TaxTMI 
TaxTMI 
2015 (11) TMI 1005
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....to as 'the Commission') has been accepted and as a result the main claim in the leading matter relating to Bill for Capacity Charges and in the other appeal for Minimum Alternate Tax (MAT) for 2001-2005 have been remanded for a follow up order by the Commission on the actual claims and interest. In respect of MAT, a concession on merits was recorded in respect of period 2006-2009 and for the earlier period (2001-2005) the contest was confined only to issue of limitation, as evidenced by Original Order of Commission dated 13.6.2011. Hence, through a SLP leading to C.A.No.6835 of 2015, the Appellant has chosen to make a direct challenge to aforesaid order to explain and overcome the alleged concession in respect of claim for reimbursement of MAT for the entire period of 2001-2009. C.A. No.6138 of 2012 is a statutory appeal to again challenge MAT for 2006-2009 but directed against appellate order dated 20.7.2012 by APTEL. The last matter, C.A.No.9304 of 2013 arises out of a SLP against the original order of Commission dated 8.8.2013 relating to MAT claim for the period 2009-2012. Since issues are same or similar between the same appellant and respondent in all these appeals, t....
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....lectricity Board had invited bids for short gestation power projects. M/s. LANCO also submitted its bid which was accepted by the Board and approved by the Government of Andhra Pradesh leading to a Power Purchase Agreement (for brevity, 'PPA') dated 31.3.1997. M/s. LANCO then set up a 355 MW (ISO) Combined Cycle Gas Power Plant. The completion of the plant took more than the scheduled period of 16 months. It is not necessary to go into reasons for the delay in the present proceeding. It will suffice to note that M/s. LANCO declared 25.10.2000 as the date of commissioning of their project but this was not accepted as the Commercial peration Date (COD) by APTRANSCO. However, M/s. LANCO continued to generate power and delivered it to grid. It raised bills from 19.9.2000. While the charges for the energy delivered were accepted, the bill for capacity charges was disallowed on the ground that it was not in accordance with the PPA. On 8.9.2003 M/s. LANCO issued a notice of arbitration under Article 14 of the PPA. There is some dispute as to whether this notice was only for invoking the mechanism for informal dispute resolution or also a notice for resolution of dispute by Arbitra....
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.... Court further clarified that except the power of appointing arbitrator getting shifted to the State Commission, conduct of arbitration even under Section 86(1)(f) of the Electricity Act would be governed by provisions of the Arbitration and Conciliation Act, 1996. Only in cases of conflict the Electricity Act would prevail. 6. In view of law settled by the judgment in the case of Gujarat Urja (supra), the Arbitration Application No.31 of 2004 was closed by the High Court on 18.3.2009 with liberty to M/s. LANCO to approach the Commission under Section 86(1)(f) of the Electricity Act. M/s. LANCO filed O.P.No.33 of 2009 before the Commission on 5.6.2009 to claim capacity charges on the basis of bills raised from 15.9.2000 onwards to 11.1.2001. The appellants resisted the claim inter alia on the ground of limitation. The appellants preferred a specific application for rejecting the O.P.No.33 of 2009 on the ground of limitation. M/s. LANCO preferred a reply in which Section 14 of the Limitation Act was invoked for seeking exclusion of time when the arbitration proceeding had remained pending with the High Court in the form of Arbitration Application No.31 of 2004. The Commission rej....
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....rred to the arguments advanced on behalf of M/s. LANCO before APTEL to highlight that even in appeal it claimed exclusion of time spent in arbitration proceedings under Section 14(2) of the Limitation Act and hence this Court should not allow M/s. LANCO to now urge that the Limitation Act cannot apply and hence there will be no bar of any limitation in preferring a claim before the State Commission. We have noticed that in para 28 of the judgment under appeal APTEL has noted that the appellant no.1 (M/s. LANCO) does not seriously dispute the fact that the Limitation Act would be applicable to the present case. But learned counsels have conceded that the issue whether Limitation Act is applicable or not is one of law and accordingly the parties have advanced detailed submissions on this issue. Hence we propose to consider these submissions also. 9. From the above stand of the parties, the following issues emerge for our consideration and adjudication :- (i) Whether the Limitation Act, 1963, particularly Section 3 and the Schedule will apply to any action instituted before the Commission under Section 86(1)(f) of the Electricity Act, 2003? (ii) Whether the impugn....
