Gujarat High Court
Alembic Limited vs State Of Gujarat on 9 February, 2023
Author: Aravind Kumar
Bench: Aravind Kumar, Ashutosh Shastri
C/LPA/1068/2016 CAV JUDGMENT DATED: 09/02/2023
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/LETTERS PATENT APPEAL NO. 1068 of 2016
In R/SPECIAL CIVIL APPLICATION NO. 8320 of 2009
With
CIVIL APPLICATION (FOR STAY) NO. 2 of 2016
In R/LETTERS PATENT APPEAL NO. 1068 of 2016
With
R/LETTERS PATENT APPEAL NO. 1069 of 2016
In
SPECIAL CIVIL APPLICATION NO. 2683 of 2004
With
CIVIL APPLICATION (FOR STAY) NO. 2 of 2016
In R/LETTERS PATENT APPEAL NO. 1069 of 2016
In
SPECIAL CIVIL APPLICATION NO. 2683 of 2004
==========================================================
ALEMBIC LIMITED & 1 other(s)
Versus
STATE OF GUJARAT & 3 other(s)
==========================================================
Appearance:
MR. S.I. NANAVATI, LD. SR. COUNSEL for NANAVATI & NANAVATI(1933)
for the Appellant(s) No. 1,2
MS. SHRUTI PATHAK, LD. AGP with MS. MANISHA LUVKUMAR SHAH, LD.
GOVERNMENT PLEADER for the Respondent(s) No. 1
RULE SERVED for the Respondent(s) No. 2,3,4
==========================================================
CORAM:HONOURABLE THE CHIEF JUSTICE MR. JUSTICE
ARAVIND KUMAR
and
HONOURABLE MR. JUSTICE ASHUTOSH SHASTRI
Date : 09/02/2023
CAV JUDGMENT
(PER : HONOURABLE MR. JUSTICE ASHUTOSH SHASTRI)
1. Both these letters patent appeals are arising out of a common CAV Judgement dated 24.08.2016 passed by the learned Single Judge in Special Civil Application No.2683 Page 1 of 50 Downloaded on : Fri Feb 10 20:48:39 IST 2023 C/LPA/1068/2016 CAV JUDGMENT DATED: 09/02/2023 of 2004 with Special Civil Application No.8320 of 2009. Since facts in both the appeals are common and parties are also the same, the learned advocates appearing for both the sides have requested to take up the hearing of both these letters patent appeals conjointly. Considering their request and in view of similarity of grievance, we deem it proper to hear and dispose of these appeals by the present common order.
2. Since the grievance arising out of these proceedings is identical, for the sake of convenience, we have treated Letters Patent Appeal No.1068 of 2016 as the lead matter and facts are taken from said appeal.
3. Insofar as Letters Patent Appeal No.1068 of 2016 is concerned, same is related to Special Civil Application No.8320 of 2009, in which, appellants-original petitioners challenged the legality and validity of the decision taken by respondent No.2 dated 17.06.2008 and sought refund of the amount paid, and to be precise, the relief clause contained in the petition is reproduced hereunder;
"[A] Your Lordships may be pleased to issue a writ of mandamus or a writ in the nature of mandamus or any other appropriate writ, order or direction, quashing and setting aside the decision dated 17.6.2008 (AnnexureK) passed by Respondent No.2 herein;
[B] Your Lordships may be pleased to issue a writ of mandamus or a writ in the nature of Page 2 of 50 Downloaded on : Fri Feb 10 20:48:39 IST 2023 C/LPA/1068/2016 CAV JUDGMENT DATED: 09/02/2023 mandamus or any other appropriate writ, order or direction directing Respondent No.2 herein to grant the benefit of exemption to the petitioner Company under Section 3(2) (vii)(a) of the said Act for GT1 and GT2 and as a consequence thereof directing the respondent authorities to refund Rs.5,49,28,915/ being the excess amount as would be calculated after the retrospective exemption w.e.f. 18.11.1996 granted to the petitioners under Section 3(2)(vii)(a) of the said Act;
[C] Pending admission hearing, and final disposal of this petition, Your Lordships may be pleased to restrain the respondent authorities from levying and collecting the electricity duty for the period starting from 18.11.1996;
[D] An ex-parte ad interim relief in terms of prayer (C ) above may kindly be granted;
[E] Such other and further reliefs as may be deemed just and proper in the facts and circumstances of the present case may kindly be granted."
4. The appellant-original petitioner of this petition is a Public Limited Co. incorporated under the provisions of the Companies Act, 1956 and is engaged in the manufacturing activity of antibiotic life saving bulk drugs, formulations etc. right from the year 1907. The appellant No.2 is the share holder of a Company and is entitled to invoke extraordinary jurisdiction of this Court. On account of the Gujarat Electricity Board which was not in a position to supply continuous and uninterrupted Page 3 of 50 Downloaded on : Fri Feb 10 20:48:39 IST 2023 C/LPA/1068/2016 CAV JUDGMENT DATED: 09/02/2023 electrical power at relevant point of time, appellant- Company purchased two DG sets each of 550 KVA for the purpose of generating general lighting for its residential colony and corporate office building (commercial complex) in the year 1963. The said two DG sets were being used for the purpose of generating and supplying of electrical energy to the residential colony and corporate office building of the appellant-Company. Subsequently, in the year 1974, the appellant-Company again purchased and installed additional two DG sets each of 860 KVA for generating energy for general lighting for its residential colony and also for corporate office. The said DG sets, four in numbers, were generating and having capacity of 2820 KVA at the time of there installation and used when new would be hypothetically capable of generating 16,46,880 units of energy per month as per there installed capacity. It is the case of the appellant that it has not claimed or availed any exemption in respect of electrical energy generated by said four DG sets. At the time of registration of two DG sets in the year 1963 and additional two DG sets in the year 1974, totaling four DG sets, an application was submitted with the Department on 28.02.1986 in Form-C, wherein it was clearly stated that DG sets were to be used for generating lighting purpose for commercial complex and residential colony. The registration in respect of four DG sets was duly granted by the Office of Collector of Electricity Duty on Page 4 of 50 Downloaded on : Fri Feb 10 20:48:39 IST 2023 C/LPA/1068/2016 CAV JUDGMENT DATED: 09/02/2023 15.04.1986.
