The High Court of Punjab and Haryana observed that electricity consumed by the Government of India cannot be subjected to tax by the State Government and directed the Punjab Government to refund a sum of Rs.4.57 lakh to the Union of India.
Brief Facts:
A writ petition was filed by the Union of India, against Punjab Government electricity body, Punjab State Electricity Board (PSEB) and other authorities seeking direction to the State Government to refund a sum of Rs.4,57,342 along with interest which was collected from a department (MES) under Ministry of Defence, Union Government on purchasing the electricity.
Contentions of the Petitioner:
The learned counsel appearing on behalf of the petitioner submitted that in view of Article 287 of the Constitution of India, the respondent could not charge octroi from the petitioner. The respondent, during the period in question, supplied electricity to other Central Government Organizations like Diesel Locomotive Works, Patiala, but octroi was not charged; however, the petitioner, who is part of the Ministry of Defence, was subjected to octroi duty. The respondent has wrongly and in violation of Article 287 of the Constitution of India, collected octroi from the petitioner.
Contentions of the Respondent:
The learned counsel appearing on behalf of the respondent submitted that they have collected octroi from the petitioner; however, they further deposited with the municipal committee. The refund, if any, can be granted by the municipal committee. Further, the DAG submitted that PSEB brought electricity within municipal limits and paid octroi. It was PSEB which had collected and deposited octroi. The PSEB, as per its contract, collected octroi from a few Government departments, though it did not from other departments and further stated that the state does not dispute the fact that as per Article 287 of the Constitution of India, octroi was not payable on the sale of electricity to Government of India, however, State is not responsible for payment of octroi to PSEB.
Observations of the court:
The court stated that the the petitioner is an integral part of the Government of India, and it petitioner purchased electricity from PSEB-respondent No.1, which was utilised in the cantonment area. Respondent No.1, along with charges of electricity, collected octroi and deposited them with the local body. The amount collected by respondent No.1 is with the local body. The respondent has abolished octroi and it is no more payable after 2007.
Further, the court stated that Article 287 of the Constitution of India specifically provides that save as otherwise provided by Parliament by law, no law of a State shall impose or authorise the imposition of tax on the consumption or sale of electricity which is consumed by Government of India, or sold to the Government of India for consumption by that Government and observed that it is quite evident that electricity consumed by Government of India cannot be subjected to tax by State Government.
It was further stated that the petitioner is part of the Government of India, and it has purchased electricity for its consumption. In view of Article 287, the respondent could not charge octroi on the sale of electricity; still respondent has recovered octroi from the petitioner. The respondent has conceded that Octroi was not charged with respect to the sale of electricity to other Government departments. The respondents are shifting responsibility from one shoulder to another. Respondent No.1, i.e. PSEB, is also a State Government Undertaking. Despite knowing the fact that the sale of electricity to the Government of India cannot be subjected to tax, respondent No.1 collected octroi and deposited it with the local body, and the act of the respondent was in violation of Article 287 of the Constitution of India.
The decision of the Court:
The court allowed the petition and directed the respondent to refund a sum of Rs.4,57,342/- to the petitioner within 08 weeks.
Case Title: Union of India vs. Punjab State Electricity Board and Ors.
Coram: Hon’ble Mr Justice Sanjeev Prakash Sharma and Hon’ble Mr Justice Jagmohan Bansal
Case No.: CWP-4763-2007 (O&M)
Advocate for the Petitioner: Mr. Tajeshwar Singh Sullar
Advocate for the Respondent: Mr. P.S. Thiara and Mr. Bhuvnesh Satija
Read Judgment @LatestLaws.com
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