A lessee consuming electricity generated from a power plant is liable to pay electricity duty, even if the lessor is exempted, due to strict compliance requirements of exemption conditions.

1. The pivotal question that falls to be determined in this writ petition is whether the petitioner company being lessee of Biomass Power Plant is not liable to pay the electricity duty under S.3 of Chhattisgarh Electricity Duty Act, 1949 (hereinafter called as - ED Act, 1949')on consumption of electrical energy on the ground that lesser company (MUUL) is exempted from payment of electricity duty by the State of Chhattisgarh / respondent herein in exercise of power conferred under S.3B of the ED Act, 1949?

2. The core facts, in nutshell, required for judging legality, validity and correctness of the order dated 22.08.2012 (Annexure P / 4) as well as demand notice dated 26.03.2013 (Annexure P / 6) are stated as under:
2.1 M/s Maa Usha Urja Limited (for short, MUUL) i.e. a company registered under the provisions of Indian Companies Act, 1956 situated at village Girodh, Dharsiwan, District Raipur, installed Power Plant of 7.5 MW for producing power from non - conventional sources like Biomass (Rice husk) and is a new industrial unit as defined in new industrial policy 2004-09.
2.2 The respondent / State in exercise of power conferred under the provisions of S.3B of the ED Act, 1949 read with industrial policy, 2004-09, exempted the said company "MUUL" from payment of electricity duty on its own consumption and sale to the third party for a period of fifteen years commencing from 07.03.2007 to 06.03.2022 subject to conditions mentioned in exemption certificate issued on 29.12.2011 (Annexure P / 3). The said industrial unit was commissioned on 07.03.2007.
2.3 The petitioner herein is a company engaged in business of manufacturing of steel and its ancillary products. It is case of the petitioner that "MUUL' entered into a lease agreement on 04.01.2007 (Annexure P / 2) with the petitioner for leasing out the Biomass Based Power Plant on payment of necessary rent for operation and after grant of lease, petitioner company operated the power plant from March 2007 to June 2012 and paid rent for operating the said power plant. It is further pleaded by the petitioner that MUUL still remains the legal owner of the said power plant. The said company MUUL has been exempted from payment of electricity duty for a period of 15 years by order - cum - certificate dated 29.12.2011, thus, there does not exist any occasion for the respondents / State of Chhattisgarh to charge electricity duty upon the petitioner. It is further submitted that petitioner had acquired 31.33 percent shares for the purpose of declaring its power plant a captive generation plant which is permissible under R.3 of the Electricity Rules, 2005 (for short, the Rules, 2005) and actually the primary liability to pay such, electricity duty etc. under the relevant provisions of law lies upon the exemptee company (MUUL) from payment of electricity duty.
2.4 It was also pleaded on behalf of the petitioner, that he was surprised to receive the order dated 22.08.2012 (Annexure / 4) requiring petitioner to pay electricity duty of Rs. 9,68,59,029/- stating that petition company has taken the said power plant on lease from the said MUUL, which was replied by petitioner company stating that petitioner company has been taken to operate the electrical power plant generator on lease, however, the ownership and title over the said power plant remained with MUUL and since the MUUL enjoys the complete exemption from payment of electricity duty, therefore, no such liability of payment of electricity duty can be fastened upon the petitioner for the period from March, 2007 to June, 2012, and therefore order dated 22.08.2012 (Annexure P / 4) as well as demand notice (Annexure P / 6) be withdrawn and proceedings be closed.

3. Invoking the extra ordinary jurisdiction of this Court, under Art.226/227 of the Constitution of India, the petitioner herein, in the abovestated background filed the instant writ petition questioning the order dated 22.08.2012 (Annexure P / 4) as well as demand notice dated 26.03