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1972 Supreme(All) 133
Allahbad High Court
H.N.SETH,C.S.P.SINGH
Renusagar Power Co. Ltd. - Appellant
Versus
The State of U.P. - Respondent
Decided On : 05/02/1972
N.B. Singh, K.L. Misra and R.K. Gulati, for Petitioner; Standing Counsel, for Opposite Parties.
Headnote:
ELECTRICITY DUTY - U. P. ELECTRICITY DUTY ACT, 1952 - SECTIONS 2(D), 2(F), 3, 3-A, 7 - EXPLANATIONS 1 TO SECTION 3 - ELECTRICITY DUTY - LIABILITY OF LICENSEE TO PAY DUTY - ENERGY CONSUMED BY LICENSEE FOR TESTING AND START-UP OF POWER PLANT - WHETHER CONSUMED IN OR UPON PREMISES USED FOR COMMERCIAL OR RESIDENTIAL PURPOSES - INTERPRETATION OF EXPLANATIONS 1 TO SECTION 3 - EXEMPTION FROM DUTY UNDER PROVISO TO SECTION 3 - GOODS - WHETHER INCLUDES ELECTRICAL ENERGY - INTERPRETATION.
Fact of the Case:
Petitioner, a licensee under the Indian Electricity Act, 1910, obtained sanction from the State Government to supply electricity to Hindustan Aluminum Corporation. Before the plant could be commissioned, petitioner entered into an agreement with the State Electricity Board for the supply of electrical energy for start-up operations. The Board submitted monthly bills for the energy consumed, which were duly paid by the petitioner. After about a year and a half, the Electrical Inspector demanded electricity duty from the petitioner, claiming that it was liable to pay duty at the rate of 25% on the energy consumed during the start-up period. The petitioner denied its liability to pay the duty, and the State Electricity Board and the Electrical Inspector continued to press for payment. The petitioner filed a writ petition challenging the demand for duty, contending that it was not liable to pay duty under the provisions of the U. P. Electricity Duty Act, 1952.
Finding of the Court:
The Court held that the petitioner was not liable to pay electricity duty under the U. P. Electricity Duty Act, 1952, in respect of the energy consumed by it for the testing and start-up of the Renusagar Power Plant. The Court interpreted Explanation 1 to Section 3 of the Act, which provides that the energy consumed by a licensee in or upon premises used by it for its commercial or residential purposes shall be deemed to be energy paid for and consumed by a consumer, as meaning that a licensee is liable to pay duty only if it consumes energy in or upon premises which are being used by it for the purpose of generating or supplying electricity. The Court held that the petitioner did not consume the energy in dispute in or upon premises which were being used by it for its own commercial or residential purposes, and was, therefore, not liable to pay any duty in respect of that energy.
Issues: 1. Whether the petitioner was liable to pay electricity duty under the U. P. Electricity Duty Act, 1952, in respect of the energy consumed by it for the testing and start-up of the Renusagar Power Plant? 2. Whether the energy consumed by the petitioner was consumed in or upon premises used by it for its commercial or residential purposes?
Ratio Decidendi: 1. The Court interpreted Explanation 1 to Section 3 of the U. P. Electricity Duty Act, 1952, as meaning that a licensee is liable to pay duty only if it consumes energy in or upon premises which are being used by it for the purpose of generating or supplying electricity. 2. The Court held that the petitioner did not consume the energy in dispute in or upon premises which were being used by it for its own commercial or residential purposes, and was, therefore, not liable to pay any duty in respect of that energy.
Final Decision: The Court allowed the petition and quashed the demand for payment of electricity duty and the recovery certificate issued by the Tehsildar.
H.N. SETH, J.:- The petitioner, Renusagar Power Co. Ltd., has filed this petition under Art. 226 of the Constitution praying that demand in the letter dated 5th of January, 1971 from the Electrical Inspector amounting to Rs. 1,44,400/- and the recovery of certificate dated June 21, 1971 under the signatures of Tehsildar, Dudhi requiring the petitioner to pay a sum of Rupees 1,44,384/- be quashed.
2. The petitioner Company was incorporated under the Companies Act, 1956. The object of its incorporation was to generate, develop and supply electrical power at a place or places for which licences may be obtained and to transmit, distribute and supply such power throughout the area of supply named therein, and without prejudice to the generality of the above to transmit, distribute and supply such power to and for the purposes of feeding the plant of the Hindustan Aluminum Corporation Ltd., and generally to generate, develop and supply power at any place or places and to transmit, distribute and supply such power for all lawful purposes. The petitioner company obtained sanction of the State Government under Section 28 of the Indian Electricity Act, 1910 to supply electricity to Hindustan Aluminum Corpn. Ltd. vide Government notification dated 12th November, 1964. After obtaining this sanction it started constructing and erecting the power plant which was completed round about June 1967. Before, however, the plant could be commissioned, it was necessary for the petitioner to carry out start-up and testing operations for which it required some electrical energy. Accordingly, it entered into an agreement with the U. P. State Electricity Board for the supply of 6000 K,W. of electrical energy for purposes of start-up operations. By its letter dated June 29, 1967 addressed to Messrs. Hindustan Aluminum Corporation (Hindalco) of which the petitioner company claims to be a subsidiary. The Board confirmed the agreement to supply electrical energy for the testing and start-up of the Renusagar power plant according to the rates mentioned in the rate schedule. Originally that agreement was to remain in force for a period of six weeks but that period was subsequently extended. In pursuance of that agreement, the petitioner Company deposited Rs. 1,20,000/- by way of security which was either refundable and/or adjustable on termination of the supply under that agreement.
3. The supply under the agreement commenced on 14th of July, 1967 and continued upto 5th November, 1967. The State Electricity Board submitted monthly bills for the electrical energy consumed during July to November, 1967, in accordance with the agreement, amounting to Rs. 5,77,636/-which were duly paid by the petitioner company. It may be mentioned that at the time of submission of these bills, the petitioner was not required to pay any electricity duty under the provisions of the U. P. Electricity Duty Act, 1952. After making certain adjustments it was found that from out of the security amount deposited by the petitioner a sum of Rs. 62,976 became refundable to it. This sum was ultimately adjusted against other amounts due from the Hindalco in March, 1968.
4. After about a year and a half, by a letter dated 16th June, 1969, the Assistant Electrical Inspector informed the Executive Engineer, Riband Hydel Generation Division that the Renu Sagas Power Company was liable to pay electricity duty at the rate of 25%, amounting to Rs. 1,44,000, in respect of the power consumed by it from July 14, 1967 to 6th of November, 1967. This duty had not been charged from the petitioner. The Executive Engineer was therefore requested that he should take immediate steps for realizing the duty under intimation to him. The Executive Engineer, Hydel Generation Division, thereupon, asked the petitioner to pay the duty at an early date. The petitioner by its letter dated November 5, 1969 denied its liability to pay the duty demanded. The Electrical Inspector and the State Electricity Board, ho