5. It is the case of the appellant-Company that subsequent to that company had purchased and installed additional Gas Turbine Generating Set (GT-1) on 14.10.1996 for the purpose of generating the electrical energy to be used for manufacturing of its pharmaceutical products, i.e, for industrial purpose, and according to the appellant, said GT-1 was commissioned on 18.11.1996 and the Company has been using the said GT-1 set from the said date. Thereafter, on 20.03.1997 another 5000 KVA additional Gas Turbine Generating Set (GT-2) was installed by the appellant-company and commissioned the same with effect from 18.05.1997 and said GT-2 was also used for manufacturing activity. After installation of the said two sets in 1996 and 1997, appellant-Company made an application on 05.06.1997 seeking registration of aforesaid two GT sets and also sought an exemption by making appropriate application from payment of electricity duty in Form-C and Form-E through its covering letter dated 29.04.1997 and 05.06.1997. It is the case of the appellant that perusal of the said forms indicate that same were filled in seeking eligibility certificate for exemption from electricity duty in view of Section 3(2)(vii)(a) or Section 3(2A) of the Act. According to the appellant, for seeking such exemption and while submission of the Form, the Company is not Page 5 of 50 Downloaded on : Fri Feb 10 20:48:39 IST 2023 C/LPA/1068/2016 CAV JUDGMENT DATED: 09/02/2023 required to specifically mention as to under which particular provision of the said Act, appellant is claiming exemption. In view of such applications having been submitted, the Office of Commissioner of Electricity, Gandhinagar was pleased to issue two certificates, both of even date, i.e., dated 13.11.1998 in respect of aforesaid two generating sets, i.e, GT-1 and GT-2. The first certificate in respect of GT-1 stipulated that Company was entitled to exemption for a period from 18.11.1996 to 17.11.2011, i.e,. for a period of 15 years in respect of such units of additional energy generated by GT-1 in excess of 16,46,880 units per month; whereas in respect of GT-2, the certificate indicated that appellant-Company is entitled to have exemption for the period commencing from 18.05.1997 to 17.05.2012 in respect of such additional units of additional energy generated in excess of 45,60,880 units per month. Thus, according to the appellant, the exemption was granted by the authority under Section 3(2A) of the Act for generation of additional energy for the captive purpose and not under Section 3(2)(vii)(a) for energy consumed for motive power in respect of premises used for the manufacturing/industrial purpose. The appellant-original petitioner, by referring to the aforesaid provisions, namely, Section 3(2A) and Section 3(2)(vii)(a) has submitted that exemption from payment of electricity duty for all the units of energy consumed deserves and, Page 6 of 50 Downloaded on : Fri Feb 10 20:48:39 IST 2023 C/LPA/1068/2016 CAV JUDGMENT DATED: 09/02/2023 according to the appellant, undisputedly, the four DG sets which were gradually installed in the year 1963 and 1974 earlier, were never used for any manufacturing process and were used only for residential colony and commercial complex, and as such, the installation of GT- 1 and GT-2 cannot be said to be an installation of additional generating sets for industrial purpose and the exemption from electricity duty on the units of energy would not fall under the provisions of Section 3(2A) of the said Act since four DG sets were never used for generation of energy used for industrial purpose or to the company's manufacturing process.
6. It is the grievance of the appellant-company that despite aforesaid situation, respondent No.3 issued certificate of exemption (Annexures-D1 and D2), treating the GT-1 and GT-2 sets as additional generating sets for generation of additional energy and thereby exempting from payment of electricity duty for the said two generating sets purportedly under Section 3(2A) after deducting therefrom the notional capacity generation from four DG sets, and as such, feeling aggrieved by such deduction of notional capacity generation from four DG sets from the units of electrical energy sought to be exempted from levy and electricity duty, the appellant company made representation for refund for wrongful collection of electricity duty from the year 2001 onwards, Page 7 of 50 Downloaded on : Fri Feb 10 20:48:39 IST 2023 C/LPA/1068/2016 CAV JUDGMENT DATED: 09/02/2023 and unfortunately, the authority concerned, by one line order, without assigning any proper reason, rejected the said request vide communication dated 03.06.2003. On account of this, with a view to dissuade the appellant from following up for seeking refund of duty collected on deemed generation, the respondent No.3 initiated an inquiry regarding method and manner adopted by the appellant-Company for calculating electricity duty, and vide communication dated 18.06.2003, demanded differential duty on the premise that appellant-company had purportedly availed its exemption in excess of its actual entitlement. On account of this decision, the appellant-company made a detailed representation against the said demand, but as usual, same has not been considered, as a result of which, appellant was constrained to prefer a writ petition before this Court being Special Civil Application No.2683 of 2004 and by entertaining the said writ petition, the Honble Court, on 01.03.2004, was pleased to grant an ad-interim relief and the said petition was pending for final disposal.
7. It is the case of the appellant that subsequently, it has been found by the Company that exemption which has been granted was under the wrong head, and for the first time, in the month of August, 2006, said issue came to be raised before the authority by the appellant vide its letter dated 01.08.2006 claiming exemption for GT-1 and Page 8 of 50 Downloaded on : Fri Feb 10 20:48:39 IST 2023 C/LPA/1068/2016 CAV JUDGMENT DATED: 09/02/2023 GT-2 in view of Section 3(2)(vii)(a) of the Act. In the said letter, appellants have applied for seeking exemption from payment of electricity duty for a period of 15 years with effect from 18.11.1996, on which date, the GT-1 and GT-2 were commissioned for the first time seeking electricity co-generation plant under Section 3(2)(vii)(a) of the Act. The appellant had been granted exemption not only on incorrect interpretation of the amendment but also erroneously under Section 3(2A) of the Act. In fact, Company is entitled to exemption benefit under Section 3(2)(vii)(a) of the Act and though the appellant has emphasized and highlighted in the said letter that under the wrong premise, huge amount of electricity difference is sought to be recovered, the representation may be considered. The calculation projected and indicated to the appellant upto the Financial Year 2005-06, the claim of refund amount, according to the appellant-Company, comes to Rs.5,49,28,915/-, and as such, for pretty long period, namely, for almost two years, appellant persistently tried to ventilate its grievance before the authority since after communication dated 27.03.2007, nothing was heard from the side of the authority except bare denial. Despite aforesaid undisputed position, the grievance is not redressed, and later on, the Office of Collector of Electricity Duty, vide its communication dated 11.07.2008, advised the appellant to submit Form- D, which came to be submitted by the appellant on Page 9 of 50 Downloaded on : Fri Feb 10 20:48:39 IST 2023 C/LPA/1068/2016 CAV JUDGMENT DATED: 09/02/2023 29.07.2008. Simultaneously, appellant has also addressed a communication in the form of representation to the Hon'ble Minister of Energy on 07.08.2008 informing about the controversy, in which, the appellant-company was brought. Since the order dated 17.03.2008 was passed during the pendency of first petition, i.e,. Special Civil Application No.2683 of 2004, the Company sought an amendment in the main special civil application by filing Civil Application No.12512 of 2008 in the said petition. The authority, i.e., respondent No.1 filed reply to the same opposing the amendment, and accordingly, vide order dated 29.06.2009, the civil application came to be rejected with a clarification that it will be open for the appellant-company to challenge the order dated 17.06.2008 by filing substantive petition. As a result of this, the appellant is constrained to prefer present lead petition for challenging legality and validity of the order dated 17.06.2008 passed by respondent No.3.
8. With this background, the appellants have prosecuted the special civil applications, i.e, Special Civil Application No.2683 of 2004 with Special Civil Application No.8320 of 2009, and both these petitions were heard by the learned Single Judge and by a detailed CAV judgment dated 24.08.2016, was pleased to dismiss the petitions and vacated the interim relief which was earlier granted, and it is this common judgment and order Page 10 of 50 Downloaded on : Fri Feb 10 20:48:39 IST 2023 C/LPA/1068/2016 CAV JUDGMENT DATED: 09/02/2023 passed by the learned Single Judge, which is the subject matter of present letters patent appeal.
9. Since identical controversy has arisen in both the petitions, and accordingly, both the letters patent appeals were requested to be heard and a conjoint hearing took place, in which, the learned senior advocate Mr. S.I. Nanavati for Nanavati & Nanavati has represented the appellant-original petitioner; whereas Ms. Manisha Luvkumar Shah, the learned Government Pleader has represented the contesting respondent- authorities.
