Jharkhand High Court
M/S. Usha Martin Limited vs The State Of Jharkhand on 4 May, 2022
1
IN THE HIGH COURT OF JHARKHAND AT RANCHI
W.P. (T) No. 2018 of 2020
With
W.P.(T) No. 2148 of 2020
With
W.P.(T) No. 2153 of 2020
With
W.P.(T) No. 2157 of 2020
With
W.P.(T) No. 2273 of 2020
M/s. Usha Martin Limited ...... Petitioner (in all the writ petitions)
Versus
1. The State of Jharkhand, through the Secretary-cum-Commissioner,
Commercial Taxes Department, having its office at Project Building, Dhurwa,
P.O. and P.S. Dhurwa, Ranchi 834 004, District Ranchi.
2. Joint Commissioner of Commercial Taxes (Administration), Jamshedpur
Division, Jamshedpur, P.O. and P.S. Sakchi, Town Jamshedpur, District East
Singhbhum.
3. Deputy Commissioner of Commercial Taxes, Adityapur Circle,
Jamshedpur, having its office at Sakchi, P.O. and P.S. Sakchi, Town Jamshedpur,
District East Singhbhum. .... Respondents (in all the writ petitions)
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CORAM : Hon'ble Mr. Justice Aparesh Kumar Singh
Hon'ble Mr. Justice Deepak Roshan
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For the Petitioner : Mr. Kavin Gulati, Sr. Advocate
: Mr. Sumeet Gadodia, Adv.
: Mrs. Shilpi Sandil, Adv.
: Mr. Ranjeet Kushwaha, Adv.
(in W.P.(T) 2018/2020)
For the Petitioner : Mr. Sumeet Gadodia, Advocate,
: Mrs. Shilpi Sandil, Adv.
: Mr. Ranjeet Kushwaha, Adv.
(in W.P.(T) 2148/2020, W.P.(T) 2153/2020,
W.P.(T) 2157/2020 and W.P.(T) No. 2273/2020)
For the State : Mr. Sachin Kumar, AAG-II (in all cases)
: Mrs. Suruchi Kumari, Adv.
--------
11 /04.05.2022
Per Deepak Roshan, J: Heard learned counsel for the parties.
2. This present batch of writ petitions involve identical questions of law and
facts and are decided together by this common order. Writ Petitions, being
W.P.(T) No. 2153 of 2020 relates to Assessment Year 2009-10, W.P.(T) No. 2148
of 2020 relates to Assessment Year 2010-11, W.P.(T) No. 2157 of 2020 relates to
Assessment Year 2011-12, W.P.(T) No. 2019 of 2020 relates to Assessment Year
2012-13 and W.P.(T) No. 2273 of 2020 relates to Assessment Year 2013-14.
Common Appellate Order dated 20.01.2015 has been passed pertaining to the
Assessment Years 2009-10, 2010-11 and 2011-12 and common Revisional Order
has been passed by Commercial Taxes Tribunal also in respect of the
aforementioned Assessment Years. With respect to the Assessment Years
pertaining to 2012-13 and 2013-14, learned Commercial Taxes Tribunal and
learned Appellate Court have passed respective separate orders. Challenge in the
present writ applications relates to the orders passed by Commercial Taxes
Tribunal which are all dated 29.01.2020 passed in Revision Petitions Nos. JR (ED)
106/2015, JR (ED)107/2015, JR(ED)108/15, JR(ED) 109/15 and JR (ED) 40/2017
for the periods 2009-10, 2010-11, 2011-12, 2012-13 and 2013-14 respectively.
3. With the consent of the parties, Writ Petition bearing W.P.(T) No. 2018 of
2020 pertaining to the Assessment Year 2012-13 has been treated as the lead
matter and since the facts in all the writ petitions are common and identical, the
facts pertaining to W.P.(T) No. 2018 of 2020 is enumerated hereinafter which
would govern the other writ petitions also.
Factual Matrix
4. The petitioner is a Company registered under the Companies Act, 1956,
and it has several industrial units including mines in the State of Jharkhand. The
present disputes pertains to its Steel Alloys Manufacturing Unit at Gamharia,
wherein the petitioner has established captive power generation plants and benefit
of exemption from payment of electricity duty to the petitioner has been denied in
respect of its 30MW captive power plant having date of commercial production on
4th May, 2009.
5. The petitioner in respect of its captive power generation plants was an
assessee under the Bihar State Electricity Duty Act, 1948 (as adopted by the State
of Jharkhand) and was liable to pay electricity duty on the units of electricity
generated and consumed by the petitioner in its industrial unit.
6. The petitioner initially established a 3MW captive power generation plant,
and, in terms of clause 9.2 of the Bihar Industrial Policy, 1955 read with
Notification No. S.O. 485 dated 22.12.1995, exemption was granted to the said
captive power generation plant of 3MW for a period of five years from payment of
electricity duty i.e. for the period 31.03.1997 to 30.03.2002.
7. While the petitioner was enjoying the benefit of exemption from payment
of electricity duty in respect of its aforesaid 3MW captive power generation plant,
State of Jharkhand was created with effect from 15.11.2000 and State of
Jharkhand promulgated Jharkhand Industrial Policy, 2001 on 25.08.2001 which
was initially valid from 15.11.2000 to 31.03.2005. Vide clause 15.2.2 of the
Industrial Policy, complete exemption was provided to captive power generation
plants (for short CPP) from payment of electricity duty for a period of 10 years
from the date of commercial production. Petitioner pursuant to the said promise
extended by the State of Jharkhand established a 25MW captive power generation
plant which commenced commercial production of 26.03.2002. In terms of the
clause 15.2.2 of the Industrial Policy, petitioner was extended the benefit of
exemption from payment of electricity duty on captive power generated from the
said 25 MW CPP with effect from 26.03.2002 to 25.03.2012.
