Madras High Court
Coimbatore Pioneer Fertilizers ... vs The Superintending Engineer on 17 June, 2022
W.P. Nos.25456 to 25460 of 2010
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 17.06.2022
CORAM
THE HONOURABLE MR.JUSTICE MOHAMMED SHAFFIQ
W.P. Nos.25456 to 25460 of 2010
and M.P.Nos. 1,2,1,1, and 1 of 2010
W.P.No.25456 of 2010:
Coimbatore Pioneer Fertilizers Ltd.,
represented by its Managing Director,
Muthugoundanpudur Post,
Via Sulur-641 406,
Coimbatore-641 406. …Petitioner
Vs.
1.The Superintending Engineer,
Coimbatore Electricity Distribution Circle (South),
Tamil Nadu Electricity Board,
Coimbatore-641 012.
2.The Government of Tamil Nadu,
Rep. by its Secretary to Government,
Energy Department, Fort St.George,
Chennai-600 009.
3.The Tamil Nadu Electricity OMBUDSMAN,
No.19A, Rukmini Lakshmipathy Salai,
(TIDCO Complex), Egmore, Chennai-600008. …Respondents
1/12
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W.P. Nos.25456 to 25460 of 2010
PRAYER in W.P.25456 of 2010:
Writ Petition filed under Article 226 of the
Constitution of India, praying to issue a Writ of Certiorarified Mandamus
Calling for the records of the 3rd respondent culminating in its Common
Order dt.31.3.2010 passed in Petition Nos.12-16 24 33 36-46 53-59 64
65-70 and 76-83 of 2009 and Petition Nos.1 of 2010 9 of 2010 and 12 of
2010 quash the same in so far as the petitioner is concerned and direct the
1st and 2nd respondents to refund or adjust against the future bills of the
petitioner the sum of Rs.2 98 204/-(Rupees Two Lakhs Ninety Eight
Thousand Two Hundred and Four Only) paid by the petitioner under the
head maximum demand charge at 4% covering the period from September
1991 to May 2003 in respect of their HT SC No.20.
For Petitioner : Mr.Arun Anbumani
(In all W.P's)
For R1 and R3 : Mr.Abul kalam
(In all W.P's) Standing Counsel for TNEB
For R2 : Mr.S.Jaya Chandran
(In all W.P's) Government Advocate
******
COMMON ORDER
These Writ Petitions have been filed seeking issuance of a Writ of
Certiorarified Mandamus, to call for the records of the 3rd Respondent
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W.P. Nos.25456 to 25460 of 2010
culminating in its Common Order dated 31.03.2010 passed in Petition
Nos.12-16 24 33 36-46 53-59 64 65-70 and 76-83 of 2009 and Petition
Nos.1 of 2010, 9 of 2010 and 12 of 2010 and quash the same insofar as the
petitioners are concerned and direct the 1st and 2nd Respondents to refund or
adjust against the future bills a sum of Rs.2,98,204/-(Rupees Two Lakhs
Ninety Eight Thousand Two Hundred and Four Only) paid by the petitioner
under the Head Maximum Demand Charge at 4% during the period
September 1991 to May 2003 in respect of their HT SC No.20.
2. The petitioner has a High Tension supply connection to its factory
bearing HT SC No.20. Electricity Tax was imposed and collected from the
petitioner originally under the provisions of the Tamil Nadu Electricity
(Taxation on Consumption) Act, 1962. From 06.06.2003 the Electricity Tax
was collected under the provisions of the Tamil Nadu Tax on Consumption
on Sale of Electricity Act, 2003.
