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SOUTHERN PETROCHEMICAL INDUSTRIES versus THE SECRETARY & COMMISSIONER

High Court of Madras

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Southern Petrochemical Industries v. The Secretary & Commissioner - WRIT PETITION NOS. 12507 of 1997 AND WP NO. 12508 OF 1997 AND WMPS. 20122 to 20123 OF 1997 [2002] RD-TN 172 (15 March 2002)



IN THE HIGH COURT OF JUDICATURE AT MADRAS

DATED: 15.3.2002.

CORAM:

THE HONOURABLE MR.JUSTICE V.KANAGARAJ WRIT PETITION NOS. 12507 of 1997 AND WP NO. 12508 OF 1997 AND WMPS. 20122 to 20123 OF 1997 Southern Petrochemical Industries

Corporation Limited,

No.97, Mount Road,

Guindy, Chennai-600 032. ... Petitioner in both the Wps. Vs.

The Secretary & Commissioner

to Government, Energy (B1) Department,

Government of Tamil Nadu,

Fort St.George,

Chennai 600 009. ... First respondent in in WP.12507 of 1997. The Secretary & Commissioner

to Government,

Public Works Department,

Government of Tamil Nadu,

Fort St.George,

Chennai-600 009. ... First respondent in WP.12508 of 1997. The Chief Electrical Inspector

to Government,

Thiru-vi-ka Industrial Estate,

Guindy, Chennai 600 032.

The Superintending Engineer,

Chidambaranar Electricity

Distribution Circle,

Beach Road,

Tuticorin 628 001.

The Superintending Engineer

Madras Electricity Distribution

Circle (North),

No.791, Anna Salai,

Chennai 600 002.

The Superintending Engineer,

Madras Electricity Distribution

Circle (South),

Chennai 600 002. ... Respondents 2 to 5 in both the writ petitions. Writ Petition No.12507 of 1997 is filed under Article 226 of the Constitution of India praying to issue a Writ of Certiorarified Mandamus as stated therein.

Writ Petition No.12508 of 1997 is filed under Article 226 of the Constitution of India praying to issue a Writ of Mandamus as stated therein.

For petitioner in

both the Wps. : Mr.C.Natarajan, Senior Counsel for Mr.N.Inbarajan For R.1 in both the

writ petitions : Mr.M.Mahalingam, Govt.Advocate For R.2 to R.5 in

both the Wps. : Mr.M.Muthuswamy

:COMMON ORDER



The petitioner Corporation has filed both the above writ petitions, the first one in W.P.No.12507 of 1997 praying to issue a Writ of Certiorarified Mandamus to call for the records from the file of the first respondent in Letter No.6245/B1/96-3, dated 15.10.1996 and quash the said proceeding confirming the proceeding of the second respondent in Letter No.38659/I4/91 dated 18.12.1991 and that of the third respondent in Letter No.09562/H1/A1/93-1, dated 21.5.1993 and that of the fourth respondent in Lr.No.SE/MEDC/N/AD/R/RA.I/A.5/HT 1294/D.1321/9 2, dated 8.9.1992 and direct the respondents not to recover tax under the provisions of the Tamil Nadu Electricity (Taxation on Consumption) Act, 1962 on the maximum demand charges paid by the petitioner.

2. The petitioner has filed the second writ petition above in W.P. No.12508 of 1997 praying to issue a Writ of Mandamus forbearing the respondents from recovering the electricity tax under the Tamil Nadu Electricity (Taxation on Consumption) Act, 1962 on maximum demand charges claimed by the T.N. Electricity Board.

3. For easy reference, W.P.No.12507 of 1997 and W.P.No.12508 of 199 7 are hereinafter referred to as the first and the second writ petition respectively.

4. In the common affidavit filed in support of the writ petitions, the petitioner would submit that it is incorporated under the Companies Act, 1956 and is engaged in the manufacture of fertilisers, chemicals etc.; that the petitioners were served with the bill for November, 1991 demanding tax on maximum demand of energy charges apparently relying upon a Government Gazette publication dated 14.10.1991 concerned with Section 3-A introduced by Act 32/91; that however, the petitioner deposited the money under protest vide letter dated 9.12.1991; that the fourth respondent vide its communication dated 8.9.1992 stated that the charges were made as per instructions issued by headquarters; that the third respondent by its communication dated 21.5.199 3 directed the petitioners to address the second respondent; that earlier the second respondent by communication dated 18.12.1991, rejected the application of the petitioner against which the petitioners filed an appeal on 3.2.1992 before the first respondent, who by the impugned communication dated 15.10.1996 rejected the appeal for cancellation of the consumption tax on maximum demand charges; that similar demands have been served by the 5th respondent regarding the use of power at their Principal Office and the same had also been paid under protest.

