Jharkhand High Court
M/S Bihar Caustic & Chemical Ltd. Now ... vs The State Of Jharkhand on 9 May, 2018
Equivalent citations: AIR 2019 JHARKHAND 56, AIR 2019 JHA 56, 2019 (1) AJR 394
Author: Aparesh Kumar Singh
Bench: Aparesh Kumar Singh, Ratnaker Bhengra
1
IN THE HIGH COURT OF JHARKHAND, RANCHI
W.P.(T) No. 6155 of 2016
M/s Bihar Caustic & Chemical Ltd. now Grasim Industries Ltd., Chemical
Division, Rehla having its works at Garwha Road, Rehla, PO & PS-
Rehla, Dist. Palamau through its authorized signatory Neyaz Ahmad
Khan, son of Nazir Ahmad Khan, resident of Stya Enclave B-406, Lake
Avenue, PO- Kanke Road, PS- Gonda, Dist- Ranchi. --Petitioner
Versus
1. The State of Jharkhand.
2. Commissioner of Commercial Taxes, Jharkhand, Commercial Tax
Department, Project Building, Dhurwa, PO and PS Dhurwa, District-
Ranchi.
3. Joint Commissioner of Commercial Taxes (Administration), Ranchi
Division, PO- GPO Ranchi, PS- Sadar, District: Ranchi.
4. Deputy Commissioner of Commercial Taxes, Palamau Circle, Medini
Nagr, PO & PS Daltonganj, District: Palamau. --Respondents
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CORAM :- HON'BLE MR.JUSTICE APARESH KUMAR SINGH
HON'BLE MR. JUSTICE RATNAKER BHENGRA
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For the Petitioner : Mr. Navaniti Prasad Singh, Sr. Advocate;
M/s.D.K. Pathak, Saket Upadhyay, Sweta Rani, Shashi Kant Mishra, Nama Mishra & Akash Deep, Advocates.
For the Respondents : Mr. Ajit Kumar, A.G.;
Mr. Vikash Kumar, A.C. to A.G.
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18/ Dated 09.05.2018:
1. Heard Mr. Navaniti Prasad Singh, learned senior counsel for the petitioner and Mr. Ajit Kumar, learned Advocate General, representing the State.
2. Whether the petitioner is entitled for refund of the electricity duty and surcharge paid by it for the period 01.01.2001 to 31.05.2004 in terms of the Industrial Policy, 2001 and the notification bearing S.O. No. 70 dated 17.07.2004, issued by the Commercial Taxes Department, Government of Jharkhand is the issue to be answered in the present matter.
3. We shall proceed to answer the instant issue, in the light of the relevant material facts, borne out from the pleadings on record and the grounds urged in support or against by the learned counsel for the parties.2
4. In the present writ petition, petitioner has sought quashing of the order dated 23.06.2016 (Annexure-20), passed by learned Commercial Tax Tribunal in Revision Petition RN 99/2010, whereby, the claim of the petitioner for refund of the electricity duty and surcharge for the aforesaid period in lieu of exemption granted under the Industrial Policy, 2001 has been rejected. The order of the learned Commissioner, Commercial Taxes, Ranchi has been upheld. Petitioner also sought quashing of the order dated 12.04.2010 (Annexure-19), passed by the learned Commissioner, Commercial Taxes in Revision Case No. CC(S) 132/2007, whereunder, though the learned Commissioner has accepted the eligibility of the petitioner under the Industrial Policy, 2001 and the date of commercial production i.e. 01.01.2001 declared by the Director, Industries, but the claim of refund of the electricity duty and surcharge for the period 01.01.2001 to 31.05.2004 has been rejected on the ground of unjust enrichment. The order of the Joint Commissioner, Commercial Taxes dated 17.01.2007 (Annexure-16) rejecting the claim of the refund by the petitioner is also under challenge. Petitioner has sought appropriate direction upon the respondents for payment of the amount deposited by it as electricity duty and surcharge on the ground that it is entitled for such exemption under the Industrial Policy, 2001 and the statutory notification dated 17.07. 2004, issued by the Commercial Taxes Department, Government of Jharkhand for 10 years from the date of commencement of commercial production.
5. Learned senior counsel for the petitioner has, at the outset, submitted that the learned Tribunal has fallen in serious error of jurisdiction by overruling the findings of the learned Commissioner on the point of eligibility of the petitioner for exemption though neither they were under challenge by the revenue nor assailed by the petitioner. Though the Joint Commissioner, Commercial Taxes had rendered its finding both on the point of eligibility and on the ground of unjust enrichment against the petitioner but the learned Commissioner in revision had set aside the findings on the eligibility of the petitioner while rejecting the claim only on the ground of unjust enrichment. The findings of the learned Tribunal therefore are susceptible to challenge on both counts.
6. The Industrial Policy, 2001 was notified on 25.08.2001 w.e.f. 15.11.3
2000 as the effective date of its operation. As per Clause 15.2.2 captive power generation and purchase shall be provided exemption from electricity duty for a period of 10 years from the date of commercial production with an object to encourage private sector in setting up of captive power generation plants of any capacity to meet the existing as well as the future demand for power of industrial units. Such power generation units can be set up without permission of the State Electricity Board. 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. The Policy defines both "existing industrial units" and "new industrial units" as per Annexure-1 thereto. The date of production has been defined at Clause-16. The date of production of an industrial unit shall mean the date on which the unit actually starts commercial production of the item for which the unit has been registered. For SSI units the certificate is to be issued by the respective General Manager, District Industries Centres or Managing Director, Industrial Area Development Authority. In case of any dispute in the date of production, the decision of the Director, Industries shall be final. In case of large and medium industries, the certificate issued by the Director of Industries shall be accepted. In case of any dispute the decision of the Industrial Development Commissioner/Secretary, Industries shall be final. As per Clause-17 of Annexure-1, the captive power generation units established by the petitioner at Garhwa would fall among the most backward category-C.