8. It may be noted herein that clause 36.2 of the Policy provided, inter alia,
for issuance of follow-up notifications by all concerned departments and
institutions to give effect to the provisions of the Policy within 30 days of
declaration of the Policy and, accordingly, a follow-up notification bearing
Notification No. S.O. 70 dated 17.07.2004 was issued by the Secretary,
Department of Commercial Taxes and National Savings, wherein in exercise of
powers under Section 9 of the Electricity Duty Act, 1948, exemption from
payment of electricity duty for a period of 10 years in respect of captive power
generation from CPPs which came into commercial production during the
subsistence of Policy was notified. Since the industrial policy came into operation
from 15.11.2000 and was initially valid up to 31.03.2005, in the aforesaid
notification it was provided that exemption from payment of electricity duty
would be granted to such captive power generation plants which came into
commercial production between the period 15.11.2000 to 31.03.2005.
9. Petitioner further during the subsistence of the Policy of 2001 established a
10MW captive power generation plant which commenced commercial production
on 15.11.2004. The said captive power generation plant was also extended the
benefit of exemption for a period of 10 years from 15.11.2004 to 14.11.2014 on
the electricity generated. It may be noted here that the petitioner has already
availed the benefit of exemption in respect of its 25 MW CPP & 10 MW CPP for
10 years in terms of clause 15.2.2 of the Industrial Policy.
10. Petitioner further established a 30 MW CPP having date of commercial
production on 4th May, 2009. Admittedly, the currency of the Industrial Policy,
2001 which was initially valid up to 31.03.2005 was extended from time to time
and remained valid up to 31.03.2011 and the 3rd plant being 30 MW CPP of the
petitioner was established during the subsistence of the Industrial Policy. The date
of commercial production of said 30 MW CPP was 4th May, 2009 and there is no
dispute in respect of the aforesaid date of commercial production.
11. Despite the aforesaid, the benefit of exemption under the Industrial Policy
was denied by the Assessing Officer while passing the assessment order dated
23.07.2014 by primarily relying upon Notification No. S.O. 70 dated 17.07.2004
by recording, inter alia, that the benefit of exemption is only available to those
CPPs which have been set up between the period 15.11.2000 to 31.03.2005 as per
the Notification.
12. Petitioner-company being aggrieved by the assessment order, preferred
Appeal before the Joint Commissioner of Commercial Taxes (Appeal),
Jamshedpur Division, Jamshedpur and Petitioner also filed a writ application
being W.P. (T) No. 1155/2015 before this Court seeking direction upon
Respondent-State to give effect to the provisions of 2001 Policy and/or extending
the validity of Notification dated 17.07.2004 up to 31.03.2011. The said writ
application was preferred on the premise that although Respondent-State of
Jharkhand extended the validity of the Industrial Policy, 2001 up to 31st March
2011 but the corresponding follow up Notification being S.O. 70 dated 17.07.2004
was not suitably amended to extent the validity of exemption in respect of captive
power generation plants established up to 31st March, 2011.
13. During the pendency of the aforesaid writ application the learned Appellate
Authority vide order dated 13.02.2015 dismissed the Appeal of the petitioner by
primarily again relying upon Notification No. S.O. 70 dated 17.07.2004. The
Appellate Authority further held that in terms of Notification No. S.O. 70 dated
17.07.2004 petitioner was also required to furnish certificate evidencing date of
commercial production issued by the Director of Industries which was also not
produced by Petitioner and, hence, petitioner cannot be extended the benefit of
exemption. Being aggrieved by the order passed by the Appellate Authority,
petitioner preferred statutory Revision Application before the Commercial Taxes
Tribunal. During the pendency of the Revision Application State of Jharkhand
vide Notification No. S.O. 78 dated 26.03.2015 amended Notification S.O. No. 70
dated 17.07.2004 and validity period of the Notification was extended up to
31.03.2011. Accordingly, the Writ Petition filed by the petitioner before this Court
being W.P.(T) No. 1155 of 2015 was disposed of by giving liberty to avail
appropriate remedy.
14. It may be noted here that during pendency of Revision Application
petitioner entered into a Business Transfer Agreement on 22.09.2018 with 'Tata
Steel Limited', wherein decision was taken for sell and/or transfer the petitioner's
steel business including an operative iron ore mines, a coal mine under
development, CPPs and plant and machinery to Tata Steel Limited. The closing
date of transfer of steel business including CPPs and plant and machinery was 9 th
April, 2019 and closing date for transfer of iron ore and coal mines was 3rd July,
2019. It is an admitted fact that the said Business Transfer Agreement and the
consequential transactions entered between the petitioner and Tata Steel Limited
specifically envisaged that certain litigations, especially pertaining to taxation will
not be applicable to the continuing company i.e. Tata Steel Limited, and, would
continue to be the liability of the petitioner.
15. Petitioner even fulfilled all statutorily obligations regarding transfer of its
steel business including iron ore and coal mines to Tata Steel Limited and the
transfer of petitioner's business was widely published in newspapers and petitioner
even gave due intimation as per SEBI Regulations to the National Stock Exchange
of India about transfer of its steel business. Petitioner even applied under Section
281 of the Income Tax Act seeking permission of transfer of its assets. It may be
noted that by virtue of subsequent Agreement executed between Petitioner and
Tata Steel Limited and Tata Sponge Iron Limited, Tata Steel Limited was
substituted by Tata Sponge Iron Limited and the said entity Tata Sponge Iron
Limited even intimated vide its letter dated 12.04.2019 to the State Tax
Authorities regarding transfer of steel business which included the CPPs.
