2017 (5) TMI 264 - SC - Indian Laws

Captive consumption of electricity - Exemption of payment of electricity duty both under Section 3(2)(vii)(a)(i) as well as under notification dated 27.02.1992 - Held that - The High Court although has noted the fact that in the present case there is no such Memorandum of Understanding between EPL and ECL but the judgment of the High Court is not based only on the above premise rather High Court has clearly found that conditions stipulating under Section 3(2)(vii)(a)(i) of 1958 Act are not satisfied, hence, appellant no.1 is not entitled for exemption. High Court has elaborately considered all the submission raised by the appellant and rightly came to the conclusion that conditions as enumerated in Section 3(2)(vii) (a) are not fulfilled. We do not find any error in the aforesaid finding of the High Court. The notification dated 27.02.1992 was issued in exercise of power conferred by Section 3(3) of Bombay Electricity Act, 1958.The claim raised by the appellant under the above said notification was specifically dealt by the High Court and the Government. The condition which was found lacking for applicability of the notification was that generating sets were not purchased or installed or commissioned during the period from 01.01.1991 to 31.12.1992. The High Court has recorded categorical finding that the generating sets have been commissioned in the month of August 1995. Another reason given by the High Court was that no application was made within 180 days of application of the notification dated 27.02.1992 or even from the date of installation of generating sets i.e. August 1995. Even if the second reason given by the High Court is ignored, nonfulfillment of condition no.(a) of notification dated 27.02.1992 clearly entailed rejection of claim under notification dated 27.02.1992. There is no foundation or basis laid down even in this appeal to assail the finding recorded by the High Court that generating set was not purchased from 01.01.1991 to 31.12.1992. We thus do not find any error in rejection of claim of appellant under the notification dated 27.02.1992.

Summary

Issues Involved:
1. Exemption from payment of electricity duty under Section 3(2)(vii)(a)(i) of the Bombay Electricity Duty Act, 1958.
2. Exemption from payment of electricity duty under the notification dated 27.02.1992 issued under Section 3(3) of the Bombay Electricity Duty Act, 1958.

Detailed Analysis:

1. Exemption under Section 3(2)(vii)(a)(i):

The appellant companies sought exemption from electricity duty under Section 3(2)(vii)(a)(i) of the Bombay Electricity Duty Act, 1958, which exempts electricity duty for industrial undertakings generating energy either singly or jointly for their own use or for the use of industrial undertakings jointly generating the energy. The Supreme Court analyzed whether the statutory conditions for this exemption were met.

The Court noted that the appellant no.1 holds 42% equity shares in appellant no.2, a Special Purpose Vehicle generating company. The Power Purchase Agreements (PPAs) between the parties allocated 58% of the generated electricity to the Gujarat Electricity Board (GEB) and 42% to the ESSAR Group. The Court found that the statutory condition of generating energy jointly with another industrial undertaking was not met because GEB, which received 58% of the electricity, was not jointly generating the energy with the appellants. The Court emphasized that statutory provisions for exemptions must be strictly construed and concluded that the conditions under Section 3(2)(vii)(a)(i) were not satisfied.

2. Exemption under Notification dated 27.02.1992:

The appellants also sought exemption under the notification dated 27.02.1992, which remits electricity duty for industrial undertakings generating energy jointly, provided the generating sets were purchased, installed, or commissioned between 01.01.1991 and 31.12.1992. The Court found that the generating sets were commissioned in August 1995, outside the specified period. Additionally, the appellants failed to establish that the generating sets were purchased within the required timeframe. The High Court had also noted that no application for exemption was made within 180 days of the notification or the installation of the generating sets. The Supreme Court upheld these findings, concluding that the appellants did not meet the conditions of the notification.

Conclusion:

The Supreme Court dismissed the appeal, affirming the High Court's judgment that the appellants were not entitled to exemption under either Section 3(2)(vii)(a)(i) or the notification dated 27.02.1992. The Court emphasized the need for strict compliance with statutory conditions for exemptions and found that the appellants failed to meet these conditions.