TaxTMI 
TaxTMI 
2017 (5) TMI 264
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....y selling/supplying electrical energy. The appellant no.1 company set up its gas based steel plant at Hazira, in the year 1990 or thereabout for production of HBI. It also set up a 20 MW Open Cycle Power Plant for captive consumption of power for its HBI plant. On the application made by the appellant no. 1 Company, the State Government granted exemption from payment of electricity duty for a period of 10 years commencing from 21.07.1990 with respect to the said Open Cycle Power Plant. Subsequently, the appellant no.1 Company converted the said Open Cycle Power Plant of 20 MW into 30 MW Combined Cycle Mode Power Plant by adding steam turbine. Consequent upon such conversion, the appellant no.1 company was granted by the State Government exemption from payment of electricity duty for a period of 15 years commencing from 21.07.1990. In the year 1991, the appellant no.1 company also desired to put up a composite plant after making substantial investment for production of both HBI and HRC. Therefore, in or about the year 1991-92, the appellant no.1 company thought of setting up another Captive Power Plant of 300 MW of capacity in Combined Cycle Mode at Hazira for meeting its requiremen....
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....d 17.03.2003 left open to the Government to take a fresh decision. The State Government again by Order dated 23.01.2006 rejected the application of appellant no.1 for grant of exemption for payment of electricity duty for 215 MW power generation equivalent to 42% of the total generation. The Writ Petition was again filed challenging the Order dated 23.01.2006 in which High Court set aside the Order dated 23.01.2006 and directed the Government to pass a fresh Order. The State Government passed the detailed Order dated 24.12.2009 rejecting the claim of appellant no.1 for exemption of payment of electricity duty both under Section 3(2)(vii)(a)(i) as well as under notification dated 27.02.1992. After decision dated 24.09.2009 recovery notice dated 06.10.2009 was issued for payment of electricity duty amounting to Rs. 562/Crores together with interest totaling Rs. 1038.27/Crores for the period of April 2000 to August 2009. The Order of State Government dated 24.09.2009 was challenged by the appellants before the High Court by means of Special Civil application no. 10946 of 2009. Learned Single Judge dismissed the Writ Petition vide its judgment dated 25.02.2010 aggrieved against which L....
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.... Counsel appearing for the State refuting aforesaid submission contends that Government as well as High Court has rightly rejected the claim of exemption of duty. The appellant neither fulfills the statutory requirements under Section 3(2) nor fulfill the conditions of the notification dated 27.02.1992. ESSAR Power and ESSAR Steel are separate and independent legal entities. ESSAR Steel is not generating energy. ESSAR Steel is not generating either singly or jointly with either GEB or its successor entity, Gujarat Urja Vikas Nigam Limited or even with ESSAR Power. ESSAR Power is not generating energy for its own use. ESSAR Power Limited has established 515 MW power station, out of which 300 MW capacity has been allocated to Gujarat Electricity Board (GEB). Thus 58% of the installed capacity is allocated to GEB and in relation to such capacity; ESSAR Power Limited generates and sells electricity as a generating station and not as a captive Power Plant of GEB. The remaining capacity of 215 MW, which constitutes 42%, is for ESSAR Group of Companies, as per the stipulation contained in the Power Purchase Agreement dated 30.05.1996 entered into between ESSAR Power and GEB as well as the....