16. State Tax Authorities never disputed the transaction pertaining to Business
Transfer Agreement and the State Authorities were fully aware that liability
towards payment of electricity duty on exemption being denied on 30 MW CPP
still continued with the Petitioner and, in fact, State authorities even issued
garnishee notice's dated 17.06.2019 against petitioner for realizing of the disputed
tax amount and even realized a part of the disputed tax amount from the petitioner.
Even before this Court, Respondent-State has not disputed the fact about the
knowledge of Business Transfer Agreement, including the fact that past liabilities
were to be borne by petitioner itself.
17. It is significant to note here that petitioner during the pendency of the
Revision Application applied before the Director of Industries for issuance of
certificate of commercial production and even the said certificate of commercial
production was issued by the Director of Industries on 27.09.2019 evidencing that
30 MW CPP of the petitioner was established and commenced commercial
production with effect from 4th May, 2009.
18. Thus, during the pendency of the Revision Application before the
Commercial Taxes Tribunal the twin conditions imposed by the State Authorities
for availment of the benefit of exemption was duly fulfilled as the validity of
Notification S.O. 70 dated 17.07.2004 was extended up to 31.03.2011 and even
the petitioner produced the certificate of commercial production issued by Director
of Industries evidencing the date of commercial production of 30 MW CPP. It is
relevant to mention here that the State of Jharkhand neither before the Commercial
Taxes Tribunal nor before this Hon'ble Court disputed the factum of issuance of
certificate of commercial production by the Director of Industries to the petitioner.
19. However, despite the fact that petitioner fulfilled the aforesaid twin
conditions, Commercial Taxes Tribunal vide its impugned orders all dated
29.01.2020 dismissed the Revision Application of the petitioner. The learned
Tribunal despite issuance of Notification dated 26.03.2015 by which the validity
of earlier Notification S.S. 70 dated 17.07.2004 was extended up to 31.03.2011,
held that the benefit of exemption would not be automatically effective in the case
of the petitioner merely because a subsequent Notification has been issued
extending the validity of the period of exemption. Further, the Tribunal despite no
objections being raised by the State of Jharkhand regarding validity of the
certificate of commercial production, doubted the genuinity of the said certificate
by recording, inter alia, that enquiry report of team of industries department was
not enclosed with the certificate. Further, Tribunal drew an adverse inference
against the petitioner on the ground that the petitioner failed to inform the Tribunal
about its Business Transfer Agreement entered with Tata Steel Limited and held
petitioner guilty of suppressing important facts and consequently denied to grant
relief to the Petitioner. Accordingly, the Revision Petitions were dismissed and the
present batch of writ applications have been preferred by the petitioner against the
said impugned orders.
20. In the present batch of Writ Petitions, Counter Affidavits have been filed by
Respondent-State of Jharkhand wherein, Respondent-State in substance has not
supported the reasoning given by the Commercial Taxes Tribunal in dismissing
the Revision Application of the petitioner. The Respondents in their Counter
Affidavit have not denied the fact that the validity of the period of exemption was
extended by amending Notification No. 70 dated 17.07.2004 and even genuinity of
the certificate issued by the Director of Industries was not questioned. However,
interestingly, in the Counter Affidavit, a complete new plea has been raised
stating, inter alia, that benefit of exemption under the Industrial Policy, 2001 can
be granted only to one CPP established during the tenure of the Policy and, on the
said basis, it has been contended that Petitioner was entitled for benefit in respect
of its 25 MW CPP only and subsequent establishment of CPPs by the petitioner of
10 MW and 30 MW were not entitled for exemption.
21. We have heard the counsel for the petitioner, Mr. Kavin Gulati, Senior
Advocate and Mr. Sumeet Gadodia, Advocate assisted by Ms. Shilpi Sandil and
Mr. Ranjeet Kushwaha, Advocates. The learned Counsels for the petitioner have
emphatically argued that the petitioner was entitled for the benefit of exemption
from payment of electricity duty in respect of its 30 MW CPP in terms of clause
15.2.2 of the Industrial Policy, 2001 and denial of such benefit to the petitioner is
violative of the doctrine of promissory estoppel and legitimate expectation. The
petitioner further while relying upon the decisions of Hon'ble Apex Court in the
case of Mohindhr Singh Gil & Anr. v. Chief Election Commissioner, New Delhi
& Ors, reported in 1978 (1) SCC 405 and the decision of United Air Travel
Services vs. Union of India reported in (2018) 8 SCC 141 have vehemently
contended that Respondent-authorities cannot supplement fresh reasons in the
shape of affidavit to otherwise validate the impugned orders. The learned
Advocates have further argued that even if assuming that State-Respondents can
supplement fresh reasons, then also, on merits the said reasons stated by the
Respondent-State in its Counter Affidavit is not tenable both in facts and/or in law.
22. Mr. Kavin Gulati, Senior Advocate drew attention of this Court towards the
provisions of the Industrial Policy, 2001 and has emphasized that under the
Industrial Policy, 2001 various types of incentives were stipulated including
incentives to encourage establishment of capital infrastructure as well as fiscal
incentives. While placing reliance upon Clause 3(16), Clause 15.1, Clause 15.2.1
and Clause 15.2.2 it was argued that Industrial Policy, 2001 emphasized on
establishment of small power generating units and developing non-conventional
source of energy through private participation and it is in the said background
Clause 15.2.2 was incorporated to encourage private sector in setting up of captive
power generation plants to meet the existing as well as future demand of power. It
was emphasized that the benefit of exemption from electricity duty is provided on
'captive power generation' and Clause 15.2.2 does not even remotely suggests that
such exemption is limited to only one CPP established by industrial unit.