7. Learned senior counsel for the petitioner has submitted that Central Electricity Authority had examined the proposal of the petitioner and found it to be in order. Bihar State Electricity Board (BSEB) was requested to endorse a copy of letter to the petitioner with a request to the company to send monthly progress report of implementation regularly vide Annexure-2, letter dated 12.07.1999. The Chief Engineer (Commercial), Bihar vide letter no.611/Patna dated 17.12.1999 (Annexure-3) informed that it has no objection to the setting up of the proposed 30 MW Captive Power Plant (CPP). However, so far as the synchronous operation of the CPP with BSEB system is concerned, 4 decision could only be taken when the petitioner submitted the detailed proposal of technical and commercial terms for their examination. Till such period, the said terms are decided, they would not permit the petitioner to synchronize its CPP with BSEB system. The rate of power purchase, if required, will be settled by the BSEB after discussion and letter of 'No Objection' should not be taken as a commitment to purchase surplus power from the petitioner's plant. Learned senior counsel for the petitioner submits that the captive power plant would only turn commercial after it was synchronized with the grid maintained by BSEB. Upon verification of the premises of the power plant by a team of technical officers of the Industries Department constituted vide memo no.2318 dated 5.10.2001 a certificate was granted by the Director of Industries to the effect that the unit has gone into commercial production on 01.01.2001 for power generation. Certificate is dated 18.06.2002 at Annexure-4 to the writ petition.
8. Learned senior counsel for the petitioner has also placed the notification issued by the Commercial Taxes Department dated 17.07.2004 granting exemption for 10 years to such captive power plant on the payment of electricity duty and surcharge from the date of commercial production in terms of Industrial Policy Resolution (Annexure-5). However, petitioner like a law abiding person, continued to make deposits of the Electricity duty and surcharge with the Commercial Tax Department. The deposits made by the petitioner were duly certified vide letter dated 20.04.2005 bearing memo no.331 to the Joint Commissioner, Commercial Taxes, Palamau Circle, Daltonganj by the Treasury Officer, Palamau (Annexure-6). An amount of Rs.2,31,09,239.25 only were deposited by the petitioner. Petitioner made an application for refund of the electricity duty and surcharge deposit for the period 01.01.2001 to 31.05.2004. Since the matter was kept pending, petitioner approached this Court in W.P.(T) No.6167/2006. The writ petition was disposed of on 02.11.2006 with a direction to the authorities to consider and dispose of the matter relating to application for refund within two months. The Joint Commissioner, Commercial Taxes, thereafter, issued notice to the petitioner vide letter no.1059 dated 24.11.2006 (Annexure-13). Petitioner duly replied thereto vide its letter 5 dated 04.12.2006. Learned Joint Commissioner, Commercial Taxes, however, rejected the claim application by holding that the unit had become operational before 15.11.2000 and was therefore ineligible under the Industrial Policy of the State and the notification dated 17.07.2004. It had entered into commercial production since 16.09.2000 which continued till 02.10.2000. The Joint Commissioner, in fact, overturned the declaration made by the competent authority i.e. the Director of Industries regarding the date of commercial production which was wholly beyond his jurisdiction. It also held that since levy of electricity duty and surcharge deposited by the petitioner has been passed on to the consumers, petitioner was not entitled to refund on the principles of unjust enrichment. Petitioner approached the Commissioner, Commercial Taxes, Jharkhand being aggrieved. In the meantime, the Secretary, Industries Department had set up a high power committee to verify the actual date of commercial production as certified by the Director of Industries earlier. On the basis of the report of the high power committee, the Director Industries again confirmed the date of commercial production of the Captive Power Plant of the petitioner as 01.01.2001.
9. Learned Commissioner, Commercial Taxes, took note of the report of the high power committee, constituted by the Secretary, Industries on the basis of which the Director of Industries again confirmed the date of commercial production of Captive Power Plant with effect from the same date i.e. 01.01.2001. It accordingly found no justifiable ground to deny the eligibility of the petitioner for availment of the benefits under the Industrial Policy, 2001 and the department's notification No. S.O 70 dated 17.07.2004. However, on the question of refund, the learned Commissioner concurred with the view of the Joint Commissioner on the principles of unjust enrichment and rejected the claim by the impugned order dated 12.04.2010. It was of the view that the petitioner had paid electricity duty and surcharge which formed the part of their cost and was passed on to the consumer. There had been no change in the price of the commodities even after the issue of notification dated 17.07.2004 when the petitioner was not paying electricity duty and surcharge.
10. Learned senior counsel for the petitioner submits that in this background of the chronology of facts, the learned Commercial Tax 6 Tribunal fell in serious error of jurisdiction in reversing the finding of learned Commissioner on the point of eligibility of the petitioner under the Industrial Policy, 2001 though there was no appeal or revision on the part of the revenue. He has placed reliance on the judgment of the Bombay High Court, reported in AIR 1958 Bombay 143 that such a course was not open for the revisional authority. He has further placed reliance on the judgment of the Apex Court in the case of State of Kerala versus M/s. Vijaya Stores, reported in (1978) 4 SCC 41 where the opinion of the Bombay High Court has been affirmed. It is submitted that it is the petitioner alone who had approached the learned Tribunal being aggrieved by the rejection of the claim of refund on the doctrine of unjust enrichment recorded by the learned Commissioner, Commercial Taxes. He further submits that surprisingly the respondent Commercial Tax Department through its present counter affidavit has backed the stand of the Joint Commissioner, Commercial Taxes and relied upon the report of the Commercial Tax Officer which formed the basis of the finding of the JCCT.