10. The learned senior advocate Mr. S.I. Nanavati has submitted that impugned order passed by the learned Single Judge is contrary to the object of exemption policy framed by the Government by virtue of Amendment Act No.17 of 1983. Clause-(a) came to be inserted in Section 3(2)(vii) by way of very same amendment of 1983 which provides that only if an industrial undertaking generates energy by an installation of a co-generation plant or back pressure turbine, it will be entitled to the benefit of exemption from payment of electricity duty for a period of 15 years from the date of commencement of the Act or from the date of commissioning of such generation system whichever is later. Similarly, clause-(b) of Section 3(2A) has been added by virtue of amendment in 1983 which provides for exemption from payment of electricity Page 11 of 50 Downloaded on : Fri Feb 10 20:48:39 IST 2023 C/LPA/1068/2016 CAV JUDGMENT DATED: 09/02/2023 duty by installation of additional generating set under co- generation method. According to Mr. Nanavati, the said policy decision of the Government was to motivate and encourage the industries to set up their own electricity generation plants by either of the said two methods so as to see that burden of supply of electricity of the State can be reduced. The installation cost of the said generation system is around Rs.10 to 15 Crores per installation, and as such, the exemption scheme has been introduced with a view to encourage the industries and to install its own supply system, and as such, the sequence of event would indicate that amendment of 1983 to Section 3(2A) by inserting clause-(b) has to be read in juxtaposition to the amended Section 3(2)(vii)(a), which appears to be prior in point of time in the Act and, therefore, according to Mr. Nanavati, while interpreting the said provisions, reference cannot be drawn to clause-(a) of Section 3(2A) and/or explanation-(a) to the said section which was in force in the year 1979 and not in line with 1983 amendment and policy of the Government.
11. Mr. Nanavati, learned senior counsel has further contended that plain reading of Statement of Objects and Reasons of Amendment Act No.17 of 1983 makes it clear that intent of the legislature was to grant exemption to the units generating electricity by co-generation plant or by back pressure turbines for 15 years from its Page 12 of 50 Downloaded on : Fri Feb 10 20:48:39 IST 2023 C/LPA/1068/2016 CAV JUDGMENT DATED: 09/02/2023 installation, and in view of the same, DG sets installed in the year 1963 and 1974 do not qualify as primary installation and, hence, cannot be taken into consideration to determine the quantum of exempted units.
12. It is further contended by the learned senior counsel that action of respondent No.2 in considering GT-1 as an additional generating set and considering DG sets as primary installations is ex-facie, unreasonable, arbitrary and contrary to the object of amended Act. Even factually also, it was not correct on the part of the authority that DG sets were to be used for the industrial purpose. In fact, same were never used for industrial or manufacturing process and, therefore, primary installation of GT sets, i.e., GT-1 and GT-2 is covered under the Exemption Policy of 1983. Hence, the plain reading of the aforesaid two provisions clearly indicate that for such additional installation also, if the same is either a back pressure turbine or co-generation plant, the electricity duty shall not be leviable on such additional energy so generated by such sets and the learned Single Judge could not have ignored the intent of the legislature of such benevolent policy, and as such, the application of provision, namely, explanations-(a) and (b) of Section 3(2A) is wholly erroneous and contradictory to the benevolent object of exemption policy, and as such, Page 13 of 50 Downloaded on : Fri Feb 10 20:48:39 IST 2023 C/LPA/1068/2016 CAV JUDGMENT DATED: 09/02/2023 accepting the case of the authority by the learned Single Judge permitting the authority to resort to Explanation-(a) to Section 3(2A) is not legal.
13. It has been further contended that on one hand, the exemption is said to have been granted on the units generated by GT-1, whereas on the other hand, exemption is taken back while calculating exemption for GT-2. Similarly, for GT-1, duty is required to be paid on installed capacity of DG sets, i.e, on 16,46,880 units, and again for GT-2, the duty is required to be paid on total 45,66,880 units which includes the earlier figure of DG sets and 29,20,000 unit of GT-1. Therefore, for the hypothetical generation from DG sets, the duty is tried to be recovered twice. This aspect has not been appreciated by the learned Single Judge, and as such, the order impugned deserves to be corrected. It is further contended that while passing the order by authority and which has not been appreciated by the learned Single Judge that undue weightage has been given to the statement made by the appellant in the petition of 2004 wherein it was apparently stated that DG sets were also used at times as backup for fermentation process which is a part of manufacturing/industrial activity. However, the learned Single Judge at that stage, has missed out two basic issues, namely, (i) that DG sets were neither co- generation plant nor back pressure turbine and (ii) that Page 14 of 50 Downloaded on : Fri Feb 10 20:48:39 IST 2023 C/LPA/1068/2016 CAV JUDGMENT DATED: 09/02/2023 though due to some inadvertence, such statement was made by the appellant in 2004 petition on facts, the record of the case in 1986 (application for registration of DG sets) goes to show that DG sets were always intended to be used by appellant-company for generating lighting in the commercial and residential complex.
14. Mr. Nanavati, learned senior advocate has further contended that without prejudice, DG set is not a co- generation plant or a back pressure turbine and the learned Single Judge has failed to consider that resort to Explanation-(a) to Section 3(2A) by the company is unwarranted and said explanation can be availed only where at the time of installation of additional generating set, the existing generating set is not operated after installation; whereas in the case of the appellant- company, undisputedly, at the time of installation of GT sets, DG sets were already in operation to its full capacity. On the contrary, company had procured the second-hand DG sets and were not in a position to generate the fullest capacity, and as such, the authority, while calculating the electricity duty, is also on error which aspect ought to have been gone into by the learned Single Judge when the appellant has projected the same before the Court.
15. Additionally, the learned senior advocate Mr. Nanavati has submitted that company was availing the Page 15 of 50 Downloaded on : Fri Feb 10 20:48:39 IST 2023 C/LPA/1068/2016 CAV JUDGMENT DATED: 09/02/2023 benefit of exemption both under Section 3(2A) and Section 3(2)(vii)(a), and as such, it was not open for the appellant to apply for exemption under any particular section. That aspect has been materially erred by the learned Single Judge and ought to have appreciated the non-application of mind of the authority. In fact, the exemption policy was introduced in the year 1983 and the exemption was granted by mixing up the incentive scheme of 1983 vis-a-vis earlier provisions and, therefore, the demand made by the respondent-authority is erroneous, impermissible and, hence, the order under challenge deserves to be corrected. In fact, while seeking exemption, full particulars were disclosed before the authority and whatever exemption was granted, was accepted by the company under bonafide belief that the same is correct and the payments were also made, and as such, if bonafide consumer like appellant, if grant of exemption is incorrect, the pragmatic view ought to have been taken in consonance with the policy of exemption. The learned Single Judge, in paragraph-12 of the judgment has considered the entire case of the appellant by considering Section 3(2A) of the Act, whereas the case of the appellant falls squarely under clause-(a) of Section 3(2)(vii).
16. It has further been contended by the learned senior counsel that an error has also been committed in para-14 Page 16 of 50 Downloaded on : Fri Feb 10 20:48:39 IST 2023 C/LPA/1068/2016 CAV JUDGMENT DATED: 09/02/2023 of the judgment which indicates that generation of electricity for the fist time by co-generation employed through GT-1 and GT-2 had no relevance with the levy of electricity duty. This striking is contrary to the introduction of exemption scheme itself, and as such, when the Company, way back in the year 1996-97 has spent nearly Rs.30 Crores approximately for installation of two GT sets, the benefit of exemption could not have been deprived. It is against the legitimate expectation of a citizen, and as such, learned Single Judge ought not to have ignored the same. In fact, learned Single Judge has unduly considered the factum of existence of four DG sets. In fact, various correspondences which took place between the appellant and the respondent-authority for grant of exemption under Section 3(2)(vii)(a) ought to have been gone into, since the case of the appellant falls within the aforesaid provision, the demand raised by the Chief Auditor of respondent No.2 is erroneous. According to Mr. Nanavati, the demand can be raised only by respondent No.2 and not by the Chief Auditor, i.e, respondent No.3. Hence, the order passed by the authority deserves to be quashed, and since the learned Single Judge has also not appreciated the aforementioned aspect, the order under challenge deserves to be quashed by allowing the appeal.
