Jharkhand High Court
M/S Mecon Limited vs The State Of Jharkhand on 26 September, 2022
Author: Aparesh Kumar Singh
Bench: Aparesh Kumar Singh, Deepak Roshan
1
IN THE HIGH COURT OF JHARKHAND AT RANCHI
W.P.(T) No.1262 of 2021
With
W.P.(T) No.1265 of 2021
--------
M/s MECON LIMITED, a Government of India Enterprise, through its General Manager, Subhash Chandra Jha ..... Petitioner (In both the cases) Versus
1. The State of Jharkhand, through its Secretary-cum-Commissioner of Commercial Taxes, Head Quarter Jharkhand
2. The Deputy Commissioner of Commercial Taxes, Ranchi South Circle, Ranchi
3. The Assistant Commissioner of Commercial Taxes, Ranchi South Circle, Ranchi ..... Respondents (In both the cases) With W.P.(T) No.1263 of 2021 With W.P.(T) No.1264 of 2021
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M/s MECON LIMITED, a Government of India Enterprise, through its General Manager, Subhash Chandra Jha ..... Petitioner (In both the cases) Versus
1. The State of Jharkhand through its Secretary cum Commissioner of State Taxes, Head Quarter Jharkhand, having its office at Ranchi
2. The Deputy Commissioner of State Taxes, Ranchi South Circle, Ranchi
3. The Assistant Commissioner of State Taxes, Ranchi South Circle, Ranchi ..... Respondents
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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. M. S. Mittal, Sr. Advocate
Mr. Rahul Lamba, Mr. Salona Mittal
Advocates
For the Respondents : Mr. Sachin Kumar, AAG-II
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10/26.09.2022 Heard learned counsel for the parties.
2. Since all these writ applications are in relation to the same petitioner for respective financial years and as similar issue is involved in all these cases, all are heard together and disposed of by this common order.
The petitioner in all these writ applications have prayed for quashing and setting aside the respective Assessment Orders, all dated 17.11.2020 and also the notice of demand dated 18.11.2020 issued by Respondent No.2 to the petitioner for respective financial years on the ground that the demand made in all these writ applications are absolutely unlawful and has been raised by the respondents without jurisdiction as this court, in the case of M/s Anjaney Ferro 2 Alloys Ltd. & Ors vs. State of Jharkhand & Ors., reported in 2012 SCC Online Jhar 426 has declared that Section 5 of the Jharkhand Electricity Duty (Amendment) Act, 2011 is ultra vires and the State Government has no right to recover the electricity duty from the consumers.
3. Brief facts of the case as it emerge from the averments made in the writ application is that the petitioner is a Government of India Enterprise and is engaged in the business of engineering and consultancy services. It is a consumer of electricity supplied by the Licensee namely Jharkhand State Electricity Board (JSEB) or Jharkhand Bijli Vitran Nigam Limited (JBVNL). The specific case of the petitioner is that it is only a consumer of electricity supply and is not the Licensee of the electricity supply. The Licensee of electricity supply in the present case is JSEB or JBVNL. Further, the petitioner is not an industrial or mining consumer but is only a domestic and/or commercial consumer of electricity. The petitioner utilizes the electricity energy for its office premises as well as in the residential colony.
The petitioner received an e-mail on 18.12.2020 from the Commercial Taxes Department, South Circle, Ranchi, containing four notice of demand for the relevant Assessment period i.e., for 2014-15, 2015-16, 2016-17 & 2017-18, all dated 18.12.2020, which was issued by the Respondent No.2 to the petitioner demanding the payment of the alleged electricity duty.
The further case of the petitioner is that neither the original notices of demand were served by the Respondents on the petitioner nor the assessment orders on the basis of which the said notice of demand was given to the petitioner, was served by the respondents. Accordingly, the petitioner applied for a certified copy of the said assessment order. On 09.01.2021, the Respondent Commercial Taxes Department issued a certified copy of the Assessment Order, dated 17.11.2020, passed by the Respondents in the case of the petitioner for the respective period, wherein the petitioner has been held liable to pay the electricity duty and further penalty was also imposed.
For the sake of brevity, a chart is being given below with regard to respective financial years.