11. Learned senior counsel for the petitioner has further referred to the observations of the Apex Court at para-107 in the case of Mafatlal Industries Ltd. Vrs. Union of India, reported in (1997) 5 SCC 536. He submits that the Constitution Bench has left the question of captive consumption open. Therefore, the judgment relied upon by the Commissioner, Commercial Taxes could not govern the case of the petitioners to reject the claim of refund on the ground of unjust enrichment. Learned senior counsel for the petitioner has also questioned the reliance of the respondents on the judgment of the Apex Court rendered in Amrit Banaspati Co. Ltd. Vrs. State of Punjab reported in (1992) 2 SCC 411. He submits that the instant matter did not relate to a case of exemption under Industrial Policy. The Apex Court found that there was no promise on the part of the State by issuance of a notification to refund the tax duly collected under a statute. In the aforesaid factual context, the Apex Court proceeded to hold that the refund of tax collected under the statute cannot be claimed. Reference is made to paragraph-10, 11 & 12 of the report. Learned senior counsel for the petitioner has also placed reliance on the judgment rendered by the 7 Apex Court in the case of State of Bihar & Ors. Vrs. Suprabhat Steel Ltd. & Ors., reported in (1999) 1 SCC 31 para-17 thereof in support of the submission that if the notification of the Commercial Tax Department is contrary to the Industrial Policy of the State, the claim for exemption granted under the Industrial Policy cannot be rejected by the respondent- State on the basis of such a notification. The view of the learned Division Bench of Patna High Court in the case of Suprabhat Steel Limited Vrs. State of Bihar, reported in 1995 (2) PLJR 536 has been confirmed. Learned counsel has also placed reliance upon the judgment of the Apex Court in Mangalore Chemicals and Fertilisers Limited Vs. Deputy Commissioner of Commercial Taxes & Ors., reported in 1992 Supple (1) SCC 21, para-22 to 24. It is submitted that the Apex Court in the light of the challenge made therein held that simply because the period of Industrial Policy had been over, the State cannot refuse to grant exemption, if the industrial unit falls within the eligibility conditions prescribed under the Industrial Policy. The action of the State was accordingly struck down. Reliance has also been placed on the judgment of the Apex Court in the case of Bhadrachalam Paperboards Ltd. & Anr. Vrs. Government of A.P. & Ors. reported in (1998) 6 SCC 250. Learned senior counsel has referred to para-7 to 9 of the report and submitted that the Apex Court after referring to the judgment of the Constitution Bench in the case of Mafatlal Industries Ltd. held that the appellants had reimbursed a tax liability which was on the Forest Department and the appellants had consumed the goods for manufacturing paperboards etc. The Apex Court was, therefore, of the opinion that the question of the appellants passing on the tax liability to the consumer, on the facts of the case, would not arise. Consequently, they were held entitled to refund of the tax collected from them, not for the entire period but for the period commencing three years prior to the date of filing of the writ petition. Reliance has also been placed in the case of State of Jharkhand and others versus Tata Cummins Ltd. and another, reported in (2006) 4 SCC 57 (para-16 to 19 of the report). Learned senior counsel submits that the Apex Court in the said case arising out of the claim for exemption under the Industrial Policy had the occasion to observe that an exemption from the payment of tax under an 8 enactment is an exemption from the tax liability. Therefore, every such exemption notification has to be read strictly. However, when an assesse is promised with a tax exemption for setting up an industry in the backward area as a term of the industrial policy, the implementing notification has to be read in the context of the industrial policy. In such a case, the exemption notifications have to be read liberally keeping in mind the objects envisaged by the industrial policy and not in a strict sense as in the case of exemptions from tax liability under the taxing statute. Learned senior counsel for the petitioner has also placed reliance upon the judgment rendered by the Apex Court in the case of M/s. Hindustan Sugar Mills versus State of Rajasthan and others, reported in (1980) 1 SCC 599. Apex Court in the said case had held that the Central Government is bound to pay the amount of the sales tax on the freight component of the price. The freight component was treated as a part of the sale price on which the sales tax was leviable. In the present case, the cost of the unit generated by the Captive Power Plant of the petitioner has been included in the cost component of the final product. It is not a case where a tax liability has been passed on to the consumers, which would deny refund in the light of the doctrine of unjust enrichment.
12. Learned senior counsel for the petitioner, while summarizing his submissions, has again referred to the detailed findings rendered by the Commissioner, Commercial Taxes, wherein, he had accepted the decision of the Director, Industries on the date of commercial production. Bihar State Electricity Board (BSEB) had granted permission for synchronization of 30 MW Captive Power Plant of the petitioner on 20.12.2000 and the consultant of the petitioner, M/s Development Consultant Pvt. Ltd had issued a certificate on 28.12.2000 to the effect that plant was completely capable of production. Thus the Department of Industries came to the considered opinion that all the machineries and equipments of the Captive Power Generating Unit of the petitioner were finally established by December, 2000 and consequent upon this commercial production has commenced from 01.01.2001. Learned Commissioner had accordingly held that there remained no justifiable grounds to deny the eligibility of the petitioner for availment of the benefits declared in the Industrial Policy, 2001 and the notification dated 9 17.07.2004. He has also submitted that if the claim of refund made by the petitioner is denied, it would amount to giving effect to the statutory notification in a manner, which is in teeth of the Industrial Policy Resolution itself. The delay in issuance of the notification should not be to the detriment of the petitioner, when as a law abiding person, it had duly paid the electricity duty and surcharge from the date of its commercial production i.e. 01.01.2001. Therefore, the impugned order, passed by the learned Commercial Taxes Tribunal, rejecting the claim for refund is unsustainable in law and facts and deserves to be set aside.
13. Learned Advocate General, representing the State, has in support of the impugned order made the following submissions:
(i) According to him, the statutory notification dated 17.07.2004 (Annexure-5) clearly provideed that the industry should have been established within the period 15.11.2000 to 31.03.2005 for being entitled to avail the benefit of exemption in terms of Clause 15.2.2 of the Industrial Policy, 2001.
(ii) Learned Advocate General has also countered the submissions of the petitioner on the point of jurisdiction of the learned Tribunal to declare the petitioner ineligible in terms of the Industrial Policy, 2001. He has placed the provisions of Electricity Duty Act, 1948, especially, Section 9A and the Electricity Duty Rules, 1949 framed thereunder. By referring to the provisions of Section 9A(3) of the Electricity Duty Act, 1948 read with Rule-14 of the Electricity Duty Rules, 1949, he has tried to bring home the point that learned Commercial Taxes Tribunal had jurisdiction to test the correctness of the order passed by the learned Commissioner, Commercial Taxes. That power could be exercised upon the application made by the aggrieved party or on its own motion. The Scheme of the Act of 1948 and the Rules framed thereunder are wide enough to confer such power of revision upon the prescribed authority, which, in this case, is the Commercial Taxes Tribunal. In effect, petitioner has invoked the provision of revision for the second time before the Tribunal. The order of the Joint Commissioner of Commercial Taxes was earlier challenged in revision before the Commissioner, Commercial Taxes. On being aggrieved by the findings of the learned Commissioner, the present revision has been preferred by the petitioner. Learned Tribunal therefore 10 had jurisdiction to examine the correctness of the findings rendered by the learned Commissioner on other issues as well, apart from what was specifically under challenge.