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....29.9.1999 2 30.7.1990 Form 'F' Sec. 3(2) (vii) (b) GEB connection No HT 159 28.1.1992 19.12.1991 to 26.3.1995 3 May, 1995 Form 'F' Notification dt. 30.6.1993 issued under Sec. 3(3) GEB connection No HT 0159/ HT 10029 + 215 MW from ESSAR Power (exclusively for HRC Project) 6.9.1995 31.3.1995 to 30.3.2000 4 30.1.1996 Form 'E' Sec. 3(2) (vii) (a) (i) 20 MW (existing) + 11 MW i.e. Co- generation plant 26.11.1998 15.12.1995 to 29.9.2004 13. In the present case, no application in the prescribed form as per Rule 11 of the Rules was filed by the appellant no.1 and for the first time the appellant had come up with an application dated 15.03.2001 seeking an exemption under notification dated 27.02.1992 and subsequently on 12.04.2001 has again claimed exemption under Section 3(2)(vii)(a) (i) of 1958 Act. The exemption from payment of duty as claimed by the appellant is in two parts. Firstly, under Section 3(2)(vii)(a)(i) of 1958 Act and secondly, under the notification dated 27.02.1992. We proceed to examine both the claim separately. Claim under Section 3(2)(vii)(a)(i) 14. Section 3 of 1958 Act deals with "duty on units of energy consumed". Sub....
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....6 which contains various conditions for sale of electricity by appellant no.2. The State Government in its order dated 24.09.2009 has extracted the recitals in Power Purchase agreement dated 01.06.1996 which are to the following effect: "... WHEREAS the Company is a Generating Company as defined under clause 4(A) of Section 2 of the Electricity (Supply) Act, 1948 AND WHEREAS the Company has substantially implemented a 515 MW combined Cycle Generating Station at Hazira Dist. Surat, Gujarat of which it has already commissioned 3 x 110 MW Gas Turbine Generating Set an aggregate generating Capacity of 330 MW. AND WHEREAS the Company is setting up the said Generating Station and has been permitted as a special case to supply power to its sister concerns viz. ESSAR Steel Ltd. and ESSAR Oil Ltd, hereinafter jointly and severally referred to as 'ESSAR Group Companies'. AND WHEREAS ESTL which is engaged in the manufacture of Steel products at Hazira, intends to purchase electrical output generated by the Generating Station equivalent to 138 MW capacity in the Open Cycle mode and 215 MW capacity in Combined Cycle mode operation (hereinafter collectively or severally referred to as....
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....R Power Limited to set up a generating station as a special case, and to supply power generated by it to its sister concern, i.e. ESSAR Gujarat, ESSAR Steels and ESSAR Oil again as a special case only subject to fulfillment of requirements of legal provisions as laid down under Section 15A and 18A of the Electricity Supply Act and with the express condition that the power generated through this subject shall never as sold outside the State or to any other person except as mentioned above. Moreover, in case, the power generated by EPL is to be wheeled, GEB shall decide the wheeling rate according to the sound commercial principles. In addition to this, if there is any excess power generated by EPL, the each may be purchased by the Board, at a price decided by the Board subject to the norms laid down by GoI from to time. It is, therefore, requested that GEB may take further necessary action in the matter." 19. We have noticed above that Power Purchase Agreement allocated the energy to the Gujarat Electricity Board to the extent of 58% and 42% power supply was to be given to sisters concern i.e. ESSAR Gujarat, ESSAR Steel and ESSAR Oil as a special case. It is well settled that t....
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.... 39. In Compack (P) Ltd. v. CCE, this Court has observed thus: (SCC p. 306, para 20) "20. Bhalla Enterprises laid down a proposition that notification has to be construed on the basis of the language used. Rukmani Pakkwell Traders16 is an authority for the same proposition as also that the wordings of some other notification are of no benefit in construing a particular notification. The notification does not state that exemption cannot be granted in a case where all the inputs for manufacture of containers would be base paper or paperboard. In manufacture of the containers some other inputs are likely to be used for which MODVAT credit facility has been availed of. Such a construction, as has been suggested by the learned counsel for the respondents, would amount to addition of the words 'only out of' or 'purely out of' the base paper and cannot be countenanced. The notification has to be construed in terms of the language used therein. It is well settled that unless literal meaning given to a document leads to anomaly or absurdity, the golden rule of literal interpretation shall be adhered to." (emphasis supplied) 40. In CCE v. Mahaan Dairies, this Court has held: (SCC p.....
