Case BriefsSupreme Court

Supreme Court: The Division Bench comprising of M. R. Shah* and Sanjiv Khanna, JJ., reversed the impugned order of the High Court whereby the High Court had held that education institutions run by charitable societies are exempted from payment of electricity duty. The Bench held that if the argument that all the schools/colleges or institutions, imparting education or training are exempted from electricity duty is accepted it would lead to absurd result and in that case, even the private hospitals, nursing homes, dispensaries and clinics, who are profit making entities can also claim exemption from levy of electricity duty.

Factual Backdrop

The State of Maharashtra had preferred the instant appeal to assail the order of the High Court wherein it had held that education institutions run by charitable societies were exempted from payment of electricity duty. The High Court had set aside levy of electricity duty on the respondents- Shri Vile Parle Kelvani Mandal, a society registered under the Societies Registration Act, 1860 and also a public charitable trust registered under the Maharashtra Public Trusts Act, 1950 along with respective electricity bills levying the electricity duty on consumption of electricity charge.

The crux of dispute was that prior to 01-09-2016, the charitable education institutions were exempted from payment of electricity duty levied on the consumption charges or the energy consumption for the purposes of or in respect of a school or college or institution imparting education or training, students’ hostels, hospitals, nursing homes etc. as per Section 3(2)(iii) of the Maharashtra Electricity Duty Act, 1958. However, in the year 2018, the respective electricity supply companies levied the electricity duty pursuant to a letter from the State Government stating that as per Maharashtra Electricity Act, 2016, charitable institutions registered under the Maharashtra Public Trusts Act, 1950 for the purpose of or in respect of school or college imparting education or training in academic or technical subjects are not entitled for electricity duty exemption with effect from 01-09-2016.

Intelligible Differentia vis-a-vis Taxing Statute

The respondents contended that if the interpretation canvassed by the state is accepted then it will lead to absurdity and manifest injustice as school/colleges etc. run by the local authority will fall within the purview of Section 3(2)(iii) of 2016 Act, while those run by the statutory university or charitable institution would fall outside the ambit of Section 3(2)(iii). It was submitted that as such there is no essential difference between schools/colleges etc. run by the statutory university or institution registered under the Maharashtra Public Trusts Act, 1950 and those run by the local authority. Further, that who runs the educational institution could not be the intelligible differentia for the purpose of classification. Hence, it was submitted that Electricity Duty Act being taxing statute, it must be strictly construed and if there is any ambiguity the benefit of ambiguity must lean in favour of the assessee rather than the revenue.

On the contrary, the stand of the State was that on enactment of the Maharashtra Electricity Duty Act, 2016 which repealed the earlier the Maharashtra Electricity Duty Act, 1958, no such exemption from levy/payment of electricity duty has been provided to such charitable education institutions.

Analysis of the Statute

As per subsection (2) of Section 3 of the Act, 1958 the electricity duty was not leviable on the consumption charges or the units of energy consumed…………..by or in respect of charitable institution registered under the Bombay Public Trusts Act, 1950, for the purpose of, or in respect of, school or college imparting education or training in academic or technical subjects.

However, there are material changes under the Act, 2016. As per Section 3(2) of the 2016 Act, even the public undertakings are liable to pay the electricity duty. The Bench observed,

“Section 3(2)(iiia), which was there in 1958 Act, is now conspicuously and deliberately absent in Section 3(2) of the 2016 Act.”

Interpreting the Section 3(2)(iii), under Act, 2016, the Bench stated that electricity duty on the consumption of charges or energy consumed for the purposes of, or in respect of a school or college or institution imparting education or training, student’s, hostels………….run by any local bodies shall alone be exempted from levy of electricity duty and the State Government and Central Government are also specifically excluded from payment of electricity duty. However, the public sector undertakings are not exempted from payment of electricity Act.

Therefore, the Bench held that the language and words used in Section 3(2) are plain and simple and are capable of only one definite meaning that there is no exemption provided under the Act, 2016 from levy of electricity duty so far as the charitable education institutions are concerned.

Findings and Conclusion

In Essar Steel India Ltd. v. State of Gujarat, (2017) 8 SCC 357, it was held that the statutory conditions for grant of exemption can neither be tinkered with nor diluted. The exemption notification must be interpreted by their own wordings, and where the wordings of notification with regard the construction is clear, it has to be given effect to. Similarly, in Commr. of Customs Vs. Dilip Kumar & Co., (2018) 9 SCC 1, it was held that, in the context of exemption notification there is no new room for intendment. Regard must be to the clear meaning of the words. Claim to exemption is governed wholly by the language of the notification, which means by plain terms of the exemption clause. An assessee cannot claim benefit of exemption, on the principle that in case of ambiguity a taxing statue must be construed in his favour, for an exception or exemption provision must be construed strictly.

Hence, the Bench opined that if the submissions of the respondents is accepted that as per Section 3(2)(iii), with respect to all the schools/colleges or institutions, imparting education or training, the electricity duty is not leviable, it would lead to absurd result. In that case, even the private hospitals, nursing homes, dispensaries and clinics, who are profit making entities, can also claim exemption from levy of electricity duty. Therefore, it was held that charitable education institutions are not entitled to any exemption from levy/payment of the electricity duty from the date on which Maharashtra Electricity Duty Act, 2016 came into effect.