23. Per contra, Mr. Sachin Kumar, learned AAG-II while referring to the
Counter Affidavit argued that Industrial Policy, 2001 only contemplated providing
benefit of an 'industrial unit' only 'once'. It was submitted that petitioner had only
one new CPP Unit of 25 MW and subsequent additions will be treated as
expansion of the existing unit and not a new unit. Hence, 10 MW and 30 MW
CPPs are not 'new units' and not eligible for exemption. Further, while relying
upon Notification S.O. 70 dated 17.07.2004, it was contended that the said
Notification uses the term 'plant' and not 'plants' and, thus, it was argued that the
subsequent establishments of 10 MW and 30 MW CPPs cannot be granted the
benefit of exemption. Reliance was placed upon Clause 29.2 of the Industrial
Policy to contend that incentives under the policy is admissible only once to a unit
which comes into the commercial production during the period Policy remains
effective. Further, reliance was placed to the definition of 'industrial unit' /
'industrial concern' and the definition of 'expansion/modernization/
diversification' as contained in Annexure-1 of the Policy to contend inter alia that
10 MW and 30 MW CPPs were an expansion to 25 MW CPP already established
by the Petitioner and the Petitioner in order to avail the benefit of exemption was
required to send prior intimation to the Director of Industries before undertaking
expansion. However, Mr. Sachin Kumar, learned AAG-II fairly submitted that the
findings of the learned Tribunal regarding concealment of material facts and
certificate issued by Director of Industries was unwarranted, as the State of
Jharkhand never disputed the aforesaid factum before the Tribunal. In fact, it was
suggested by the learned Counsel for the Respondent that since the claim of
exemption of the petitioner was rejected on the ground that S.O. 70 dated
17.07.2004 was only initially valid up to 31.03.2005 and further that Petitioner
failed to produce the commercial production certificate by Director of Industries,
and, since both the said grounds are now non-existent, the matter may be
remanded to the Assessing Authority for passing order afresh in accordance with
law and it would be left for the Assessing Authority to determine afresh whether
benefit of exemption for 10MW and 30 MW CPPs would be available to the
petitioner or not in terms of Industrial Policy, 2001.
24. Having heard learned counsel for the parties and after going through the
documents available on record especially the industrial policy, only issue involved
in the present batch of writ petitions is as to 'Whether petitioner is entitled for
the benefit of exemption from payment of electricity duty for a period of ten
years from the date of commercial production of its 30 MW Captive Power
Generation Plant in terms of Clause 15.2.2 of the Industrial Policy-2001?'
25. The State of Jharkhand was created with effect from 15th November, 2000
vide Bihar Reorganization Act, 2000 , and, immediately after its creation, the State
of Jharkhand promulgated Industrial Policy, 2001.Vide Clause 2.0 "Objectives" to
be achieved by the Industrial Policy was enshrined and it was provided, inter alia,
that the Industrial Policy aims at making Jharkhand one of the most preferred
destination for investment, both from inside and outside the country and to ensure
accelerated implementation of infrastructure related projects, increasing
employment opportunities, improving productivity, ensuring homogenous and
balanced development of all Geographical regions of the State with emphasis on
development of small, tiny and cottage industries.
26. Further, Clause 3 of the Industrial Policy enumerated the "strategies" to be
adopted for achieving the objectives of the Industrial Policy and vide Clause 3.1
(xvi), "Emphasis on small power generating units and developing non-
conventional sources of energy through private participation" was noted as one of
the strategies for achieving the objectives of the Policy.
27. A holistic reading of the Policy would reveal that the Policy identified
various sectors including Infrastructure facilities which were required to be boost
up to ensure that the newly created State of Jharkhand optimally utilizes its
available resources in a planned manner to accelerate industrial development of
the State. Clause 15 of the Policy recognized 'Power' as the lifeline for industrial
development of the State and the said Clause clearly recognized that development
of Power Sector is to be given highest priority in the State's economic planning to
bridge the gap between demand and supply. It is in the said background vide
Clause 15.2 of the Industrial Policy various encouragements were stipulated and
promised which included 'Private Sector Participation' in generation and
distribution of power and establishment of 'Captive Power Generation units'.
Clause 15.2.2 of the Policy, which is the subject matter of interpretation is quoted
herein-under:-
"15.2.2 CAPTIVE POWER GENERATION
The Government would encourage private sector in setting up of
Captive Power Generation Plants of any capacity to meet the existing
as well as future demand for power of industrial units. For setting up
such power generation unit, no permission from SEB shall be
required. The surplus power generated by such plant could also be
purchased by the State Electricity Board on mutually agreed terms.
The State Electricity Board shall allow wheeling and banking to such
power plants. Large industrial unit/consortium of industrial
enterprises in growth centers/industrial areas shall be allowed to set
up power generating units as well as to take over distribution of power
in such industrial complexes. Such captive power generation and
purchase shall be provided exemption from electricity duty for a
period of ten years from the date of commercial production."
28. A bare perusal of the aforesaid Clause would reveal as under:-
(i) The Government was encouraging private sectors in setting up of
Captive Power Generation Plants of any capacity to meet the existing
as well as future demand for power of Industrial Unit.
(ii) No permission from SEB was required for setting up Power
Generating Units.
