Hon''ble Supreme Court in State of A.P. Vs. National Thermal Power Corporation Ltd. and Others, . In that case, the Hon''ble Supreme Court has analysed the issue in question, where levy of duty imposed by the State of Andhra Pradesh on sales of electrical energy generated by the NTPCL at its thermal power station located within the State of Andhra Pradesh and selling electricity power to the Electricity Board of Karnataka, Kerala, Tamil Nadu and State of Goa pursuant to contracts of sale was declared as illegal by the High Court of Andhra Pradesh at Hyderabad. The electricity generated by NTPCL would be construed as inter-state or intra-state sale when it was transmitted outside the State of Andhra Pradesh. List I-Union List (i) Entry 92-A, which deals with taxes on the sale or purchase of goods other than newspapers, where such sale or purchase takes place in the course of inter-state, trade or commerce, it was the Union of India who could tax with respect to goods in a case of inter-state trade; (ii) after the existing Entry 52 dealing with taxes on entry of goods and Entry 53 dealing with taxes on the consumption or sale of electricity, Entry 54 was amended. After sixth amendment, it was clarified that taxes on sale or purchase of goods other than the newspapers, shall be subject to provisions of Entry 92-A of List-I. Therefore, in a case of inter-state sale, as per Entry 92-A of List-I, the State Government could not levy taxes after the sixth amendment. The aforesaid judgment of the Hon''ble Supreme Court has been followed by a Division Bench of this Court in Rana Sugars Limited, Chandigarh & others v. State of Punjab & others, CWP No. 10339 of 2010, decided on 05.09.2013. This was a case relating to the State of Punjab, wherein the petitioner had challenged the notification, whereby duty was sought to be levied on inter-state sale of electricity. In this case, it has been observed that there no hiatus between generation, sale, supply, transmission and consumption, as the electricity cannot be stored. The inter-state movement of the electricity is pursuant to the contract of sale. Such sales are inter-state sales. In the aforesaid case, the Division Bench of this Court has further held that the State Legislature had no power to impose, taxes with respect to the energy, which was generated within the State of Punjab, but was transferred out of the State in the course of inter-state trade. The State Government under Entry 53 of List-II could not impose duty with respect to sale of energy from one State to another being an interstate sale. Ultimately, the notification imposing electricity duty was set aside. The second argument of learned counsel for the petitioner is that under the Punjab Electricity (Duty) Act, 1958, as applicable to the State of Haryana, under Section 3(1), the electricity duty can be levied on the energy supplied by the Board to the consumer. The energy, which is supplied by the Board, is the energy which belongs to the Board and not that energy which conies through Open Access. On this proposition, he has referred to the judgments delivered in Union of India Vs. Elphinstone Spinning and Weaving Co. Ltd. and Others etc., and Burrakur Coal Co., Ltd. Vs. The Union of India (UOI) and Others, . He has further argued that the Chief Electrical Inspector-respondent No. 4 does not have the jurisdiction to issue communication/clarification dated 10.09.2013 (Annexure P-10) and he has travelled beyond the statutory powers given under the Punjab Electricity (Duty) Act & Rules 1958, Electricity Act 2003 and Qualification, Power and Functions of Chief Electrical Inspectors Rules, 2006.
Mr. Balbir Singh, Advocate, for respondent No. 2 has argued that Articles 245 and 246 of the Constitution of India vests Parliament with power Of legislation on all matters enumerated in List-I (Union List) and also the matters enumerated in List-III (Concurrent List) of the Seventh Schedule of the Constitution of India. However, the State Legislator has exclusive power to make law with respect to any of the matters enumerated in List-II in the Seventh Schedule of the Constitution of India. Therefore, power to tax on consumption of electricity falls in Entry 53 in List-II of Seventh Schedule, which reads as under:--
"Article 245. Extent of laws made by Parliament and by the Legislatures of States.-
(1) Subject to the provisions of this Constitution, Parliament may make laws for the whole or any part of the territory of India, and the Legislature of a State may make laws for the whole or any part of the State.