(iii) Learned Advocate General has referred to the judgment of the Apex Court in the case of State of Gujarat and another versus Gujarat Revenue Tribunal Bar Association and another, reported in (2012) 10 SCC 353 para-17. Reliance is also placed on the case of Bombay Ammonia Pvt. Ltd. versus The State of Tamil Nadu, reported in (1976) 3 SCC 6 para-11 &15 in support of the aforesaid submission.
(iv) On the merits of the challenge, learned Advocate General has referred to the finding rendered by the Joint Commissioner, Commercial Taxes (JCCT). According to him, since the industry was established prior to the formation of the State of Jharkhand on 15.11.2000, the JCCT was right in holding that it is not eligible under the Industrial Policy Resolution, 2001 of the State of Jharkhand. This unit had unsuccessfully tried to avail the benefits of the Industrial Policy under the State of Bihar, during which period, the Captive Power Plant was established. The whole purpose and object of the Industrial Policy Resolution in granting exemption or subsidy is to encourage investment in the State obviously after its formation. If the petitioner's Industry/ Captive Power Plant had been established prior to the creation of the State of Jharkhand, benefits of the Industrial Policy cannot accrue to it. It is in that light, statutory notification dated 17.07.2004, issued in furtherance of the Industrial Policy and under the provisions of the Sales Tax Act are relevant to be considered.
(v) Learned Advocate General has, during the course of submissions, also cast a doubt on the finding of the learned Commissioner, Commercial Taxes on the question of eligibility of the petitioner. He has referred to the orders of learned Tribunal at para-21 where it has dealt with these issues and rightly come to the finding that the petitioner could not be eligible for claim of exemption as the petitioner had started power production on 08.09.2000 while commercial production was started on 16.09.2000.
(vi) It is further submitted on behalf of the State that the petitioner has not challenged the statutory notification dated 17.07.2004, which lays down a condition that the industry should have been established 11 between 15.11.2000 and 31.03.2005. In such a case, the reliance of the petitioner on the judgment rendered in the case of Suprabhat Steel Limited is misplaced. Offending notification was itself under challenge in the case of Suprabhat Steel Limited, where the Apex Court had the occasion to observe that consequential notification could not be contrary to the terms of the Industrial Policy Resolution.
(vii) Learned Advocate General has, however, not been able to counter the submissions of the learned senior counsel for the petitioner on the issue of unjust enrichment. That the plea of unjust enrichment would not apply to the case of captive consumption as clearly held by the Apex Court at para-107 of the report in the case of Mafatlal Industries Ltd. has not been distinguished on the part of the learned Advocate General.
Based on these submissions, the prayers of the writ petitioner have been opposed.
14. Learned senior counsel for the petitioner in reply has submitted that powers of revision are conferred by a statute and are exercisable within the contours prescribed under the Statute itself. Conjoint reading of Section 9A(3) of the Electricity Duty Act, 1948 with Rule-14(5) of the Electricity Duty Rules, 1949, would make it clear that the powers of revision is exercisable by the Commissioner, Commercial Taxes and not by the Commercial Taxes Tribunal. He further submits that the Industrial Policy Resolution in clear terms provided a finality to the decision of the Director, Industries, as per Clause-16 thereof, so far as declaration of the date of commercial production is concerned. Even after fresh inquiry and verification, the Secretary, Industries has confirmed the date of commercial production as on 01.01.2001. Learned Commissioner has taken note of these facts in his order dated 12.04.2010. Lastly, it has been submitted that the petitioner would be satisfied if the respondents are directed to allow adjustments of the amount due for refund in their future bills instead of making refund.
DISCUSSION:
15. We have considered the submissions of the learned counsel for the parties at length, gone through the impugned orders and relevant material facts and circumstances borne out from the record. We have also gone through the judgments cited at the bar by the learned senior 12 counsels for the parties. In order to answer the issue at hand, we may first refer to the relevant provisions of Jharkhand State Industrial Policy, 2001.
16. The Jharkhand State Industrial Policy, 2001 was framed to optimally utilize the available resources of the State in a planned manner and to accelerate the industrial development of the State. It is intended to achieve expected industrial growth, in the State so as to capitalize industrial potential through planned utilization and development of natural and human resources and to gradually increase the employment opportunities. It indicates the Government commitment to facilitate rapid, accelerated and planned industrial growth of the region. It also intended to provide the required infrastructure, simplified mechanisms, sensitive and proactive Government machinery and a friendly atmosphere for industrial growth in the State. The industrial policy aimed to make Jharkhand one of the most preferred destinations for investment, both from inside and outside the country and to ensure accelerated implementation of infrastructure related projects, increasing employment opportunities, improving productivity, ensuing homogeneous and balanced development of all geographical regions of the State with emphasis on the development of small, tiny and cottage industries.
Amongst its broad policy objectives enumerated under Clause 2.2 of the Industrial Policy, 2001, sub-clause(3) provides for identification of thrust areas and thrust zones to prioritize the sectors and categorization of backward regions with respect to industrialization. Sub-clause (6) thereof intended to encourage and involve private sector participation in the process of planned and rapid industrialization of the State. As per the strategy defined under sub-clause (16) of Clause 3.0 emphasis was to be made on small power generating units and developing non-conventional sources of energy through private participation. Industrial policy intended to create appropriate framework for private sector participation in infrastructure development in the State, as it is one of the critical components for ensuring industrial growth. It also intended to create more Industrial Area Development Authorities apart from the three Industrial Area Development Authorities having headquarters at Adityapur, Bokaro and Ranchi. The endeavor was to identify new 13 industrial areas so as to ensure that each district has at least two industrial areas which would facilitate balanced growth of the entire State. Lands for growth centres, industrial areas etc., land for industries outside industrial areas/ growth centres, allotment of Government lands, encouragement for establishment of Private Industrial Estate by acquiring and making available such land at the acquisition cost etc. were part of the Industrial Policy initiative. The policy resolution intended to provide ambitious projects of Road Network, Railways and Air Transport along with Sea Access, despite the fact that Jharkhand is a land locked State, in order to achieve the industrialization objectives. It was in this light that clause-15.0 provided for highest priority to the development of power sector in the State to bridge the gap between the demand and supply. Clause-15.2.1 provided that the State Government shall encourage Private Sector Participation in generation and distribution of powers. Clause-15.2.2 'Captive Power Generation' provides that 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. The surplus power generated by such plants could also be purchased by the State Electricity Board on mutually agreed terms. It also provided that 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. Clause 15.2.2 which is relevant for determination of the instant issue is appropriately being quoted hereunder:
"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 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 14 ten years from the date of commercial production."