Case No. Financial Notice of Assessment Order dated
Year Demand dated 17.11.2020
18.11.2020
Duty Penalty Total
W.P.(T) 2016-17 Rs.8,73,197/- Rs.410445.60/- Rs.461751.30/- Rs.872196.90/
-
No. 1262
(Annexure-3
of 2021
filed by S.A. at
3
page no. 6 of
S.A.
W.P.(T) 2017-18 Rs.6,38,864/- Rs.418271.40/- Rs.219592.49/- Rs.637863.89/
-
No. 1263
of 2021
W.P.(T) 2015-16 Rs.11,27,090/- Rs.413244.00/ 712845.90/- Rs.1126089.9
0/-
No.1264 -
(Annexure-3
of 2021 filed by S.A.
at page no. 6
of S.A.
W.P.(T) 2014-15 Rs.13,99,327/- 420549.60/- Rs.977777.82 Rs.
No. 1265 /- 1398327.42/-
of 2021
4. Mr. M. S. Mittal, Sr. Advocate assisted by Mr. Rahul Lamba and Mr. Salona Mittal, learned counsels for the petitioner submits that the said assessment order, dated 17.11.2020, is completely based on the provision of Jharkhand Electricity Duty (Amendment) Act, 2011 which has already been declared as ultra vires and illegal by this Court in the case of M/s Anjaney Ferro alloys Ltd. (supra).
Learned sr. counsel further submits that the assessment orders have been passed on the basis of the provisions of the Jharkhand Electricity Duty (Amendment) Act, 2011, which are not either relevant or existing in the said Act. It is submitted that the said assessment order relied on Section 3 of the said Amendment Act, by incorrectly stating that Section 3 of the said Amendment Act provides for payability of the electricity duty. It is submitted that Section 3 of the said Amendment Act only provides for insertion of various definitions in the main Act and it does not provide for any payability of electricity duty as has been incorrectly stated in the assessment orders. The said assessment orders has further been based on Section 4 and Section 4 (a) of the said Amendment Act, however Section 4 (a) does not exist at all in the said Amendment Act and Section 4 of the said Amendment Act only provides for deletion of Section 3A of the main Act i.e. the Bihar Electricity Duty Act, 1948.
It is further submitted that this Court in the aforesaid judgment has also declared that the Amendment made in Section 4 of the Electricity Duty Act, which gave power to the State Government to choose and pick either the Sellers or Consumers of the Electricity for payment of Electricity Duty to be ultra vires and illegal. Mr. Mittal lastly submits that the issue involved in this case has 4 already been decided in the case of M/s Shroff Enterprises [W.P.(T) No. 1282 of 2021 with W.P.(T) No. 1283 of 2021 with W.P.(T) No. 1300 of 2021 with W.P.(T) No. 1303 of 2021]. In said cases the assessing authority has treated the petitioner as a consumer of bulk supply of electricity and consequently imposed electricity duty including penalty upon the petitioner on account of not getting itself registered under the provisions of the Jharkhand Electricity Act and Rules. This court quashed the assessment order. Paragraph 18 of the aforesaid order is quoted hereunder:
"18. The impugned orders of assessment having been passed by treating the petitioner as a consumer of bulk supply of electricity is ex facie perverse and has been passed in total disregard to the amended definition of "bulk supply" vide notification No. SO 4 dated, 18.06. 2012. Consequently, the impugned orders of assessment suffer from wrongful assumption of jurisdiction by the assessing authority. It is also important to note that the counter affidavit filed in the present relied upon the definition of "bulk supply" as introduced in the rules vide aforesaid Notification dated 08.10.2011 and ignores the amended definition of "bulk supply" which stood amended by virtue of aforesaid notification dated 18.06.2012 whereby commercial consumers were omitted."
5. Mr. Sachin Kumar, AAG-II, learned counsel for the respondents submits that the petitioner is a commercial establishment and is in the business of engineering and consultancy services. It is further submitted that the petitioner is a bulk purchaser of electricity and uses the energy purchased to supply the same in its commercial establishment.