3. The present writ petitions raises a question as to the
legality/validity of levy of tax on Maximum Demand Charges under the
Tamil Nadu Electricity (Taxation on Consumption) Act, 1962. The levy of
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W.P. Nos.25456 to 25460 of 2010
Electricity Tax on Maximum Demand Charges for the period from
September, 1991 to May 2003 under the provisions of the Tamil Nadu
Electricity (Taxation on Consumption) Act, 1962 was the subject matter of
challenge before the Hon'ble Supreme Court in SPIC vs. Electricity
Inspector and E.T.I.O and others reported in 2007 (5) SCC 447, wherein it
was held that the levy of tax on Maximum Demand Charges would fall
outside the purview of Entry 53 of list II of VII Schedule to the Constitution
of India. The said Entry reads as “Taxes on the consumption or sale of
electricity”. Any levy on tax which is not on the event of consumption or
sale of electricity was found impermissible in terms of Article 246 read with
Entry 53 list II of VII Schedule of the Constitution of India. It may be
relevant to refer to the following passage of the decision of the Hon'ble
Supreme Court cited supra which would show that the Apex Court found
that Maximum Demand Charges is not on actual delivery of electricity and
thus the levy/imposition of tax is beyond the pale of Entry 53 of List II of
VIIth Schedule of Constitution of India. The relevant para is extracted
below:
154. Our attention has been drawn to a simple bill, from a
perusal whereof it appears that although permitted MD was 350
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W.P. Nos.25456 to 25460 of 2010
kVA, the recorded demand being 144 kVA, electricity tax was
charged only on the basis of 144 kVA and not on the basis of 350
kVA. Keeping in view the fact that the maximum demand
postulates something other than actual delivery of electricity, the
question of imposition of any tax thereupon does not arise. The
decision of this Court in Northern India Iron & Steel Co. [(1976)
2 SCC 877] did not assign any reason. The said decision did not
take into consideration the provisions of Article 366(12) of the
Constitution of India or the effect of Entry 53 of List II of the
Seventh Schedule of the Constitution of India. It has also not
been taken into consideration that the State cannot impose tax
only because the State Electricity Board would be entitled to levy
tax on certain services. It would bear repetition to state that the
concept of tariff and tax is different. Whereas tariff would
include a list of charges, the tax must be on actual basis. It is
also not the case nor can it be that imposition of tax on actual
sale or consumption of electrical energy was impossible keeping
in view the particular fact situation. As noticed herein before,
two different meters are installed, one, for the purpose of actual
consumption of electrical energy and another being a trivector,
the same merely records the maximum demand.
(emphasis supplied)
3. Thereafter, the State of Tamil Nadu had passed Act 38 of 2007
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W.P. Nos.25456 to 25460 of 2010
with a view to validate the levy of tax on on Maximum Demand Charges.
Act No. 38 of 2007 introduced a number of amendments including Section
2(7) wherein while defining “consumption charges” it provided that the
“consumption charges” would include the charges on maximum demand
and power factor sur-charge. The relevant provision of the Validation Act is
extracted below:
ACT No. 38 of 2007
An Act to amend the Tamil Nadu Tax on consumption
or sale of Electricity or sale of Electricity Act,2003
Be it enacted by the Legislative Assembly of the State
of Tamil Nadu in the Fifty-eighth Year of the Republic of
India as follows:-
1. 1. This Act may be called the Tamil Nadu Tax on
Consumption or Sale of Electricity (Amendment) Act,2007.
2. (a) All sections, except Section 6, shall be deemed
to have come into force on the 16th day of June 2003.
(b) Section 6 shall come into force at once
2. In Section 2 of the Tamil Nadu Tax on Consumption
or Sale of Electricity Act, 2003 ( hereinafter referred to as
the principal Act):-
(1) after clause (2) the following clause shall be
inserted, namely:-
“(2-A) “Charge on maximum demand” means the
charge levied on the highest value of the average
kilovolt- Ampers delivered at the point of supply
to the consumer during any consecutive thirty
minutes in a month,:.
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W.P. Nos.25456 to 25460 of 2010
(2) for clause (7) the following clause shall be
substituted, namely:-
(7) “ consumption charge” means the amount
charged by a licensee for the supply of electricity to a
consumer before deduction of rebate, if any, allowed by the
licensee for payment on or before such date as may be
specified by the licensee, but does not include:-
(i) meter charges:
(ii) interest on delayed payment
(iii) fuel charges; and
(iv) fuse off call charges and re-connection charges:
Provided that in the case of High Tension supply of
electricity, consumption charge includes the charge on
maximum demand and power factor surcharge.
Explanation – If electricity is supplied to any person
free of charge or at a concessional rate ( other than tariff
concession) the consumption charge would mean the tariff
fixed by the Tamil Nadu Electricity Regulatory commission
in tis Tariff order to similar consumer,:
6. Notwithstanding anything contained in the
principal Act or the rules made on notification issued
thereunder, or in any other law for the time being in force
or in any Judgment, decree, or order of any Court or other
authority:-
(a) any tax on the electricity sold or consumed,
paid by any license under sub-section (1) of Section 3
of the Principal Act, during the period commencing on
the 16th day of June 2003 and ending with the date of
publication of the Tamil Nadu Tax on Consumption or
Sale of Electricity ( Amendment) Act, 2007 in the Tamil
Nadu Government Gazette, shall be deemed to be and
shall be deemed always to have been paid in
accordance with law, as if the principal Act as
amended by this Act, had been in force as all material
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W.P. Nos.25456 to 25460 of 2010
time when such tax was paid.
(b) all acts done or proceedings taken under the
Principal Act, during the period commencing on the
16th day of June 2003 and ending with the date of
publication of the Tamil Nadu Tax on consumption or
sale of Electricity (Amendment) Act, 2007 in the Tamil
Nadu Government Gazettee, shall be deemed to be and
shall be deemed always to have been validity done or
taken in accordance with law as if the principal Act as
amended by this Act, had been in force at all material
times when such acts or proceedings were done or
taken.
