Hon'ble Mrs. Justice R. Banumathi
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOS.4616-4617 OF 2009
VASANT CHEMICALS LIMITED ….Appellant
VERSUS
THE MANAGING DIRECTOR, HYDERABAD
METROPOLITIAN WATER SUPPLY AND
SEWERAGE BOARD AND OTHERS …Respondents
With
CIVIL APPEAL NOS.4618-4619 OF 2009
VASANT CHEMICALS LIMITED ….Appellant
VERSUS
M. D., HYDERABAD METRO W.S. &
S. BOARD & OTHERS …Respondents
J U D G M E N T
R. BANUMATHI, J.
These appeals arise out of the judgment dated 29.10.2003
passed in the Writ Petition Nos.4917 and 5044 of 2000 and order
dated 29.12.2003 passed in review petition by the High Court of
Andhra Pradesh at Hyderabad dismissing the writ petitions as well
as the review petitions holding that the levy of sewerage cess
levied on the appellant by the respondent-Board is in accordance
with Section 55 of the Hyderabad Metropolitan Water Supply and
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Sewerage Act, 1989 (HMWS&S Act) and Clause 16 of the
agreement entered into between the appellant and the Board.
2. The facts giving rise to these appeals are that the appellantM/s Vasant Chemicals Limited which is an amalgamation of three
companies is engaged in the manufacture and export of dye
intermediates and other organic chemicals in their units at
Jeedimetla Industrial Estate, Ranga Reddy District, Hyderabad. The
effluents of the appellant industry and other industries were not of
acceptable standards to be let into the sewer line of the Board and
required treatment and therefore, the industrial units in Jeedimetla
Estate decided to establish the Common Effluent Treatment Plant
(CETP). Hence, under the joint efforts of all the chemical units and
other industries including the appellant, a company was formed
namely M/s Jeedimetla Effluents Treatment Limited (JETL) in the
year 1987 to get the effluents treated at their own cost to bring
the quality of the effluents to an acceptable level. The appellant
and the other industrial units made investment by way of shares in
the said company towards its capital. According to the appellant,
it has invested to the extent of more than 29% of the shares in
JETL towards its equity.
3. After treating the effluents to sewer standards as prescribed
under the Water (Prevention and Control of Pollution) Act, 1974
(Water Act, 1974) and the Environment (Protection) Act, 1986
(Environment Act, 1986) between 1988 and 1995, JETL was
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discharging the treated waste water/effluents into the open
drains/nalas in Jeedimetla Area. After discussion with Hyderabad
Metropolitan Water Supply and Sewerage Board (HMWS&SB-the
Board) and the Government of Andhra Pradesh and APPCB, a
dedicated pipeline was laid from the premises of JETL to connect to
the sewerage system of HMWS&SB which is located at a distance
of about 10.38 kilometers at Balanagar at an estimated cost of
Rs.346 lakhs. For the said dedicated pipeline, JETL paid an amount
of Rs.75,00,000/- as its contribution and the balance amount was
contributed by the Board and the Government of Andhra Pradesh.
The pipeline became operational on 31.01.1998. As per the
direction of APPCB, the industries in IDA Jeedimetla are discharging
their industrial effluents to JETL, which in turn partially treat
effluents and let into the dedicated pipeline connecting JETL and
sewer line at Board’s sewer at Kukatpalli, Balanagar and then
carried to Sewerage Treatment Plant (STP) at Amberpet.
4. The appellant has obtained bulk water supply connection
from the respondent-HMWS&S Board and the Board accorded
sanction for supply of 36,200 gallons water per day @ Rs.12 per
kilo litre to the appellant-Industry. An agreement was entered into
by the appellant with the respondent-Board on 27.04.1995
stipulating the terms and conditions of supply of water and the
payments required to be made in terms thereto. The agreement
provides that HMWS&SB will supply water to the appellant industry
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and water charges will be levied for the supply of water as per the
agreement. Clause 16 of the agreement inter alia provided for
payment of sewerage cess and that the appellant is liable to pay a
sewerage cess in accordance with Section 55 of the HMWS&S Act.
Clause 17 of the agreement obligates the appellant to avail the
sewer facility provided by the HMWS&SB if the premises of the
appellant is located at a distance of less than thirty-five meters
from the sewer line of the HMWS&SB.
5. The appellant made representations between 1998 and
February, 2000 stating that levy of sewerage cess was illegal and
contrary to the provisions of HMWS&S Act as the appellant is not
discharging its effluents into the sewerage system of the Board.
According to the appellant, the Board insisted upon payment of
the arrears and sought payment of the sewerage cess for the
period January, 1998 to March, 2000 and sought certain amount
towards water cess from 1st January, 1998 to February, 2000 vide
two notices dated 25.01.2000. Aggrieved thereby, the appellant
filed writ petitions in WP(C) No.4917/2000 and WP(C)
No.5044/2000 challenging the notices levying of water cess and
sewerage cess respectively. The writ petitions were dismissed by
the High Court by the common judgment dated 29.10.2003
upholding the levy of sewerage cess by holding that such levy is in
terms of Section 55 of HMWS&S Act. The High Court held that
though the appellant’s premises is not directly connected to the
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sewer line of the Board, the industrial effluents of the appellant are
being carried to JETL and after partial treatment at JETL, the same
is let into the sewerage system of the Board. It was further
observed that as per Section 55 of the HMWS&S Act, the occupier
of the premises from where the sewerage or effluents are let into
the sewer facility provided by the Board by any means, has to pay
the sewerage cess irrespective of the fact that whether or not the
area is served by sewerage system of the Board. The High Court
pointed out that this statutory liability is incorporated in Clause 16
of the agreement as per which the appellant has to pay sewerage
cess along with water cess @ 20% of the water charges. The High
Court dismissed the writ petitions vide judgement dated
29.10.2003 holding that the demand notices are not arbitrary and
that do not suffer from any legal infirmities.
