Captive consumption exemption fails where electricity is sold to a sister concern rather than used by the generator itself

Electricity generated by one distinct juristic entity and transferred to a sister concern was not treated as consumption for its own use under the Rajasthan Electricity Duty Act. The exemption for captive use applied only where the energy was generated for the generator's own consumption, and separate corporate existence could not be ignored merely because the companies were related or operated from the same premises. On the admitted basis that the transfer was a sale and not self-consumption, the supply fell outside the exemption and electricity duty was payable.

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Issues: Whether electricity generated by the petitioner and supplied to its sister concern could be treated as consumption for its own use so as to escape electricity duty under Section 3 of the Rajasthan Electricity Duty Act, 1962.

Analysis: The statutory exemption applies only where energy is generated for the generator's own use or consumption. The petitioner and the recipient company were separate juristic entities, and the mere fact that they belonged to the same family, operated from the same premises, or were loosely described as sister concerns did not make them one concern. The facts were distinguishable from cases where the corporate veil was lifted because the power-generating company had no independent existence apart from the consuming company. On the admitted position that the transfer of electricity to the other company was a sale and not self-consumption, the transaction fell outside captive use. The reasoning in later authorities on sister concerns and sale of surplus electricity supported the conclusion that such transfer amounts to distribution or sale and not own consumption.

Conclusion: The electricity supplied to the sister concern was not covered by the exemption for energy generated for own use, and electricity duty was rightly levied.

Final Conclusion: The levy of electricity duty on the energy transferred to the sister concern was upheld, and the writ petitions were rejected.

Ratio Decidendi: Electricity generated by one distinct juristic person and supplied to another as sale cannot be treated as generation for own use or captive consumption for the purpose of exemption from electricity duty.

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