Gujarat High Court
State Of Gujarat And Anr. vs Associated Cement Co. Ltd. on 16 September, 1994
Equivalent citations: (1995)1GLR757
JUDGMENT R.K. Abichandani, J.
1. This appeal is directed against the judgment and order dated 21st August, 1981 passed by the learned single Judge (Coram: N.H. Bhatt, J.) partly allowing the petition by restraining the appellant No. 2 from recovering the electricity dues in respect of the units consumed by the respondent-petitioner company for the benefit of the people of village Sevalia, while holding that the appellant No. 2 was entitled to claim electricity duty in respect of the units consumed for the purpose of residential and office premises in Sevalia village.
2. The respondent had challenged the notice dated 3rd November, 1976 at Annexure-C to the petition, in so far as it relates to the item Nos. 1, 2, 3 and 4. The said notice was issued by the Collector of Electricity Duty, Ahmedabad with reference to a claim for refund which was made by the respondent-company and it was stated therein that while scrutinising the refund claims, recoveries as per the details given in the said notice were noted by the office and out of total, the sum of Rs. 4,72,643-90 Ps. which was recoverable, it was proposed to adjust the refund claims of Rs. 1,85,567-11 Ps. resulting into net recovery of Rs. 2,87,076-79 Ps. The respondent-company was called upon to remit the said amount.
3. The case of the respondent-company was that an agreement was entered into between the company and 23 villagers of village Sevalia under which electricity was to be supplied free to the villagers by the company as stated in the agreement. The company was generating electricity for its own use, which was under the agreement also supplied to villagers of Sevalia. The contention of the respondent was that in view of the definition of word 'consumer' as contained in Section 2(a) of the Bombay Electricity Duty Act, 1958 only a person who was supplied electricity on payment of charges could be considered as a consumer. According to the respondent, the definition did not contemplate supply of the electrical energy free of charge and, therefore, the villagers of village Sevalia to whom the energy was supplied by the company free of charge could not be termed as consumers. It was further contended that in view of the provisions of Section 3(2)(vii)(a) of the said Act, the respondent-company was not liable to pay any electricity duty for 10 years from the date of commencement of the Bombay Electricity Duty (Gujarat Amendment) Act, which was 1st April, 1961. It was also contended that the petitioner was a licensee and, therefore, was not required to collect electricity duty from the villagers of Sevalia supplied to them free of charge under the provisions of Section 4(2) of the Act.
4. The case of the appellants was that the supply of the electricity to the villagers by the respondent-company was not under any licence obtained under the provisions of Indian Electricity Act, 1910. The company generated electricity for its own use and supply to the villagers free of charge, but was not engaged in the business of supply of electricity to public in general. It was contended that the case of the respondent-company did not fall in any of the exemptions enumerated in Section 3(2) of the said Act, as regards items covered by notice at Annexure-C to the petition and therefore, the company was called upon to pay up the amount recoverable as electricity duty by the said notice dated 3-11-1976. It was also contended that the respondent-company did enjoy the exemption for a period of 10 years from 1-1-1962 in accordance with the provision of Section 3(2)(vii)(a) of the Act. However, for non-industrial purposes, the respondent-company was bound to make payment of duty. The letter addressed by the respondent-company to the appellant No. 2 on dated 8-2-1977, which was not brought to the notice of the Court by the respondent in its petition, was placed on record with the affidavit-in-reply and it referred to the fact that only the first item of the said notice was disputed by the respondent, while the payment of other undisputed amount was being made.
5. The learned single Judge was much impressed by the agreement that the company entered into with the villagers of Sevalia for supply of free of charge electricity to them. On the basis that the said agreement was entered into in the year 1952, the learned single Judge resorted to the provision of Part-II of the Bombay Financial Act, 1932 and relying upon the proviso to Section 5 of that Act found that the respondent-company was not liable to pay electricity duty on the units consumed by it, except those in respect of the units consumed for the residential and office purposes of the village people of Sevalia. On this basis, the learned single Judge restrained the appellant No. 2 from recovering the electricity duty in respect of the units consumed by the company for the benefit of the people of Sevalia except in respect of units consumed for the purposes of residential and office premises in Sevalia village.