(iii) Surplus Power could also be purchased by SEB.
(iv) SEB was to allow wheeling and banking to such Power Plants.
(v) Large Industrial Units etc. was permitted to set up Power Generating
Units as well as to take distribution of power in such Industrial
Complexes.
(vi) Such Captive Power Generation and purchase was to be provided
exemption from electricity duty for a period of 10 years from the date
of commercial production.
29. Thus, the bare reading of Clause 15.2.2 leaves no iota of doubt that State
Government was keen to encourage private sectors to establish such number of
CPPs as would be required by it to meet the existing and future demand of its
Industrial units. Even generation of surplus energy through CPPs could have been
purchased by SEB from private sectors. This clear emphasis on establishment of
CPPs was to fulfill the dual objective to be achieved by the State Government,
namely, to ensure that industries situated in the State are not starved of power and,
further, if CPPs are encouraged and established by private sector, State resources
towards supply of power can be utilized to supply power to other sectors/industrial
units which could not establish CPPs. It is with the said avowed objective, it was
clearly stipulated in the Policy that power generated from such CPPs would be
exempted from payment of electricity duty for a period of 10 years from the date
of commercial production.
30. Clause 36.2 of the Industrial Policy provided for issuance of follow-up
notifications to give effect to the provisions of the Policy by concerned
departments/institutions. Clause 36.2, for ready reference, is quoted :-
"36.2 All concerned departments and institutions shall issue follow-up
notifications to give effect to the provisions of this policy within 30 days of
declaration of this policy."
31. In order to give effect to Clause 15.2.2 of the Industrial Policy, Commercial
Tax Department issued a follow-up notification vide Notification S.O. 70 dated
17.07.2004, wherein in exercise of power under Section 9 of the Bihar Electricity
Duty Act, 1948, exemption was provided from payment of electricity duty in
respect of Captive Power Generation Plant established between the period
15.11.2000 to 31.03.2005 for a period of ten years. However, in the said
notification, an additional condition, not stipulated in the Policy, was inserted
regarding obtaining a Certificate of Commercial Production from the Director of
Industries. The period of exemption was limited up to 31.03.2005 in the follow up
Notification as, initially, the Policy was only valid up to 31.03.2005. However, the
Policy was subsequently extended from time to time and was extended up to
31.03.2011 but validity of the Notification dated 17.07.2004 was not extended up
to 31.03.2011 in terms of the Industrial Policy, which compelled the Petitioner to
approach this Court by filing writ petition being W.P.(T) No. 1155 of 2015, and, it
is only thereafter that Notification S.O. 70 dated 17.07.2004 was amended and the
validity period was extended up to 31.03.2011 vide Notification No. 78 dated
26.03.2015.
32. It is an admitted fact that Petitioner has established 25 MW and 10 MW
CPPs on 26.03.2002 and 15.11.2004 respectively, and, since the said CPPs were
established before 31.03.2005, Respondent-State of Jharkhand extended the
benefit of exemption from payment of electricity duty to said CPPs for a period of
10 years, which has already been availed by the petitioner. However, to the utter
dismay of the petitioner, the petitioner was denied the benefit of exemption of 30
MW CPP having date of commercial production on 4th May, 2009 by the
Assessing Officer and Appellate Authority on the ground that follow-up
notification only provided for exemption to CPPs having commercial production
before 31st March, 2005 and not thereafter. Even an additional ground of
production of Certificate of Commercial Production from Director of Industries
was taken by the Appellate Authority for denying the benefit of exemption.
33. Thus, due to the lethargy of the officers of State of Jharkhand in not
extending the validity of the Notification consequent upon extension of the period
of Industrial Policy, Petitioner has been dragged into unnecessary litigation. The
Hon'ble Supreme Court, in the case of Manuelsons Hotels Pvt. Ltd. Vs. State of
Kerala & Ors., reported in (2016) 6 SCC 766, has held as under:-
"36. In the present case, it is clear that no writ of mandamus is being issued to
the executive to frame a body of rules or regulations which would be subordinate
legislation in the nature of primary legislation (being general rules of conduct
which would apply to those bound by them). On the facts of the present case, a
discretionary power has to be exercise on facts under Section 3-A of the Kerala
Building Tax Act, 1975. The non-exercise of such discretionary power is clearly
vitiated on account of the application of the doctrine of promissory estoppel in
terms of this Court's judgments in Motilal Padampat and Nestle. This is for the
reason that non-exercise of such power is itself an arbitrary act which is vitiated
by non-application of mind to relevant facts, namely, the fact that a G.O. dated
11-7-1986 specifically provided for exemption from building tax if hotels were to
be set up in the State of Kerala pursuant to the representation made in the said
G.O. True, no mandamus could issue to the legislature to amend the Kerala
Building Tax Act, 1975, for that would necessarily involve the judiciary in
transgressing into a forbidden field under the constitutional scheme of separation
of powers. However, on facts, we find that Section 3-A was, in fact, enacted by the
Kerala Legislature by suitably amending the Kerrala Building Tax Act, 1975 on
6-11-1990 in order to give effect to the representation made by the G.O. dated 11-
7-1986. We find that the said provision continued on the statute book and was
deleted only with effect from 1-3-1993. This would make it clear that from 6-11-
1990 to 1-3-1993, the power to grant exemption from building tax was statutorily
conferred by Section 3-A on the Government. And we have seen that the Statement
of Objects and Reasons for introducing Section 3-A expressly states that the said
section was introduced in order to fulfill one of the promises contained in the
G.O. dated 11-7-1986. We find that the appellants, having relied on the said G.O.
