The judgment established the importance of understanding exemption provisions, interpreting government orders, and adhering to the procedure for assessment and appeal under the relevant electricity tax acts.

ORDER :

[PRAYER: Writ Petition filed under Article 226 of the Constitution of India praying to issue a Writ of Certiorari, to call for the records relating to the impugned order C.No.6848/B1/2008, dated 30.9.2010, passed by the 1st Respondent and quash the same.]

The petitioner challenges an order passed by the Principal Secretary, Energy Department dated 30.09.2010. The petitioner claims to be a unit of Aditya Birla Nuvo Limited, engaged in the manufacture of carbon black. It had, at the relevant point in time, an installed capacity of 90,000 TPA. The manufacturing process resulted in the emission of combustible gases of high calorific value that are generated from the carbon black particles and fed into specially designed boilers for generation of steam. The said steam is further used for generation of power through turbo generator sets.

2. The petitioner used three turbo generator sets of capacity of 2.5, 6 and 8 MW, each for generation of power. The Government of Tamil Nadu in terms of the power vested in it under Section 27 of the Indian Electricity Tax Act, 1910 (in short ‘1910 Act’) issued G.O.Ms.No.180 dated 17.11.1997 permitting usage of turbo generators for electricity generation in parallel with the grid operated by the Tamil Nadu Electricity Board (Board/TNEB).

3. A Power Purchase Agreement (PPA) dated 22.03.1999 had been entered into with the Board for wheeling of the power generated from two turbo generators for business use of its sister concerns through the grid. The PPA also provided for TNEB to purchase the power that remained after supply to the sister concerns. The power generated by the petitioner is supplied to the TNEB meter. In addition, there is a charge for using the grid, wheeling charges, that are to be adjusted at 15%, to be adjusted from the total power supplied by the petitioner to the Board.

4. Act 4 of 1962 provides for levy of tax on the consumption charges of electricity. The Tamil Nadu Electricity (Taxation on Consumption) Act, 1962 (in short ‘1962 Act’) had granted exemption in respect of electricity tax payable under the said Act for a period of 5 years from date of commencement of manufacture of principal product if high tension electricity supply is consumed in the process of manufacture of the principal product.

5. G.O.No.2072 dated 19.11.1969 granted exemption for a period of 5 years. G.O.No.1201 dated 18.06.1970 modified G.O.No.2072 extending the exemption for a further period of 5 years to industries which consume electricity, generated by itself, in addition to that provided by TNEB.

6. The 1962 Act was in force till 30.04.1979, when G.O.Ms.No.787, Public Works Department was issued on 30.04.1979 revising the tariff structure substantially. The revised electricity tax stood merged with basic rate and there was only one uniform levy thereafter. On and from 01.05.1979 a single tariff was levied and collected and the petitioner was one of the beneficiaries of such rationalisation measures. The Electricity Act, 2003 was in effect on and from 16.06.2003.

7. The cause of action for the present Writ Petition arose with issuance of letter dated 08.06.2005 calling for electricity tax payment for the period July, 1999 to January,2005, falling under the 1962 as well as 2003 Acts. The demands made were three fold:-

(i) Electricity Tax under Section 3 of the 1962 Act in respect of surplus power sold to Tanfac Industries, Cuddalore, a sister concern of the petitioner, computed for the period July 1999 to 15.06.2003.

(ii) Additional Tax under Section 3A of the 1962 Act for surplus power sold to Tanfac Industries for the same period as above.

(iii) Tax under Section 3(1)(b) of the 2003 Act for energy sold to Tanfac between 16.06.2003 to January, 2005.

8. Despite objections, the demands were confirmed by the second respondent, i.e., the Chief Electrical Inspector to Government by his order dated 21.09.2005. The petitioner assailed the same under Section 9(2) of the 1962 Act which appeal came to be dismissed by