6. The appellant filed review petitions being Review MP
No.33154/2003 in WP(C) No.4917/2000 and Review MP
No.33158/2003 in WP(C) No.5044/2000 before the High Court
which came to be dismissed vide order dated 29.12.2003 on the
ground that the judgment dated 29.10.2003 does not suffer from
any error apparent on the face of the record.
7. Mr. V. Giri, learned senior counsel for the appellant submitted
that since the premises of the appellant industry is situated in the
area not served by the sewage system of the Board and in terms of
proviso to Section 55 of the HMWS&S Act, no sewerage cess is
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leviable. It was contended that since the appellant is covered
under proviso to Section 55 of the HMWS&S Act, the statutory
liability cannot be imposed on the appellant on the basis of Clause
16 of the agreement. Without prejudice to the above contentions,
it was urged that under the agreement dated 31.08.2000 between
the JETL and the Board, various charges are levied on JETL which
are in effect sewerage cess and therefore, there cannot be double
levy for the same service/same taxable event which is
impermissible under the law. It was contended that the various
documents produced and the contentions raised by the parties in
the review petitions were not considered by the High Court and the
High Court erred in dismissing the review petitions.
8. Reiterating the above submissions, on behalf of JETL, Mr.
Guru Krishna Kumar, learned senior counsel submitted that under
the agreement dated 31.08.2000, five different kinds of charges
are levied on JETL by the Board namely:- (i) capital contribution
(clause 4); (ii) sewerage connection charges (clause 4); (iii)
charges towards maintenance of sewer line (clause 28); (iv)
sewerage maintenance and sewerage treatment charges (clause
28); and (v) sewerage surcharge for effluents above a certain level
(clause 29) and those charges though not christened as sewerage
cess, they are in effect sewerage cess in terms of Section 55 of
HMWS&S Act. It was further contended that various charges levied
on JETL by virtue of the agreement dated 31.08.2000 correspond to
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the sewerage cess under Section 55 of HMWS&S Act and levy of
sewerage cess on the appellant for the same act of discharging of
the same sewage, would therefore amount to a double levy on the
industrial units.
9. On behalf of the respondent Board, learned senior counsel
Mr. Gourab Banerji submitted that the appellant industry, obtaining
bulk water supply from the Board and discharging sewage into the
sewer line of the Board, is liable to pay sewerage cess under
Section 55 of the HMWS&S Act. It was submitted that since after
partial treatment at JETL, the effluents are let into the sewer line of
the Board through which the effluents are carried to Sewerage
Treatment Plant (STP) at Amberpet for further treatment, the
appellant is connected to the sewerage system of the Board and is
liable to pay sewerage cess under Section 55 of the HMWS&S Act.
It was contended that Clause 16 of the agreement incorporates the
levy under Section 55 of the HMWS&S Act and the Rules and
Regulations thereunder and as per the terms of the agreement
also, the appellants are liable to pay sewerage cess. Insofar as the
plea of double taxation, it was submitted that the JETL was not a
party to the writ petitions filed by the appellant and the
subsequent writ petition in WP(C) No.17381/2004 filed by the JETL
inter alia challenging the sewerage surcharge under various
agreements was already dismissed for default by the High Court.
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10. We have carefully considered the submissions and perused
the impugned judgment and materials on record. The following
points arise for determination in these appeals:-
(i) Whether the appellant is right in contending that
the appellant unit is not connected to the
sewerage system of the Board and so the levy of
sewerage cess on the appellant under Section 55
of HMWS&S Act is not sustainable?
(ii) Whether the appellant is right in contending that
since the appellant’s unit is not served by a
sewerage system of the Board, as per proviso to
Section 55 of HMWS&S Act, no sewerage cess can
be levied?
(iii) Whether the charges collected from JETL under the
agreement dated 31.08.2000 is in effect, sewerage
cess in terms of Section 55 of HMWS&S Act,
thereby amounting to double levy of sewerage
cess/charge for the same service/same taxable
amount?
Appellant’s statutory liability to pay sewerage cess and
Re: contention: Appellant is covered by the proviso to
Section 55 of the Act
11. Section 55 of the HMWS&S Act contemplates levy of
sewerage cess on the occupier of the premises from where the
sewage or industrial effluents, as the case may be, are let into the
sewer facility provided by the Board by any means whatsoever
irrespective of fact whether or not the area is served by sewerage
system of the Board. Section 55 of HMWS&S Act reads as under:-
“55. Charges towards the use of sewerage cess---
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Every occupier of both domestic and non-domestic
premises shall pay to the Board at the rate not exceeding
thirty five percent of the bill charging for the water
consumed or at such rate as may be prescribed by rules, to
defray the capital cost of sewerage and sewage treatment
works undertaken by the Board and the operation and
maintenance of the sewerage system from time to time:
Provided that no such charges shall be levied in any
premises situated in the areas which are not served by the
sewerage system of the Board.”
