2004 (3) TMI 764 - SC - VAT and Sales Tax

Summary

Issues Involved:
1. Eligibility for concessional power tariff.
2. Commencement of commercial production.
3. Compliance with conditions for power allocation.
4. Delay in power allocation by Kerala State Electricity Board (KSEB).
5. Validity of supporting documents for commercial production.

Issue-wise Detailed Analysis:

1. Eligibility for Concessional Power Tariff:
The appellant challenged the dismissal of their writ appeal by the Kerala High Court, which upheld the rejection of concessional power tariff for their industrial unit. The policy, as per G.O. (MS) No.4/92/ID dated 6.2.1992, allowed new industrial units established between 1.1.1992 and 31.12.1996 to be exempted from enhanced power tariffs for five years. The eligibility required certification from relevant authorities like KSIDC, KFC, or the Director of Industries and Commerce.

2. Commencement of Commercial Production:
The central issue was whether the appellant had started "commercial production" by 31.12.1996 to qualify for the concessional tariff. The appellant argued that they commenced production on 14.12.1996 using a diesel generator set, supported by invoices, a certificate from KSFC, and other documents. However, both the single Judge and Division Bench of the High Court found against the appellant, noting that commercial production could not have realistically started with a 125 KVA diesel generator set for a factory of such scale.

3. Compliance with Conditions for Power Allocation:
The KSEB sanctioned power allocation with specific conditions, including the construction of a separate 11 KV feeder line under the OYEC scheme, which the appellant had to finance. Despite the appellant's contention of KSEB's tardiness, the court found that the appellant did not fulfill the conditions timely. The remittances for the security deposit and the execution of the power supply agreement were made only after the concession period had expired.

4. Delay in Power Allocation by KSEB:
The appellant claimed that the delay in power allocation by KSEB was deliberate to prevent them from meeting the deadline for concessional tariff eligibility. The court, however, found no undue tardiness on KSEB's part, considering the acute power shortage in Kerala at the time. The necessary remittances and compliance with conditions were completed by the appellant only in December 1996, just before the concession period ended.

5. Validity of Supporting Documents for Commercial Production:
The appellant relied on various documents, including a certificate from KSFC, to prove the commencement of commercial production. The court found these documents unconvincing, noting that the KSFC certificate was based on records submitted by the appellant without independent verification. The High Court also pointed out potential manipulation, suggesting that goods could have been sourced from another factory owned by the promoters in Raipur, Madhya Pradesh, to create an impression of production in Kerala.

Conclusion:
The Supreme Court upheld the findings of the Kerala High Court, concluding that the appellant did not commence commercial production by 31.12.1996 and thus was not entitled to the concessional power tariff. The appeal was dismissed, with no order as to costs. The court emphasized the lack of credible evidence to support the appellant's claims and the adherence to the factual findings of the lower courts.