Consequently, the Bench concluded, the High Court had committed a grave error in setting aside the levy of electricity duty levied on the respondents. Accordingly, the impugned judgment and order were held unsustainable and thereby, quashed and set aside.

[State of Maharashtra v. Shri Vile Parle Kelvani Mandal, 2022 SCC OnLine SC 18, decided on 07-01-2022]


*Judgment by: Justice M. R. Shah


Appearance by:

For the State: Sachin Patil, Advocate

For the Respondents: Shekhar Naphade, Senior Advocate


Kamini Sharma, Editorial Assistant has put this report together 

Jharkhand High Court
Case BriefsHigh Courts

Jharkhand High Court: A Division Bench of Aparesh Kumar Singh and Anubha Rawat Choudhary, JJ., allowed the petition and sets aside the impugned assessment orders as well as demand notices arising therefrom, which has been passed by treating the petitioner as a consumer of bulk supply of electricity.

The present writ petitions were filed challenging the order of assessment dated 22-05-2020 for the respective period passed by the Respondents, whereby the petitioner has been directed to pay electricity duty on the amount of electricity energy consumed by the petitioner and penalty has also been imposed for not getting itself registered under the provisions of Jharkhand Electricity Duty Act and the Rules framed thereunder. The petitioner has also challenged the demand notice and the order of attachment of its bank account arising out of the order of assessment in each case.

Counsel for the petitioner submitted that the impugned order of assessment has been passed treating the petitioner as a consumer of bulk supply of electricity from JBVNL. the impugned order of assessment is an ex-parte order, but the assessing Authority ought to have applied its mind while treating the petitioner as a consumer of bulk supply of electricity, in as much as the petitioner is admittedly having a shopping complex and is receiving electricity supply from JBVNL under High Tensions Agreement and is accordingly consuming the electricity the purpose for which the supply is given is ‘market complex’ at single point of supply and as per the schedule to the agreement, the petitioner is only a consumer of electricity and not a reseller.

Counsel for respondents submitted that the petitioner never appeared before the Authority and having not appeared before the Authority, ex-parte orders were passed and there is alternative remedy of appeal against the impugned orders of assessment.

As per the provisions of Bihar Electricity Duty, Act, 1948 and the rules framed thereunder, the term bulk supply was never defined. Subsequently in the year 2011, vide Notification dated 24.06.2011, the term bulk supply has been defined for the first time which reads as under:

“Rule 2(ba). “Bulk Supply” means supply of energy to such industrial units, mines or commercial consumers who are supplied with the high tensions energy connection for their respective premises.”

Notification 18-06-2012. Rules S.O. 4 dated 18-06-2012 amending rule 2 clause (ba) reads as under:-

2(ba). “bulk supply” means, supply of energy to such industrial and mining consumers who are supplied with the high tensions voltage supply services for their respective premises.”

The Court relied on Magadh Sugar & Energy Ltd. v. State of Bihar, 2021 SCC Online SC 801 and observed that  the petitioner is receiving electricity from JBVNL with respect to its Market (Shopping) Complex at Deoghar under high tension Tariff and is neither an industrial consumer nor a mining consumer but is a commercial consumer.

The Court further observed that the term ‘bulk supply’ was defined vide Notification dated 08-10-2011, wherein the supply to industrial units, mines or commercial consumers under high tension energy connection were treated to be “bulk supply”, but the definition of “bulk supply” was amended vide Notification No. S O 4 dated 18-06-2012 and the term “commercial consumer” stood deleted and consequently, the term “bulk supply” was confined to energy supplied to industrial units and consumers engaged in mining. Admittedly, the petitioner is neither an industrial consumer, nor a mining consumer.

The Court observed “The impugned orders of assessment in all the cases have been passed by treating the petitioner as a consumer of bulk supply of electricity. The respondents have failed to satisfy this court as to how the petitioner can be treated as a consumer of bulk supply of electricity on the face of the amended definition of “bulk supply” under notification No. SO 4 dated, 18.06.2012.”

The Court held “the impugned order cannot be sustained in the eyes of law, as the petitioner cannot be treated as a consumer of bulk supply of electricity.”

[Shroff Enterprises v. State of Jharkhand, W. P. (T) No. 1282 of 2021, decided on 28-10-2021]


Arunima Bose, Editorial Assistant has reported this brief.

Appearances

For the Petitioner: Mr. M.S. Mittal Mr. Vishnu Deo Bhagat and Mr. Salona Mittal,

For the respondent 1 to 3: Mr. A.K. Yadav

For the respondent 4: Mr. P.A.S. Pati

For the respondent 5: Mr. Manoj Kumar

Case BriefsDistrict CourtTribunals/Commissions/Regulatory Bodies

Consumer Disputes Redressal Commission Gujarat State, Ahmedabad: Justice V.P. Patel, President and U.P. Jani, Member, addressed an appeal which was raised in light of a complaint raised due to excess of electricity duty being charged.