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....ch the tax is required to be paid by the Company, whichever is later. 5.7 - Billing Disputes Notwithstanding any dispute as to all or any portion of any bill submitted by the company to the Board, the Board shall pay the full amount of the bill provided that the amount of the bill is based on (a) a meter reading that has either been signed by both Parties or certified by the Company with respect to the Board's refusal to sign within three (3) days of the meter reading date and (b) the provisions of this Agreement. The Board shall notify the Company of any disputed amount, and the Company shall rectify the defect or otherwise notify its rejection of the disputed amount, with reasons, within five (5) days of the reference by the Board, falling agreement on which the provisions of Article 14 shall apply with respect thereto. If the resolution of any dispute requires the Company to reimburse the Board, the amount to be reimbursed shall bear interest at the Working Capital Rate applicable to the Board from the date of payment by the Board to the date of reimbursement. The Board may not dispute any amount after sixty (60) days following the Due Date of Payment there....
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....pany may notify the Board of any proposed amendments to this Agreement required to put the Company in the same economic position it would have occupied in the absence of such cost increase reduction in the net after-tax cash flow or any other economic burden. Such notice shall be accompanied by a certification of the Company's independent chartered accountant and a reasonably detailed explanation of certification of any officer of the Company respecting the basis for such net economic burden increase. The amount of an net economic burden claimed by the Company shall be net of any insurance proceeds received in respect thereof. (b) Within sixty (60) days after the COD of the first Generating Unit or the end of any Tariff Year, if after accounting as provided in subsection (a) for the net economic effects on the Company during the period prior to the COD of the first Generating Unit or as the case may be, such tariff year of any changes in law or Changes in Permits, the Company experiences a reduction in costs or an increase in after-tax cash flow or any other net economic benefit which it would not have experienced but for such Changes in Law or Changes in Permits, the ....
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....nancing Documents on a current basis, then in addition to the Company's right under sub-section (a) but notwithstanding the time period for exercising such rights specified therein, the Company shall be entitled to propose amendments to this Agreement as provided in sub-section(a) and the Parties shall consider such proposal as provided in subsection (e) below, provided that any benefits which the Company is eligible to receive under subsection (a) shall be reduced by any benefits received by the Company prior to the end of the relevant period under this subsection. (e) Within thirty (30) days after receiving any proposal pursuant to paragraph (a), (b) or (d), the Parties shall meet and agree on either amendments to this Agreement or alternative arrangements to implement the foregoing. If no such agreement has been reached within ninety (90) days after any meeting pursuant to Article 11.3(a), (b) or (d), as the case may be, the proposals of the Parties shall be submitted to the Independent chartered accountant referred to in paragraphs (a), (b) and (d), as the case may be. 14.1 - Informal Dispute Resolution (a) Each Party shall designate in writing to....
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....g the issue relating to MAT. Article 5 contains various sub-articles relating to billing and payment. They provide for monthly tariff bills which are payable by the Board or the licensee on the Due Date of Payment. The supplementary bills are covered by Article 5.5. They cover different items and are required to be supported by supporting data. Such bills are also payable on the Due Date of Payment, except the supplementary bill for taxes on income which is to be submitted at least 30 days prior to the time when the income tax is required to be paid by the generating company. Such bill is payable by the Board within 25 days of presentation or at least 5 days before the date on which the tax is required to be paid by the company, whichever is later. 12. Article 5.7 relates to billing disputes and it refers to the provisions of Article 14 which governs Arbitration including Informal Dispute Resolution. Article 11 caters to the effects of Change in Law upon the rights and liabilities of the parties. This has assumed relevance in the present context on account of stand taken by the appellant that MAT does not fall under Article 3.8 governing claims for Taxes on Income but under Arti....