17. To strengthen his submission, the learned senior Page 17 of 50 Downloaded on : Fri Feb 10 20:48:39 IST 2023 C/LPA/1068/2016 CAV JUDGMENT DATED: 09/02/2023 counsel has referred to the following decisions;
"(i) In the case of Commissioner of Customs, Kolkata vs. Rupa & Co. Ltd., 2004 (8) SCC 408;
(ii) In the case of Commissioner of Central Excise, Surat vs. Favourite Industries, (2012) 7 SCC 153;
(iii) In the case of S. Sundaram Pillai & Ors. vs. V.R. Pattarbiraman & Ors. (1985) 1 SCC 591;
(iv) In the case of Southern Petrochemical Industries Co. Ltd. vs. Electricity Inspector & Etio & Ors., (2007) 5 SCC 447;
(v) In the case of Bhagwant Rai & Ors. vs. State of Punjab & Ors., (1995) 5 SCC 440;
(vi) In the case of M/s. Dhrangadhra Chemical Works Ltd. & Anr. vs. State of Gujarat & Ors., Letters Patent Appeal No.1367 of 2013.
18. In respect of cognate petition, i.e., Letters Patent Appeal No.1069 of 2016, no separate submissions are made since the issue is identical, and after submitting and relying upon the aforesaid decisions, the learned senior counsel has requested the Court to allow the appeals by granting the reliefs in the main proceedings. No other submissions have been made.
Page 18 of 50 Downloaded on : Fri Feb 10 20:48:39 IST 2023C/LPA/1068/2016 CAV JUDGMENT DATED: 09/02/2023
19. As against this, Ms. Manisha Luvkumar Shah, the learned Government Pleader appearing on behalf of the authority has vehemently opposed the stand taken by the appellant. Ms. Shah has vehemently contended that case put up by the appellant is an attempt to create and make out a new case altogether by misleading that DG sets were never used for industrial purpose. In fact, the said DG sets were used for manufacturing purpose, and for substantiating this contentions, she has drawn the attention of the Court to the specific assertion not only made in para-3 of the memo of the main petition but also to pages-45, 48, 52 and 68 of the main compilation to content it has never been the stand of the appellant- company that said DG sets were exclusively meant for residential or commercial complex. On the contrary, the appellant-company, from its inception, has consciously availed the benefit under Section 3(2A) and not under Section 3(2)(vii)(a), and as such, according to her, a serious attempt is made to create a new case altogether. The learned Government Pleader Ms. Shah has submitted that learned Single Judge has minutely examined the documentary evidence with regard to the stand in the context of decision which has been taken by the authority, and after critical analysis of the relevant provision and material, a conclusion is arrived that no case is made out. Hence, a well reasoned judgment may not be interfered with in the interest of justice. The Page 19 of 50 Downloaded on : Fri Feb 10 20:48:39 IST 2023 C/LPA/1068/2016 CAV JUDGMENT DATED: 09/02/2023 learned Government Pleader has further contended from the assertion made in the affidavit-in-reply filed on behalf of the respondent No.2 dated 9.11.2009 reflecting on page-170 onwards of the lead appeal that after the order which has been passed by the authority on 17.06.2008, the appellant-company filed Civil Application No.12512 of 2008 in the main petition, i.e., Special Civil Application No.2683 of 2004, and in the said proceedings, a request was made by the appellant to delete certain averments from para-3 in the petition. The said averments read as under;
"since continuity of power is critical to the manufacturing process of fermentation' so as to read the same as under;
"3. The petitioner had purchased and installed four second-hand Diesel Generating (DG) sets in respect of which registration was granted by the respondent No.2"
20. By submitting such application, according to the learned Government Pleader, an attempt was made to improvise the stand to contend that four DG sets were not meant for manufacturing purpose and the said effort was with a view to take a benefit under the provisions of Section 3(2)(vii)(a) of the Act by treating installation of additional GT-1 and GT-2 as first installation for industrial purpose. The said civil application was opposed by the Page 20 of 50 Downloaded on : Fri Feb 10 20:48:39 IST 2023 C/LPA/1068/2016 CAV JUDGMENT DATED: 09/02/2023 Government at the relevant point of time, and after contest, same came to be disposed of. However, liberty was granted to the appellant to challenge the said order dated 17.06.2008 by way of a separate petition leaving it open for the State to take all permissible contentions. So, the deletion which was sought for raising new ground was not accepted by the court at the relevant point of time.
21. The learned Government Pleader Ms. Shah has further contended that four DG sets were installed by the Company for using it as manufacturing process as well, and now the appellant-company cannot turn around to contend that same were not for industrial purpose and were used for only commercial or residential purposes. The authority, while passing the impugned order in the petition, has thoroughly examined the material placed before it, and as such, neither the authority nor the learned Single Judge has committed any error which would call for any interference in the present appeal and has requested to dismiss the same. The learned Government Pleader has further contended that Company, after availing benefit for a pretty long period, has now come forward to seek benefit of Section 3(2)(vii)
(a), and on perusal of the documents attached to the petition compilation by the appellant-company itself it would indicate that such stand which is now tried to be Page 21 of 50 Downloaded on : Fri Feb 10 20:48:39 IST 2023 C/LPA/1068/2016 CAV JUDGMENT DATED: 09/02/2023 taken is not available, and as such, by referring to the relevant provisions, the learned Government Pleader has opposed the stand of the appellant. By referring to the relevant provisions, as indicated, the learned Government Pleader has submitted that authority, while passing the order has clearly found that four DG sets were already there, and over and above the said generating sets, the additional generating system tried to be introduced by the appellant-company and said decision has been taken in consonance with not only the policy framed for exemption but also keeping in view the relevant statutory provision and on its interpretation, and further the same was taken after grant of full opportunity of hearing on 02.06.2008, and as such, it cannot be said in any manner that decision making process of the authority is ill- founded in any manner. In fact, the very conduct of representative of the appellant-company who refused to sign even after perusal of the record is sufficient enough to suggest that no extraordinary jurisdiction deserves to be exercised in favour of the company, and learned Single Judge has rightly dismissed the petition on merits. After proper scrutiny of material and after representation by the appellant-company, a categorical conclusion is arrived at that prior to commissioning of two generating sets of 5000 KVA capacity, the energy units were used for non-industrial purpose which was found to be not inconsistent with earlier electricity duty payment by the Page 22 of 50 Downloaded on : Fri Feb 10 20:48:39 IST 2023 C/LPA/1068/2016 CAV JUDGMENT DATED: 09/02/2023 company, and as such, the authority has categorically found that issues which have been tried to be raised are only with a view to avoid payment of electricity duty regularly. In fact, according to Ms. Shah, the company, undisputedly, was not providing any details about monthly consumption of electricity regularly which has constrained the authority to instruct to supply within 10 days. When that be the situation and the conduct of petitioner, even otherwise would also indicate that equity does not lean in favour of the appellant-company, and as such, authority, while putting up the calculation, has rightly arrived at a conclusion and determined the amount. Hence, according to her, there is no question of refund of any amount. The learned Government Pleader, by taking the Court to various documents and the assertion made in the pleadings, has contended that stand taken by the authority is impermissible, and for that purpose, the application seeking exemption has also been brought to our notice, and after drawing our attention to such material, a request is made to dismiss the letters patent appeal. According to her, the learned Single Judge has examined all the material at length and no error can be said to have been committed. The order passed by the learned Single Judge is a well reasoned order and is a possible view arrived at on the basis of available material, and in the absence of any distinguishable material, it cannot be set at naught. She would also submit that Page 23 of 50 Downloaded on : Fri Feb 10 20:48:39 IST 2023 C/LPA/1068/2016 CAV JUDGMENT DATED: 09/02/2023 decision making process adopted by the authority is based upon proper scrutiny of material and it is in consonance with the principles of natural justice. There is hardly any reason for the appellant-company to raise any grievance, and that too, after several years and after availing the benefit for considerable length of time. Hence, no case is made out calling for any interference and, accordingly, both appeals may be dismissed in the interest of justice.