Learned counsel further submits that after the judgment rendered by this Court in the matter of M/s Anjaney Ferro alloys Ltd. (Supra), there have been some amendments in the rules known as The Jharkhand Electricity Duty (Amendment) Rules, 2012 introduced by the State Government vide S.O. 4 dated 18.06.2012. Learned counsel contended that after reading the definitions and the amendment conjointly and the fact that the petitioner is a High-Tension consumer, it is apparent that the petitioner is a bulk purchaser of electricity and is an Assessee of the State Government as well and is therefore liable to pay the electricity duty as levied by the Government. He further submits that the amendments as mentioned above has never been under challenge, thus the assessing officer had rightly assessed the petitioner for the electricity duty in accordance with law.
56. Having considered submissions of learned counsel for the parties, the pleadings, relevant documents placed on record and the judgments cited, it appears that the whole and sole basis, on which the electricity duty has been imposed on the petitioner under the impugned Assessment Orders, all dated 17.11.2020, is that the petitioner is a High Tension ('HT') connection consumer of electricity and therefore the petitioner is liable to get assessed and pay electricity duty directly to the State Government. The said basis can be clearly seen from the first order dated 24.07.2020 of the assessment proceedings, which is provided at Annexure-C to the Counter Affidavit of the respondents and also from the impugned Assessment Order dated 17.11.2020 which is provided at Annexure-3 of the writ petition.
It further appears that the said basis of the respondent authorities has no support of any legal provisions of the Bihar Electricity Duty Act, 1948, as adopted by the State of Jharkhand, or the rules made thereunder.
7. Further, as can be seen from the impugned Assessment Order as well as the assessment proceedings, the genesis of the impugned Assessment Order lies in the audit observation of the Accountant General, Jharkhand that electricity duty has to be paid by HT consumer to the State Government.
It appears that the respondent authorities have, without any appreciation of the legal provisions, followed the said audit observations of the Auditor General in passing the impugned Assessment Order and imposing the liability of electricity duty on the petitioner. The said approach of the Respondent authorities is arbitrary and not fair.
In this regard, there are several judgments of the Hon'ble Supreme Court which categorically holds that the audit observations/reports must be examined before implementation to the effect that whether the said observations have some mistake or may be the issues have not been properly appreciated etc. The Hon'ble Apex Court in one of its recent judgments passed in the matter of Uttar Pradesh Power Transmission Corporation Limited v. CG Power and Industrial Solutions Limited reported in 2021 SCC OnLine SC 383, has held in Para No. 60, 62 & 69 as under:
"60. As observed above, UPPTCL demanded and partly realised cess on the supply contract, solely on the basis of report of the CAG. In our considered view, in the absence of any adjudication, it was impermissible for UPPTCL to issue the impugned communication to realise cess solely on the basis of the report of the CAG.
62. In Pathan Mohammed Suleman Rehmatkhan v. State of Gujarat [Pathan Mohammed Suleman Rehmatkhan v. State of Gujarat, (2014) 4 SCC 156] , this Court held: (SCC pp. 161-62, paras 9-10 & 12) 6 "9. We heard Shri Y.N. Oza, the learned counsel for the petitioner and perused the records, as well as counter-affidavit and reply-affidavit filed by the parties before the Gujarat High Court. The entire case of the petitioner is based on the CAG Report. The applicability and the binding characteristics of such report were considered [Pathan Mohammed Suleman Rehmatkhan v. State of Gujarat, 2013 SCC OnLine Guj 5391] by the High Court. In Arun Kumar Agrawal case [Arun Kumar Agrawal v. Union of India, (2013) 7 SCC 1] , this Court held as follows:
(SCC p. 24, para 68) '68. We may, however, point out that since the report is from a constitutional functionary, it commands respect and cannot be brushed aside as such, but it is equally important to examine the comments what respective Ministries have to offer on the CAG Report. The Ministry can always point out, if there is any mistake in the CAG Report or the CAG has inappropriately appreciated the various issues.'