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....ry in the license of a licensee, shall be determined by such person or persons as the Commission may nominate in that behalf on the application of either party; but in all other respects the Arbitration shall be subject to the provisions of the Arbitration and Conciliation Act, 1996. 14. On the basis of powers and functions of the Commission highlighted above and on account of law declared in Gujarat Urja (supra) as well as in Tamil Nadu Generation & Distribution Corpn. Ltd. v. PPN Power Generating Co. (P) Ltd., (2014) 11 SCC 53, the contention of Mr. Giri is that in discharge of its functions to adjudicate all disputes between the licensees and generating companies and/or in referring a dispute to arbitration under Section 86(1)(f) of the Electricity Act, the Commission deserves to be treated as a substitute and therefore equivalent of civil court for the purpose of attracting the bar of limitation provided under the Limitation Act, 1963. According to him the law laid down by this Court that Limitation Act applies only to civil courts in the strict sense of the term requires reconsideration in an appropriate case but in the present matter, since in the case of PPN Power Generat....
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....urt was satisfied on facts itself that the principle of delay and laches was not attracted. Further, the provisions in the PPA in that case provided that the seat of Arbitration shall be in London and that alone made part I of the Arbitration Act inapplicable to the arbitration proceeding and ruled out applicability of Section 43 also. 17. Mr. Giri has placed considerable reliance upon a judgment by three Judges of this Court in State of Kerala v. V.R. Kalliyanikutty (1999) 3 SCC 657. The question of law in that case was whether a debt which is barred by the law of limitation can be recovered by resorting to recovery proceedings under the Kerala Revenue Recovery Act of 1968. The High Court held that in the absence of any provision in the aforesaid Kerala Act creating a substantive right to recover time barred debts, such debts could not be recovered through the summary proceedings under that Act. As per Section 71 of the Kerala Act the Government could issue a notification making the provisions of the Act applicable to the recovery of "amounts due" from any person or class of persons to any specified institution or any class of institutions. The say of State Government and the S....
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.... 1958. The words "arrears of rent payable" were given a limited meaning by holding thus: "..... In the context of recovery of arrears of rent under Section 7, this Court said that if the recovery is barred by the law of limitation, it is difficult to hold that the Estate Officer could still insist that the said amount was payable. When a duty is cast on an authority to determine the arrears of rent the determination must be in accordance with law. ...." (emphasis added) 19. Mr. Giri referred to paragraphs 98 and 99 of the judgment in the case of Kihoto Hollohan v. Zachillhu 1992 Supp. (2) SCC 651 to highlight the attributes of a "Court" and those of a Tribunal and also the relevant tests which led the court to hold that the Speaker while deciding certain disputes is a Tribunal. Similarly in the case of Thakur Jugal Kishore Sinha v. Sitamarhi Central Co-operative Bank Ltd. 1967 (3) SCR 163, this Court held that the Assistant Registrar of Co-operative Societies was a court within the meaning of the Contempt of Courts Act, 1952. This inference was based on the pronounced view that the subordination for the purpose of Section 3 of the Contempt of Courts Act means j....
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....e; 4. Nor because it gives decisions which affect the rights of subjects; 5. Nor because there is an appeal to a Court; 6. Nor because it is a body to which a matter is referred by another body. See Rex v. Electricity Commissioners 1924-1KB 171(C) and observed at page 298: "An administrative tribunal may act judicially, but still remain an administrative tribunal as distinguished from a Court, strictly so-called. Mere externals do not make a direction to an administrative officer by an ad hoc tribunal an exercise by a Court of judicial power." (16) The same principle was reiterated by this Court in - Bharat Bank Ltd. v. Employees of Bharat Bank Ltd.', AIR 1950 SC 188 (D); and - Meqbool Hussain v. State of Bombay, AIR 1953 SC 325 (E), where the test of a judicial tribunal as laid down in a passage from - Cooper v. Willson, 1937-2 KB 309 (F) at p.340, was adopted by this Court : "A true judicial decision presupposes an existing dispute between two or more parties, and then involves four requisites: - (1) The presentation (not necessarily orally) of their case by the parties to the dispute, (2) if the dispute between t....