12. Admittedly, the appellant industry has obtained sanction for
bulk water supply connection from the Board for the supply of
36,200 gallons of water per day @ Rs.12/- per kilo litre for the
manufacture of dye and other chemicals. In terms of the sanction
of water supply to the appellant, an agreement was entered into
with the respondent-Board on 27.04.1995 stipulating the
conditions and the payments required to be made in terms thereto.
The agreement provides for payment of sewerage cess in
accordance with Section 55 of the HMWS&S Act. Clause 16 of the
agreement mandates the Board to collect sewerage cess from the
appellant-industry in terms of Section 55 of the HMWS&S Act.
Clause 17 of the agreement makes it obligatory on the part of the
appellant to avail the facility of the Board if it is located within
thirty-five meters from the Board’s sewerage system. Clauses 16
and 17 read as under:-
“Clause 16. In accordance with the provisions of Section
55 of the HMWSSA Act, 1989, the consumer shall pay
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sewerage cess along with water charges at the rate of 20%
of the water charges or such other rates as may be
prescribed and determined by the Board from time to time.
Clause 17. It shall be obligatory on the part of the
consumer to avail the sewers facility provided by the Board
if the premises of the consumers are located at a distance
less than 35 metres away from the Board sewer line to any
point of the boundary of the consumer premises.”
13. Appellant industry and other industrial units are producing
chemicals, bulk pharmaceuticals and dye intermediates causing
heavy pollution. In order to comply with the provisions of Water
Act, 1974, the industrial effluents discharged by the appellant
industry and others are to be treated otherwise the industrial units
will be violating various laws governing the treatment and disposal
of sewage including protection of environment. The issue
pertaining to pollution, discharge of effluents in the State of Andhra
Pradesh including the industrial region of Jeedimetla was the
subject matter of a proceeding before this Hon’ble Court being Writ
Petition (C) No.1056 of 1990, in the matter of Indian Council for
Enviro/legal Action and Others. In the said proceedings, a joint
action plan was proposed by the CPCB, New Delhi and APPCB and a
common effluent treatment plant was ordered to be set up. As the
industries were sending their untreated effluents into the sewer,
directions were given that the A.P. Pollution Control Board would
not accept the effluents unless these conform to the standards
prescribed by the Board vide Indian Council for Enviro Legal
10
Action and others v. Union of India and others, (1998) 9 SCC
580. Similar problem arose in the case of World Saviors v. Union
of India and others (1998) 9 SCC 247. In order to comply with
the provisions of the Water Act, 1974 and the Environment Act,
1986 and in order to carry the industrial sewage to the Board’s
sewer trunk, a dedicated pipeline to the extent of 10.38 kilo meters
from JETL to Kukatpally and Sanathnagar Main Line was laid. The
cost of laying the pipeline is stated to be Rs.346 lakhs out of which
contribution of the JETL was Rs.75 lakhs and the balance amount
was contributed by the Board and the Government of Andhra
Pradesh. This dedicated pipeline became operational from
31.01.1998. The pipeline from JETL to Balanagar is a dedicated
pipeline used exclusively by the JETL. As per the agreement
entered into with the Board, the management of the JETL pays the
amount to the Board towards surcharge for discharging partially
treated effluents from JETL into Board sewer and also for
maintenance of the sewerage system. After the industrial effluents
are partly treated at JETL, the industrial effluents are let into the
dedicated pipeline belonging to the Board system at Balanagar and
from there, the sewage is let into 1000 mm diameter sewage trunk
main belonging to the Board through which the effluents are
carried to Sewerage Treatment Plant (STP) at Amberpet.
14. “A ‘trunk sewer’ is one which bears the same relation to an
entire sewer system that the trunk of a tree bears to its branches,
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or the main stream of a river bears to its tributaries. It is
sometimes called a ‘trunk line sewer,’ an ‘intercepting sewer,’ or a
‘trunk line intercepting sewer”. “Ref: Environmental & Pollution
laws in India by Justice T. S. Doabia (2
nd
Edition-2010) published by
LexisNexis Butterworths Wadhwa, Volume 1 at page no.1054.”
Graphic description of the sewerage connection is as under:-
STP,
Amberpet
18.90 kms
Hyderabad Metropolitan
Water Supply &
Sewerage Board,
Kukatpalli/Balanagar
1.2 kms…. No pipeline
15. As per Section 55 of the HMWS&S Act, the following essential
ingredients are to be satisfied for levy of sewerage cess:-
1. There has to be an occupier domestic or non-domestic
premise;
2. There should be consumption of water by such
occupier;
3. The rate to be charged would be up to 35% of bill for
water consumed or at such rate as may be prescribed
by rules; and
4. The amount collected is towards:- (a) defraying capital
cost of sewerage and sewerage treatment works
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1000 mm
sewage
Trunk Disposal of Treated Wastewater
Through Dedicated Pipeline/Pipeline
laid by the Board part contribution by
JETL
Water Supply
10.38 kms
Jeedimetla Effluent
Treatment Limited (JETL)
Vasant Chemicals
Private Limited Industrial Wastewater & Domestic
Sewage taken by tankers
for Treatment & Disposal
undertaken by the Board; and (b) for operation and
maintenance of sewerage system from time to time.
