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2003(1) Supreme 904
SUPREME COURT OF INDIA
(From Gujarat High Court)
M.B. Shah & Arun Kumar, JJ.
State of Gujarat & Ors. -Appellants
versus
Saurashtra Cement & Chemical Industries -Respondents
Civil Appeal No. 3658 of 1994
Decided on 29-1-2003
Counsel for the Parties :
For the Appellants : S.K. Dholakia, Sr. Advocate, Ms. Hemantika Wahi, Ms. Aruna Gupta, Advocates.
For the Respondents : Bhaskar P. Gupta, Sr. Advocate, Sanjay R. Hegde, Satya Mitra, Anil K. Mishra, Advocates.
Held : The respondent company when it initially started had a production capacity of 660 metric tonnes which was subsequently increased to 1000 metric tonnes. In 1969-70 by setting up the alleged new unit, production capacity of the company more than doubled. But as already seen this unit is not self contained. It is not an independently viable unit. It is dependant on various items of plant and machinery and mills of the existing unit. Further respondent was having two kilns and third is added. This leads to the inevitable conclusion that the new unit is an expansion of an existing undertaking in the State. Once it is held to be a case of expansion, the claim for exemption from electricity duty, set up by the respondent, completely falls to the ground. In the facts and circumstances of the case we are clearly of the view that the respondent is not entitled to exemption from electricity duty. The High Court failed to apply the real test which emerges from the judgment of this Court in Textile Machinery Corporation (supra) which was affirmed in a subsequent decision in Bajaj Tempo Ltd., Bombay vs. Commissioner of Income Tax, Bombay City III, Bombay [1992 (3) SCC 78]. Accordingly, this appeal is allowed. The judgment of the High Court under appeal is set aside. The respondent is held not entitled to exemption from electricity duty. (Para 10)
JUDGMENT
Arun Kumar, J.-This appeal is directed against a judgment dated 29th November, 1990 of the Gujarat High Court allowing a Writ Petition filed by the respondent seeking exemption from levy of electricity duty and for quashing the orders of the authorities under the Bombay Electricity Duty Act, 1958 (hereinafter referred to as Act ) whereby exemption had been denied to the respondent. The High Court held that the respondent had set up a new industrial undertaking as contemplated under the Act and was entitled to exemption from electricity duty under Section 3(2)(vii)(b) of the said Act. The State Government has filed the present appeal against the said judgment of the High Court.
2. Briefly the facts are that the respondent is engaged in manufacture of portland cement. It installed a manufacturing plant in the year 1960 with a capacity of producing 660 metric tones of clinker per day. The respondent added one more kiln in 1965 and increased its production capacity to 1000 metric tones. By August 1969 the respondent installed further machinery in a new building erected within the same premises to further increase its production capacity. The respondent installed a new kiln alongwith separate silos, lepol and nodulizers, coal mill and cement mill. This unit started manufacturing cement on 24 June, 1971. The unit was using existing idle capacity of crushers, cranes, packing machines, coal mills, and raw mills.
3. According to the case of the respondent, the new kiln set up in 1969 was a new industrial undertaking as contemplated by Section 3(2)(vii)(b) of the Act and as such was entitled to exemption from levy of electricity duty. At this stage it will be appropriate to reproduce relevant provisions of the Act.
"Section 3(1) : Subject to the provisions of sub-sections (2) and (3) there shall be levied and paid to the State government on the units of energy consumed (excluding losses of energy sustained in transmission and transformation by a licensee before supply to a consumer), a duty (hereinafter referred to as "electricity duty") at the rates specified in the Schedule to this Act.
(2) Electricity duty shall not be leviable on the units of energy consumed-
(i) to (vi)..........................................
(vii) for motive power and lighting in respect of premises used by an industrial undertaking for industrial purpose, until the expiry of the following period, that is to say:-
(a) in the case of an industrial undertaking which generates energy for its own use, ten years from the date of the commencement of the Bombay Electricity Duty (Gujarat Second Amendment) Act, 1961 (hereinafter referred to as "the commencement date") or the date of starting the generation of such energy, whichever is later;
(b) in the case of a new industrial undertaking established on or after 1st May, 1960, which does not generate energy for its own use, five years from the commencement date or the date on which the industrial undertaking commences for the first time manufacture or production of goods, whichever is later:
Provided that no industrial undertaking shall be entitled to exemption from payment of electricity duty under this clause, unless it has obtained a certificate regarding eligibility for such exemption in prescribed form by making an application therefore in prescribed form and within prescribed period to such officer as the State government may, by notification in the Official Gazette, specify.
Explanation 1.- For the purpose of clause (vii)-
(i) "an industrial undertaking" means an industrial undertaking which manufactures or produces for sale or use in the manufacture or production of other goods but does not include an undertaking which manufactures or produces any kind of food and drinks, meant ordinarily for consumption on the premises of the undertaking; and
(ii) "a new industrial undertaking" means any such industrial und
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