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The Supreme Court on Friday held that the rights of the parties before the court can be determined without any reference to the factual scenario and without delving into any factual dispute.

A bench of Justice DY Chandrachud, Justice Vikram Nath and Justice BV Nagarathna while restoring the proceedings back before the High Court noted, "this court in Sree Meenakshi Mills Ltd. v Commissioner of Income Tax succinctly explained the tests for the identification of questions of fact, questions of law and mixed questions of law and facts."

The Court was hearing the plea filed by M/s Magadh Sugar & Energy Ltd. challenging order of the Patna High Court refusing 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 1948.

The petitioner herein is in the business of manufacturing and selling white crystal sugar, in addition, this, waste of sugarcane (bagasse) produced in the process of manufacturing sugar is used for the production of electricity for its consumption and the surplus energy is supplied to Bihar State Electricity Board (BSEB).

Whereas, while exercising the power under Section 3(1) of the Act, the State of Bihar issued a notification dated 21 October 2002 which stipulated that the rate of duty applicable on the consumption or sale of electricity would be fixed at six percent of the value of energy consumed or sold for any other purposes other than irrigation.

Later, the notification was amended by another notification dated March 4, 2005 which provided that the rate of duty to be levied on consumption of electrical energy generated by captive power plants would be six percent of the value of energy, which shall be equivalent to the energy tariff as fixed by the BSEB. 

In furtherance to this after several litigations before the High Court, a notice was issued 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 demand of electricity duty and penalty of about Rs 67 crores.

Whereas, after many rounds of litigation the challenge to the notice came before the High Court and the Court 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."

To which Supreme Court held that supply of electricity by a power generator who is manufacturing sugar as well is liable to file tax returns under Sections 6B(1) and 5A of the Bihar Electricity 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).

In addition, the Court noted, "The questions raised by the appellant can be adjudicated without delving into any factual dispute."

Case Title: M/s Magadh Sugar & Energy Ltd. Vs. The State of Bihar & Ors.