22. The learned Government Pleader, to strengthen her submission, has made a reference to the following decisions;
"(i) In the case of State of Rajasthan & Anr. vs. J.K. Udaipur Udhyog Ltd. & Anr., 2004 (7) SCC 673;
(ii) In the case of Giridhar G. Yadalam vs. Commissioner of Wealth Tax & Anr., 2015 (17) SCC 664;
(iii) In the case of Commissioner of Customs (Import), Mumbai vs. Dilipkumar & Co. & Ors., 2018 (9) SCC 1;
(iv) In the case of Novopan India Ltd. Hyderabad vs. Collector of Central Excise & Customs, Hyderabad, 1994 Supp. (3) SCC 606;
(v) In the case of Liberty Oil Mills (P) Ltd., Bombay vs. Collector of Central Excise, Bombay, 1995 (1) SCC 451;
(vi) In the case of Sidheshwar Sahakari Sakhar Page 24 of 50 Downloaded on : Fri Feb 10 20:48:39 IST 2023 C/LPA/1068/2016 CAV JUDGMENT DATED: 09/02/2023 Karkhama Ltd. vs. Union of India & Ors., (2005) 5 SCC 369;
(vii) In the case of Katira Constructions Ltd. vs. Union of India & Ors., 2013 SCC Online Guj. 8614;
(viii) In the case of S. Sundaram Pillai & Ors. vs. V.R. Patta D. Raman & Ors., 1985 (1) SCC 391;
23. Having heard the learned advocates appearing for the parties and having gone through the materials on record, following circumstances deserve consideration before arriving at the ultimate conclusion.
24. It is an undisputed position that the appellant has set up DG sets, i.e., Diesel Generators, two in numbers, in 1963 for the purpose of generating the electricity and each one having capacity of 550 KVA. Even in 1974, further two DG sets, each having capacity of 860 KVA came to be installed, and as such, the total capacity of four DG sets was 2820 KVA capable of generating 16,46,880 units per month. The said four DG sets, though used for considerable long time for generating electricity, the company applied for registration on 20.08.1986 in Form-P. The registration was made after almost a period of more than 20 years and 10 years respectively as indicated above. Though company has claimed that these DG sets were meant for residential colony and commercial complex lighting, during the course of the proceedings before the Court, an assertion has been Page 25 of 50 Downloaded on : Fri Feb 10 20:48:39 IST 2023 C/LPA/1068/2016 CAV JUDGMENT DATED: 09/02/2023 made that the said DG sets were also used for manufacturing process and this was clearly asserted by the authority in its affidavit-in-reply in Para-4.6 reflecting on page-180. So it is seriously in dispute as to whether said DG sets, four in numbers, were exclusively meant for residential use in the colony or commercial complex for lighting purpose or were being used for manufacturing process. In fact, in earlier petition, i.e., Special Civil Application No. 2683 of 2004, the stand was that undue weightage has been given to the statement made by the appellant that DG sets were also used as backup for fermentation process which is part of an industrial activity, and as such, it could not have been treated as generation from primary installation of electricity as an additional generation. Nonetheless, it is borne out from the stand of the appellant and found by the authority that these four DG sets, were having capacity of generating electricity to the extent of 16,46,880 units and were used as backup for fermentation process which is part of the manufacturing process.
25. Additionally, when the GT-1 and GT-2 came to be installed and sought for permission and exemption simultaneously, the appellant was awarded with a certificate of exemption under sub-section (2A) of Section 3 of Bombay Electricity Duty Act, 1958 for the respective period as mentioned in the said certificates Page 26 of 50 Downloaded on : Fri Feb 10 20:48:39 IST 2023 C/LPA/1068/2016 CAV JUDGMENT DATED: 09/02/2023 which are at Annexure-D1, page-53 and Annexure-D2, page-59. These two certificates of exemption were given under Form-H under Rule 11(2) of the Rules specifically mentioning that permission has been granted by virtue of sub-section (2A) of Section 3 of the Electricity Duty Act and it has been clearly stipulated the units which can be given exemption. The first certificate which has been given is with respect to the period commencing from 18.11.1996 to 17.11.2011 in respect of such units of additional energy generated by their own additional generating sets (co-generation) in excess of 16,46,880 units which relates to four DG sets. The gist of the said certificate deserves to be reproduced hereunder since the appellant company has raised grievance about non- applicability of sub-section (2A) of Section 3.
"CERTIFICATE This is to certify that M/s.Alembic Chemicals Works Co. Ltd., Baroda is an industrial undertaking entitled to exemption from payment of electricity duty under sub-section (2A) of Section 3 of the Bombay Electricity Duty Act, 1958 for the period from 18.11.1996 to 17.11.2011 in respect of such units of additional energy generated by their own additional generating sets of the capacity of 5000 KVA (Co- generation) in excess of 16,46,880 units of energy capable of generation per month from existing generating sets installed prior to installation of these sets of 5000 KVA (co- generation plant). Alternator Sr. No.45069-A- 201-11-01.Page 27 of 50 Downloaded on : Fri Feb 10 20:48:39 IST 2023
C/LPA/1068/2016 CAV JUDGMENT DATED: 09/02/2023 No.Baroda/Ex.Gs/5.4.97/28236 Office of the Commissioner of Electricity Duty Wing, Block No.18, Sector 11, 7th floor, Udyog Bhavan, Gandhinagar-11.
13 Nov. 1998"
26. The second certificate with respect to GT-2 which has been given is also issued under sub-section (2A) of Section 3 of the Act of 1958 specifying the excess of units as well. The same is reproduced hereunder;
"CERTIFICATE This is to certify that M/s.Alembic Chemicals Works Co. Ltd., Baroda is an industrial undertaking entitled to exemption from payment of electricity duty under sub-section 2A of Section 3 of the Bombay Electricity Duty Act, 1958 for the period from 18.05.1997 to 17.05.2012 in respect of such units of additional energy generated by their own additional generating sets of the capacity of 5000 KVA (Co- generation) in excess of 45,66,880 units of energy capable of generation per month from existing generating sets installed prior to installation of these sets of 5000 KVA (co- generation plant). Alternator Sr. No.45069-A- 261-11-02.
No.Baroda/Ex.Gs/5.4.97/28236 Office of the Commissioner of Electricity Duty Wing, Block No.18, Sector 11, 7th floor, Udyog Bhavan, Gandhinagar-11.