(2) No law made by Parliament shall be deemed to be invalid on the ground that it would have extra-territorial operation.
Article 246. Subject-matter of laws made by Parliament and by the Legislatures of States.-
(1) Notwithstanding anything in clauses (2) and (3), Parliament has exclusive power to make laws with respect to any of the matters enumerated in List I in the Seventh Schedule (in this Constitution referred to as the "Union List").
(2) Notwithstanding anything in clause (3), Parliament, and, subject to clause (1), the Legislature of any State [***] also, have power to make Jaws with respect to any of the matters enumerated in List III in the Seventh Schedule (in this Constitution referred to as the "Concurrent List").
(3) Subject to clauses (1) and (2), the Legislature of any State [***] has exclusive power to make laws for such State or any part thereof with respect to any of the matters enumerated in List II in the Seventh Schedule (in this Constitution referred to as the "State List").
(4) Parliament has power to make laws with respect to any matter for any part of the territory of India not included [in a State] notwithstanding that such matter is a matter enumerated in the State List.
List-II, State List (Seventh Schedule)
Entry 53. Taxes on the consumption or sale of electricity."
The electricity duty has been levied on consumption of electricity by the consumers in the State of Haryana as per legislative intent in the Preamble of Punjab Electricity (Duty) Act, 1958, applicable to Haryana, which is reproduced as under:--
"Preamble:
An Act to levy a duty on the sale or consumption of electricity."
The charging provision of the Punjab Electricity (Duty) Act, 1958 is reproduced as under:--
"Section 3 - Electricity duty, on energy supplied to consumers or licensees by Board etc.
(1) There shall be levied and paid to the State Government on the energy supplied by the Board to a consumer or a licensee a duty, to be called the "electricity duty", computed at the following rates, namely:--
(i) where the energy is supplied to a domestic consumer, not exceeding twenty-eight paise per unit;
(ii) where the energy is supplied to a commercial consumer, not exceeding twenty-eight paise per unit; and
(iii) where the energy is supplied to any other category of consumers, not exceeding fifty per cent on the price of energy so supplied in a month;
Provided that if such a consumer uses any part of the energy so supplied to him for a domestic or commercial purposes,
(a) where a separate meter is installed for measuring energy so used for domestic or, commercial purpose, the rate of electricity duty on the part of the energy so used shall be as notified under clause (i) or clause (ii), as the case may be, and
(b) where a separate meter is not installed for measuring energy so used for a domestic or commercial purpose, the rate of electricity duty on the whole of the energy so supplied, including the energy so used, shall be as notified in clause (i);
(iv) where the energy is supplied to any consumer, not being a licensee, through a temporary connection or a temporary extension of an existing connection for the purpose of illumination on the occasion of a marriage or other religious or social function, at the rate of ten rupees per unit of the energy so supplied notwithstanding anything to the contrary contained in preceding clauses; and
(v) where the energy is supplied to a licensee, twenty-five per cent on the price of energy so supplied in a month;
Provided that on the supply of energy which is sold by a licensee not being a licensee specified in sub-clause (ii) of clause (d) of section 2,
(a) to a domestic consumer or a commercial consumer the rate of electricity duty on the energy so sold shall be as notified under clause (i) or (ii), as the case may be,
(b) to any other category of consumers and such a consumer uses any part of the energy so sold to him for a domestic or commercial purpose,-
(i) where a separate meter is installed for measuring energy so used for domestic or commercial purpose, the rate of electricity duty on the part of the energy so used per unit shall be as notified under clause (i) or clause (ii), as the case may be, and
(ii) where a separate meter is not installed for measuring energy so used for a domestic or commercial purpose, the rate of electricity duty on the whole of the energy so supplied, including the energy so used, per unit shall be as specified in clause (i), and
(c) to any consumer, through a temporary connection or a temporary extension of aft existing connection for the purpose of illumination on the occasion of a marriage or other religious or social function, the rate of electricity duty on the energy so sold per unit shall be as specified in clause (iv); and
(2) There shall be levied for and paid to the State Government the electricity duty at the rate of one-and-a-half naye paise per unit also by "
(a) a licensee generating energy himself on the energy supplied by him to the consumers; and
(b) a person generating energy for his own use or consumption on the energy used or consumed by him in a month.
