The Central Electricity Regulatory Commission has jurisdiction to adjudicate income tax claims as part of tariff regulation under the Electricity Act, 2003.

JUDGMENT :

S.M. SUBRAMANIAM, J.

Under assail is the writ order dated 11.09.2024 passed in W.P.No.7519 of 2023.

2. The Tamil Nadu Generation and Distribution Corporation Limited (TANGEDCO)/writ petitioner is the appellant before this Court. The writ petition came to be instituted challenging the demand uploaded in the PRAAPTI Portal asking the appellant to pay income tax to the tune of around Rs.184 Crores.

3. The learned Senior Counsel Mr.P.Chidambaram appearing on behalf of the appellant would mainly contend that the TANGEDCO is the major beneficiary with procurement of power from the second respondent to the tune of around 2,200 MW of thermal power, by virtue of various Power Purchase Agreements entered between the TANGEDCO and N.L.C. India Limited. It is mainly contended that the writ Court has relegated the appellant to approach the Central Electricity Regulatory Commission (for short, “the CERC”) for adjudication of issues. The CERC has no jurisdiction to adjudicate the income tax related issues and therefore the writ Court ought to have adjudicated the merits of the case. The appellant is paying the admitted arrears of several thousand crores of rupees and the DISCOMS like TANGEDCO have to face serious consequences towards regulation of power supply in case of non-payment of the disputed dues. The debit note raised by the second respondent through PRAAPTI Portal is unsustainable, on the ground that it is a time barred claim, no prior intimation or consultation or consent of the appellant has been made nor the details regarding the income tax arrears have been stated. The unilateral debit note raised in the PRAAPTI Portal is not only bereft of details, but the justification of the claim also is unknown to the appellant. In the absence of any such details, the liability cannot be fastened on the appellant and therefore the rules of natural justice also have been violated. The writ Court has not considered these aspects, but relegated the appellant to approach the CERC.

4. Mr.P.Chidambaram, learned Senior Counsel would submit that determination or re-determination of income tax now claimed after several years is unsustainable, in view of the fact that the appellant is paying the tariffs as per the debit note raised in lieu of the agreement. The sudden raising of debit note asking the appellant to pay income tax to the tune of around Rs.184 Crores is unsustainable and therefore the issues ought to have been adjudicated on merits by the writ Court.

5. To substantiate the said claim, the appellant relied on Section 79(1)(a) & (f) of the Electricity Act, 2003 . Accordingly, the functions of Central Commission under clause (a) of sub-section (1) of Section 79 is to regulate the tariff of generating companies owned or controlled by the Central Government. Clause (f) of sub-section (1) of Section 79 stipulates that the Central Commission shall adjudicate upon issues involving generating companies or transmission licensee in regard to matters connected with clauses (a) to (d) and to refer any dispute for arbitration. Income tax disputes are not falling under any of the subject under Section 79 of the Electricity Act and therefore the CERC lacks jurisdiction. Since the CERC has no jurisdiction, the writ petition under Article 226 of the Constitution is maintainable and thus the finding of the writ Court that the writ petition is not entertainable is perverse. In support of the said contention, the judgment of the Hon'ble Supreme Court in the case of Andhra Pradesh Power Coordination Committee and others v. Lanco Kondapalli Power Limited and others, (2016) 3 SCC 468 has been relied upon. In paragraph-30, the Apex Court observed that “In the absence of any provision in the Electricity Act creating a new right upon a claimant to claim even monies barred by law or limitation, or taking away a right of the other side to take a lawful defence of limitation, the Court was persuaded to hold that in the light of nature of judicial power conferred