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TMI Blog2020 (7) TMI 529X X X X Extracts X X X X X X X X Extracts X X X X ..... 39; are required to satisfy the EDC to the requisite extent, though the matter is still pending consideration before the Apex Court in respect of the validity of Section 3(1-a) of the 1981 Act. The entire case is moulded with reference to the nature of business being performed by the Petitioners in the capacity as a 'Distributor ' of electricity, coming within the purview of 'Section 3(1)' of the 1981 Act and not with reference to the liability as a 'Producer' of electricity, separately coming within the purview of 'Section 3(1-a)' of the 1981 Act (which issue is pending before the Supreme Court). There is no pleading in the writ petition that the Petitioner-Company is a 'Producer' of electricity in any capacity and the rights of the Petitioners in this regard are adversely affected because of any unreasonable classification with reference to IPP and CPP, as the case may be. Every 'Distributor' of electrical energy shall pay the electricity duty in respect of each month before expiry of the following month into the Government treasury under the head as mentioned therein and send 'treasury receipt' to the Electrical Insp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C ') and interest payable for the period from October, 2007 to January, 2014. 2. We heard Shri Naveen Kumar, the learned counsel for the Petitioner-Company supported by Shri Ashish Shrivastava, and Shri Siddharth Dubey, the learned Deputy Government Advocate representing the State/Respondents. 3. The sequence of events is as follows: The Madhya Pradesh Upkar Adhiniyam, 1981 obtained the assent of the President on 16.12.1981 and it was published in the Madhya Pradesh Gazette (Extraordinary) dated 12.01.1982; by virtue of which the said enactment was given life as Act No. 1 of 1982 in the erstwhile undivided State of Madhya Pradesh, from which the State of Chhattisgarh was carved out in the month of November, 2000. After formation of the State as above, the Madhya Pradesh Upkar Adhiniyam, 1981 and the Madhya Pradesh Electricity Duty Act, 1949 ( for short 'the Act, 1949' ) came to be adopted by this State and necessary notification has been issued bringing the above Acts into force, insofar as the State is concerned. 4. The Petitioner-Company is engaged in the business of manufacture of steel at its plant in the Raigarh District. Petitioner-Company obtained ' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ough there was no challenge from the part of the distributors of electrical energy, who are required to satisfy such cess as borne by the charging section 3(1) of the 1981 Act, the insertion of a new provision by way of Section 3(1-a) bringing the 'producers' of electrical energy as well within the 'tax net' made various captive power producers to challenge the constitutional validity of Section 3(1-a) of the 1981 Act before this Court. The writ petition filed by the Petitioner (WP No. 2384 of 2006) came to be finalised by Division Bench of this Court as per the judgment dated 15.12.2006, whereby Section 2(2) of the CG Act No. 28 of 2004 inserting Section 3(1-a) in the 1981 Act, was declared as unconstitutional. The Respondents were restrained from levying and collecting EDC from the Petitioners under Section 3(1-a) of the 1981 Act and the bills raised in this regard were quashed. The verdict passed by a Division Bench of this Court declared the provisions as invalid, as per judgment dated 15.12.2006, whereby Section 2(2) of the CG Act No. 28 of 2004 inserting Section 3(1-a) in the 1981 Act was declared unconstitutional. The Respondents were restrained from levying ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1) of the 1981 Act and seeking to quash Annexure P/1 and P/3 orders/demand notices. On 14.08.2014, it was submitted before this Court that, the validity of the Act, 1981 was pending consideration before the Apex Court and hence, the Petitioner had no objection in depositing the cess determined under the Act, under protest, however, pressing the objection towards the interest charged thereupon. In the said circumstance, an interim order was passed by this Court granting stay in respect of the cess amount provided the Petitioners deposited the entire amount before the 2nd Respondent within one month and continue to deposit the future cess as and when they fell due. The Petitioners were also required to furnish Bank Guarantee for interest portion to the 2nd Respondent within the same period. Pursuant to the said direction, it is stated that deposit of the entire cess amount has been satisfied and the Bank Guarantee to the requisite extent towards the interest payable is also stated as furnished, which is stated a kept/renewed as valid throughout. 9. A return has been filed on behalf of the Respondents rebutting the pleadings and opposing the prayers. The contentions raised by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntitled to recover any amount towards 'EDC' for the period beyond two years prior to its demand letter dated 26.08.2014. This has been sought to be challenged by the Petitioners before the learned Single Bench of this Court by filing Writ Petition (C) No. 2308 of 2015, wherein an interim order has been granted on 22.12.2015 and the matter is still pending. 