5. The petitioners would further submit that the maximum demand charges cannot be looked upon as "price of energy" as defined under Section 2(9) of the Act; that Section 3 of the Act specifically deals with tax on consumption of energy calculated on "price of energy consumed"; that the bill presented by the Electricity Board specifically indicates the price of energy at a price per unit; that Rule 8(1) of the Tamil Nadu Electricity (Taxation on Consumption) Rules, 1964 provides for a meter being maintained for recording the unit of energy consumed; that under Rule 8(3)(ii) of the said Rules, the tax is payable on the basis of the price payable; that the fixation of the price by the State Government periodically indicating the price charged for the units of energy supplied; that under Condition No.6 of the agreement entered into in between the Board and the petitioners dated 2.3.1984 , the petitioners are liable to pay energy charges, maximum demand charges, surcharge and the meter rent in accordance with the tariff applicable; that under supplemental agreement dated 20.10.1994, there is reference to the maximum demand and contracted demand and that under agreement dated 10.10.1991, the mode of charging the maximum demand charges is also indicated.

6. The petitioner would further submit that the maximum demand charges are claimed not for the actual energy supplied but on the peak demand recorded for any 30 minutes during the month at a tariff rate and if the maximum demand charges are added as "price of energy", the very cost of energy vary from month to month disproportionately. On such reasons, the petitioner would pray for the reliefs extracted supra.

7. In the common counter affidavit filed on behalf of the respondents 3 to 5, they would submit that as per the policy decision taken by the Tamil Nadu Government communication vide G.O.No.487 dated 14.10.l991, the Electricity Tax is being levied for the price of energy ( energy consumed as well as recorded demand actually reached) at the rate of 4 from September, 1991 onwards and 5% from April 1994 till date for all the High Tension consumers including the petitioner; that the Electricity Tax is being levied only for the recorded demand and not for the permitted maximum demand as stated by the petitioner; that the petitioner is liable to pay electricity tax for the actual consumption of energy as well as the maximum demand recorded; that the demand charges are part and parcel of price of energy as mentioned in the Act.

8. The respondents would further submit that the electricity tax is being levied based on the T.N. Government G.O.No.487 dated 14.10.19 91 and the levy of additional tax at the rate of 4 with effects from September 1991 is calculated on the actual recorded demand along with the consumed units and both the parameters put together indicate the price of energy as per the Act and this fact was informed to the petitioner by the 4th respondent's letter dated 9.9.1991. Further denying the contention of the petitioner that the maximum demand charges cannot be looked upon as price of energy under the Act, the respondents would quote Section 2(9) of the Act and would submit that from the Section, it is evident that price of energy does not mean only the four items mentioned therein but also includes both the demand charges and the consumption of energy and the petitioner cannot presume deleting the demand charges from the price of energy; that Section 3 of the Act deals with tax on consumption of energy and calculated on " price of energy", explicitly mentioned in Section 2(9); that Rule 8(1) of the Rules indicates the procedure to be adopted with regard to the meter reading and tax assessment; that the meters record both energy consumed and demand reached; that as per Rule 8(3)(ii), the electricity tax shall be calculated at the appropriate rates of tax on the basis of the "price of energy" payable, which consists of both the energy charges and maximum demand charges.

9. Admitting the agreement dated 10.10.1991 and the supplemental agreement dated 23.6.1997 executed between the Board and the petitioner, the respondents would say that the petitioner is bound by the terms and conditions of the agreement and as per the supplemental agreement dated 21.8.1997, the sanctioned demand is fixed at 32000 KVA which is in addition to the terms of the subsisting agreements dated 10.10.1991 and 23.6.1997. Explaining that H.T.tariff consists of two parts, one the demand charges and the other energy charges for the actual amount of energy consumed, the counter affidavit would go to say that each is independent as per the schedule to the Tamil Nadu Revision of Tariff on supply of electrical energy Act, 1978 as enacted by the State Legislature and therefore the current consumption charges mean and include both demand charges and unit charges, which the petitioner paid all along when demanded and only to avoid statutory levies along with current consumption charges, the petitioner is trying to give a different interpretation. On such averments, the respondents would pray to dismiss the above writ petitions with costs.