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....the Customs Act excludes the application of the principles underlying Section 14 of the Limitation Act. In order to reach the conclusion that only principles underlying Section 14 and not the very Section itself can apply to tribunals having attributes of Court, in M.P. Steel Corporation (supra) the Court analysed the precedents and the Limitation Act 1963. It concluded that a quasi-judicial Tribunal will suffer Limitation Act only as per the statutory scheme under which it is created and functions. On the other hand, on its own the Limitation Act is applicable in respect of proceedings before courts proper, i.e., courts as understood in the strict sense of being part of the Judicial Branch of the State. In support of this principle several judgments of this Court were noted such as a three-Judge Bench judgment in Commissioner of Sales Tax v. Parson Tools and Plants (1975) 4 SCC 22 in which reliance was placed upon Ujjam Bai v. State of U.P. AIR 1962 SC 1621. For the same purpose reliance was also placed upon judgment in the case of Jagannath Prasad v. State of U.P. AIR 1963 SC 416. A contrary view taken by a two-Judge Bench in the case of Mukri Gopalan v. Cheppilat Puthanpurayil A....
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....s per facts of each case. He also contended that even if a definite limitation period is found to be attracted, in view of law laid down clearly in M.P. Steel Corporation (supra), the principles underling Section 14 will be applicable and the same has been rightly applied by APTEL while rendering the impugned order under appeal. 23. Mr. Sundaram referred to PPN Power Generating Co. (P) Ltd. (supra) and placed reliance upon a solitary sentence at the end of paragraph 64 which reads thus : "In any event, the Limitation Act is inapplicable to proceeding before the State Commission." He also placed reliance upon paragraph 65 which is as follows: "65. The submission of the appellant that the Limitation Act would be available in case the reference was to be made to arbitration, in our opinion, is also without merit. Firstly, the State Commission exercised its jurisdiction to decide the dispute itself. The matter was not referred to arbitration, therefore, the Limitation Act would not be applicable. Secondly, Section 43 of the Arbitration and Conciliation Act would not be applicable even if the matter was referred to arbitration by virtue of Section 2(4) of the Arb....
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....ess limitation is found to be applicable by virtue of the provisions of the Electricity Act 2003. According to him if Limitation Act does not apply, courts cannot import limitation and the exceptional cases where this Court has introduced principles of delay and laches relate to proceedings before quasi-judicial tribunals which are vested with discretionary or suo motu jurisdiction like revisional power; the other exception being courts having extraordinary or equity jurisdiction such as writ jurisdiction vested in the High Courts or the Supreme Court. In support of the limited and exceptional applicability of principles of delay and laches as distinguished from limitation, Mr. Bhushan placed reliance upon an old judgment of Supreme Court of United States in the case of Henry Hauenstein v. John A. Lynham 100 U.S. 483 and also upon extracts from Halsbury's Laws of England and a judgment of Chancery Division in the case of Re. Jarvis (Deceased) Edge v. Jarvis (1958) 2 All.ER 336. Since the principle noted above is well settled, the above authorities need not be discussed particularly when this Court has taken similar view in the case of Bombay Gas Co. Ltd. v. Gopal Bhiva 1964(3) ....
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....Co. (P) Ltd. (supra) this Court examined the issue of limitation in a very summary manner and without referring to the relevant provisions of the Electricity Act 2003, at the end of para 64 it was observed in a single sentence that the Limitation Act is inapplicable to proceeding before the State Commission. But in view of detailed discussion in the case of M.P. Steel Corporation (supra), we have held above that by itself the Limitation Act is inapplicable to proceeding or action brought before the State Commission. However, the Electricity Act 2003 requires a further scrutiny to find out whether by virtue of Section 175 of the Electricity Act or otherwise it can be inferred that the provisions of Limitation Act will govern or curtail the powers of the Commission in entertaining a claim under Section 86(1) (f) of the Electricity Act. Section 175 reads thus: "175. Provisions of this Act to be in addition to and not in derogation of other laws. - The provisions of this Act are in addition to and not in derogation of any other law for the time being in force." A plain reading of this Section leads to a conclusion that unless the provisions of the Electricity Act are in con....