Clause-37.0, contains the Power of the State Government. Other relevant conditions/ clauses of the Industrial Policy, as contained in its Annexure-1 such as effective date; Existing Industrial Units; New Industrial Unit; Date of Production and Classification of Backward Areas, are also extracted hereinunder for appreciating the issue at hand.
"37.0 POWER OF THE STATE GOVERNMENT 37.1 Notwithstanding anything contained in the foregoing paragraphs of the industrial policy, the State Government by issuance of notification in the official gazette may amend or withdraw any of the provisions and/or the schemes mentioned herein above.
37.2 If any difficulty arises in giving effect to provisions of the industrial policy and/ or if any dispute arises about the interpretations of any provisions of the said policy, the same shall be referred to the Chief Minister through Chief Secretary and thereon the decision taken shall be final.
ANNEXURE-I DEFINITIONS
1. EFFECTIVE DATE Effective date means 15th November 2000 from which date the new State of Jharkhand has been created, the date on which the provision of this policy come into force, i.e. November 15, 2000. This policy will remain in force till 31st March 2005.
2. ....................
3. EXISTING INDUSTRIAL UNITS Existing Industrial Unit means an industrial unit which has gone into commercial production before the effective date.
4. NEW INDUSTRIAL UNIT New Industrial Unit means an industrial unit which has come into commercial production between 15th November, 2000 and 31st March, 2005.
16. DATE OF PRODUCTION The date of start production of an industrial unit shall mean the date on which the unit actually starts commercial production of the item for which the unit has been registered. As regards the date of production of a SSI unit, the certificate issued by the respective General Manager, District Industries centers or Managing Director, Industrial Area Development Authority will be accepted. In case of any dispute in the date of production the decision of the Director of Industries in this regard shall be final. In case of large and medium industries, the certificate issued by the Director of Industries shall be accepted. In case of any dispute in 15 the date of production the decision of the Industrial Development Commissioner/ Secretary Industry shall be final.
17. CLASSIFICATION OF BACKWARD AREAS For the purpose of determination of types and quantum of incentives available under this policy, different area of the State are being classified into the following three categories:
Category A (Least Backward):
All such blocks in Ranchi, East Singhbhum, Dhanbad, Seraikela and Bokaro districts, which are industrially developed as notified by the State Government. Category B (Backward):
Rest of the blocks listed in the above mentioned districts, all blocks in Hazaribagh, Giridih, Koderma districts. Category C (Most Backward):
All blocks in Dumka, Godda, Sahebganj, Pakur, Lohardaga, Chatra, Palamu, Gumla, Deoghar, Garhwa, Latehar, Jamtara, Simdega, West Singhbhum districts."
17. Proposal of this unit for installation of 30 MW Captive Power Plant was examined by the Central Electricity Authority under Section 44(2A) of the Electricity (Supply) Act, 1948. Vide Annexure-2, letter dated 12.07.1999, the Central Electricity Authority found its proposal to be in order and requested BSEB to endorse a copy of the letter to the petitioner with a request to the company to send monthly progress report of implementation regularly. Consequent thereto, the Chief Engineer (Commercial), Bihar, vide letter No.611/ Patna dated 17.12.1999 (Annexure-3) informed that it had no objection to the setting up the proposed 30 MW Captive Power Plant. However, it was indicated that so far as the synchronous operation of Captive Power Plant with BSEB system is concerned, the decision could only be taken when the petitioner submitted the detailed proposals of technical and commercial terms for their examination. Till such period, the said terms are decided, they would not permit the petitioner to synchronize its Captive Power Plant with BSEB system. Rate of power purchase, if required, will be settled by the BSEB after discussion and letter of 'No Objection' should not be taken as a commitment to purchase surplus power from the petitioner's plant. The BSEB granted permission for synchronization of the Captive Power Plant of the petitioner on 20.12.2000. In that light, the Director of Industries, after examination of papers and the inspection 16 report concluded that unit had gone into commercial production on 01.01.2001 vide letter dated 18.06.2002 (Annnexure-4). It is pertinent to mention here that Clause-16 of the Industrial Policy Resolution provides that the Director, Industries was the prescribed authority for medium and large industries to declare the date from which such a unit starts commercial production. In case of any dispute on the date of production, the decision of the Industrial Development Commissioner/ Secretary would be final. This issue relating to the date of commercial production came to be verified again, in view of the doubts expressed by the Joint Commissioner (Administration), Ranchi Division, Ranchi by the Secretary, Industries, Government of Jharkhand in the light of letter No. 3079 dated 08.12.2006, issued by the Commercial Taxes Headquarters. On the basis of the report submitted by a high level enquiry team constituted by the Secretary, Industries Department, the Director of Industries vide letter No. 30 dated 12.01.2009 again confirmed that the date of commercial production of captive power plant of the petitioner is 01.01.2001. This decision was conveyed after approval of the Secretary, Department of Industries. These facts which find reference in the order of the learned Commissioner of Commercial Taxes, are not in dispute.