(3) Nothing in sub-sections (1) and (2) shall apply to the consumption or sale of energy which is "
(a) [consumed by or sold to the Government of India for consumption by that Government, or]
(b) consumed in the construction, maintenance or operation of any railway by the Government of India or a railway 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.
(4) For the purpose of computing the electricity duty under this section, the consumption shown by the meters starting after the first meter reading date falling after the commencement of this Act shall be taken into account:
[Provided that for the purpose of computing the electricity duty at the rates specified in section 3 of the Punjab Electricity (Duty) Amendment Act, 1963, the consumption shown by the meters commencing with the first meter reading date falling after the first day of April, 1963 shall be taken into account:
Provided further that, for the period commencing with the first April, 1963 and ending with the first meter reading date falling after the first day of April, 1963, the electricity duty shall be computed as if the Punjab Electricity (Duty) Amendment Act, 1963 had not been enacted.]"
As per Section 4 of the aforesaid Act, the respondents can collect duty on consumption of electricity and pay the same to the State Government. The consumption of electricity has been recorded in the meter of the consumer (Annexure P-3) and thereafter, electricity duty has been levied by respondent No. 2. It has been further argued that the Judgment delivered by the Hon''ble Supreme Court in National Thermal Power Corporation''s case (supra) and the subsequent judgment of the Division Bench of this Court in Rana Sugar Limited''s case (supra) are not applicable to the case of the petitioner, as in those cases, the question for consideration was the levy of duty on supply/sale of electricity from the generating State to the consuming State. The sale was held to be an inter-state sale and it was only the Parliament, who could levy such duty under Entry 53 in the List-I of the Seventh Schedule and Article 286 of the Constitution of India.
Counsel for the respondents argued that the State of Haryana has levied duty on the consumer in the State of Haryana, who has been supplied electricity within the State of Haryana after calculating electricity consumed as per the meter installed by respondent No. 2. Hence, supply and consumption is within the State of Haryana and therefore, the Government under Entry 53 in List -II had the powers to impose duty on the electricity, which was supplied and consumed within the State of Haryana. He has referred to the Judgment delivered by the Hon''ble Supreme Court in State of Uttar Pradesh and Another Vs. Union of India (UOI) and Another, , on the proposition that in case of sale of electricity, the supply and consumption cannot be bifurcated. The analogy of composite contract will apply. In that case) the Hon''ble supreme Court was considering a case of providing the service of telephone connection. The sale and services were treated to be two independent objects. But, by application of analogy of composite contract, the classification of sale and services was not to be made application. Finally, he has referred to the judgment delivered by the Hon''ble Supreme Court in Southern Petrochemical Industries Co. Ltd. Vs. Electricity Inspector and E.T.I.O. and Others, , whereby the legislative competence of the State regarding levy of duty on consumption of electricity was upheld.
Learned counsel has further stated that taxes on consumption of electricity is levied in most of the States in India. The Karnataka Electricity (Taxation on Consumption) Act, 1959 has been enacted by the State of Karnataka for levy of tax on the consumption of electricity in that State. Levy of duty under the said Act: has been upheld by the High Court of Karnataka in Indian Aluminium Co. Ltd. and another Vs. State of Karnataka and other, .
Finally, learned counsel for respondent No. 2 has submitted that the petitioner, in this case, has challenged the Sale Circular/Sale Instructions issued by the Distribution Licensee levying electricity duty on the consumption of electricity in the State of Haryana, without challenging the vires bf Punjab Electricity (Duty) Act, 1958.
Heard, counsel for the parties.