dated 11-7-1986, had, in fact, constructed a hotel building by 1991. It is clear,
therefore, that the non-issuance of a notification under Section 3-A was an
arbitrary act of the Government which must be remedied by application of the
doctrine of promissory estoppel, as has been held by us hereinabove. The
ministerial act of non-issue of the notification cannot possible stand in the way of
the appellants getting relief under the said doctrine for it would be
unconscionable on the part of the Government to get away without fulfilling its
promise. It is also an admitted fact that no other consideration of overwhelming
public interest exists in order that the Government be justified in resiling from its
promise. The relief that must, therefore, be moulded on the facts of the present
case is that for the period that Section 3-A was in force, no building tax is payable
by the appellants. However, for the period post 1-3-1993, no statutory provision
for the grant of exemption being available, it is clear that no relief can be given to
the appellants as the doctrine of promissory estoppel must yield when it is found
that it would be contrary to statute to grant such relief. To the extent indicated
above, therefore, we are of the view that no building tax can be levied or collected
from the appellants in the facts of the present case. Consequently, we allow the
appeal to the extent indicated above and set aside the judgment of the High
Court." ...Emphasis Supplied.
34. The aforesaid decision has been further followed recently by the Hon'ble
Supreme Court in the case of State of Jharkhand and ors Vs. Brahmaputra
Metallics Ltd., reported in 2020 SCC OnLine SC 968. The said decision arose in
respect of Jharkhand Industrial Policy, 2012, wherein the State of Jharkhand again
delayed in issuing follow-up Notification under the Industrial Policy, 2012 for
extending the benefit of exemption of electricity duty. The Hon'ble Apex Court, in
the aforesaid decision, has, in detail, enumerated the doctrine of promissory
estoppel and legitimate expectation and held that the State having held out solemn
representation in its Industrial Policy acted in a manifest unfair and arbitrary
manner to deprive Industrial units within the State of their legitimate entitlement
by delay in issuing the Notification. The Hon'ble Supreme Court, in Para-53 of its
report, held as under:-
"53.......The State must discard the colonial notion that it is a sovereign handing
out doles at its will. Its policies give rise to legitimate expectations that the state
will act according to what it puts forth in the public realm. In all its actions, the
State is bound to act fairly, in a transparent manner. This is an elementary
requirement of the guarantee against arbitrary state action which Article 14 of
the Constitution adopts. A deprivation of the entitlement of private citizens and
private business must be proportional to a requirement grounded in public
interest...." ... Emphasis Supplied
35. The case of the present Petitioner is squarely covered by the aforesaid
decision of the Hon'ble Apex Court, as under the Industrial Policy, 2001, there
was a solemn promise extended by State of Jharkhand that generation of electricity
from CPPs would be exempted from payment of electricity duty for a period of 10
years from the date of its commercial production. Merely because the State
authorities delayed in issuance of the follow up Notifications, the Petitioner could
not be deprived of its legitimate entitlement of exemption in respect of its 30 MW
CPP.
36. In view of the above, we are of the firm opinion that both, the Assessing
Authority and the Appellate Authority, have wrongly denied the benefit of
exemption to the Petitioner in respect of its 30 MW CPP on the ground that
validity of Notification SO 70 dated 17.07.2004 was not extended and, further,
that the petitioner did not produce the Certificate of Commercial Production from
Director of Industries despite the fact that there was no dispute that Petitioner's 30
MW CPP was established on 04.05.2009 i.e. during subsistence of the Industrial
Policy-2001.
37. The learned Tribunal has further committed grave error in upholding the
decision of the Assessing Authority and the Appellate Authority and declining the
benefit of exemption to the petitioner. As already stated above, during pendency of
the revision application before the Commercial Taxes Tribunal, validity of the
Notification SO 70 dated 17.07.2004 was already extended by the State of
Jharkhand up to 31st March, 2011 and the petitioner obtained the Certificate of
Commercial Production from Director of Industries on 27.09.2019 and even
produced the same before the Tribunal. Despite the said fact, learned Tribunal, on
being primarily influenced by the fact that Petitioner sold its Steel business along
with its CPP, through Business Transfer Agreement, dismissed the revision
petition of the petitioner by declaring that Petitioner is guilty of suppression of
material fact.
38. The finding rendered by the Tribunal that petitioner has concealed material
facts before it and is guilty of suppression, is perverse. Respondent-State of
Jharkhand, before the Tribunal, raised no objection regarding subsequent transfer
of Steel Alloys Manufacturing Plant including CPPs of the Petitioner in favour of
Tata Steel Ltd. as the State Government was aware that all tax liabilities arising
prior to or relating to the period prior to the closing date continued and remained
the liability and responsibility of the petitioner and, thus, transfer of the Industrial
undertaking of the petitioner during pendency of the revision application has no
relevance at all to the dispute pending before the Tribunal. However, despite the
aforesaid facts, learned Tribunal, suo moto, without any objection being raised by
the State of Jharkhand, held that petitioner was guilty of concealment of material
fact, and, thus, thereby clearly exceeded its jurisdiction in dismissing the revision
application of the petitioner.