18. The issue relating to eligibility of the petitioner under the Industrial Policy Resolution was dependent upon whether the petitioner-unit had gone into the commercial production after 15.11.2000 in terms of Clause 15.2.2 quoted above and the statutory notification (Annexure-5) dated 17.07.2004. The Industrial Policy Resolution designated the Director, Industries as the authority to declare the effective date of commercial production. Even after expression of doubts by the Commercial Taxes Department, this date was confirmed by the Secretary, Industries Department after enquiry by high power committee. There should not have been any further doubt after such determination by the competent authority, on the question of the date of commercial production of the unit. The JCCT, however, was guided by the considerations that in the existing Industrial Policy, 1995 of the State of Bihar, this unit had applied for grant of exemption and on failure to submit necessary papers in terms of S.O. No. 478 dated 22.12.1995 had not been able to avail it. The JCCT also seems to be guided by the report of the Circle Incharge that 17 the unit had produced about 11,185 units of energy on 08.09.2000 and that by 16.09.2000 it had produced 96,700 units. The JCCT or the Commercial Taxes Tribunal failed to take note that in terms of the conditions prescribed by the Electricity Board synchronization of the unit was permissible only after detailed examination of the technical and commercial terms, in view of the letter dated 17.12.1999. These authorities also failed to take into account that in terms of the guidelines of the Ministry of Energy, Government of India, synchronization of operations of such a captive power plant and the stabilization of production was mandatory. It had prescribed a trial run of six months for the said purpose. These facts have been taken into account by the Industries Department as also reflected in the order of the Commissioner, Commercial Taxes. The question at hand was whether in terms of the Industrial Policy Resolution and the notification dated 17.07.2004 the unit had gone into commercial production after 15.11.2000 or not. Whether the industry had tried to avail the benefits of Industrial Policy, 1995 and had failed were not relevant for coming to such a finding.
19. The arguments of the learned Advocate General on this point does not merit acceptance. If the Industrial Policy Resolution and the notification dated 17.07.2004 intended to provide the benefit of exemption from electricity duty w.e.f. the date of commercial production after the formation of the State of Jharkhand on 15.11.2000, it would mean that investment for setting up of the Captive Power Plant could be done even prior to that date. Therefore, establishment of the Captive Power Plant prior to the date of formation of the State in no way would have the effect of denying the benefit of the Industrial Policy Resolution, if under Clause 15.2.2 read with Clause 16 thereof, the unit had entered into commercial production after coming into force of the Industrial Policy Resolution i.e. 15.11.2000. The Industrial Policy Resolution was notified on 25.08.2001 and given effect to from 15.11.2000 i.e. the date of creation of the State. The benefit of exemption was granted under the statutory notification for a period of ten years from the date of entering into commercial production.
20. The submission of the learned Advocate General that the Captive Power Plant had to be established between 15.11.2000 and 31.03.2005 18 as per the terms of the statutory notification would not also merit acceptance for two reasons, (i) that it would be contrary to the proclaimed objectives of the Industrial Policy Resolution and the effective dates from which it is to be implemented i.e. 15.11.2000 reckoning the actual date of commercial production, which in this case is 01.01.2001 and (ii) if the said argument is accepted, then the decision of the respondents to grant the benefit of exemption to the petitioner from the date of the notification i.e. 17.07.2004 would in itself be incongruous. This submission does not find support from the Industrial Policy Resolution or from the stand of the respondents themselves, who have granted the benefit of exemption to the petitioner-unit after 17.07.2004. As per the ratio rendered by the Apex Court in the case of Suprabhat Steel Limited (supra), it could not be permissible for the State Government to deny any benefit which is otherwise available to an industrial unit under the incentive policy itself by issuing a notification of the Finance Act. The industrial incentive policy is issued by the State Government on approval by the Cabinet. It was held that the notification under Section 7 of the Bihar Finance Act is issued to carry out the objectives and the policy decision taken in the Industrial Policy itself. In that view of the matter, any notification issued by the Government order in exercise of power under Section 7 of the Bihar Finance Act, if found to be repugnant to the Industrial Policy declared in a Government Resolution must be held to be bad to that extent.
21. At this stage, it is also pertinent to rely upon the ratio rendered by the Apex Court in the case of Mangalore Chemicals and Fertilisers Limited (supra), on the principles, which govern the construction of an exemption provision. The Apex Court relying upon the precedents on point in the case of Collector of Central Excise versus Parle Exports (P) Ltd, reported in (1989) 1 SCC 345 and in the case of Union of India versus Wood Papers Ltd., reported in (1990) 4 SCC 256 held that liberal and strict construction of an exemption provision are to be invoked at different stages of interpreting it. When the question is whether a subject falls in the notification or in the exemption clause, then it being in nature of exception, is to be construed strictly and against the subject but once ambiguity or doubt about applicability is lifted and the subject falls 19 in the notification then full play should be given to it and it calls for a wider and liberal construction.
22. Opinion of the Apex Court, contained at para-22 to 24 of the report, in the case of Mangalore Chemicals and Fertilisers Limited (supra) are profitably quoted hereunder:
"22. Such is not the scope or intendment of the provisions concerned here. The main exemption is under the 1969 notification. The subsequent notification which contains condition of prior permission clearly envisages a procedure to give effect to the exemption. A distinction between the provisions of statute which are of substantive character and were built in with certain specific objectives of policy on the one hand and those which are merely procedural and technical in their nature on the other must be kept clearly distinguished. What we have here is a pure technicality. Clause 3 of the notification leaves no discretion to the Deputy Commissioner to refuse the permission if the conditions are satisfied. The words are that he "will grant". There is no dispute that appellant had satisfied these conditions. Yet the permission was withheld - not for any valid and substantial reason but owing to certain extraneous things concerning some inter-departmental issues. Appellant had nothing to do with those issues. Appellant is now told, "We are sorry. We should have given you the permission. But now that the period is over, nothing can be done". The answer to this is in the words of Lord Denning. "Now I know that a public authority cannot be estopped from doing its public duty, but I do think it can be estopped from relying on a technicality and this is a technicality".
23. Francis Bennion in his Statutory Interpretation, (1984 edn.) says at page 683:
"Unnecessary technicality: Modern courts seeks to cut down technicalities attendant upon a statutory procedure where these cannot be shown to be necessary to the fulfilment of the purposes of the legislation."