16. The appellant being an occupier of a “non-domestic premise”
having bulk water supply connection from the Board and “a
consumer of water” and eventually discharging sewage effluents
into the sewer line of the Board, the essential ingredients of
Section 55 are thus satisfied. The levy of sewage cess by the
respondent is a statutory levy which the appellant is liable to pay
under Section 55 of HMWS&S Act. Clause 16 of the agreement
provides for payment of sewerage cess in terms of Section 55 of
the Act which inter alia stipulates that the appellant is required to
pay sewerage cess in accordance with Section 55 of the Act. The
sewerage cess of 35% levied by the Board for carrying the sewage
of the acceptable quality through its transmission system is thus
both statutory and in terms of the agreement between the
appellant and JETL.
17. Contention of the appellant is that it is not liable to pay
sewerage cess to the Board as it is not letting out the sewage
effluents to the sewage system of the Board but is carrying the
effluents in the tanker, lorries and letting it out in the effluent
treatment of JETL and thus is not connected with the sewage line
of the Board. Mr. V. Giri, learned senior counsel for the appellant
contended that the appellant industry is not connected with
sewerage system of the Board and therefore, levy of sewerage
13
cess under Section 55 of the HMWS&S Act is not sustainable.
Drawing our attention to the finding of the High Court “that there
is no sewerage line of HMWS&SB connecting the appellant’s
premises to the sewerage system of HMWS&SB…..”, the learned
senior counsel for the appellant submitted that since there is no
sewer or drainage line connecting the appellant industry, proviso
to Section 55 of the HMWS&S Act applies and no sewerage cess is
leviable. It was further submitted that even assuming that the
dedicated pipeline from JETL for carrying its treated effluents to the
sewerage system of the Board at Balanagar is a “sewerage system
of the Board” which is more than two kilo meters from the
premises of the appellant industry, JETL is separately paying the
surcharge and the appellant is not connected with the sewerage
system and therefore, there cannot be levy of sewerage cess on
the appellant under Section 55 of the HMWS&S Act.
18. As pointed out earlier, admittedly, the appellant has obtained
bulk water supply connection from the Board for supply of 36,200
gallons of water per day @ Rs.12/- per kilo litre. It is also admitted
that the appellant is discharging its industrial effluents into the
Board sewer line. The appellant being an occupier of the premises
who is consuming water and discharging sewage into the sewerage
system of the Board, in terms of Section 55 of the HMWS&S Act, is
liable to pay sewerage cess. Though the pipeline from JETL to
Kukutpally/Balanagar is stated to be the dedicated pipeline, as
14
pointed out earlier, this was laid at the cost of Rs.346 lakhs, out of
which, JETL has paid only Rs.75 lakhs. The rest of the cost was
borne by the Board and the Government of Andhra Pradesh. It is
pertinent to note that Clause 4 of the agreement dated 31.01.1998
between JETL and the Board categorically stipulates that the
dedicated pipeline from JETL to Kukutpally/Balanagar belongs to
the Board.
19. As per Section 54 of the Act, sewage which is likely to
damage or interfere with the free maintenance of the sewerage
system of the Board cannot be passed into the Board sewer and
sewage treatment works. In terms of Section 54 of HMWS&S Act,
Clause 19 is also incorporated in the agreement dated 27.04.1995
between the appellant industry and HMWS&SB. As per Clause 19
of the agreement, no effluents shall be discharged into the Board’s
sewerage system unless such effluents are treated in accordance
with the provisions of the Water Act, 1974. Clause 19 reads as
under:-
“19. No effluent shall be discharged into the Board sewer
unless such effluent is treated in accordance with the
provisions of Water (Prevention and Control of Pollution) Act,
1974 relating to discharge and disposal of industrial effluents
and other objectionable effluents. Further, the treatment
shall also conform to the IS specification laid down from time
to time for disposal of effluent into the domestic sewer of the
Board.”
15
Admittedly, JETL is neither a consumer of bulk water supply nor
generating any sewage/industrial effluents of its own. The
effluents of the appellant industry are not of acceptable standards
for transmission system of the Board. Before the effluents of the
appellant industry are to be let into the sewer line of the Board, the
appellant industry has to get the effluents treated at its own cost
to bring the quality of the effluents to an acceptable level. After
getting partial treatment from JETL, the effluents are let into the
said dedicated pipeline which belongs to the Board at
Kukutpally/Balanagar and then they are let into 1000 mm diameter
sewage trunk belonging to the Board through which the effluents
are carried to Sewerage Treatment Plant (STP) at Amberpet
measuring a distance of 18.90 kilo meters. The length of the
pipeline from JETL to Amberpet is 29.28 kilo meters. Though the
appellant’s unit is not directly connected with the Board sewer line,
the industrial effluents of the appellant unit partially treated at JETL
are ultimately let into the Board sewer line which is finally carried
to STP at Amberpet. In the light of this admitted factual position,
the appellant is liable to pay sewerage cess under Section 55 of
the Act. Proviso to Section 55 of the Act contemplates that the
sewerage cess shall not be levied on the occupier of the premises
if such premises is stated to be in an area which is not served by
the sewerage system of the Board. The proviso implies that the
occupier of such premises cannot use the Board sewer by any
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means whatsoever. Therefore, the contention of the appellant that
it is not liable to pay sewerage cess to the Board as it is not
directly letting out sewage effluents into the sewage line of the
Board and that it is carrying its effluents in the tanker, lorries and
letting out in the effluent treatment plant of JETL and thus not
connected with the sewage system of the Board, in our view, is
wholly untenable. Since the sewage of the appellant is ultimately
let into the sewer line of the Board, the appellant cannot contend
that it is not covered under Section 55 of the Act and that it is
covered under proviso to Section 55 of the Act.