10. The CAG is a key figure in the system of parliamentary control of finance and is empowered to delve into the economy, efficiency and effectiveness with which the departmental authorities or other bodies had used their resources in discharging their functions. The CAG is also the final audit authority and is a part of the machinery through which the legislature enforces the regulatory and economy in the administration of public finance, as has been rightly pointed out by the High Court. But we cannot lose sight of the fact that it is the Government which administers and runs the State, which is accountable to the people. The State's welfare, progress, requirements and needs of the people are better answered by the State, also as to how the resources are to be utilised for achieving various objectives. If every decision taken by the State is tested by a microscopic and a suspicious eye, the administration will come to a standstill and the decision-
makers will lose all their initiative and enthusiasm. At hindsight, it is easy to comment upon or criticise the action of the decision-maker. Sometimes, decisions taken by the State or its administrative authorities may go wrong and sometimes they may achieve the desired results. Criticisms are always welcome in a parliamentary democracy, but a decision taken in good faith, with good intentions, without any extraneous considerations, cannot be belittled, even if that decision was ultimately proved to be wrong.
***
12. Reference in this regard may also be made to the judgment of this Court in Centre for Public Interest Litigation v. Union of India [Centre for Public Interest Litigation v. Union of India, (2012) 3 SCC 1] , wherein it was held that when the CAG Report is subject to scrutiny by the Public Accounts Committee and the Joint Parliamentary Committee, it would not be proper to refer to the findings and conclusions contained therein. The Court even went on to say that it is not necessary to advert to the reasoning and suggestions made, as well."
69. It is now well settled by a plethora of decisions of this Court that relief under Article 226 of the Constitution of India may be granted in a case arising out of contract. However, the writ jurisdiction under Article 226, being discretionary, the High Courts usually refrain from entertaining a writ petition which involves adjudication of disputed questions of fact which may require analysis of evidence of witnesses. Monetary relief can also be granted in a writ petition. "
It is also a well settled principle of law that the entire proceeding fails if the genesis or the initiation of such proceeding is bad in law. Accordingly, as the audit observation itself was bad in law, the subsequent assessment 7 proceedings initiated against the petitioner and also the impugned orders are unsustainable and void ab initio. In this regard, reference may be made to the judgment of the Hon'ble Apex Court passed in the matter of State of Punjab v. Davinder Pal Singh Bhullar reported in (2011) 14 SCC 770, Para 107, wherein it has been held as under:
"107. It is a settled legal proposition that if initial action is not in consonance with law, all subsequent and consequential proceedings would fall through for the reason that illegality strikes at the root of the order. In such a fact situation, the legal maxim sublato fundamento cadit opus meaning thereby that foundation being removed, structure/work falls, comes into play and applies on all scores in the present case "
8. It further seems that the entire counter affidavit of the Respondents is based on certain amendments, brought in the Bihar Electricity Duty Rules, 1949 by way of the Jharkhand Electricity Duty (Amendment) Rules, 2012 introduced by S.O. No. 4 dated 18.06.2012, in order to support the Respondent's impugned Assessment Order, dated 17.11.2020 and to show that the petitioner is liable to pay the electricity duty to the Respondent department, whereas from bare perusal of the impugned Assessment Order it is evident that the assessment is based upon Section 5 (wrongly mentioned as Section 4 in the impugned Assessment Order) of the Jharkhand State Electricity Duty (Amendment) Act, 2011 (which section has since been struck down by this Court) and not on the said Jharkhand Electricity Duty (Amendment) Rules, 2012.
It is undisputed fact that the petitioner is engaged in the business of engineering and consultancy services. Further it is also undisputed that the petitioner is only a consumer of electricity supplied by the licensee namely Jharkhand State Electricity Board (JSEB) or Jharkhand Bijli Vitran Nigam Limited (JBVNL). Prior to coming into force of the Jharkhand Electricity Duty (Amendment) Act, 2011, the liability to pay the electricity duty was of the licensee and not of the consumer of electricity. It was by way of the Jharkhand Electricity Duty Act (Amendment), 2011 and specifically Section 5 of the said Amendment Act that the liability to pay the electricity duty was imposed on the consumer in addition to the licensee, Section 5 of the said Amendment Act amended Section 4 of the Bihar Electricity Duty Act, 1948 to create a liability of payment of electricity duty also on the consumers.
