Water users like Pepsi must pay higher cess: SC

A bench of justices Mukundakam Sharma and A R Dave rejected the plea of the Pepsi soft drink manufacturer that government's decision to adopt differential rates of cess for different users was discriminatory.

"The appellant (Pepsico Holdings) is receiving the facility of water supply from the Corporation and is obliged to pay at such rates which are demanded by the Corporation as the same rate is being charged by government.

"The Corporation cannot be asked to suffer a loss for extensive use of water by the appellant using water as raw material for its business as it is discharging its public and welfare duty for supplying water to help and assist industries like the appellant," the apex court said.

The bench passed the ruling while dismissing the appeal filed by the soft drink manufacturer challenging the decision of the Maharashtra Industrial Development Corporation to increase by 10-fold the water cess imposed on water users in the State from 2001.

As several industries had made representations, government had initially held back the increase in abeyance but subsequently in 2003 approved the increase and sought payment of the cess with retrospective effect.

Aggrieved, Pepsico moved the Bombay High Court which dismissed its plea, following which it appealed in the apex court.

The apex court said there was nothing wrong in the authorities fixing differential rates of cess for various class of industries on the basis of their usage.

Pepsico alleged that by adopting three different rates of cess for different category of industries, the government had adopted a discriminatory approach.

Brushing aside the argument, Justice Sharma, writing the judgement, said "there cannot be any dispute to the fact that in the industries like that of the appellant, consumption of water is much more than all other types of industries as they use water as raw material.

"Requirement and use of water in these industries is huge and therefore they are placed as one distinct category or class of their own. These industries stand apart from other industries and also differently situated from residential houses.

"Therefore, there is an intelligible differential between these three categories and so there is no discrimination", the apex court said.

In this case, the authorities had increased the cess from Rs 3.65 per cubic meter(PCM) to Rs 40 pcm from September 1, 2001, for industries where water is being used as a raw material as drinking water. It was also specified that the revised rates would increase by 15% in July of every following year.

The apex court also rejected Pepsico's contention that retrospective recovery of the cess was illegal.

"The stand of the appellant that the increased rate of water charges is being demanded from them on a retrospective basis is erroneous and fallacious and not proper because it is established from the record that the appellant had the knowledge about the aforesaid increase in 2001 itself when government issued the notification intimating such increase, which fact is an admitted position,," the bench said.

However, it allowed the company to file a representation to government with its grievances.