10. During arguments, the learned senior counsel appearing on behalf of the petitioner Corporation would submit that under an agreement entered into in between the petitioner company and the Electricity Board, the Board supplied power and the petitioner is paying the tax; that while so, the petitioners were served with the bill for November 1991 demanding tax on maximum demand of energy charges apparently relying on Government Gazette dated 14.10.1991 based on Section 3-A introduced by Act 32/1991 and the fourth respondent vide its communication dated 8.9.1992 made it known that the charges were made as per the instructions issued by the headquarters; that the second respondent by its communication dated 18.12.1991 rejected the application of the petitioner filed for cancellation of the consumption tax on maximum demand charges, which also came to be rejected by the impugned communication and hence the petitioner has come forward to file the writ petition seeking to quash the first respondent's communication made in its letter No.6245/B1/96-3, dated 15.10.1996 seeking to quash the said proceeding whereby it has confirmed the proceedings of the respondents 2 to 4 respectively dated 18.12.1991, 21.5.1993 and 8.9.1992 and to direct the respondents not to recover the tax on the maximum demand charges paid by the petitioner; that the petitioner has also filed the second writ petition above in W.P.No.12508 of 1997 for a Writ of Mandamus to be issued forbearing the respondents from recovering the maximum demand charges claimed by the Board.

11. The learned senior counsel would draw the attention of the Court to Section 2(9) of the Act wherein the term "price of energy" is defined. I extract the same:

"(9) "Price of energy" means the money consideration paid by a consumer to a licensee for the energy supplied by the licensee but does not include -

i)meter charges;

ii)interest on delayed payments;

iii)fuel surcharge; and

iv)fuse-off call charges and reconnection charges. Explanation:

(a) Where no energy at all has been consumed, minimum charges or fixed charges, as the case may be, shall not be deemed to be `price of energy'. (b) Where the number of units of energy actually consumed is less than the tariff minimum in respect of the consumer concerned `price of energy' shall mean only the price of energy actually consumed and not the minimum charges or fixed charges, as the case may be;

(c) For the period during which the Madras Electricity Supply ( Madras State Electricity Board and Licensees Areas) Surcharge Order, 1963, is in force, "price of energy" shall include that portion of the surcharge which bears to the total amounts of the surcharge leviable under the said Order, the same proportion as the amount of "overall charges" as defined in the Explanation to Clause 4 of the said Order, excluding the aggregate amount of the charges mentioned in items (i) to (iv) of this clause, bears to the total amount of the overall charge aforesaid."

12. The learned senior counsel would then focus his attention to Section 3 of the Act wherein the levy of tax on the consumption of energy and the rates on the basis of the price of energy consumed by the consumer for each category of High Tension Supply and Low Tension Supply have been provided for. Then the learned senior counsel would lay emphasis on Section 3(2) of the Act, which reads: "Where the energy supplied to a consumer is not determined by a meter, but is determined in accordance with any formula adopted by the licensee the electricity tax shall be calculated on the basis of the price of the energy determined in accordance with such formula."

13. The learned senior counsel would also lay emphasis on Section 5 (1) of the Act, which reads:

"5. Payment of electricity tax:

(1)Every licensee shall collect from the consumer and pay to the Government at the time and in the manner prescribed, the electricity tax payable under this Act in respect of the energy supplied by him to the consumer. The tax so payable shall be a first charge on the amounts recoverable by such licensee for the energy supplied by him and shall be a debt due by him to the Government."

14. The learned senior counsel would cite a judgment of the Apex Court delivered in M/S.NORTHERN INDIA IRON AND STEEL CO. ETC. vs. THE STATE OF HARYANA AND ANOTHER reported in A.I.R. 1976 S.C. 1100 wherein, in the context of Section 3 of the Punjab Electricity (Duty) Act, 1 958 and Rule 3(1) of the Punjab Electricity (Duty) Rules, 1958, the Honourable Apex Court has held:

"The electricity duty is chargeable on the price of energy supplied in a month. The price of energy in a two-part tariff system would mean and include the energy charge as also the demand charge. Therefore, the duty under the Duty Act is chargeable not only on the energy charge but also on the demand charge when the supply is governed by two-part tariff and it is chargeable on the actual amount of demand charge realisable from the consumer."

On such arguments and ultimately remarking that from September, 1991, the tax levy was 4 and the same from April 1994 is 5% which continues as on date, the learned senior counsel would pray to grant the reliefs sought for in both the writ petitions above.

15. On the contrary, reiterating the averments in the counter filed by respondents 3 to 5, the learned counsel for all the respondents would pray to dismiss both the above writ petitions.

16. In consideration of the pleadings by parties, having regard to the materials placed on record and upon hearing the learned counsel for both, what comes to be known is that the main order impugned in the writ petition is the letter from the Government communicated in Letter No.6245/B1/96-3, dated 15.10.1996, which has been sent to the petitioner as a reply to its letter dated 3.7.1996.

