Madras High Court
M/S.Seshasayee Paper & Boards vs The Government Of Tamil Nadu on 28 July, 2022
Author: R.Subramanian
Bench: R.Subramanian
W.P.No.32575 of 2017
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 28.07.2022
CORAM:
THE HONOURABLE MR.JUSTICE R.SUBRAMANIAN
W.P.No.32575 of 2017
and WMP No.35901 of 2017
M/s.Seshasayee Paper & Boards,
Rep. By Deputy Managing Director,
Pallipalayam (P.O.) Namakkal District,
Erode. .. Petitioner
Vs.
1.The Government of Tamil Nadu,
Rep. By Secretary to Government,
Energy (A2), Department,
Fort St. George, Chennai 600 004.
2. Chief Electrical Inspector to Government,
Thiru Vi Ka Industrial Estate,
Guindy, Chennai 600 032.
3. Electrical Inspector,
LMR Arcade, II Floor,
Salem Main Road, Namakkal. ..Respondents
Prayer: Writ Petition filed under Article 226 of the Constitution of India
seeking issuance of Writ of Certiorarified Mandamus, calling for records on
the file of the second respondent relating to communication bearing
No.22036/A3/2015 dated 24.03.2017 and the consequential order of the third
1/11
https://www.mhc.tn.gov.in/judis
W.P.No.32575 of 2017
respondent dated 05.05.2017 and quash the same and direct the respondents
to grant exemption to the petitioner from payment of Electrical tax under the
Tamil Nadu Tax on Consumption or Sale of Electricity Act in respect of the
16 MW generator used by the petitioner as its unit at Pallipalayam which is
run by using Black Liquor Dry Solids as fuel in terms of G.O.Ms.18 dated
01.04.2015.
For Petitioner : Mr.Rahul Balaji
For Respondents : Ms. P.Aishwarya
Government Advocate
ORDER
The challenge in the writ petition is to the order of the Chief Electrical Inspector dated 24.03.2017 and the consequential notice issued by the Electrical Inspector, Namakkal dated 05.05.2017, in and by which, the exemption that was granted to the petitioner from payment of tax on Consumption or sale of electrical energy under the Tamil Nadu Tax on Consumption or Sale of Electricity Act, 2003 [herein after called 'the said Act'].
2. The said Act imposes obligation on persons who either sell or consume electricity to pay a certain amount as tax. The Captive generating plant is defined under Section 2(2) of the said Act as follows:- 2/11
https://www.mhc.tn.gov.in/judis W.P.No.32575 of 2017 (2) "captive generating plant" means a power plant set up by any person or association of persons or any Co-operative society to generate electricity primarily for his own use or for the use of members, and includes the power plants that are permitted to sell the surplus power so generated.
3. While Section 3 is charging Section, Section 14 of the Act empowers the State Government to grant exemption or reduction of the rate of tax. The petitioner which is paper manufacturer has its own captive generating plants using different kinds of fuel. The Government invoking powers under Section 14 issued G.O.Ms.No.18 dated 01.04.2015 which granted exemption to the generating plants situated within Tamil Nadu using biomass (excluding bagassee) as fuel for generation of electricity with effect from 1st April 2015.
4. Claiming that it uses a kind of biomass known as Black Liquour Dry Solid as a fuel for its 16 MW generating unit, the petitioner claim exemption under the Government Order. After prolonged correspondence on the issue, the Chief Electrical Inspector to the Government passed the 3/11 https://www.mhc.tn.gov.in/judis W.P.No.32575 of 2017 impugned order on 24.03.2017 rejecting the claim for exemption on the ground that exemption cannot be granted in view of the fact that the petitioner uses Black Liquour Dry Solid as fuel for the 16 MW generator and the clarification issued by the MNRE states that Black Liquour Dry Solid is a bye–product of wood crop residue and bagassee generated in pulp and paper industries. The electrical inspector therefore concluded that since bagasse is used for generation in 16 MW generator the petitioner is not entitled to exemption. The petitioner was also directed to pay the tax payable on the consumption of electricity generated through the 16 MW power plant from 01.04.2015 till the date of rejection. This was followed by a demand notice issued by the electrical Inspector, Namakkal. Rejection is the subject matter of challenge in this writ petition.
5. Mr.Rahul Balaji, learned counsel appearing for the petitioner would vehemently contend that while the notification granting exemption states that electricity generated using biomass fuel except bagassee would be exempted from payment of electricity tax, the Electrical Inspector is not justified in relying upon the clarification issued by MNRE which only says 4/11 https://www.mhc.tn.gov.in/judis W.P.No.32575 of 2017 that Black Liquour Dry Solid is a bye-product in the process of making paper using wood crop residue and bagassee. Therefore, according to Mr.Rahul Balaji, even accepting the MNRE's clarification, what is used viz., Black Liquour Dry Solid as a fuel in the 16 MW generator is only the bye-product of the process of manufacturing paper using wood crop residue and bagassee. Therefore, according to the learned counsel bagassee is not directly used for producing electricity.