12. Altogether, 16 grounds have been raised by the Petitioners, 13 at the time of filing of the writ petition and the remaining 3 by way of amendment. Among those grounds, (A) to (G) are in respect of validity of Section 3(1) of the 1981 Act - stated as in conflict with the constitutional mandate and the remaining grounds are in respect of the correctness of the proceedings finalised by the 2nd Respondent in issuing Annexure P/1 order, the subsequent demands, the quantification of the amount, denial of opportunity of hearing and the excessive/maximum rate of 'interest' (24%) stated as penal in character. The additional grounds (N) to (P) brought in as per the amendment are in respect to the alleged bar of limitation and the unreasonable delay of 8 years in issuing Annexure P/1 and the demands, claiming the cess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve granted. Hearing expedited. To be tagged with Civil Appeal arising out of SLP (C) No. 3853/2007. In the meantime, pending the hearing and final disposal of the appeal, the Department may raise the Bills but they shall not take coercive steps to recover the dues till further orders. In SLP (C) No. 11870 of 2007: Leave granted. Hearing expedited. To be tagged with Civil Appeal arising out of SLP (C) No. 3853 of 2007 14. As mentioned already, though the statue originally intended to collect EDC only from the ' Distributors ' of electricity as given under Section 3(1) of the 1981 Act, as per the CG Act No. 28 of 2014, 28 of 2004, Section 3(1-a) was introduced in similar terms, demanding Cess from the ' Producers ' of electricity as well. The rate is also common, as on date, by virtue of the CG Act No. 10 of 2010. This being the position, there is no unreasonable classification and both the 'Producers' and the 'Distributors' are required to satisfy the EDC to the requisite extent, though the matter is still pending consideration before the Apex Court in respect of the validity of Section 3(1-a) of the 1981 Act. As it stands ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quasi-judicial forum before which the person facing the demand of such kind can approach. The absence of any machinery or mechanism as above will make the taxation unconstitutional. Support is sought to be drawn by the verdict passed by the Apex Court in Kunnkathat Thathunni Moopil Nair (supra) {paragraph 9} and Nalla Raja Reddy (supra) {paragraph 22 and 23} wherein the Apex Court held that, if a taxing statute does not provide for redressal i.e. notice, opportunity of hearing, taxing authority, procedure for assessment, redressal mechanism, then, such statute is unconstitutional. 17. Coming to the Act, 1981, it is a self contained statute. Section 3(1) clearly stipulates the extent of liability for payment of EDC at the of 10 paise per unit and the total units of electrical energy sold or supplied to the consumers or consumed by him or his employees during any month, subject to the exceptions mentioned in the proviso. Section 4 of the above Act clearly stipulates that the provisions of Section 4 to 9 (both inclusive) of the Act, 1949 and the Rules made thereunder shall mutatis mutandis apply to cess under the Act, 1981 as they shall apply to levy of duty on sale or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to determine the amount of electricity duty by way of best of his judgment method and the subsequent issuance of a notice of demand requiring to satisfy the amount due pointing out that the amount so assessed shall be deemed to be the duty payable under Section 3 of the Act, 1949, are clearly mentioned in Rule 15(1) of the Rules, 1949. The liability to satisfy interest under such circumstance, in addition to the duty, is clearly given in sub-rule (2) of Rule 15. Rule 16 of the Rules, 1949 speaks about the penalty to be mulcted upon a person who commits breach of any of the Rules. From this, it is clear that the statute provides a complete mechanism as to the quantum of liability to be satisfied, the burden to submit the return, the period within which the payment has to be effected, liability to satisfy interest on delay, the power of the Electrical Inspector to fix the quantum when there is a failure on the part of the distributor, the rate of interest payable in respect of delay and also for settlement of disputes. 20. There is no case for the Petitioners that they had complied with the requirements by effecting the payment of 'Cess' in terms of Rule 3 of the Rules, 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... including non-perennial sources to alleviate energy shortage; (e) energy conservation programmes; (f) extending such facilities and services to the consumers as may be deemed necessary; (g) creation of a laboratory and testing facilities for testing of electrical appliances and equipments and other equipments used in the field of energy; (h) programmes of training conducive to achieve any of the above objectives; (i) transfer of technology in the field of energy; (ii) any purpose connected with safety of electrical installations and (j) any other purposes connected with improvement of generation, transmission, distribution or utilization of electrical and other forms of energy, as the State Government may, by notification, specify. Explanation . In this sub-section, 'energy' includes all conventional and non-conventional forms of energy. 