17. The petitioner has addressed the said letter dated 3.7.1996 to the first respondent thereby stating that `by the Tamil Nadu Electricity (Taxation on Consumption) Amendment Act, 1991 (Act 32 of 1991), the Tamil Nadu Government has amended the Tamil Nadu Electricity ( Taxation on Consumption) Act, 1962, effective from 1.9.1991, thereby introducing Section 3-A in the parent Act (Act 4 of 1962), whereby an additional tax on the consumption of energy calculated at 4 of the price of energy consumed is payable by the consumer every month i.e. on both energy consumed as metered and also on maximum demand' and further stating that they feel `that the levy of 4 tax on maximum demand is without authority of law and so illegal and arbitrary' and further stating that `the tax on consumption of electricity at 4 could be only on energy actually consumed as metered and not on maximum demand charges' they have requested the first respondent to issue favourable orders accordingly. But, the first respondent has issued the impugned letter thereby stating that `the representation (of the petitioner) for exclusion of maximum demand charges in the levy of additional tax on the price of energy cannot be complied with', thus rejecting the request of the petitioner.

18. Therefore, it is patent to the knowledge of the petitioner that by the Tamil Nadu Electricity (Taxation on Consumption) Amendment Act, 1991 (Act 32 of 1991), the Government of Tamil Nadu have amended the parent Act (Act 4/62) with effects from 1.9.1991 by introduction of Section 3-A. Even though from the point of view of the petitioner, the said amendment, which is the basis for such collection of enhanced levy of tax, is without authority of law and so illegal and arbitrary, they have not challeged the said provision of law, but are challenging only the communications of the respondents, which have been issued in adherence to the said provision of law. Therefore, so far as this provision of law providing the authority to the respondents to demand and collect such enhanced tax persists, the petitioner has no reason to loiter or get aggrieved of any su ch reply given by the Government as one which is impugned herein dated 15.10.1996, since the basis for the Government to make such reply rejecting the representation of the petitioner requesting for exclusion of tax on the maximum demand charges exists having derived the authority from the amended Section 3-A, which reads:

"3-A: Levy of additional tax on consumption of energy: (1)Save as otherwise provided in sub-section (1) of section 3, there shall be levied and paid to the Government every month, an additional tax on the consumption of energy calculated at the rate of four per centum of the price of energy consumed by the consumer:

Provided that no additional tax shall be levied under this subsection:

(a)on the energy consumed by any person for domestic connections including hut connections or for agricultural purposes; or (b)on the energy consumed by any person (other than a licensee) who consumes energy generated by himself.

(2)The additional tax under sub-section (1) shall be levied in addition to any tax payable on the consumption of energy levied and collected under sub-section (1) of section 3.

(3)The provisions of this Act shall apply in relation to the additional tax payable under sub-section (1) as they apply in relation to the tax payable under sub-section (1) of section 3."

19. It is not only the legislative intent to make such additional tax payable to the Government on the consumption of energy levied and collected under Section 3(1) of the Act, but also the enforcement of the statutory provision of law by the respondents in the manner it is shown in the communications made by all the respondents, which are impugned in the writ petition, are made beyond question. Therefore, suffice it to put in a nut-shell that unless the amended Act 32/91, whereby the parent Act 4/1962 has been amended to the effect of introducing Section 3-A is challenged, no such remedy as one sought for in the above writ petitions could either sustain or ordered accordingly.

20. In all respects, the above writ petitions seeking either to quash the proceedings of the first respondent dated 15.10.1996 thereby confirming the proceedings of the respondents No.2 to 4 or to forbear the respondents from recovering the tax on the maximum demand charges as claimed by the Tamil Nadu Electricity Board, does not merit acceptance and they only become liable to be dismissed. In result, both the above writ petitions do not ut merit acceptance and they are dismissed as such.

However, in the circumstances of the cases, there shall be no order as to costs.

Consequently, W.M.P.Nos.20122 and 20123 of 1997 are also dismissed.

Index: Yes/No

Index for internet: Yes/No

Rao

15.3.2002.

Sd./

ASSISTANT REGISTRAR

// TRUE COPY//

SUB ASSISTANT REGISTRAR

To

1.The Secretary & Commissioner

to Government, Energy (B1) Department,

Government of Tamil Nadu,

Fort St.George,

Chennai 600 009.

2.The Secretary & Commissioner

to Government,

Public Works Department,

Government of Tamil Nadu,

Fort St.George,

Chennai-600 009.

3.The Chief Electrical Inspector

to Government,

Thiru-vi-ka Industrial Estate,

Guindy, Chennai 600 032.

4.The Superintending Engineer,

Chidambaranar Electricity

Distribution Circle,

Beach Road,

Tuticorin 628 001.

5.The Superintending Engineer

Madras Electricity Distribution

Circle (North),

No.791, Anna Salai,

Chennai 600 002.

6.The Superintending Engineer,

Madras Electricity Distribution

Circle (South),

Chennai 600 002.

Rao

V.KANAGARAJ,J.

common order in Wps.12507

and

12508 of 1997 and WMPs.

15.3.2002.




Copyright

Reproduced in accordance with s52(q) of the Copyright Act 1957 (India) from judis.nic.in, indiacode.nic.in and other Indian High Court Websites

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