39. The Hon'ble Apex Court, in the case of SACI Allied Products Ltd, UP.
Vs. Commissioner of Central Excise, Meerut, reported in (2005) 7 SCC 159, has
held as under :-
"15. The Appellate Tribunal, by the impugned order, has upheld the order of
the respondent Collector, however, on a totally new and different basis which was
never the case of the Department either in the show-cause notice or in the
impugned order. The Appellate Tribunal, in the impugned order, has held as
under:
"All the wholesale dealers and all the wholesale buyers in the whole of the
country would not be taken to form a single class of buyers. M/s SACI and
SCIL were related persons. M/s SACI sold their goods in the State of U.P.
through SCIL and no direct sales were effected by SACI in the State of
U.P. Seen in the light of the Tribunal's decision in the case of Goranmal
Hari Ram Ltd., the prices at which SCIL were disposing of the goods of
SACI in the State of U.P. had been correctly taken as the normal price for
determining the duty liability of SACI under Section 4 of the Act".
"17. In this context, we may usefully refer to the judgment of this Court in the
case of Reckitt & Colman of India Ltd. v. CCE. This Court held that it is beyond
the competence of the Tribunal to make out in favour of the Revenue a case which
the Revenue had never canvassed and which the appellants had never been
required to meet." ... Emphasis Supplied.
40. The learned Tribunal further rendered perverse finding and wrongly held
that benefit of Notification dated 26.03.2015, by which validity of the Notification
SO 70 dated 17.07.2004 was extended up to 31.03.2011, would not be
automatically applicable in the case of the petitioner. We see no justification and
are unable to comprehend as to why benefit of exemption would not have been
applicable to the petitioner especially when Respondent-State of Jharkhand itself
extended the validity of the exemption notification up to 31.03.2011. Thus, the
said finding of the Tribunal cannot be countenanced either in law or in facts.
41. The learned Tribunal further committed grave error in rejecting the
Certificate of Commercial Production dated 27.09.2019 produced by the petitioner
before the Tribunal, by holding that the enquiry report of the team of Industries
Department was not enclosed with the Certificate. The Respondent-State of
Jharkhand, before the Tribunal never questioned the genuinity and validity of the
said Certificate, but despite the said fact, learned Tribunal discarded the said
Certificate on the above erroneous reason that said Certificate does not enclose the
enquiry report. It appears that learned Tribunal was primarily swayed with the fact
that petitioner sold its Steel business and CPPs and was, thus, guilty of
concealment of material fact, and, it is in the said oblivious manner, even the
Certificate issued by Director of Industries was rejected despite the fact that State
never raised any objection on the said Certificate. In view of the above, we are of
the opinion that the order passed by Commercial Taxes Tribunal is not sustainable
in law and is liable to be set aside.
42. Ordinarily, in view of the findings rendered by us above, we would have
not adjudicated the additional point raised by Respondent-State in its Counter
Affidavit in view of the settled law that Respondent-authorities cannot supplement
fresh reason in the shape of Affidavit or otherwise to validate its order (Ref.
Mohinder Sing Gill Vs. Chief Election Commissioner). However, in order to put
a quietus to the dispute, we have thought it fit to even adjudicate the aforesaid
additional point raised by Respondent-State in its Counter Affidavit.
43. Mr. Sachin Kumar, Counsel for Respondent-State, while placing heavy
reliance upon Clause 29.2 and the definition of 'Expansion, Modernization and
Diversification', as contained in Annexure-1 of the Industrial Policy, has
contended that the benefit of incentive under the Industrial Policy is only once
available to an Industrial unit. It has been further submitted that 25MW CPP of the
petitioner was a new Unit and the subsequent expansion undertaken by the
petitioner by establishing 10 MW and 30 MW CPPs would fall under the
definition of "Expansion, Modernization and Diversification' as defined under
Clause 8 of Annexure-1 of the Industrial Policy, for which petitioner was required
to give prior intimation, and, since the petitioner failed to give prior intimation,
benefit under the Industrial Policy would not be available to it. On the strength of
the above, it has been argued that petitioner was not entitled to the benefit of 30
MW CPP, and even the benefit already granted to the petitioner in respect of its 10
MW CPP is required to be reviewed.
44. In order to effectively adjudicate the aforesaid arguments raised on behalf
of Respondent, we feel it appropriate to quote relevant clauses of the Industrial
Policy.--
"29.0 FISCAL INCENTIVES
29.1 There is a dire need for the new born State of Jharkhand to accelerate
industrialization in the back ground of lost opportunities and non
realization of its industrial potential.
29.2 The types of incentives which are being offered are given below. Such
incentives shall be admissible only once to a unit, which comes into
commercial production during the period this policy remains effective :
1. Capital Investment Incentive
2. Captive Power Generating Subsidy
3. Interest Subsidy
4. Stamp Duty and Registration
5. Employment Generation Based Incentives
6. Special Incentives for Thrust Areas/EOU and SC/ST/Women/Ex-
Servicemen and Handicapped Persons.
7 Feasibility Study - Project Report Cost Reimbursement Subsidy
8. Pollution Control Equipment Subsidy
9. Incentive for Quality Certification.
29.4 CAPTIVE POWER GENERATING SUBSIDY
The Captive Power Generating subsidy admissible to new Industries in
various categories of districts are as follows:
Sl. Incentive Category Maximum Financial Special Benefits
No. Incentive Limit
(%) (Lakhs)
1. Captive A 15 2.25 Additional 5% incentive
Power B 20 3.00 over and above with a cap of
Rs. 0.75 lakhs in thrust areas,
Generating
Subsidy C 25 3.75 100% Export Oriented Units,
SC/ST Entrepreneurs, Women
Entrepreneurs, Handicapped
Persons and Ex-servicemen
shall be admissible.