20. Placing reliance upon Ultra Tech Cement Ltd. v. State of
Maharashtra and another, (2011) 13 SCC 497, learned senior
counsel for the appellant contended that when a particular cess is
leviable under an enactment and the said enactment exempts a
specific class of persons from paying the said cess, the State
Government cannot make the lessee liable to pay the said cess on
the ground that the agreement was entered into under a different
enactment. Placing reliance upon paras (12) and (20) of the said
judgment, it was contended that there is no sewer or drainage line
connecting the appellant’s units or any other industry in
Jeedimetla Effluent Treatment Limited to the sewerage system of
HMWS&SB and neither the appellant nor other industries discharge
their sewage into the sewer line of the Board and, therefore, the
appellant’s unit is covered under proviso to Section 55 of the
17
HMWS&S Act. The learned senior counsel further contended that
any fiscal extraction is required to be constructed strictly in
accordance with the provisions of the charging section and even if
a clause for such payment is incorporated into the agreement as
the agreement is subject to the provision of the relevant charging
section.
21. The above argument proceeds on the presumptive footing as
if the appellant’s unit is covered under proviso to Section 55 of the
HMWS&S Act. Proviso to Section 55 of HMWS&S Act states that no
charge would be levied in any premises situated outside the
sewage system/not served by the sewerage system of the Board.
It has to be seen whether the appellant is right in contending that
the appellant industry is not connected with the sewerage line of
the Board and that no sewage of the appellant is let into the
sewerage system of the Board and therefore, the appellant is
covered under proviso to Section 55 of HMWS&S Act.
22. In the process of letting out effluents, two things are involved
namely – (i) the treatment of industrial effluents to bring down the
contents of the effluents to an agreed specification on one part;
and (ii) the transmission of those partially treated industrial
effluents through the sewerage system of the Board. Parties have
entered into various agreements and there are three sets of
agreements which are as under:-
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S. No. Parties Date of
Agreement
1. M/s. Vasant Chemicals Ltd. and
HMWS&S Board
27.04.1995
2. M/s. Vasant Chemicals Ltd. and
Jeedimetla Effluent Treatment Ltd.
(JETL)
22.01.1996
3. Jeedimetla Effluent Treatment Ltd.
(JETL) and HMWS&S Board
31.01.1998
and
31.08.2000
23. Let us now consider the effect of the agreement between the
appellant and JETL on the statutory liability of the appellant under
Section 55 of the Act. The agreement between the appellant and
JETL for partial treatment of appellant’s industrial effluents is the
internal contractual agreement between JETL and the appellant.
The appellant unit is to treat and process the industrial effluents
and bring them down to permissible standard limits in accordance
with the provisions of Water Act, 1974 and Environment Act, 1986
relating to discharge and disposal of industrial effluents and other
objectionable effluents into sewers before discharging of the
effluents into the Board sewer. The treated effluents should also
have to conform to the IS specification laid down from time to time
for disposal of effluent into the domestic sewer of the Board. To
discharge their contractual obligation in bringing the industrial
effluents to permissible standard limits, the appellant unit entered
into an agreement dated 22.01.1996 with JETL engaging it to treat
its industrial effluents in accordance with the environmental laws
in force. The appellant instead of treating the effluents at its
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premises at its own cost engaged JETL for treating its effluents.
Thus, for its convenience, the appellant unit has entered into an
agreement with JETL for treating its effluents and the charges paid
by them to JETL are towards the treatment of effluents and bring it
to permissible standards. Therefore, the function of JETL is that of
an intermediary with whose assistance, the appellant is
discharging its statutory obligation.
24. Admittedly, the appellant’s industrial effluents are carried to
JETL in closed tankers and after partial treatment at JETL, let into
the Board’s sewer line. Admittedly, the effluents of the appellant’s
unit are not of acceptable standards for transmission through the
sewer line of the Board and therefore, the appellant’s industry and
other industries have to get the effluents treated at their own cost
to bring the quality of the effluents to an acceptable level by
treating the same to some extent. The sewerage cess of 35%
levied by the Board is for carrying the sewerage of acceptable
quality through its sewer line and further treating it at STP at
Amberpet.
25. The sewerage cess aims to recover the cost of treating the
effluents of strength stronger than domestic sewage and to make
the effluents of acceptable quality. In addition to partial treatment
at JETL, the effluents require further treatment and their
transmission to Sewer Treatment Plant (STP) at Amberpet situated
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at 18.90 kms from Bala Nagar which requires huge finance. The
maintenance of sewer line is highly essential for proper
transmission of the effluents from JETL to Board’s sewer system at
Amperpet where the Board brings down the industrial effluents to
the tolerance limits. It requires huge amount to maintain the STP
treatment of industrial effluents. Further, it requires high demand
of energy, STP personnel to operate and maintain the system,
skilled and unskilled workers for proper maintenance of the plant.
The respondent-Board unless it collects sewerage cess and other
charges cannot meet the heavy expenditure on the operation and
maintenance of sewerage system. The liability of the appellant to
pay sewerage cess to the Board arises from the Statute and also
by way of an agreement which was agreed upon by the appellant.