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....tion of Hindalco and should be liable to duty on that basis. In the premises the consumption of such energy by Hindalco will fall under Section 3(1)(c) of the Act. The learned Additional AdvocateGeneral for the State relied on several decisions, some of which have been noted." 23. In the present case, there is no dispute to the fact that appellant No.2 was created as a Special Purpose Vehicle by appellant No.1 itself. Had appellant No.2 would have been supplying energy to appellant No.1 only, the claim deserved consideration. But present is a case where the appellant no.2 is supplying energy to industrial undertakings with whom it is not jointly generating the energy. Judgment of this Court in State of U.P. and Renusagar Company, thus, has no application in the facts of present case. 24. Learned Counsel for the appellant has placed reliance on judgment of this Court in A.P. Gas Power Corporation Ltd. Versus A.P. State Regulatory Commission & Another, 2004 (10) SCC 511. In the above case, the State Government of Andhra Pradesh and Andhra Pradesh Electricity Board had mooted the idea of setting up of 3 X 33 MW gasbased Combined Cycle Power Station for establishing a generating sta....
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....t it would be necessary to have a licence under the relevant provisions of law. If there is such a legal requirement, merely an agreement amongst certain parties would not exclude the application of law. Provisions of law regulating the situation would prevail over any kind of agreement amongst some individuals as a group or otherwise. We are, therefore, of the view that such a clause in the Memorandum of Understanding would not do away with the requirement of having a licence for supply of electricity generated by A.P.GPCL to such concerns which may be under the same group as the participating industries but not the participating industries themselves. 37. To support the view taken by us, a decision of this Court referred to by the respondents may be cited as in State of U.P. Vs. Renusagar Power Co. This case, however, was decided in a slightly different fact situation. M/s Hindustan Aluminium Corporation Ltd. was established in 1959 on assurance of providing cheap electricity to it. In the year 1964, however, M/s Renusagar Power Co. Ltd. was established as a wholly owned and subsidiary of M/s Hindustan Aluminium Corporation Ltd. It was generating electricity, but incorporated ....
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.... to have license. Present is a case where Gujarat Electricity Board who has been allocated 300 MW is not a participating industry nor appellant no.2 is jointly generating the energy with Gujarat Electricity Board, even if it is held that the appellant no.1 to the extent it holds 42% equity shares of appellant no.2 is jointly generating the energy. The Gujarat Electricity Board which has been allocated 58% of electricity generated can not be said as the industrial undertaking jointly generating the energy. 28. The judgment of this Court in Gujarat Urja Vikas Nigam Ltd. Versus ESSAR Power Limited, 2016(9) SCC 103, has also been referred to. The above case was a case where parties to the present appeal were at issue and appeal was filed by Gujarat Urja Vikas Nigam, successor of Gujarat Electricity Board under Section 125 of the Electricity Act against the Order of Appellate Tribunal of electricity. The appellant had filed the petition before the Gujarat Electricity Regulatory Commission for adjudication of the dispute arising out of Power Purchase agreement. The appellant had sought compensation for wrongful allocation of electricity by EPL to the sister concerned i.e. ESSAR Steel Li....
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.... 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. Claim under notification dated 27.02.1992 31. The notification dated 27.02.1992 was issued in exercise of power conferred by Section 3(3) of Bombay Electricity Act, 1958. The relevant part of the notification dated 27.02.1992, is as follows: " NOTIFICATION Sachivalaya Gandhinagar 27th February, 1992 BOMBAY ELECTRICITY DUTY ACT, 1958 No. GHC/92/10/JCP/1188/2594/K In exercise of the powers conferred by Sub Section (3) of the Section 3 of the Bombay Electricity Duty Act,1958(Bom. XL of 1958), the Government of Gujarat hereby remitted with effect on and from the date of publication of this notification in the Official Gazette. In the whole of the State of Gujarat, the....