The petitioner-company has taken electricity connection from Dakshin Haryana Bijli Vitran Nigam Ltd.-respondent N6.2 and its sanctioned load is 3071.67 KW with sanctioned contract demand of 3400 KVA. In the month of September, 2011, the petitioner-company purchased electricity from Indian Energy Exchange New Delhi (IEX), after seeking ''no objection certificate (Annexure P-2) from HVPNL. The company has been purchasing electricity since 27.09.2011. For the period from 02.10.2013 to 01.11.2013, the company has consumed 655400 electricity, out of which, 256896 units have been purchased from Indian Energy Exchange, New Delhi, vide bill dated 10.11.2013 (Annexure P-3). Similarly, it has consumed 681600 electricity units w.e.f. 02.11.2013 to 01.12.2013, out of which, 363168 units were purchased from the Indian Energy Exchange, as per bill dated 10.12.2013. (Annexure P-4). For this consumption of electricity, which the petitioner-company had purchased from Indian Energy Exchange, New Delhi, respondent No. 2 has charged the electricity duty as mentioned in the bills (Annexures P-3 and P-4), without providing break-up of electricity duty charged on the electricity supplied by respondent No. 2 and the electricity purchased by the petitioner company through Open Access System.
As per Section 3 of the Electricity (Duty) Act, 1958, the State is competent to charge electricity duty on the energy, which is supplied by the respondent-board to a consumer or a licensee. Definition of a consumer, as per Section 2 "(b) of Electricity (Duty) Act, 1958, is reproduced as under:--
"2 (b): "consumer" means a person, other than a licensee, who is supplied with energy-
(i) by a licensee; or
(ii)by the Board."
Hence, as per Entry 53 in the List-II of the Seventh Schedule and Electricity (Duty) Act, 1958, the State is competent to impose duty/taxes on the electricity, which is supplied by the respondent-board to a consumer in the State. As per the agreement and no objection certificate'' (Annexure P-2), the petitioner had purchased electricity from the Indian Energy Exchange, New Delhi (IEX) in the month of September, 2011. The electricity supplied by the Open Access is metered separately and its consumption is also reflected separately in the bills (Annexures P-3-and P-4). The supply of this electricity from Indian Energy Exchange, New Delhi, cannot be covered under the definition of ''energy supplied by the board'' under Section 3(i) of the Punjab Electricity (Duty) Act, as applicable to Haryana. Once, the energy has not been supplied by Dak-shin Haryana Bijli Vitran Nigam Ltd.-respondent No. 2, the petitioner cannot be held to be a consumer as per definition 2 (b) of the said Act, as he has not been supplied energy by the respondent-Nigam. Therefore, the State Government cannot exercise powers to levy duty on consumption of the energy, supplied by the Indian Energy Exchange, New Delhi, which is metered separately and is also reflected as per bills (Annexures P-3 and P-4). The respondent-Nigam is not a supplier of the such energy.
Circulars (Annexures P-5 and P-6) can be examined in the backdrop of the above factual position. Vide sales instructions dated 12.05.2006 (Annexure P-5), certain charges had been imposed on energy sourced through open access, which are as under:--
Wheeling Charges.
SLDC/ALDC/Control Room Charges.
Reactive energy charges.
Un-scheduled Inter-Changes charges.
Electricity Duty.
Monthly Minimum charges (MMC)."
Hence, as per sales instructions (Annexure P-5), electricity duty has been made applicable on the power contracted and drawn. These instructions were followed by sale circular dated 08.02.2008 (Annexure P-6) and sales instructions dated 16.07.2010 (Annexure P-7), whereby it was clarified that electricity duty shall be charged from such consumer, who has purchased electricity from open access. The above circulars, as per the respondents, have been issued under Section 3(i) of the charging provision of Electricity (Duty) Act, 1958, which has already been reproduced above. A perusal of preamble and Section 3 of the Electricity (Duty) Act, 1958, as applicable to Haryana, shows that the electricity duty is leviable on the energy consumed in the State of Haryana, which is supplied by the respondent-electricity board. After collecting the said duty under Section 4 of the Act, the same is to be paid to the State Government.