9. The validity and vires of Section 5 of the Jharkhand Electricity Duty (Amendment) Act, 2011 by which Section 4 of the Bihar Electricity Duty Act, 1948 was amended was challenged inter-alia before this Hon'ble Court in the matter of M/s Anjaney Ferro Alloys Ltd. (supra). The said matter was decided by this Court vide its judgment dated 03.04.2012. This Court in the said 8 judgment has declared Section 5 of the Jharkhand Electricity Duty (Amendment) Act, 2011, which amended Section 4 of the Bihar Electricity Duty Act, 1948, as ultra vires and illegal. This Court also categorically held in the said judgment that the State Government has no right to recover the electricity duty from the consumers of licensee.
As Section 5 of the said Amendment Act, 2011 (by which Section 4 of the Bihar Electricity Duty Act, 1948 was amended) has been declared ultra vires, the liability to pay the electricity duty is not of the consumer but of the licensee as provided by Section 4 of the Bihar Electricity Duty Act, 1948 prior to the said amendment.
10. At the cost of repetition, the respondents have squarely relied on the Amendment Rules, 2012 to show that the impugned Assessment Orders, all dated 17.11.2020, passed by the Respondents Authorities is valid in law.
11. Even the Amendment Rules, 2012 do not create any liability on the petitioner to pay the electricity duty to the Respondent Department. The Respondents have relied on the definition of the term 'Assessee' provided in Rule 2(b) of the Amendment Rules, 2012 to show that the Petitioner is a consumer who is supplied with bulk supply of energy and thus is an 'Assessee' who is also liable to pay the electricity duty. The definition of assesse as provided is said Rule 2(b) is reproduced herein below:
"2(b) - "assessee" means: the licensees, the electricity traders, the captive generating plants, and such consumers who are supplied with bulk supply of energy by a licensee or by a distribution licensee or by the electricity traders, who are liable to pay duty under the Act but does not include the domestic consumers and such commercial consumers who do not fall in the categories cited herein before."
In this regard, it is pertinent to consider the term "bulk supply", which is also defined under the said Rules, in order to appreciate whether the supply of electricity to the petitioner falls within the meaning of "bulk supply". The term "bulk supply" has been defined in Rule 2(ba) of the said Rules which reads as under:-
"2 (ba)- "bulk supply means: supply of energy to such industrial and mining consumers who are supplied with the high-tension voltage supply services for their respective premises."
Thus, it is clear from the aforesaid definition that the supply of energy to any industrial or mining consumer will only be considered as "bulk supply". It is an undisputed fact that the petitioner not a mining consumer. As far as being industrial consumer is concerned, it is submitted that Industrial Unit is 9 defined under Section 2(i) of the Electricity Duty Act, 1948. The said definition is quoted herein below for ready reference:
2(i) - "Industrial unit" means an industrial unit engaged, predominantly in :
(i) the manufacture or production or processing of goods:
(ii) any job work which remits in the manufacture or production of goods but does not include a unit which manufactures or produces any kind of food or drinks or both; meant ordinarily for consumption in the premises of such establishment; and
(iii) who are supplied with the electrical energy with a contract demand above 100 KVA or more with 3 Phase at 6.6 KV/11KV/33KV by a "licensee" or a "distribution licensee" or as may be notified in this behalf by the State Government from time to time.
Explanation - The premises of industrial unit does not include "Mines" and such premises used for residential purposes."
From perusal of the aforesaid definition, it can be seen that the petitioner, who is undisputedly into the business of rendering the services of engineering consultancy is not an industrial consumer, therefore the petitioner does not fall under the definition of "bulk supply" as provided in the said Rules. Accordingly, since the petitioner is not being supplied with bulk supply of energy the petitioner is not an 'Assessee' as defined under the said Rules. Therefore, no liability can be imposed upon the petitioner to pay the electricity duty to the Respondent Department.
12. In view of the aforesaid discussions, the impugned assessment orders, all dated 17.11.2020 and subsequent notice of demand for the respective financial years, dated 18.11.2020, are, hereby, quashed and set aside.
13. With the aforesaid observations, the writ petitions are allowed.
(Aparesh Kumar Singh, J.) (Deepak Roshan, J.) sm/