There is no merit in the contention of the appellant unit that its
liability has ended upon transferring the industrial effluents to the
respondent-JETL and that it is not connected to the Board’s sewer
line. As discussed earlier, the partially treated effluents of the
appellant’s unit are ultimately let into the sewer line provided by
the Board which is being carried to Amberpet STP for further
treatment and discharge. After partial treatment at JETL, when
appellant’s effluents are let into the Board’s sewage system, the
appellant is not justified in contending that it is not connected to
the sewer line of the Board and hence, covered under the proviso
to Section 55 of the Act.
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26. It is well-settled that the normal function of a proviso is to
except something out of the enactment. While considering the
interpretation of the proviso, in Romesh Kumar Sharma v.
Union of India and others, (2006) 6 SCC 510, this Court held as
under:-
“12. “10. The normal function of a proviso is to except
something out of the enactment or to qualify something
enacted therein which but for the proviso would be within
the purview of the enactment. As was stated in Mullins v.
Treasurer of Surrey (1880) 5 QBD 170 (referred to in Shah
Bhojraj Kuverji Oil Mills and Ginning Factory v. Subbash
Chandra Yograj Sinha AIR 1961 SC 1596 and Calcutta
Tramways Co. Ltd. v. Corpn. of Calcutta AIR 1965 SC 1728,
when one finds a proviso to a section the natural
presumption is that, but for the proviso, the enacting part
of the section would have included the subject-matter of
the proviso. The proper function of a proviso is to except
and to deal with a case which would otherwise fall within
the general language of the main enactment and its effect
is confined to that case. It is a qualification of the
preceding enactment which is expressed in terms too
general to be quite accurate. As a general rule, a proviso is
added to an enactment to qualify or create an exception to
what is in the enactment and ordinarily, a proviso is not
interpreted as stating a general rule. ‘If the language of the
enacting part of the statute does not contain the provisions
which are said to occur in it you cannot derive these
provisions by implication from a proviso. …’ said Lord
Watson in West Derby Union v. Metropolitan Life Assurance
Society 1897 AC 647. Normally, a proviso does not travel
beyond the provision to which it is a proviso. It carves out
22
an exception to the main provision to which it has been
enacted as a proviso and to no other……”
27. The sewerage cess levied under Section 55 of the HMWS&S
Act is a statutory levy on the appellant as it satisfies the essential
requirements of Section 55 of the Act. The agreement/contract
between the appellant’s unit and JETL does not take away the
appellant from the network of the Board’s sewer line and its “use
and treatment of sewerage” of the Board’s sewerage system.
Where the appellant’s effluents are being eventually sent to the
Board’s sewer, the contention of the appellant that its premises
are not served with a sewer line by the Board defies logic and runs
contrary to the object of the Act. The appellant, being an occupier
of non-domestic premises, is consuming the water provided by the
Board, generating the industrial effluents and using the Board’s
sewer to release them after partial treatment. In such an admitted
position, the appellant cannot escape from the statutory levy by
taking a technical approach and interpreting the proviso as a
general rule where it is merely a qualifying one. As the appellant
eventually lets out its effluents to the Board’s sewerage system,
the appellant is not right in contending that it is covered under
proviso to Section 55 of the Act.
28. Re: Contention – Levy of double taxation:- Learned
senior counsel for the appellant contended that even assuming
that the dedicated pipeline of JETL which connects to the sewerage
23
system of the Board at Balanagar is construed to be “Sewer”, any
levy of sewerage cess is applicable only to JETL and JETL under its
agreement with HMWS&SB, is paying surcharges and sewerage
charges to HMWS&SB by collecting the said amount from the
appellants and other industries for the said taxable event. It was
submitted that under Section 55 of HMWS&S Act, the sewerage
cess is collected for the – (i) to defray capital cost of sewerage; (ii)
for sewage treatment works undertaken by the Board; and (iii) for
operation and maintenance of the sewerage system. It is
contended that under its agreement dated 31.08.2000 with the
Board, JETL is paying various charges like - (i) sewerage
connection charges; (ii) charges towards maintenance of sewer
line; (iii) sewerage maintenance and water treatment charges; and
(iv) sewerage surcharge for effluents above a certain level. It was
contended that various charges paid by JETL to the Board is in
essence “sewerage cess”, though it is collected under different
head “sewerage surcharge”.
29. Taking us through Clause 4 of the agreement with Board
dated 31.08.2000, Mr. Guru Krishna Kumar, learned senior counsel
appearing for JETL submitted that under agreement dated
31.08.2000, various charges are collected and it additionally
provides for levy of surcharge also. It is contended that even
though these charges may not be christened as a sewerage cess,
they are in effect correspond to the essentials of “sewerage cess”
24
in Section 55 and a levy of cess from the appellant for the same
act of disposal of the sewage would therefore amount to a double
levy on the industrial units. The learned senior counsel submitted
that sewerage cess cannot be exacted from the appellant because
it is already been paid by JETL. It was urged that various charges
levied on JETL are excessive arbitrary apart from the fact that
there is a double levy.
30. As rightly contended by learned senior counsel for the
respondent-Board, the plea of double payment of sewerage cess
was never raised in the writ petition filed by the appellant; but it
was raised by way of oral submission before the High Court and
thereafter, by way of review petition. The plea of double levy was
rightly rejected by the High Court inter alia holding that “even
assuming for a moment that the petitioner-company is paying
some amounts to the JETL, it cannot be said that it is towards
sewerage cess”.