6. Under the proviso to Section 5 of the Bombay Financial Act, 1932 (Part-II), it was provided that electricity duty was not leviable on the units of energy consumed by the industrial undertaking as specified in Schedule-II to that part except to the extent specified therein. In our opinion, the learned single Judge grossly erred in placing reliance on this proviso in view of the fact that by Section 14 of said Act, Part-II of Bombay Financial Act, 1932 was repealed. Therefore, the very basis of the decision of the learned single Judge did not exist.
7. The contention on behalf of the respondent that in view of the definition of consumer under Section 2(a) the villagers of village Sevalia to whom the energy was supplied by the respondent free of charge cannot be said to be consumers cannot be accepted. Under Section 2(a), 'consumer' means any person who is supplied with energy on payment of charges or otherwise by a licensee or by any other person who generates energy. The definition, therefore, also contemplates a consumer who consumes energy without payment of charges. The provision of Section 4(2) of the Act provides that every person, not being a licensee, who generates energy and supplies the same to any other person free of charge shall collect and pay to the State Government, at the time and in the manner prescribed, the proper electricity duty payable under this Act on the units of energy consumed by that other person. In view of this provision, even if energy is supplied free of charge by a person other than a licensee who generates and supplies it, he is liable to make payment of the electricity duty payable under the Act. The expression licensee is defined in Section 2(c) and it means any person licensed under Part-II of Indian Electricity Act, 1910 to supply energy and includes any person who has obtained sanction of the State Government under Section 28 of that Act. Admittedly, the respondent-company has not obtained any such licence under the provisions of Indian Electricity Act, 1910 and, therefore, it cannot be regarded licensee for the purpose of Bombay Electricity Duty Act, 1958.
8. Therefore, the provisions of Section 4(2) were squarely attracted to the case of the respondent who generated electricity and supplied it to the villagers of Sevalia free of charge. The respondent-company was, therefore, liable to pay electricity duty in respect of energy consumed by the villagers of Sevalia. The contentions raised on behalf of the respondent to the contrary are, therefore, not accepted.
9. From the letter written by the respondent on dated 8-2-1977, it is clear that ^jhe respondent did not dispute any of the items contained in the notice at Annexure-C, except the 1st item of Rs. 1,26,220-96 Ps. It was stated in the said letter that the said amount of Rs. 1,26,220-96 Ps. was in respect of free supply of electrical energy to the villagers of Sevalia, and this item was being disputed. It was stated that the company was moving the appropriate authority to confirm that the exemption certificate held good in respect of the said item. As regards the other items, it was stated that payment of undisputed amount of Rs. 1,60,855-83 Ps. out of the demanded amount of Rs. 2,87,076-79 Ps. was being made. Thus, respondent-company never raised any dispute as regard the adjustment made and the amount claimed on account of items mentioned in notice at Annexure-C dated 3-11-1978, except the first item. As held above, the respondent was liable to pay electricity duty in view of the provision of Section 4(2) of the Act for the free supply of electrical energy to the villagers of Sevalia and was not entitled to any exemption under Section 3(2)(vii) of the Act. It is clear that even otherwise, the disputed items did not fall within the exemption under Section 3(2)(vii) of the Act. It will be noticed that under Section 3(2)(vii), electricity duty is not payable on the units of the energy consumed for motive power and lighting in respect of premises used for industrial undertaking for the industrial purpose until the expiry of the period mentioned in Clauses (a) & (b). The expression 'premises used by an industrial undertaking' has been defined in Clause (cc) of Section 2, so as to mean premises used by such industrial undertaking for any purpose other than the purpose of residential, commerce, office, sports, club, library, canteen or such other purposes as may be notified by the State Government. The supply of electrical energy under the item disputed by die respondent from the notice dated 3-11-1976 clearly does not fall within the exemption given under Section 3(2)(vii) of the Act, since the said energy was not consumed for industrial purpose of the respondent-company.
10. In the above circumstances, the appeal is allowed, the judgment and order of the learned single Judge is hereby set aside and the petition is dismissed with no order as to costs.