The respondents are charging electricity duty on the ground that though the electricity has been purchased by the petitioner through open access, but actually it is being supplied through the State of Haryana to the consumer. The electricity is supplied through open access to HVPNL and thereafter, it is supplied to the consumers through DHBVNL and certain charges, as per circular (Annexure P-5) are to be paid by the consumer, which includes electricity duty. For all intents and purposes, the electricity is actually supplied by the respondent-board (Nigam) to the consumers and therefore, the State being the supplier was competent to charge electricity duty under Section 3 of the Electricity (Duty) Act, 1958. Moreover, as per Section 3 of the Act, a separate meter is installed by the respondent-board (Nigam) for calculating the energy consumed through open access. Therefore, the argument of learned counsel for the respondents is that once the State was the supplier of the electricity to the consumers, then under Entry 53 in the List-II, the State was competent to tax on the consumption or sale of electricity. Hence, the State Government was well within its powers to impost the said tax/duty. Moreover, as per Article 245(3) of the Constitution of India, it was the State Government, who has the exclusive power to make laws for the State in respect of any matter enumerated in List-II of the Seventh Schedule.
The stand of the respondents can be now examined with reference to the judgment passed by a Division Bench of this Court in Rana Sugar Limited''s case (supra). In this case, the electricity duty was levied on the electricity sold by captive power plants in the State of Punjab to the customers situated outside the State through open access/PPA. The respondents had justified the levy of electricity duty, which was produced in the State of Punjab and supplied outside the State, on the ground that the State legislature in terms of Article 246(3) of the Constitution of India has the exclusive jurisdiction to make laws with reference to the matters set out in List-II of Schedule VII. In terms of Article 246(3) of the Constitution of India, the power to tax the sale or consumption of electricity is traceable to Entry 53 of List II of VIIth Schedule. Supply of energy from State of Punjab to outside the State i.e. other States, was by virtue of a contract. By treating electricity as "goods", it can be transmitted, transferred, delivered, stored, possessed like any other movable property. Further significant characteristic of electrical energy is that its generation and production coincides almost simultaneously with its consumption. Continuity of supply and consumption starts from the moment the electricity passes through the meters and sale simultaneously takes place as soon as meter reading is recorded. All the three steps/phases i.e. Sale, supply and consumption, take place without any hiatus. The produced electricity passes on from the place of generation to the sub-station and thereafter, to the consumers. The electricity is produced in the State of Punjab and thereafter, transmitted to sub-station outside the State of Punjab. Thereafter, it is transmitted to the consumers. The consumer being outside the jurisdiction of Punjab, makes the sale as inter-state sale. Once, the sale of electricity, which is "goods", is consumed outside the State, it is the Parliament who has got exclusive jurisdiction to make the laws as per Article 246(1) of the Constitution of India. Therefore, the Division Bench, in the aforesaid case, held that once the consumption of electricity was outside the State, as per contract, the jurisdiction of the State legislature to impose electricity duty under Entry 53, did not exist. The relevant entries would be Entry 54 in the List-II and Entry 92-A in List-I, which read as under:--
Taxes on the sale or purchase of goods other than newspapers, subject to the provisions of entry 92A of List I."
92A. Taxes on the sale or purchase of goods other than newspapers, where such sale or purchase takes place in the course of inter-State trade or commerce."
Hence, once as per the terms of the contract, the sale of electricity fell in the category of inter-state sale, as per Article 92-A, it was the Parliament to impose tax on sale of inter-state movement of electricity. The imposition of duty on the sale of electricity, generated within the State of Punjab but consumed outside the jurisdiction of State of Punjab, was set aside.
The ratio of the aforesaid judgment is that once, as per the terms of the contract, the sale is an inter-state sale, then it will be covered under Entry 54 in the List-II of Schedule VII and 92-A. In that situation, it will be the Parliament, which shall have the jurisdiction to impose tax on the supply of that energy. The object of imposition of tax by the Union Government is to avoid double taxation, so that there is free flow of business. Hence, generation of electricity can be taxed by the State legislature under Entry 53, if it is generate and consumed in the State. But, if the electricity is generated in the State, but supplied outside the State, then it would fell in Entry 54 read with Article'' 92-A.
