The court held that the authority cannot levy electricity tax based on Central Rules, as the State Act does not require such captive consumption, affirming state legislative power over taxation.

ORDER :

N.Anand Venkatesh, J.

In this writ petition, the petitioner assails the demand notice dated 23.8.2012 issued by the fourth respondent and further seeks to forbear the respondents from levying and/or collecting the electricity tax from them for their captive consumption of electricity as per Rule 3 of the ELECTRICITY RULES , 2005 (for short, the Central Rules).

2. Heard the learned Senior Counsel appearing on behalf of the petitioner and the learned Additional Advocate General assisted by the learned Government Advocate appearing for the respondents.

3. The case of the petitioner is as follows :

(i) They are engaged in the manufacture of carbon black. The steam generated from a specially designed boiler is used for generation of power through turbo generator sets. The electricity generated by the petitioner out of the turbo generator sets is metered in units. A part of the power generated from such captive power plant is used by the petitioner for their own purposes. That apart, the petitioner also consumes a part of the generated electricity for the operation of the captive generating plant. The surplus power is sold to the Tamil Nadu Electricity Board (now the Tamil Nadu Generation and Distribution Corporation Limited - TANGEDCO).

(ii) Vide letter dated 23.3.2011, the fourth respondent directed the petitioner to pay a sum of Rs.19,16,709/- towards short payment of electricity tax for the period from 2005 to 2006. Such a demand was made on the ground that the petitioner failed to adhere to the provisions of Rule 3 of the Central Rules. On receipt of the said notice, the petitioner submitted a reply dated 22.4.2011 stating that the demand raised by the fourth respondent on the basis of Rule 3 of the Central Rules is not applicable since the said Rule was framed under the Central Legislation namely the Electricity Act, 2003 (for short, the CENTRAL ACT ) and that in so far as the State of Tamil Nadu is concerned, the imposition of tax is made under the Tamil Nadu Tax on Consumption or Sale of Electricity Act, 2003 (for brevity, the State Act) read with the Tamil Nadu Tax on Consumption or Sale of ELECTRICITY RULES , 2003 (hereinafter referred to as the State Rules).

(iii) Even after receipt of the said reply sent by the petitioner, the fourth respondent issued the impugned communication dated 23.8.2012 calling upon the petitioner to remit the shortfall of Rs.19,16,709/-. This is put to challenge in this writ petition.

4. When the matter came up for admission on 12.2.2013, this Court granted an order of interim stay, which was subsequently extended on 18.2.2013 in M.P.No.2 of 2013. Pursuant to that, on 19.1.2018, WMP.No.1677 of 2018 came to be filed by respondents 1, 3 and 4 seeking to vacate the interim stay granted on 12.2.2013 in M.P.No.2 of 2013 by filing a counter dated 01.3.2017. It is worthwhile to make a mention here that on 05.7.2018, M.P.No.2 of 2013 was allowed while making absolute the interim order already granted.

5. In the initial counter dated 01.3.2017 filed in WMP.No. 1677 of 2018, respondents 1, 3 and 4 took the following stand :

It was admitted that the Central Rules were framed only for the purpose of carrying out the provisions of the CENTRAL ACT and they could not be interpreted or extended to impose an obligation for payment of the electricity tax under the State Act, which did not stipulate such a requirement for captive g