23. Sub-section (2) of Section 3 of the 1981 Act deals with the fate of the cess collected and under sub-section (1) which is to the following effect: (2) The proceeds of the cess under sub-section (1) shall first be credited to the Consolidated Fund of the State and the State Government may, at the commencem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere is no ambiguity/obscurity in any manner and the statute does not envisage issuance of any notice as to the fixation of liability. This is something like the satisfaction of the tax payable in respect of motor vehicles under the Motor Vehicles Taxation Act and such other similar statutes. When the statute is a 'self-contained' one as to the rate and the manner of satisfaction, fixing the extent of liability upon the Distributor, the alleged violation of the principles of natural justice with reference to non-issuance of notice or opportunity of hearing is not correct or sustainable and is unfounded. This being the position, the reliance sought to be placed on Kothari Filament v. Commissioner of Customs {(2009) 2 SCC 198 paragraph 15}, Municipal Committee, Hosiarpur v. Punjab State Electricity Board , {(2010) 13 SCC 216, paragraphs 31 to 36}, Kesar Enterprises Limited v. State of Uttar Pradesh , {(2011) 13 SCC 711, paragraphs 23, 30 to 36} and Swadeshi Cotton Mills Ltd. Union of India , {(1981) 1 SCC 664, paragraphs 21 to 45} in respect of the violation of principles of natural justice is quite out of context and is not applicable. 26. The knowledge of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies etc. on generation and sale of energy. (c) The maximum Contract Demand recorded during the month shall be evaluated based on 30 minutes average of the maximum power drawn during the month. If recorded Demand during the month exceeds the Contract Demand up to 10% once in a while, in that event the amount of total energy charges payable during the month shall be calculated as per clause 20(b) above. If recorded demand exceeds the contract demand upto 10% continuously for 3 months, the consumer shall increase his contract demand accordingly and also should pay additional monthly fixed charges from the date of initial exceeded M.D., recorded. If recorded demand exceeds the contract demand beyond 10% in the event the amount of total energy charges payable during the month shall be calculated proportionately for contract demand at normal rates of total energy charges as given in clause 20(b) above and for extra MD recorded at 1.5 times of the normal tariff. 28. Paragraph 25 of the agreement clearly says that the tariff set out in the schedule vide paragraph 20 does not include any tax, duty or other charges which is applicable for consumption of electrical energy that may b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 4 of the Act, 1949, it can only be the fault of the Petitioners and nobody else. 30. There is a contention for the Petitioners that the Annexure P/1 has been issued all of a sudden, demanding arrears for about 7/8 years and as such, there is a faulty exercise of power by the 2nd Respondent and hence the liability cannot be shifted to the shoulders of the Petitioners in respect of 'interest' to be satisfied for the delay. There is also a contention that the interest is excessive, as the 'maximum rate of 24%' has been imposed and it is penal in nature. Such extent of interest is stated as imposed under a wrong impression that the Petitioners had actually collected the Cess from the consumers, but had not deposited; as contended by the 2nd Respondent. We find it difficult to agree. It is true that the respondents have mentioned in their reply that the Petitioners had collected the amounts (Cess) from the consumers and the same has not been deposited in the Government Treasury under the relevant head in terms of Rule 3; nor have they filed any return before the Electrical Inspector in terms of Rule 7(i) and as such, interest is liable to be paid in terms of the rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble under sub-rule (1) shall be such as may be fixed by the Provincial Government by notification from time to time subject to a maximum of 24% per annum. Sub-rule (1) of Rule 5 of the Rules, 1949 says that interest is payable, if the duty is not paid within the period specified under Rule 3 and it shall be at the rate prevailing in accordance with sub-rule (2). Sub-rule (2) says that the rate of interest payable under sub-rule (1) shall be as notified by the Government from time to time, subject to a maximum of 24% per annum. The question is whether the Government has issued any notification and if 'yes', what is the interest payable as per the said notification. 33. It is relevant to note that Notification dated 22.07.1975 has been issued by the Government in exercise of the powers conferred by sub-rule (2) of Rule 5 of the Rules, 1949, which is in supersession of all previous orders in this regard. The same reads as follows: NOTIFICATION Notification No. 2698-3752-XIII, dated the 22nd July, 1975. In exercise of the powers conferred by sub-rule (2) of Rule 5 of Madhya Pradesh Electricity Duty Rules, 1949 and in supersesion of the previous orders in th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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