Appellants filed the instant appeal under Section 15 of the Consumer Protection Act, 1986 on being dissatisfied with the decision of the District Commission.

 Factual Matrix

Complainant obtained electric connection for their industrial undertaking and consumed exclusively low-tension energy from the opponent company. Energy bills were raised by the opponent corporation and said bills included charges of electricity duty liable under the Bombay Electricity Duty Act, 1958 (Electricity Act). Complainant realized in the year 2012 that the opponents have been collecting electricity duty at a higher rate than the prescribed rates under the Electricity Act.

Opponent charged the electricity duty at the rate of 60%, 30%, 15%, 50% or 25% without any basis. Further, it was stated that the charges of electricity duty were collected by the opponent illegally and unconstitutional in service. It was stated that the opponents could charge the electricity duty as per rules, but they have charged at a higher rate than prescribed in the rules.

Vide letter on 19-12-2012, opponent replied that the electricity duty was required to be collected at the rate of 10% as per the rules and they have started to issue bill with electricity duty at the rate of 10%. Therefore, the complainant had filed a consumer complaint about the difference in amount.

Limitation Period 

Limitation prescribed under the local or special act will be applicable and no general provision of limitation Act will be applied for counting prescribed period.

As per Rule 12(1) of the Electricity Rules, the period of limitation prescribed is 1 year to file an application for refund. Electricity Rules were amended with effect from 31-07-2014.

Coram noted that the documents produced by the complainant addressed to the Collector of Electricity Duty can be said to be applicants for a refund of an amount of excess electricity duty under Rule 12 of the Electricity Rules.

Section 3 of Consumer Proetction Act cannot be said to be inconsistent with Rule 12 of the Electricity Duty Rules.

Since the Collector of Electricity Duty did not act in conformity with fundamental principles of judicial procedure, District Consumer Commission had jurisdiction to deal with the matter.

Commission observed that:

It is true that where the statute gives finality to the order of the Collector of Electricity Duty jurisdiction of Courts is excluded. However, Collector of Electricity Duty had not been complied with the fundamental principle of judicial procedure and acted in conformity of Electricity Duty Act.

In view of the above observation, Consumer Court has jurisdiction in this case.

Collector of electricity duty has not considered the period of 1 year under Section 12(2) of the rules and has not passed an order of refund of electricity duty, this amount to deficiency in service as well as unfair practice.

Hence, in the present matter, it was held that the complainant can get refund of the amount of Electricity Duty charge not prescribed under the Electricity Act and Rules.

As per the documentary evidence and arguments of the parties, Commission concluded that the complainant was not entitled to get any amount of electricity duty for last one year. Therefore, the appeal was allowed.

On verifying the amount deposited by appellant the same shall be refunded with interest. [Gujarat Urja Vikas Nigam Ltd. v. Cham Trawi Nets Organisation, Appeal No. 913 of 2014, decided on 24-05-2021]


Additional Read:

Section 2(1)(o) of Consumer Protection Act, 1986: Supply of electricity is included in the definition of service. [for the definition of “service” in CPA, 2019, see S. 2(42)]

Section 2(1)(c) of Consumer Protection Act, 1986: ‘Complainant’ means any allegation in writing made by the complainant that trader or service provider, as the case made, has charged for the goods or for the service mentioned in the complaint a price in excess of the price, fixed by or under any law in time being force.[for the definition of “complainant” in CPA, 2019, see S. 2(6)]

Case BriefsSupreme Court

Supreme Court: Refusing to interfere with the decision of the Gujarat High Court directing Essar Steel India Ltd. (ESL) to pay electricity duty amounting to Rs. 562 Crores together with interest totaling Rs. 1038.27 Crores to the State of Gujarat, the bench of Dr. A.K. Sikri and Ashok Bhushan, JJ said that the statutory conditions for grant of exemption as contained in Section 3(2)(vii)(a) of the Bombay Electricity Duty Act, 1958 can neither be tinkered with nor diluted.

ESL holds 42% shares in Essar Power Ltd. (EPL) which is a duly incorporated company under the provisions of Companies Act, 1956, which is a generating company selling/supplying electrical energy. The Court noticed that both ESL and EPL are distinct separate legal entities and merely because ESL might have 42% shares holding in EPL, it cannot be said that ESL is generating electricity jointly with EPL and EPL is generating electricity jointly with ESL for use of electricity by ESL.

It was further stated that even assuming ESL and EPL are jointly generating the energy for the use of   industrial   undertaking   which   are   jointly generating the energy, the Gujarat Electricity Board to whom 300 MW has been allocated cannot be held to be   industrial   undertaking   which   is   jointly generating the energy with appellant. The Statutory scheme   for   grant   of   exemption   has   to   be   strictly construed.   EPL   is   not   jointly generating energy with Gujarat Electricity Board and it is selling the energy to the extent of 300 MW to Gujarat   Electricity   Board.   Hence, the   conditions   of   the statutory provisions of Section 3(2)(vii)(a) of the Act are not fulfilled. [Essar Steel India Ltd. v. State of Gujarat, 2017 SCC OnLine SC 522, decided on 02.05.2017]