13 Nov. 1998"
27. These certificates have been issued way back on Page 28 of 50 Downloaded on : Fri Feb 10 20:48:39 IST 2023 C/LPA/1068/2016 CAV JUDGMENT DATED: 09/02/2023 13.11.1998 on the same day, and petitioner-company through out accepted the same without any demur prior to last grievance which is tried to be voiced out to circumvent the liability of payment of duty. The appellant- company appears to have raised grievance with respect to claim of exemption under Section 3(2)(vii)(a) somewhere in the year late 2003, and then preferred a petition in the year 2004, meaning thereby through out after installation of GT-1 and GT-2 and having availed of benefit under 13.11.1998 exemption certificates, it has turned around and tried to canvass and improve the case which the authority as well as the learned Single Judge has found to be not worthy of acceptance. The order which has been assailed in the lead petition is an order dated 17.06.2008 at Annexure-K, which has also clearly examined the applicability of Section 3(2A) vis-a-vis the stand of the appellant under Section 3(2)(vii)(a) of the Act and it was categorically found by the authority that the exemption from payment of electricity duty had been granted in Form-H in view of Rule-11(2) of the Bombay Electricity Duty (Gujarat) Rules, 1986 and twice the request was not considered. While passing such order, the authority has extended full opportunity to the appellant of hearing, in which, the representative of petitioner Mr. Baheti as well as Mr. Singh had appeared on 02.06.2008 and only thereafter order came to be passed. It also appears from the order that despite Page 29 of 50 Downloaded on : Fri Feb 10 20:48:39 IST 2023 C/LPA/1068/2016 CAV JUDGMENT DATED: 09/02/2023 specifically being informed to Mr. Singh to see the record and affix his signature, same has been refused and it was categorically observed that meaningless issues were tried to be raised to evade the payment of electricity duty after having generated since long the additional source of energy and used for industrial purpose. It was also observed clearly that company was not submitting regularly the details with regard to monthly consumption of energy though requested time and again, and it is under that situation not only the impugned action on 17.06.2008 was taken and simultaneously directed to remit the entire amount of accumulated electricity duty with interest and fine and also conveyed to present a calculation sheet along with Chalan of payment. In the background of aforesaid circumstances, the learned Single Judge has not entertained and encouraged the stand of the appellant-company that four DG sets were used for merely residential colony lighting and not for manufacturing process and further the stand is denied that appellant-company is entitled to exemption by virtue of Section 3(2)(vii)(a) of the Act, and this is based upon the material which is available on record produced by the appellant-company itself, and before us, we make it clear that there is no distinguishable material placed on record except the stand which is tried to be taken. Hence, ex- facie if these facts are considered, it cannot be said that order passed by the learned Single Judge suffers from the Page 30 of 50 Downloaded on : Fri Feb 10 20:48:39 IST 2023 C/LPA/1068/2016 CAV JUDGMENT DATED: 09/02/2023 vice of any perversity or non-application of mind.
28. Now at this stage, before considering the stand, we may deem it proper to consider the relevant provisions which are tried to be pressed into service before us. Section 3 of the Electricity Duty Act, 1958 has, no doubt undergone various amendments, but then structured provision deserves to be quoted hereunder. Sub-section (2) of Section 3 reads as under;
"Section 3[****] (2):- Electricity duty shall not be leviable on the units of energy consumed,
(i) by the Government of Gujarat (save in respect of premises used for residential purposes;
(ia) by or in respect of any municipal corporation, municipality, municipal committee, notified area committee, containment Board or panchayat constituted under any law for the time being in force in the State, [including any body corporate constituted by the State Government or the Central Government as the State Government may, by general or special order, specify,] for the purpose of, or in respect of, public street, lighting, public water works including head-works and other auxiliary water supply works and pumps used for the purpose), public gardens including zoos, public museum or system of public sewers or drains;
(ii) by a consumer in respect of premises used for residential purposes in a rural area [*******].Page 31 of 50 Downloaded on : Fri Feb 10 20:48:39 IST 2023
C/LPA/1068/2016 CAV JUDGMENT DATED: 09/02/2023 if the total energy consumed by him for the said purpose in a year does not exceed 250 units,
(iii) in respect of a hospital or dispensary which is not maintained for private gain [(save in respect of premises used for residential purposes;
(iv) where the energy is granted by any person for the purpose of supplying it for the use of vehicles or vessels;
(v) where the energy is generated at a voltage not exceeding 100 volts;
(or) where by energy is generated by any person by solar, wind or biomass energy;
(vi) [save as provided in clause (vii), in respect of such industrial or agricultural purposes [*****] in such areas and subject to such terms and conditions and for such period as the State Government may, having regard to the need and conditions of industrial and agricultural development in the areas by general or special order specify in that behalf;
(vii) for motive power and lighting in respect of premises used by an industrial undertaking for industrial purpose, until the expiry of the following period, that is to say;
(a) In the case of an industrial undertaking which generates energy either singly or jointly with any other industrial undertaking for its own use or as the case may be, for the use of industrial undertakings which are jointly generating the energy:-
(i) fifteen years from the date of Page 32 of 50 Downloaded on : Fri Feb 10 20:48:39 IST 2023 C/LPA/1068/2016 CAV JUDGMENT DATED: 09/02/2023
commencement of the Bombay Electricity Duty (Gujarat Amendment Act, 1983 (hereinafter in this sub-section and sub-sections (2-A) and (2- AA) referred to as "the commencement date or the date of starting the generation of such energy whichever is later if such generation of energy is by back pressure turbine or if such generation of energy is obtained by co-
generation,
(ii) ten years from the commencement date or the date of starting the generation of such energy whichever is later if such generation of energy is based on any other process."
29. Sub-section (2A) of Section 3 reads as under;
"(2A) (a) Where an industrial undertaking has by installing an additional generating set started generation of industrial energy for its own use as any time during ten years before the commencement of the Bombay Electricity Duty (Gujarat Amendment) Ac, 1979 (hereinafter in this sub-section referred to as "the commencement") electricity duty shall not e leviable on such units of the additional energy so generated as are consumed for motive power and lighting in respect of premises used by the industrial undertaking or industrial purpose until the expiry of such period after the commencement as would together with the period from the date of starting the generation not exceed ten years.
(b) When an industrial undertaking by installing an additional generating set starts generation of additional energy either singly or jointly with any other industrial undertaking for its own use or, as the case may be, for the use of industrial undertaking which are jointly generating Page 33 of 50 Downloaded on : Fri Feb 10 20:48:39 IST 2023 C/LPA/1068/2016 CAV JUDGMENT DATED: 09/02/2023 additional energy at any time on or after the commencement date, electricity duty shall not be leviable on such units of additional energy so generated as are consumed for motive power and lighting in respect of premises used by the industrial undertaking for industrial purpose until the expiry of -
(i) fifteen years from the commencement date or the date of starting the generation of such additional energy whichever is later if such generation of additional energy is by back pressure turbine or if such generation of additional energy is obtained by co-generation,
(ii) ten years from the commencement date or the date of starting the generation of such energy whichever is later if such generation is based on any other process:) Provided that no industrial undertaking shall be entitled to exception from payment of electricity duty under this sub-section, unless it has obtained a certificate regarding eligibility for such exemption in prescribed form by making an application therefor in prescribed form and within prescribed period to such officer as the State Government may, by notification in the Official Gazette, specify.
Explanation - For the purpose of this sub- section-
(a) Where any generating set existing at the time of installation of the additional generating set, is at any time not operated either wholly or partly, the total units of energy which the existing generating set is capable of generating shall be excluded from the units of the additional energy generated and consumed Page 34 of 50 Downloaded on : Fri Feb 10 20:48:39 IST 2023 C/LPA/1068/2016 CAV JUDGMENT DATED: 09/02/2023
(b) Where any generated set existing at the time of installation of the additional generating set is disposed of, the total units of energy which the existing generating set so disposed of was capable of generating shall be excluded from the units of the additional energy generated and consumed."
30. Now in the light of the aforesaid provision, and keeping in view the relevant rule, the respondent- authority has issued exemption to the appellant-company in Form-H and this certificate is in purported exercise of power under Section 3(2A). Such Form-H proforma reads as under;
'FORM "H"
[See rule 11(2)]
This is to certify that
M/s ...................................... is an industrial undertaking entitled to exemption from payment of electricity duty under sub-section 2-A of section 3 of the Bombay Electricity Duty Act, 1956 from .................................. To ...................... in respect of such units of additional energy generated by their own additional generating set of the capacity of ................................... excess of ........................... number of units generated by existing generating sets installed prior to installation of this set of .....................................