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....iated in State of Kerala v. V.R. Kalliyanikutty (supra) and in the case of New Delhi Municipal Committee v. Kalu Ram (supra) is attracted so as to bar entertainment of claims which are legally not recoverable in a suit or other legal proceeding on account of bar created by the Limitation Act. On behalf of respondents those judgments were explained by pointing out that in the first case the peculiar words in the statute - "amount due" and in the second case "arrears of rent payable" fell for interpretation in the context of powers of concerned tribunal and on account of aforesaid particular words of the statute this Court held that the duty cast upon the authority to determine what is recoverable or payable implies a duty to determine such claims in accordance with law. In our considered view a statutory authority like the Commission is also required to determine or decide a claim or dispute either by itself or by referring it to arbitration only in accordance with law and thus Section 174 and 175 of the Electricity Act assume relevance. Since no separate limitation has been prescribed for exercise of power under Section 86(1)f) nor this adjudicatory power of the Commission has been....
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....on to set in, to recover such delayed claims through the Commission. Hence we hold that a claim coming before the Commission cannot be entertained or allowed if it is barred by limitation prescribed for an ordinary suit before the civil court. But in appropriate case, a specified period may be excluded on account of principle underlying salutary provisions like Section 5 or 14 of the Limitation Act. We must hasten to add here that such limitation upon the Commission on account of this decision would be only in respect of its judicial power under clause (f) of sub-section (1) of Section 86 of the Electricity Act, 2003 and not in respect of its other powers or functions which may be administrative or regulatory. 31. In the light of above there can be no difficulty in appreciating that M/s. LANCO rightly appreciated the hurdle of limitation in its way when such an objection was taken by the appellant and it rightly chose to seek exclusion of the period it was pursuing arbitration proceeding before the High Court, on the basis of principles underlying Section 14 of the Limitation Act. 32. The issue as to whether the impugned order by APTEL permitting application of principles on ....
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....the day on which it ended shall both be counted..........." The same conclusion is inevitable even on other relevant facts. The appellant had notice of the arbitral proceeding and after judgment in Gujarat Urja (supra), the appellant also took no steps to get the application under Section 11 listed and disposed of earlier to 18.3.2009. The averments and the materials are not sufficient to establish the claim of the appellant that the proceeding ceased to be bona fide after 13.3.2008. As a consequence of aforesaid discussion, the challenge to impugned order in respect of views taken on the issue of limitation in the light of principles of Section 14 of the Limitation Act fails. Issues relating to MAT 33. The notice of Arbitration dated 8.9.2003, inter alia, made a demand for reimbursement of income tax payment made by M/s. LANCO, as per Article 3.8 of the PPA. No doubt the claim on this head for the subsequent years was not and could not be in this notice but the difference between the parties on the issue had already arisen. In the notice claims for advance income tax for the period 1.4.2001 to 15.6.2003 amounting to Rs. 13.14 crores were included under the heading "Genera....
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....ment that such tax is not on income from the project and therefore, not covered by Article 3.8 of the PPA is also found to be without any substance. 35. The objective of levying MAT, as declared by the Income Tax Department is to bring into the tax net "Zero Tax Companies" which inspite of having earned substantial book profits and having paid handsome dividends, do not pay any tax due to various tax concessions and incentives provided under the Income Tax Law. It is no body's case that in fact M/s. LANCO had not generated income from the project during the relevant years. The taxable income, of course, became amenable to MAT on account of Section 115JB. The Legislative changes in respect of MAT show that it came into force initially with effect from 1.4.1988 by introduction of Section 115J in the Income Tax Act, 1961 but this provision was amended to exempt power generating companies with effect from 1.4.1989 and from 1.4.1991 MAT became inapplicable because of deletion of Section 115J which was reintroduced with effect from 1.4.1997 by insertion of Section 115JA. But it was not made applicable to power generating companies till 31.3.2001. However, Section 115JA was withdra....