In a recent decision, the division bench of the Patna High Court held that the charging sections of the Bihar State Electricity Duty Act, 1948, is not applicable to a Power generating Company supplying energy to the Electricity Board.
While quashing the orders levying duty and penalty on the petitioners, NTPC, the Court observed that they do not fall within the definition of “consumer‟, “licensee‟ and “value of energy‟ as provided under s. 3(1) of the Act.
The petitioners, NTPC is engaged in generating energy, sold energy to the respondent-Bihar State Electricity Board (BSEB) as per the power supply agreements. Neither of the petitioners are selling energy to any consumer except to the respondent-BSEB inside the state and to the other State Electricity Boards outside. The Commercial Tax Officer held that the petitioners were responsible for payment of duty under Sections 3 and 4 of the Act and liable to pay duty under Section 4A read with Rule 11 of the Rules. Consequently, the officer imposed penalty on the petitioners on ground that they concealed concealed the sale of energy to the respondent-BSEB.
The orders were challenged before the High Court mainly on…. Grounds.Firstly, the petitioners claimed that the order is passed without jurisdiction since the CTO is not the competent authority to pass the impugned order. Secondly, the petitioners do not come within the purview of the charging provisions and thus no liability of paying any electricity duty for the supply made by the petitioners to the BSEB.
Earlier there was a dispute between the NTPC and the respondent-State with regard to the sale of electricity made outside the State in which the High Court quashed the assessment orders passed against the petitioners and remanded the matter back to the assessing authority for fresh consideration.
The division bench comprising Justice Ramesh Kumar Datta and Justice Sudhir Singh noticed the decision of the Apex Court in NTPC‟s case in which the Court has interpreted Entry 53 to be read as taxation on the consumption or sale for consumption of electricity.
“That being the position whether the tax levied is under Entry 53 of List II as a tax on consumption or sale for consumption of electricity, or under Entry 54 of List II as taxes on sale or purchase of goods, it will make no difference since the goods which are to be taxed, that is, „electricity‟ remains the same under both the circumstances and the levy can only be on the consumption or sale for consumption of electricity in terms of what has been laid down by the Apex Court in the NTPC‟s case (supra). The distinction between the two entries in respect of electricity has been clarified in para 23 of the said judgment where it has been said that if the State Legislature chooses to impose tax on consumption of electricity it will not be possible to do so under Entry 54, because it does not provide for taxes on consumption whereas Entry 53 permits the same.”
Therefore, in the view of the Court, charging Section 3(1) of the Act which provides for levy of duty on either units or on the value of energy consumed or sold, has to be similarly read as the Constitutional Entry 53 providing the power to the State Legislature, to levy electricity duty either on the unit or on the value of energy consumed or sold for consumption.
“In the said circumstances, any sale of electricity which is not a sale for consumption would be beyond the purview of the State Legislature to enact and thus the charging Section 3(1) of the Act has to be read in the said light as levy of electricity duty for consumption or sale for consumption of electricity.” The bench said.
“Even on the ground of the applicability of the charging provision it has to be held that the charging provision under Section 3(1) read with the definition of “consumer‟, “licensee‟ and “value of energy‟ as provided in the Act cannot be used to levy any tax on a generating company supplying energy to a licensee like the Electricity Board as in the present matter, as no tax can be computed in their cases.”
Read the full text of the Judgment below.