Signature and Designation of the officer By order and in the name of Governor of Gujarat, J.D.GAJJAR, Secretary to Government."
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31. The appellant-company has availed and accepted the said exemption right from the year 1998 for a period of more than a decade and then tried to create a new stand despite aforesaid factual background, which according to us, is rightly turned down by the learned Single Judge. It was specifically accepted for a pretty long period the situation of exemption and availed the same for more than a decade and then, as if it is an absolute right, tried to canvass before the Court that four DG sets which had a capacity of generating 16,46,880 units were merely used for lighting purpose of residential colony and the commercial complex, and till the year 2008, it appears that no such grievance is tried to be voiced out and simultaneously, the company has not pointed out or taken a stand that residential units and the commercial complex lighting was requiring units of more than 16 lakhs as indicated above nor it is the case of petitioner that said colony and commercial complex was not having any electricity connections. In fact, it was the situation reflecting that those four DG sets were used for the manufacturing process which was known as fermentation which was part of the industrial activity and then company was tried to disassociate from the said stand. This, the learned Single Judge has rightly refused to entertain.
32. The exemption which is tried to be claimed as if it is Page 36 of 50 Downloaded on : Fri Feb 10 20:48:39 IST 2023 C/LPA/1068/2016 CAV JUDGMENT DATED: 09/02/2023 an absolute right, at this stage, we may observe that the exemption is a freedom from an obligation which the exemptee is otherwise liable to discharge. It is a privilege granting an advantage not available to others and the recepient of such a concession has no legally enforceable right against the Government to grant concession except to enjoy the benefits of concession during the period of its grant, and as such, the exemption cannot be asked as a matter of right. The said view is taken by Hon'ble Apex Court way back in 2004 while dealing with the case of State of Rajasthan & Anr. vs. J.K. Udaipur Udyog Ltd. & Anr., reported in (2004) 7 SCC 673. Since we find it necessary to take note of same, we extract the relevant observations contained in paragraph-25 hereinbelow;
"25. An exemption is by definition a freedom from an obligation which the exemptee is otherwise liable to discharge. It is a privilege granting an advantage not available to others. An exemption granted under a statutory provision in a fiscal statute has been held to be a concession granted by the State Government so that the beneficiaries of such concession are not required to pay the tax or duty they are otherwise liable to pay under such statute. The recipient of a concession has no legally enforceable right against the Government to grant a concession except to enjoy the benefits of the concession during the period of its grant. This right to enjoy is a defeasible one in the sense that it may be taken away in exercise of the very power under which the exemption was granted. [See: Shri Bakul Oil Industries & Anr.Page 37 of 50 Downloaded on : Fri Feb 10 20:48:39 IST 2023
C/LPA/1068/2016 CAV JUDGMENT DATED: 09/02/2023 V.State of Gujarat; 1987 (1) SCC 31; Kasinka Trading v. Union of India (1995)1 SCC 274; Shrijee Sales Corpn. v. Union of India (1997) 3 SCC 398]"
33. Further, the provisions which relate to tax or financial implications, it is the plain language of the provision that has to be preferred when language is clear and capable of one definite meaning. The purposive interpretation can be given only when there is some ambiguity in the language of statutory provision which we do not find on the case on hand, and as such, it is trite law that when the words in the statute are clear and unambiguous, the Courts rather bound to give effect to the said meaning and the language irrespective of consequence, and as such, a mere hardship or inconvenience cannot be the basis to alter the meaning to the language employed by the legislature. In this context when records are produced, as indicated hereinabove, it would clearly indicate that there is no ambiguity about the exemption which has been granted by virtue of Section 3(2A) which the company has availed right from the year 1998.
34. We hereby deem it proper to consider few observations made by the Hon'ble Apex Court in respect of exemptions and while dealing with the said issue of exemption from taxation, the Hon'ble Apex Court in the case of Narvopan India Ltd. Hyderabad vs. Collector Page 38 of 50 Downloaded on : Fri Feb 10 20:48:39 IST 2023 C/LPA/1068/2016 CAV JUDGMENT DATED: 09/02/2023 of Central Excise & Customs, Hyderabad, reported in 1994 Supp. (3) SCC 606, has observed in paragraphs-12 to 16, which we hereby deem it proper to quote hereunder;
"12. In Mangalore Chemicals & Fertilizers Ltd.. v. Deputy Commissioner of Commercial Taxes & Ors., [1992) Suppl. 1 S.C.C. 21, a Bench of this Court comprising M.N. Venkatachaliah, J. (as the learned Chief Justice then was) and S.C Agrawal, J. stated the relevant principle in the following words "Shri Narasimhamurty again relied on certain observations in CCE v. Parle Exports (P) Ltd, [1989] 1 SCC 345, 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 Shri Narasim-hamurthy, it was observed :
"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 Page 39 of 50 Downloaded on : Fri Feb 10 20:48:39 IST 2023 C/LPA/1068/2016 CAV JUDGMENT DATED: 09/02/2023 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. It 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., [1990] 4 SCC 256 :
"....... Truly speaking liberal and strick 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 is the notification then full play should be given to it and it calls for a wider and liberal construction....""
13. This was also the view expressed in The Commissioner of Inland Revenue v. James Forrest, (1890) 15 A.C. 334 where Lord Halsbuty, L.C. observed: "all exemptions from taxation to some extent increase the burden on other members of the community.....," and in Littman v. Barron (Inspector of Taxes, [1951] 2 A.E.R. 393, a decision of the Court of Appeal where Cohen, LJ. said :
"the principle that in case of ambiguity a taxing statute should be construed in favour of a taxpayer does not apply to a provision giving a taxpayer relief in certain cases from a section clearly imposing Page 40 of 50 Downloaded on : Fri Feb 10 20:48:39 IST 2023 C/LPA/1068/2016 CAV JUDGMENT DATED: 09/02/2023 liability".
14. It is true that in some decisions a contrary view appears to have been expressed. In Caroline M. Armytage & Ors. v, Frederick Wilkinson, (1878) 3 A.C. 355, a decision of the Privy Council, it was observed :
"Their Lordships have now to consider whether the decision of Mr. Justice Molesworth upon the merits of the application to him is correct.
They must begin by expressing their dissent from the principle which seems to have influenced Mr. Justice Moleswarth in this and some of the earlier cases, viz., that the provisions of the 24th section, because they establish an exception to the general rule, are to be construed strictly against those who invoke their benefit. That principle is opposed to the rule expressed by Loard Ellenborough's in Warrington v. Furbor, (8 East 242) and followed and confirmed in Hobson v. Neale, (17, Beav.
185). Lord Ellenborough's words are :
"I think that when the subject is to be charged with a duty, the cases in which it is to attach ought to be fairly marked out, and we should give a liberal construction to words of exception confining the operation of the duty."
It is only, however, in the event of there being a real difficulty in ascertaining the meaning of a particular enactment that the question of strict- ness or of liberality of construction need arise."
15. To the same effect is the view expressed by Page 41 of 50 Downloaded on : Fri Feb 10 20:48:39 IST 2023 C/LPA/1068/2016 CAV JUDGMENT DATED: 09/02/2023 Sir Raymond Evershed in Routledge v. McKay & Ors., [1954] 1 A.E.R. 855. The learned Master of Rolls observed : "on the authorities, that exemption, as I understand, should be liberally interpreted."