ANNEXURE-1
DEFINITIONS
2. INDUSTRIAL UNIT/INDUSTRIAL CONCERN
"Unit" means any industrial project in large and medium scale having approval in
the form of letter of intent, industrial license or registration certificate, as the case
may be, under the Industries (Development and Regulation) Act, 1951 (65 of 1951)
or an acknowledgment in the form of Secretariat for Industrial Assistance reference
number from Central Government excluding those mentioned in the negative list of
industries at Annexure-III.
8. EXPANSION/MODERNISATION/DIVERSIFICATION :
Expansion/Modernization/Diversification of an existing industrial unit would mean
additional fixed capital investment in plant and machinery of 33% or more of the
undercoated book value of fixed capital investment in the existing unit leading to
incremental production which would not be less than 33% of the installed capacity
immediately before such expansion/ diversification/ modernization.
Incremental production shall mean the excess of actual production over 2/3 of the
installed capacity immediately before expansion/diversification/ modernization is
undertaken by these units or the highest production in 3 years immediately
preceding the year in which such expansion/ diversification/ modernization
commenced, whichever of the two is higher.
In order to qualify for the sales tax and other incentives, a unit undertaking
expansion/modernization/diversification should send prior intimation before
undertaking expansion/modernization/diversification program to the concerned
officers of Industries Department and Commercial Taxes Department. For Small
Scale Industries, General Manager, District Industries Centre or the Managing
Director of concerning Industrial Area Development Authority and Deputy
Commissioner, Commercial Taxes is the competent Authority.
In case of Large & Medium Industries, the Director of Industries and Commissioner,
Commercial Taxes is the competent-Authority. Such intimation should be
accompanies by detailed expansion/ modernization/diversification proposal giving
the specific period of proposed additional investment."
45. The main thrust of the arguments of the Respondent-State is upon Clause
29.2 of the Policy. However, from a bare reading of Clause 29.2, it would be
evident that the incentive enumerated under the said Clause 29.2 only would be
admissible 'only once' to a unit and the said incentives are specifically enumerated
in the said Clause itself. One of the incentives enumerated under Clause 29.2 is
'Captive Power Generating Subsidy'. Clause 29.4 which provides for 'Captive
Power Generating Subsidy' would reveal that the said Clause under the Policy
provided for subsidy in terms of monetary consideration for establishment of CPP
and the said monetary subsidy to be provided for setting up CPP was specifically
restricted to be granted only once during the subsistence of the Policy. Per contra,
Clause 15.2.2 of the Policy provided for grant of benefit of exemption from
payment of electricity duty on Captive Power Generation of Electricity,
irrespective of number of CPPs through which such generation of electricity is
taking place. In fact, Clause 29.2 read with Clause 29.4 buttresses the contention
of the petitioner that exemption from payment of electricity duty was not restricted
to only one CPP established during the subsistence of the Industrial Policy-2001 as
the Policy itself incorporated restriction where it intended to restrict the benefit
available under the Policy 'only once'.
46. Respondents have further relied upon Clause 8 of the Definition Clause to
contend, inter alia, that 10MW and 30MW CPPs. are expansion of the existing
Industrial Unit which required prior intimation and, in absence thereof, the benefit
of the Policy is not available. The said argument of the Respondent is also
misconceived as the term 'Expansion/ Modernization/Diversification' relates to an
Industrial Unit and not a CPP. The term 'Captive Power Generation Plant' and
'Industrial Unit' have been used differently to connote different meaning in the
Industrial Policy. Clause 15.2.2 uses two different and distinct words, namely,
'Captive Power Generation Plant' and 'Industrial Unit'. It is trite law that when
two different words are used by the same Statute, prima facie, one has to construe
these different words as carrying different meaning. (Ref. Rajendra K. Bhutta Vs.
Maharasthra Housing & Area Development Authority & Ors., reported in
(2020) 13 SCC 208).
47. Moreover, from the definition of 'Industrial Unit' as defined under Clause-
2 of the Policy, it would be evident that CPPs are not covered under the said
definition. Hence, the Industrial Policy treated each CPP as an individual and
distinct unit, as distinct from the Industrial Unit. Moreover, Clause 15.2 itself
provided that for setting up of CPPs 'no permission from SEB shall be required'.
In view of the above discussions, we reject the contention of the Respondents that
Petitioner was not entitled for the benefit of exemption in respect of its 10 MW
and 30 MW CPPs.
48. Accordingly, we hold and declare that petitioner is entitled to the benefit of
exemption from payment of electricity duty under the Bihar Electricity Duty Act,
1948 in respect of its 30MW Captive Power Generation Plant having date of
commercial production on 04.05.2009 in terms of the provisions contained under
Clause 15.2.2 of the Jharkhand Industrial Policy-2001. Consequentially, we quash
and set aside the orders all dated 29th January, 2020 passed by Commercial Taxes
Tribunal, Jharkhand, Ranchi in Revision Petitions bearing Nos. JR (ED) 106/2015,
JR (ED)107/2015, JR(ED)108/15, JR(ED) 109/15 and JR (ED) 40/2017 for the
periods 2009-10, 2010-11, 2011-12, 2012-13 and 2013-14 respectively. We
remand the matter back to Respondent No.3-Deputy Commissioner of
Commercial Taxes, Adityapur Circle, Jamshedpur to pass fresh assessment orders
extending the benefit of exemption from payment of electricity duty in respect of
30 MW CPP to the petitioner and to issue consequential excess demand notices for
refund of the amount of electricity duty realized, if any, from the petitioner in
respect of its 30 MW CPP.
49. With the aforesaid directions, all these writ applications stands allowed and
disposed of. Pending IAs, if any, stands disposed of.
(Aparesh Kumar Singh, J.)
(Deepak Roshan, J.)
Amardeep/N/AFR