4. The validity of the said amendment was challenged before this
Court and was upheld. It is informed that the decision of this Court has been
challenged and presently pending consideration before the Hon'ble Supreme
Court. However, it is submitted by the learned counsel for the petitioner
that the pendency may have no relevance inasmuch as the Validation Act
only validates the levy of tax on Demand Charges for the period
commencing from 16.06.2003 while the present demand is for the period
between September 1991 to May 2003.
5. It is submitted by the learned counsel for the petitioner that a sum
of Rs.2,98,204/- was paid in respect of their HT SC No.20, under the Head
Maximum Demand Charge at 4% for the period September 1991 to May
2003. An application claiming refund of the tax paid already was filed
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W.P. Nos.25456 to 25460 of 2010
before the Tamil Nadu Electricity Ombudsman. The Electricity Ombudsman
rejected the submission of the petitioner that the Validation Act may not
have any bearing in relation to the claim of refund of tax on demand paid by
the petitioner in respect of periods prior to June 2003. The relevant portion
of the order is extracted below:-
" a) It could have never been the intention of the
legislature to validate the collections arising out of the Act
2003 and part with the collections arising out of the Act of
1962. If that be so, it would have been specifically mentioned in
the Act 38 of 2007. It may be a case of omission to include the
tax collections pertaining to the Act of 1962 within the purview
of Act 38 of 2007. But in my opinion, the legislature would
have never thought of having a different set of rule for the
claims arising out of Act of 1962........
...... In the backdrop of the same, any decision rendered
by me as sought for by the counsel for the petitioners, even if it
is based on the judgment of the Hon'ble Supreme Court under
reference, would amount to encroaching the jurisdiction of the
High Court before which the matter relating to the validity of
refund of electricity tax is sub judice. In other words, it may be
said that if as contended by the counsel for the appellants, I am
to direct the refund of tax by applying the judgment of the
Hon'ble Supreme Court of India, I will, infact, be discharging
the functions of the High Court when the High Court is seized
the issue. I am of the considered opinion that the same is not
permissible in law. Hence, I am unable to be of any help to the
petitioners. In the result, the petitioners are not entitled to seek
relief before me at this stage."
It was thus concluded by the OMBUDSMAN/ 3rd respondent herein that the
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W.P. Nos.25456 to 25460 of 2010
relief sought for by the petitioner cannot be granted, in view of the fact that
the Amending Act 38 of 2007 was under challenge before Madras High
Court, which as stated above has been disposed of by this Court upholding
the validity of the amendment Act, the said order of this Court is pending
consideration before the Hon'ble Supreme Court.
5. I am of the view that the 3rd respondent has completely mis-
directed itself in looking to Act 38 of 2007 while dealing with the claim of
refund of tax on Maximum Demand Charges for the period prior to June
2003. The Validation Act which has been relied upon by the 3rd respondent
only validates the levy of tax on Maximum Demand Charges from
16.06.2003 and not prior thereto. Admittedly, all the refund/claim forming
the subject matter of the present Writ Petitions are in relation to the period
prior to June 2003.
6. In view of the same, the order of the learned 3rd Respondent suffers
from error apparent on the face of the record inasmuch as it contrary to the
express provisions of Act 38 of 2007 validating the levy on tax on
Maximum Demand Charges only from 16.06.2003 and thus set aside.
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W.P. Nos.25456 to 25460 of 2010
7. Consequently, the petitioner shall be entitled to refund of the sum
of Rs.2,98,204/- representing tax on Maximum Demand Charges or they
may be permitted to adjust the said amount of Rs.2,98,204/- against the
future current consumption bills.
8. Accordingly, these writ petitions are allowed. No costs.
Consequently, connected miscellaneous petitions are closed.
17.06.2022
Speaking (or) Non Speaking Order
Index : Yes/ No
Psa/smn
To:
1.The Superintending Engineer,
Coimbatore Electricity Distribution Circle (South),
Tamil Nadu Electricity Board,
Coimbatore-641 012.
2.The Secretary,
Government of Tamil Nadu,
Energy Department, Fort St.George,
Chennai-600 009.
3.The Tamil Nadu Electricity OMBUDSMAN,
No.19A, Rukmini Lakshmipathy Salai,
(TIDCO Complex), Egmore, Chennai-600008.
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W.P. Nos.25456 to 25460 of 2010
MOHAMMED SHAFFIQ, J.
Psa/smn
W.P. Nos.25456 to 25460 of 2010
and M.P.Nos.2 to 4 of 2015
17.06.2022
https://www.mhc.tn.gov.in/judis
