Whether 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 Sewerage Act, 1989 (HMWS&S Act) and Clause 16 of the agreement entered into between the appellant and the Board. =The payment of sewerage surcharges and the other charges by JETL cannot take 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.


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
1
Sewerage Act, 1989 (HMWS&S Act) and Clause 16 of the
agreement entered into between the appellant and the Board.

  1. 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.
  2. 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
    2
    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.
  3. 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
    3
    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.
  4. 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
    4
    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.
  5. 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.
  6. 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
    5
    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.
  7. 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
    6
    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.
  8. 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.
    7
  9. 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
  10. 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—
    8
    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.”
  11. 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
    9
    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.”
  12. 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
  13. 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,
    11
    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

  1. As per Section 55 of the HMWS&S Act, the following essential
    ingredients are to be satisfied for levy of sewerage cess:-
  2. There has to be an occupier domestic or non-domestic
    premise;
  3. There should be consumption of water by such
    occupier;
  4. 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
  5. The amount collected is towards:- (a) defraying capital
    cost of sewerage and sewerage treatment works
    12
    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.
  6. 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.
  7. 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.
  8. 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.
  9. 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
    16
    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.
  10. 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.
  11. 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.
  12. 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:-
    18
    S. No. Parties Date of
    Agreement
  13. M/s. Vasant Chemicals Ltd. and
    HMWS&S Board
    27.04.1995
  14. M/s. Vasant Chemicals Ltd. and
    Jeedimetla Effluent Treatment Ltd.
    (JETL)
    22.01.1996
  15. Jeedimetla Effluent Treatment Ltd.
    (JETL) and HMWS&S Board
    31.01.1998
    and
    31.08.2000
  16. 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
    19
    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.
  17. 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.
  18. 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
    20
    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.
    21
  19. 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……”
  20. 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.
  21. 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”.
  22. 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.
  23. 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”.
  24. 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.
  25. 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.
  26. 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.
  27. 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”.
  28. 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:-
  29. 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
  30. 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;
  31. 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;
  32. 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;
  33. 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.
  34. 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.
  35. 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.
  36. 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.
  37. 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.
  38. 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