31. As pointed out by the learned senior counsel for the
respondent-Board, JETL never sought to implead itself as a party
respondent in the writ petition filed by the Board. It is also
pertinent to point out that one Mr. G.K.B. Chowdary who was then
the Managing Director of the appellant-group of companies, was
also the Managing Director of JETL. It passes one’s comprehension
as to why JETL whose Managing Director is the same as the
25
Managing Director of the appellant Group of Companies had not
taken any step to get themselves impleaded in the writ petition
before the High Court and raise the plea of double taxation.
32. In the Supreme Court, notice was ordered on 07.07.2004 and
permitted the appellant to implead JETL as party respondent. It
was thereafter, JETL filed writ petition in WP(C) No.17381/2004
(24.09.2004) inter alia for various reliefs:- (i) That clauses 28
and 29 of the agreement dated 10.06.2003 between the petitioner
company Jeedimetla Effluent Treatment Limited and HMWS&SB as
shylockin and unconscionable, usurious, exorbitant,
unconstitutional, ultra vires the powers of the HMWS&SB; and (ii)
That the action of the HMWS&SB in collecting various charges
under Clause 4 of the agreement and other charges levied upon
JETL. The said writ petition that kept pending for many years came
to be dismissed by the High Court’s order dated 21.12.2015 for
non-prosecution. JETL has also filed WP(C) No.20117/2017
challenging the enhancement of sewerage surcharge and the said
writ petition is also said to have been dismissed on 25.06.2014.
33. Since, elaborate arguments were advanced regarding
“excessive and arbitrary levy on JETL” as well as the plea of
“double levy of sewerage cess”, we have also considered the
matter on merits. Based on three sets of agreements between the
parties, there are three kinds of payments as under:-
26
a) Payment of sewerage cess by the appellant to the Board in
terms of Section 55 of the HMWS&S Act and Clause 16 of
the agreement dated 27.04.1995;
b) Payment of treatment and processing service charges by
the appellant unit to JETL as stipulated in Clause 19 of the
agreement between the appellant and JETL dated
01.04.2000; and
c) Various charges paid by JETL to the Board pursuant to the
agreement dated 31.08.2000 and the earlier agreements.
So far as the payment by the appellant unit to the Board, it is the
statutory liability of payment of sewerage cess in terms of
Section 55 of HMWS&S Act and Clause 16 of the agreement which
obligates the appellant unit to pay the sewerage cess in terms of
Section 55 of the HMWS&S Act. The appellant having bulk water
supply connection from the Board and being “consumer of water”
and discharging sewage/effluents into the sewer line of the Board,
the payment of sewerage cess by the appellant unit is the
statutory liability under Section 55 of the HMWS&S Act and Clause
16 of the agreement.
34. Insofar as the charges paid by the appellant to JETL for the
treatment and processing of its effluents, it is purely contractual
pursuant to the agreement entered into between the appellant unit
and JETL dated 01.04.2000 and the earlier agreement dated
22.01.1996. As pointed out earlier, the appellant unit is obligated
to treat and process the industrial effluents and bring them down
to permissible standard limits in accordance with the provisions of
27
the Water Act, 1974 and Environment Act, 1986 before they are let
into the sewer line of the Board. To discharge its statutory as well
as contractual obligation, the appellant unit has entered into
agreement with JETL for the treatment and processing of
appellant’s effluents before being let into Board’s sewer line.
Payment of charges by the appellant to JETL is purely contractual
between the parties and the same cannot be considered to be in
deference to the statutory cess/statutory charge which can only be
levied by the Board. In this regard, the High Court has rightly
observed that assuming that the appellant is paying some amount
to JETL, the same cannot be termed as “sewerage cess”.
35. So far as payment of charges by JETL to the respondent
Board, the same is governed by the terms and conditions of the
agreement between JETL and the Board dated 31.08.2000. JETL’s
contention is two fold: - (i) levy of various charges under the
agreement is arbitrary and exorbitant; and (ii) double levy of
sewerage cess. The gist of the terms and conditions of the contract
dated 31.08.2000 between JETL and the Board and various charges
levied are as under:-
1. Clause 4 specifically stipulated that JETL shall be charged
towards overall proportionate sewerage maintenance and
sewerage treatment charges being incurred by the Board
from time to time on the overall sewerage system of the
Board;
28
2. In terms of Clause 4, the Board has levied sewerage
connection charges @ Rs.4/- per litre for the discharge into
the Board sewer (6 equal installments of Rs.23.34 lakhs
each by 10th of each month) – Total Rs.140.04 lakhs;
3. Clause 18 stipulates that no treated effluent shall be
discharged by JETL unless the same is treated in
accordance with the provisions of the Water and the Air
Acts and the various upper limits of the parameters of the
treated industrial effluents shall be within the permissible
standard limits prescribed; Further, Clauses 22 to 24 give
the Board the right to reject effluents of JETL if they are not
found to be consistent with the prescribed parameters;
4. In terms of Clause 28, an amount of rupees one lakh per
month is to be paid by JETL towards maintenance of the
sewer line. Additionally, JETL has to pay sewerage
maintenance and sewerage treatment charges @ Rs.6 per
thousand litres of treated effluents;
5. Further, as per Clause 29, a surcharge was also levied on
JETL for permitting industrial effluents beyond the limits
prescribed on two important parameters viz. Chemical
Oxygen Demand (COD) and Total Dissolved Solids (TDS);
Each parameter/COD and TDS will be considered
independent for levy the surcharge.