In the present case, the State of Haryana has levied duty on the open access consumption of electricity in the State of Haryana. The electricity is being generated outside the State of Haryana and has been purchased by a separate contract by the consumer. There is separate meter installed, where the consumption of electricity, purchased through open access, is recorded. The factual aspect is not in dispute that the electricity, supplied through open access, is being received in the State of Haryana by the respondents and they are charging the necessary charges thereon. But, for the purpose of imposition of electricity duty, it is the Parliament, which can impose such duty as it is an inter-state sale.
The stand of the State that they can levy duty on sale purchase of electricity by assuming that such sale has taken place in the State of Haryana, would vitiate the extra territorial operation of State Legislature, as in the case of electrical energy, its sale, supply and consumption are all instantaneous and cannot be separated. Once, the electricity is generated from outside the State of Haryana, its sale is complete when the consumer gets the electricity. Hence, the sale transaction would be an inter-state sale. At this stage, reference can be made to a judgment passed by the Hon''ble Supreme Court in National Thermal Power Corporation''s case (supra), wherein it has been observed as under:--
With these two things in mind, namely, that electricity is goods, and that sale of electricity has to be construed and read as sale for consumption within the meaning of Entry 53, the conflict, if any, between Entry 53 and Entry 54 ceases to exist and the two can be harmonized and read together. Because electricity is goods it is covered in Entry 54 also. It is not disputed that duty on electricity is tax. Tax on the sale or purchase of goods including electricity but excluding newspapers shall fall within Entry 54 and shall he subject to provisions of Entry 92A of List I. Taxes on the consumption or sale for consumption of electricity within the meaning of Entry 53 must be consumption within the State and not beyond the territory of the State. Any other sale of electricity shall continue to be subject to the limits provided by Entry 54. Even purchase of electricity would be available for taxation which it would not be if electricity was not includible in the meaning of term ''goods''. A piece of legislation need not necessarily fall within the scope of one entry alone; more than one entry may overlap to cover the subject-matter of a single piece of legislation. A bare consumption of electric energy even by one who generates the same may be liable to be taxed by reference to Entry 53 and if the State Legislature may choose to impose tax on Consumption of electricity by the one who generates it, such tax would not be deemed to be a tax necessarily on manufacture or production or a duty of excise, as held by Constitution Bench in The Jiyajeerao Cotton Mills Ltd. Vs. State of Madhya Pradesh, . A mere consumption of goods (other than electricity), not accompanied by purchase or sale would not be taxable under Entry 54 because it does not provide for taxes on the consumption and Entry 53 does not speak of goods other than electricity. Thus in substance Entries 53 and 54 can be and must be read together and to the extent of sale of electricity for consumption outside the State, the electricity being goods, shall also be subject to provisions of Entry 92A of List I. This, in our opinion, is the best way of reading the two entries. In C.P. Motor Spirit Act re., AIR 1939 FC 131, it was held that two entries in the lists may overlap and sometimes may also appear to be in direct conflict with each other. It is then the duty of this Court to reconcile the entries and bring about harmony between them. The Court should strive at searching for reasonable and practical construction to seek reconciliation and give effect to all of them. If reconciliation proves impossible the overriding power of Union Legislature operates and prevails. Gwyer, C.J. Observed:
"A grant of the power in general terms, standing by itself, would no doubt be construed in the wider sense; but it may be qualified by other express provisions in the same enactment, by the implication of the context, and even by considerations arising out of what appears to be the general scheme of the Act."
And again he said....,
"An endeavour must be made to solve it, as the Judicial Committee have said, by having recourse to the context and scheme of the Act, and a reconciliation attempted between two apparently conflicting jurisdictions by reading the two entries together and by interpreting, and, where necessary modifying the language of the one by that of the other. If needed such a reconciliation should prove impossible, then and only then, will the non-obstante clause operate and the federal power prevail."
In The Calcutta Gas Company (Proprietary) Ltd. Vs. The State of West Bengal and Others, , the Constitution Bench has held that, the same rules of construction apply for the purpose of harmonizing an apparent conflict between two entries in the same list."