6. The petitioner is, admittedly, a paper industry. It manufactures paper using bagassee and other wood crop residue. In the process it generates the bye-product called Black Liquour Dry Solid and that bye– product which is generated in the process of manufacturing paper is used by the petitioner for generation of electricity in its 16 MW plant. Admittedly this Black Liquour Dry Solid is classified as a biomass renewable energy and the same is certified by the Ministry of New and Renewable Energy, Union of India in its letter dated 09.01.2012. What is exempted in the Government Order is the electricity generated using biomass fuel except bagassee. The said exemption will be available to any biomass fuel except bagassee. The 5/11 https://www.mhc.tn.gov.in/judis W.P.No.32575 of 2017 clarification issued by MNRE which is relied upon by the respondents to reject the claim of the petitioner is that this Black Liquour Dry Solid is a bye- product of process of manufacturing paper using bagassee. Such a clarification cannot, in my considered opinion, be used to conclude that the petitioner is using bagassee as a fuel for generation of electricity.
7. An attempt is made by the learned counsel for the respondents that exemption is available only for sale of electricity under the Government Order and not for own consumption of electricity.
8. Unfortunately that is not the ground on which the claim for exemption was rejected. Tamil Nadu Tax on consumption or Sale of Electricity Act provides for payment of tax by the the generator or the consumer or the licensee who sells electricity. The Government Order also does not make such distinction. However, in the notification that was to be published pursuant to the Government Order, the said Act states that exemption will be in respect of electricity tax payable under the said Act on energy sold for consumption. But the same is not the purport of the 6/11 https://www.mhc.tn.gov.in/judis W.P.No.32575 of 2017 Government Order. Paragraph 3 of the Government Order reads as follows:-
3. As announced in the Budget 2015-2016, the Government proposes to exempt from Electricity Tax for generating plants situated within Tamil Nadu using Biomass (excluding bagassee) as fuel for generation of electricity with effect from 1st April 2015.
9. As announced in the budget 2015-2016, the Government proposes to exempt electricity tax for generating plants using biomass excluding bagasse as fuel for generating electricity with effect from 1st April 2015. It is because of this language in the Government Order, the Authority also did not chose to reject the claim of the petitioner on the ground that the petitioner is a captive generator and the petitioner is not selling electricity.
10. In Government of Kerala and another Vs. Mother Superior Adoration Convent reported in 2021 (5) SCC 602, the Hon'ble Supreme Court has observed as follows:-
19. However, there is another line of authority which states that even in tax statutes, an exemption provision should be liberally construed in accordance with the object sought to be achieved if such provision is to grant incentive 7/11 https://www.mhc.tn.gov.in/judis W.P.No.32575 of 2017 for promoting economic growth or otherwise has some beneficial reason behind it. In such cases, the rationale of the judgments following Wood Papers does not apply. In fact, the legislative intent is not to burden the subject with tax so that some specific public interest is furthered.
27.This being the case, it is obvious that the beneficial purpose of the exemption contained in Section 3(1)(b) must be given full effect to, the line of authority being applicable to the facts of these cases being the line of authority which deals with beneficial exemptions as opposed to exemptions generally in tax statues. This being the case, a literal formalistic interpretation of the statute at hand is to be eschewed. We must first ask ourselves what is the object sought to be achieved by the provision, and construe the statue in accord with such object. And on the assumption that if any ambiguity arises in such construction, such ambiguity must be in favour of that which is exempted. Consequently, for the reasons given by us, we agree with the conclusions reached by the impugned judgments of the Division Bench and the Full Bench.
11. In view of the above, the respondents cannot take advantage of 8/11 https://www.mhc.tn.gov.in/judis W.P.No.32575 of 2017 difference in language between the main Government Order and proposed notification to contend that the exemption would apply only for sale of electricity and not for captive generation.
12. I am therefore of the considered opinion that the order impugned in the writ petition has to be set aside and it is accordingly set aside. The writ petition will stand allowed. The monies paid pursuant to the interim order in the writ petition will be adjusted in the future current consumption bills of the petitioner. No costs.
28.07.2022 dsa Index:No Internet:Yes Speaking order 9/11 https://www.mhc.tn.gov.in/judis W.P.No.32575 of 2017 To:-
1.The Secretary to Government, Government of Tamil Nadu, Energy (A2), Department, Fort St. George, Chennai 600 004.
2. Chief Electrical Inspector to Government, Thiru Vi Ka Industrial Estate, Guindy, Chennai 600 032.
3. Electrical Inspector, LMR Arcade, II Floor, Salem Main Road, Namakkal 10/11 https://www.mhc.tn.gov.in/judis W.P.No.32575 of 2017 R.SUBRAMANIAN, J.
dsa W.P.No.32575 of 2017 and WMP No.35901 of 2017 28.07.2022 11/11 https://www.mhc.tn.gov.in/judis