36. In terms of Rule 4 of Sewerage Rules, the Board shall charge
on the applicants seeking to discharge the trade or industrial
effluents etc. Rule 4 reads as under:-
“Sewerage and Industrial Effluents4. The Board shall charge on applicants seeking to
discharge their trade or industrial effluents, sullage drain,
sewer (other than storm sewer or combined sewer) of a
private party, State Government, Central Government, or
29
local body or local authority, into Board sewers, towards
the special treatment cost of such sewage and the charges
shall be as fixed by the Board from time to time, depending
upon the nature of such sewage and cost of treatment
involved to bring the same within tolerance limits of
effluent standards etc. The installation and maintenance
of required meters for measuring the volume of effluents
shall be insisted at the cost of the applicants, by the
board.”
Subject to the provisions of Water Act, 1974 and Environment Act,
1986 and subject to the restrictions of Section 54 of HMWS&S Act
and in terms of Rule 4 and other terms and conditions, Board has
the right to permit the ‘applicants’ seeking to discharge their trade
or industrial effluents into the Board’s sewer system and Sewerage
Treatment Plant subject to the imposition of costs. The treatment
for letting the trade or industrial effluents into the Board’s sewer
shall be subject to such terms and conditions and in such form of
agreement as may be prescribed in the regulations made by the
Board in accordance with these rules. Having entered into the
agreement with the Board on 31.08.2000 and on prior dates, JETL
cannot turn around and challenge the terms and conditions
imposed upon it by virtue of the agreement.
37. So far as the various payments made by JETL to the Board,
levy is in terms of Rule 4 of the Sewerage Rules and as per the
contract and is purely contractual between JETL and the
respondent Board for letting partially treated the industrial
30
effluents of the appellant and other units into the Board’s sewer.
Likewise, charges paid by JETL to the Board cannot be said to be in
lieu of the sewerage cess that the appellant unit is liable to pay
which is a statutory liability. It is pertinent to note that many
industries about fifty units, apart from the appellant unit, discharge
their effluents to the CETP/JETL. The agreement dated 31.08.2000
and the earlier agreements between JETL and the Board are purely
contractual consciously entered into between the parties.
38. JETL lets partially treated effluents into the Board’s sewerage
system for further treatment. As discussed earlier, for further
treatment of sewerage, the effluents are to be taken to Sewerage
Treatment Plant (STP) at Amberpet which is situated at the
distance of 08.30 kilometres from Balanagar. It requires huge
amount for transmission of the effluents to Board’s sewer system
at Amberpet where the Board brings down the industrial effluents
to tolerance limits. As pointed out earlier, the treatment of
industrial effluents requires high demand of energy, personnel to
operate the system and skilled workers for maintenance of the
plant. Unless the Board collects sewerage charge/sewerage
surcharge, the Board cannot meet the heavy expenditure on the
operation and maintenance of sewerage system. Various other
members of JETL who discharge sewage into JETL which is
ultimately let into Board sewer line, may or may not be consumers
of water supply by the Board. That apart, members of JETL may
31
have their own source of water supply or they may supplement the
supply of water from the Board through different sources either by
extraction of ground water or supply through tankers which cannot
be quantified by the Board. In pursuance of the provisions of the
HMWS&S Act and the Sewerage Rules and pursuant to the
agreement dated 31.08.2000, the charges are levied on JETL who
in turn collects the charges from its member industrial units who
discharge their effluents into JETL. Therefore, the payments made
by JETL to the Board and the charges in turn collected by JETL from
the appellant and other member units, cannot absolve the
appellant unit from its statutory liability to pay the sewerage cess.
We find no merit in the contention that there is double levy of
sewerage cess.
39. Levy of sewerage cess being a statutory levy in terms of
Section 55 of HMWS&S Act and Clause 16 of the agreement which
incorporates the statutory levy under Section 55 of HMWS&S Act,
the learned Single Judge and the Division Bench rightly recorded
concurrent findings upholding the levy. Observing that the
appellant being occupier of the premises, though not directly
connected to the sewer line of the Board, is ultimately letting into
the sewerage system of the Board after partial treatment at JETL,
the High Court was right in holding that the levy of sewerage cess
is in accordance with Section 55 of HMWS&S Act. The payment of
sewerage surcharges and the other charges by JETL cannot take
32
away the statutory liability of sewerage cess levied on the occupier
of the premises who consumes water and lets out the sewage into
the Board sewer system. The payment of sewerage surcharge and
other charges by JETL to the respondent-Board will not amount to
double levy and the High Court rightly dismissed the writ petitions
and also the review petitions filed by the appellant. The impugned
order does not suffer from any infirmity warranting interference.
40. In the result, these appeals are dismissed. The arrears of
sewerage cess, if any, to be paid by the appellant within a period
of eight weeks from today with 6% interest with effect from the
date cess fell due. If the arrears are not paid within the stipulated
period of eight weeks, it shall carry interest at the rate of 12%
thereafter.
..……………………….J.
[R. BANUMATHI]
...………………………..J.
[INDIRA BANERJEE]
New Delhi;
February 13, 2019
33