The ratio of the aforesaid judgment would be that if the energy is generated in a State and consumed therein, then the State Government under Entry 53 of List II, has the power to impose electricity duty, but in a case where the electricity is generated and transmitted from another State, it takes a character of inter-state sale and then the State Legislature would not have the power to impose any tax on consumption of that electricity.
In the present case, if the argument of the respondents is accepted, the State can impose tax, under Entry 53, on the energy which was supplied from outside the State of Haryana to the HVPNL and thereafter, it was transmitted to the consumer, it would result into two situations; (i) if the transmission of energy received from other State is covered under Entry 53 of List II of VIIth Schedule, then the State Government can impose electricity duty for supplying the said energy to the consumer and (ii) since the electricity was being supplied from outside the State of Haryana, the Parliament has the jurisdiction under Article 246(1) of the Constitution of India, to impose tax on such a sale, treating it to be inter-state sale. The relevant Entry would he Entry 54 of List-II. Then, it would create a situation where there would be double taxation on the theory of territorial nexus.
In the aforesaid case, the Hon''ble Supreme Court in paras 32 and 33, further observed as under:--
"32. Yet another reason why we cannot accept the line of reasoning advanced on behalf of the States of Andhra Pradesh and Madhya Pradesh is that the same runs counter to the scheme of constitutional provisions and specially the Sixth Amendment. As has been found by the Division Bench of Andhra Pradesh High Court in its impugned judgment, if the reasoning suggested on be half of the State of A.P. was accepted, the State where the dealer supplying the electricity is located and the electricity originates for sale, as also the States in which the purchaser of electricity is located and it is delivered, shall both subject the electrical energy to taxation, by relying on the theory of territorial nexus. Such a situation would be the one which was obtaining in the country with respect to sales tax prior to coming into force of the Constitution and which led to complications and difficulties in administration of sales tax legislation and therefore, was taken care of by the Sixth Amendment. Such multiple taxation would result in hampering free movement of electricity between the States, and therefore, would be prejudicial to freedom of trade, commerce and intercourse throughout the territory of India, and for the unity and integrity of the country. That would give rise to the same situation which was sought to be remedied by the Constitution and the Sixth Amendment.
On behalf of the States of A.P. and M.P., it was submitted that subject of electricity has been specifically dealt with by Articles 287 and 288 of the Constitution and by implication the Articles, other than 287 and 288 should be read as not dealing with electricity. This submission is stated only to be rejected. These articles make some provisions for electricity and water or electricity in the special context dealt with by those articles and do not exclude applicability of other articles where electricity has been dealt with as goods."
By treating the purchase of electricity (through open access) from outside the State of Haryana, this Court is of the view that the sale of electricity is an inter-state sale and the State Legislature has no jurisdiction to impose any duty/tax on the consumption Of that electricity in the State of Haryana. The said sale being inter-state sale, would fall in Entry 54 of List-II, Schedule VII, which read with Article 92-A after sixth amendment, fell in Union List-I or the purpose of taxation. Therefore, the electricity supplied in the State of Haryana through open access, which was purchased by the consumer (petitioner) by a prior contract, is an inter-state sale and the State Government could not tax it under Entry 53, as it was not generator of this electricity. Therefore, the sale of electricity was to be treated from open access outside the State of Haryana and the State did not have any jurisdiction to issue circulars (Annexures P-5, P-6 and P-7) with regard to imposition of electricity duty. The other charges mentioned in Annexures P-5, were levied for the purpose of transmission charges, for which, the State Government could charge the consumer. But, for the purpose of imposing electricity duty, it was the Parliament, which had the jurisdiction to tax, as the interest-state sale fell in List-I of Union of India.
Resultantly, sales instructions/circulars dated 12.05.2006, 08.02.2008 and 16.07.2010 (Annexures P-5, P-6 and P-7 respectively) being issued without jurisdiction, are set aside. During the pendency of this petition, the petitioners had deposited the electricity duty, which shall be returned to the petitioner by the respondents within a period of two months with simple interest at the rate of 9% from the date of deposit till the date of refund, failing which, the interest of 15% would operate.
Petition stands allowed. No order as to costs.