24. Shri Narasimhamurthy again relied on certain observations in CCE v. Parle Exports (P) Ltd., in support of strict construction of a provision concerning exemptions. There is support of judicial opinion to the view that exemptions from taxation have a tendency to increase the burden on the other unexempted class of tax payers and should be construed against the subject in case of ambiguity. It is an equally well known principle that a person who claims an exemption has to establish his case. Indeed, in the very case of Parle Exports (P) Ltd. relied upon by Sri Narasimhamurthy, it was observed: (SCC p. 357, para 17) 20 "While interpreting an exemption clause, liberal interpretation should be imparted to the language thereof, provided no violence is done to the language employed. It must, however, be borne in mind that absurd results of construction should be avoided."
The choice between a strict and a liberal construction arises only in case of doubt in regard to the intention of the legislature manifest on the statutory language.
Indeed, the need to resort to any interpretative process arises only where the meaning is not manifest on the plain words of the statute. If the words are plain and clear and directly convey the meaning, there is no need for any interpretation. It appears to us the true rule of construction of a provision as to exemption is the one stated by this Court in Union of India v. Wood Papers Ltd.
"....Truly speaking liberal and strict construction of an exemption provision are to be invoked at different stages of interpreting it. When the question is whether a subject falls in the notification or in the exemption clause then it being in nature of exception is to be construed strictly and against the subject but once ambiguity or doubt about applicability is lifted and the subject falls in the notification then full play should be given to it and it calls for a wider and liberal construction...."
In the said case, the benefits of Industrial Policy exemption were denied to the appellant on the ground that the period of industrial policy was over. The Apex Court relying upon the words of Lord Denning held that such a benefit could not be denied relying on technicality.
23. From the discussions made hereinabove and from the stand of the respondents themselves, it is clear that the petitioner has been granted the benefit of exemption from the electricity duty acknowledging it to be covered under the Industrial Policy Resolution on having entered commercial production from 01.01.2001. It has availed of the benefits of exemption post the statutory notification dated 17.07.2004, but, the respondents have chosen to deny the claim of refund on the ground that it was ineligible. As observed hereinabove, the question of eligibility was dependent upon the date on which it entered commercial production. This issue having been finally laid to rest by an authority, specifically empowered under the Industrial Policy Resolution, 2001 i.e. the Industrial Commissioner/ Secretary of the Industries Department, there was no occasion for the learned Tribunal to question the findings of the learned Commissioner, Commercial Taxes on those counts, when the 21 State had not preferred any challenge to the said findings.
24. We may proceed now to deal with the contention raised by the State in relation to the question of jurisdiction of the learned Commercial Taxes Tribunal to annul the finding of the learned Commissioner on the point of eligibility of the petitioner-unit. Reference has been made to Section 9A of the Electricity Duty Act, 1948 and Rule-14 of the Electricity Duty Rules, 1949.
Learned senior counsel for the petitioner has relied upon the judgment of the Bombay High Court in the case of New India Life Assurance Co. Ltd. versus Commissioner of Income Tax, reported in AIR 1958 Bombay 143 which has been affirmed in the case of State of Kerala versus M/s. Vijaya Stores, reported in (1978) 4 SCC 41 to counter the aforesaid challenge. Learned senior counsel for the petitioner has also referred to the provision of Rule-14(5) which specifically prescribes that the Commissioner, Commercial Taxes is empowered to exercise the powers of revision.
25. As per Section 9A, which is the provision of appeal, any licensee or other person objecting to an order or assessment with or without penalty passed under the Act, or the rules made thereunder may, within the prescribed period and in the prescribed manner, appeal to the prescribed authority against such order of assessment or penalty or both.
Sub-section(3) of Section 9A of the Electricity Duty Act, 1948, relied upon by the learned Advocate General, provides "subject to such rules as may be prescribed and for reasons to be recorded in writing the prescribed authority may, upon application or of its own motion, revise any order passed under this Act or the rules made thereunder." Rule-14 of the Electricity Duty Rules, 1949 provides for appeal, revision and review. Sub-rule (4) of Rule 14 thereof applies to present case as it deals with an application for revision of any order passed under the Act or these rules, other than an order of assessment with or without penalty or an order passed under sub-rules (1) or (2) of the said Rule. The authorities before whom such a revision would lie have been prescribed under clauses (a) to (d) of sub-rule(4) of Rule-14. Clause (d) of sub-rule (4) of Rule-14 provides that if the order sought to be revised is one passed by the Commissioner, revision application would lie to the 22 Tribunal. Sub-rule (5) of Rule-14 provides that the Commissioner may, of his own motion, revise any order passed by any authority subordinate to him. Apparently, sub-rule (5) of Rule-14 provides that Commissioner has the power to revise any order passed by any authority subordinate to him on his own motion. As is clear from the reading of Section 9A (3) the prescribed authority may upon application or of its own motion, revise any order passed under the Act or the rules made thereunder, subject to such rules, as may be prescribed.
