Electricity duty applies to auxiliary consumption from units whose exemption has expired, based on statutory provisions governing duty applicability.

JUDGMENT :

Ramesh Sinha, Chief Justice

1. This is an appeal under Section 2(1) of the Chhattisgarh High Court (Appeal to Division Bench) Act 2006 read with Rule 158(10) of the CHHATTISGARH HIGH COURT RULES , 2007 seeking to challenge the order dated 08.05.2018 passed by the learned Single Judge in WP(C) No. 6819 of 2008 by which his challenge to order dated 28.06.2008 by which the appellant/Company’s appeal was rejected and further the challenge to the demand notice dated 09.12.2005 by which a demand of Rs. 1,64,69,790, has been dismissed.

2. The facts, in brief, as projected by the appellant/Company had set up a captive power plant (for short, the CPP) of 265.70 MW at its Steel Plant at Raigarh to meet its power requirement. The said power plant of appellant comprises of three units, Power Plant – I, Power Plant – II and Power Plant – III which in turn, comprise with 9 TG sets generating power at 11 KV each. The appellant’s new industrial unit was granted exemption from payment of electricity duty under Section 3 -B of the Chhattisgarh Electricity Duty Act , 1949 (for short, 'the Act of 1949') on 29-7-2000 exempting the appellant Unit for a period of ten years from payment of electricity duty from the date of commissioning, as the appellant-Unit was a new industrial unit. It was the case of the appellant Company that it had consumed the electricity generated from TG-7 which was admittedly exempted from payment of electricity duty and as the auxiliary consumption was made by TG sets 1, 3, 5 & 6 and exemption from paying electricity duty of TG sets 1, 3, 5 & 6 had already expired, the appellant/Company was paying electricity duty in terms of the Act of 1949 for the said other TG sets. It was the further case of the appellant Company that the system of power plant of appellant is so designed that except for TG-7 all other TGs are in parallel with the Grid of the CSEB. TG-7 caters to house load of appellant and also to the auxiliary requirements of TGs 1, 3, 5 and 6, which are part of Unit I of the power plant of appellant. Thus, in effect an auxiliary bus has been created in the system of the appellant. The entire set up/arrangement has been made with the knowledge and technical approval of the CSEB and the office of the Electrical Inspector of the Government of Chhattisgarh.

3. It is also the case of the appellant that the system of auxiliary bus has been designed in the system with the sole purpose that in the event a grid failure occurs for the Grid experiences any fluctuations or disturbances, the TGs 1, 3, 5 & 6 of appellant do not stop altogether and the TG sets at least keep on running at a minimum power supplied by TG-7. TG-7 is designed to take care of the auxiliary requirements of the TGs 1, 3, 5 & 6 of Unit I of the power plant of the appellant Company. On 9.12.2005, respondent No.3 issued the demand notice demanding Rs. 1,64,69,790/- as arrears of electricity duty pertaining to the period from December, 2001 to March, 2005 in respect of the TG sets whose exemption period had expired stating that respondent No.2 totally ignored the fact that the power sought to be taxed was being gener