Indeed, the State had not chosen to file an application if it was aggrieved by the findings of the learned Commissioner, Commercial Taxes on the point of eligibility of the petitioner. The person aggrieved was the petitioner who had challenged only that part of the findings of the learned Commissioner relating to denial of the claim for refund on the ground of unjust enrichment. At this stage, it would be proper to rely upon the opinion of the Apex Court as rendered in the case of State of Kerala versus M/s. Vijaya Stores, reported in (1978) 4 SCC 41. Paragraph-6 of the report is quoted hereunder:
"6. It is true that the two Bombay decisions reported in 13 ITR 272 and 31 ITR 844 (supra) on which the High Court has relied have been rendered in relation to Section 33(4) of the Indian Income Tax Act, 1922 but in our view the said provision of Income Tax Act is in pari materia with the provision of Section 39(4) of the Kerala General Sales Tax Act, 1963. Moreover, the Bombay High Court has pointed out in those decisions that Section 33(4) merely enacted what was the elementary principle to be found in Civil Procedure Code that the respondent who has neither preferred his own appeal nor filed cross-objections in the appeal preferred by the appellant, must be deemed to be satisfied with the decision of the lower authority and he will not be entitled to seek relief against a rival party in an appeal preferred by the latter. In the first mentioned case the elementary principle is stated at page 282 of the report thus:
Apart from statute, it is elementary that if a party appeals, he is the party who comes before the Appellate Tribunal to redress a grievance alleged by him. If the other side has any grievance, he has a right to file a cross-appeal or cross-objections. But if no such thing is done, the other party, in law, is deemed to be satisfied with the decision. He is, of course, entitled to support the judgment of the first officer on any ground open to him, but he is not entitled to raise a ground so as to work adversely to the appellant and in his favour."23
(emphasis supplied)
26. Learned Advocate General on the other hand has in support of the aforesaid contention referred to the judgments rendered by the Apex Court in the cases of State of Gujarat and another versus Gujarat Revenue Tribunal Bar Association and another, reported in (2012) 10 SCC 353 para-17 and Bombay Ammonia Pvt. Ltd. versus The State of Tamil Nadu, reported in (1976) 3 SCC 6 para-11 &15. The Apex Court at para-17 in the case of State of Gujarat and another versus Gujarat Revenue Tribunal Bar Association and another (supra) while examining the main issue whether the Office of the President of Gujarat Revenue Tribunal was a judicial office or an administrative office had the occasion to observe that the supervisory or revisional jurisdiction is considered to be a power vesting in any superior court or tribunal, enabling it to satisfy itself as regards the correctness of the orders of the inferior tribunal. This is the basic difference between appellate and supervisory jurisdiction. The appellate jurisdiction confers a right upon the aggrieved person to complain in the prescribed manner to a higher forum whereas, supervisory/ revisional power has a different object and purpose altogether as it confers the right and responsibility upon the higher forum to keep the subordinate tribunals within the limits of the law. It is for this reason that revisional power can be exercised by the competent authority/ court suo motu, in order to see that subordinate tribunals do not transgress the rules of law and are kept within the framework of powers conferred upon them. In the case of Bombay Ammonia Pvt. Ltd. versus The State of Tamil Nadu (supra), at para 11 and 15 of the report relied upon by the learned Advocate General, the Hon'ble Supreme Court while dealing with the suo motu powers conferred on the Deputy Commissioner under Section 32 of the Madras General Sales Tax Act, 1959, observed that the language of this Section made it clear that the suo motu power conferred on the Deputy Commissioner in regard to the order or proceeding specified therein is quite wide and he can, subject to the conditions laid down in sub- sections (2) and (3), exercise the same even at the instance of an assessee who has not filed an appeal against the order, for the purpose of rectifying any illegality or impropriety therein. The Apex Court at 24 paragraph-13 of the same judgment had also the occasion to discuss the limitations to the revisional power. It was held that the revisional power would not invest the revising authority with power to launch upon enquiries at large so as to trench upon the powers which are expressly reserved by the Act or by the Rules to other authorities or to ignore limitations inherent in the exercise of those powers. Para-11,13 and 15 of the report are quoted hereunder for better appreciation:
"11. The language of this section makes it clear that the suo motu power conferred on the Deputy Commissioner in regard to the order or proceeding specified therein is quite wide and he can, subject to the conditions laid down in sub-sections (2) and (3), exercise the same even at the instance of an assessee who has not filed an appeal against the order for the purpose of rectifying any illegality or impropriety therein.
13. The limitations to which the revisional power is subject were indicated by the majority thus:
It would not invest the revising authority with power to launch upon enquiries at large so as to trench upon the powers which are expressly reserved by the Act or by the Rules to other authorities or to ignore limitations inherent in the exercise of those powers. For instance, the power to reassess escaped turnover is primarily vested by Rule 17 in the assessing officer and is to be exercised subject to certain limitations, and the revising authority will not be competent to make an enquiry for reassessing a taxpayer. Similarly, the power to make a best-judgment assessment is vested by Section 9(2)(b) in the assessing authority and has to be exercised in the manner provided. It would be open to the revising authority to assume that power.
15. In view of the above, we are of opinion that the suo motu power of revision of the Deputy Commissioner is of wide amplitude and can be exercised in favour of the revenue as well as the taxpayer in order to correct any error or illegality committed by the assessing authority in his order of assessment."
27. However, on the merits of the contention relating to the eligibility of the petitioner, we have found that the petitioner was rightly held by the Commissioner, Commercial Taxes to be eligible for the benefit of exemption under the Industrial Policy Resolution and the statutory notification dated 17.07.2004 (Annexure-5), on the basis of the report of the Director, Industries and the Secretary, Industries Department. We are, therefore, of the opinion that on both the counts, the grounds urged by the respondents-State to deny the claim for refund to the petitioner is not tenable on facts or in law. We are not required to further dilate on the issue of unjust enrichment as the Apex Court in the case of Mafatlal Industries Ltd. (supra) at para-107 of the report, quoted hereunder, clearly held that ratio rendered therein does not apply to the case of captive consumption.
25"107. A clarification: The situation in the case of captive consumption has not been dealt with by us in this opinion. We leave that question open."
On the other hand, learned Advocate General has not been able to counter the submissions of the learned senior counsel for the petitioner on this issue, both on facts and in the context of the ratio rendered by the Apex Court in the case Amrit Banaspati Co. Ltd. In the case of Amrit Banaspati Co. Ltd. (supra) the issue was relating to claim of refund of a tax collected under the statute without any enabling statutory notification issued thereunder. The State had issued an executive order which was deprecated by the Apex Court. In the facts of the said case, no claim for exemption under the Industrial Policy Resolution was under
consideration. Learned Advocate General has therefore also not been able to support this finding of the learned JCCT or the learned Commissioner, Commercial Taxes or the learned Tribunal on the issue of unjust enrichment, relying upon these judgments of the Apex Court.
28. As an upshot of the aforesaid discussion and for the reasons recorded hereinabove, we are unable to uphold the impugned order, passed by the Commercial Taxes Tribunal. Consequently, the order passed by the learned Commercial Taxes Tribunal, upholding the order of the learned Commissioner, Commercial Taxes, whereunder, the claim of the petitioner for refund of the electricity duty paid for the period 01.01.2001 to 31.05.2004 has been rejected, is accordingly quashed. The issue framed out at the outset is answered in favour of the petitioner. However, it would be open for the respondents-State to adjust the amount due to be refunded in the future bills of the petitioner-company.
29. This writ petition stands allowed, in the aforesaid terms.
(Aparesh Kumar Singh,J.) (Ratnaker Bhengra,J.) SD/SB-N.A.F.R