16. We are, however, of the opinion that, on principle, the decision of the Court in Mangalore Chemicals - and in Union of India v. Wood Papers, referred to therein - represents the correct view of law. The principle that in case of ambiguity, a taxing statute should be construed in favour of the assessee - assuming that the said principle is good and sound - does not apply to the construction of an exception or an exempting provision; they have to be construed strictly. A person invoking an exception or an exemption provision to relieve him of the tax liability must establish clearly that he is covered by the said provision. In case of doubt or ambiguity, benefit of it must go to the State. This is for the reason explained in Mangalore Chemicals and other decisions, viz., each such exception/exemption increases the tax burden on other members of the community correspondingly. Once, of course, the provision is found applicable to him, full effect must be given to it. As observed by a Constitution Bench of this Court in Hansraj Gordhandas V.H.H, Dave, (1969) 2 S.C.R, 253 that such a Notification has to be interpreted in the light of the words employed by it and not on any other basis. This was so held in the context of the principle that in a taxing statute, there is no room for any intendment, that regard must be had to the clear meaning of the words and that the matter should be governed wholly by the language of the notification, i.e., by the plain terms of the exemption."
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35. Yet another observation very material to the controversy also needs to be quoted profitably since we are dealing with the exemption issue tried to be raised by the appellant-company. The Hon'ble Apex Court, in the case of Liberty Oil Mills (P.) Ltd., Bombay vs. Collector of Central Excise, Bombay, reported in 1995 (1) SCC 451 has stated that even in case of any ambiguity or doubt regarding an exemption provision in a fiscal statute, such ambiguity or doubt will be resolved in favour of revenue rather than in favour of assessee since exemption is merely a privilege. Excerpts of the observations made by Hon'ble Apex Court, as contained in paragraph-7, we deem it proper to quote hereunder;
"Appellants' counsel submitted that if due stress is given to the conditions, what the notification means is, that exemption is available to the entire quantity of admixture of the vegetable product, produced out of rice bran oil the only condition being that the content of rice bran oil should be more than 1% of the total, in any consignment, and such interpretation of the notification is equally possible. We are of the view that such a construction is not possible. Even assuming that it is so, in the case of an ambiguity or doubt regarding an exemption provision in a fiscal statute, the ambiguity or doubt will be resolved in favour of the revenue and not in favour of the assessee. The matter is concluded by a recent decision of a three- member Bench of this Court in Novopan India Ltd., Hyderabad v. Collector of Central Excise and Customs, Hyderabad 1994 (6) JT SC 80. On this ground as well, the appellant is not entitled to any relief. The appeals are dismissed with Page 43 of 50 Downloaded on : Fri Feb 10 20:48:39 IST 2023 C/LPA/1068/2016 CAV JUDGMENT DATED: 09/02/2023 costs."
36. Insofar as the law related to explanation attached to statutory provision is concerned, it is well settled law as enunciated by the Hon'ble Apex Court in the case of Katira Construction Ltd. vs. Union of India & Ors., reported in 2013 SCC Online Guj. 8614 that such explanation is not a substantive provision but it is merely meant to explain or clarify certain ambiguities which may have crept in the said statutory provision and, therefore, it cannot be read beyond the provision itself. Paragraphs- 38 and 39 of said judgment deserves to be quoted hereunder;
"In the case of S. Sundaram Pillai v. V.R.Pattabhiraman, AIR 1985 SC 582, the Apex Court observed that an explanation added to a statutory provision is not a substantive provision, but as the plain meaning of the word itself shows, it is merely meant to explain or clarify certain ambiguities which may have crept in the statutory provision. It was observed as under:
52. Thus, from a conspectus of the authorities referred to above, it is manifest that the object of an Explanation to a statutory provision is -
(a) to explain the meaning and intendment of the Act itself,
(b) where there is any obscurity or vagueness in the main enactment, to clarify the same so as to make it consistent with Page 44 of 50 Downloaded on : Fri Feb 10 20:48:39 IST 2023 C/LPA/1068/2016 CAV JUDGMENT DATED: 09/02/2023 the dominant object which it seems to subserve, to provide an additional support to the dominant object of the Act in order to make it meaningful and purposeful, an Explanation cannot in any way interfere with or change the enactment or any part thereof but where some gap is left which is relevant for the purpose of the Explanation, in order to suppress the mischief and advance the object of the Act it can help or assist the Court in interpreting the true purport and intendment of the enactment, and
(e) it cannot, however, take away a statutory right with which any person under a statute has been clothed or set at naught the working of an Act by becoming an hindrance in the interpretation of the same.
There are, however, other judicial
pronouncements of the Supreme Court
suggesting that though the rule that an explanation is meant only for filling a gap in the statute or removing any ambiguity or clearing a mischief, such rule of normal application is not unknown to exceptions."
37. Additionally, from the perusal of the order passed by the learned Single Judge, upon due consideration of entire material, the intention of legislature to accord an exemption is a deviation from usual payment of duty which otherwise is to be paid, and as such, it cannot be treated as of right as rightly held by the learned Single Judge. On the contrary, a perusal of the declaration made by the appellant-company while seeking exemption upon Page 45 of 50 Downloaded on : Fri Feb 10 20:48:39 IST 2023 C/LPA/1068/2016 CAV JUDGMENT DATED: 09/02/2023 installation of GT-1 and GT-2 system is also quite surprising since said aspect, whether correct or not, is also seriously debatable. While submitting an application for registration of GT-1 and GT-2 and seeking exemption from electricity duty payment for power generation, a declaration is made to the effect that petitioner company has never installed any generating set at any time before installation of generating sets installed in November, 1996 though mentioned as installation of first set, but similar declaration was given with respect to GT-2, but then based upon such declaration in 1998, certificate has been granted in Form-H by virtue of Section 3(2A) which fact has been accepted by the appellant-company for a period of more than 10 years. So, it appears that stand taken by the appellant-company is a speculative stand which has rightly not been encouraged by the learned Single Judge, and we say so for the simple reason that Form-H certificate has clearly indicated the units of four GT sets and second certificate was including the units that may be in registration of GT-1. The company has consciously availed such exemption right from 1998 and then at fag end when the period was to expire, its stand is tried to be altered which may be a speculative stand, otherwise, language of the provisions is clear enough to indicate that no case is made out by the appellant calling for any interference.
38. Since learned Single Judge has applied his mind to Page 46 of 50 Downloaded on : Fri Feb 10 20:48:39 IST 2023 C/LPA/1068/2016 CAV JUDGMENT DATED: 09/02/2023 the core issue, and after critical analysis of material on record and the provision, has arrived at a clear possible view, and in the absence of any distinguishable material, on the basis of mere change in the stand, we are unable to exercise our appellate jurisdiction to substitute the view taken by learned Single Judge. In fact, in an intra- court appeal,, what would be the approach of the appellate court has been clearly spelt out in a decision in the case of Management of Narendra & Company Private Limited vs. Workmen of Narendra & Company, reported in (2016) 3 SCC 340. The relevant observations made in paragraph-5, we may deem it proper to quote hereunder;
"5. Once the learned Single Judge having seen the records and come to the conclusion that the industry was not functioning after January, 1995, there is no justification in entering a different finding without any further material before the Division Bench. The appellate bench ought to have noticed that the statement of MW- 3 is itself part of the evidence before the Labour Court. Be that as it may, in an intra-court appeal, on a finding of fact, unless the appellate Bench reaches a conclusion that the finding of the Single Bench is perverse, it shall not disturb the same. Merely because another view or a better view is possible, there should be no interference with or disturbance of the order passed by the Single Judge, unless both sides agree for a fairer approach on relief."
39. So, from the aforesaid conjoint reading of the fact, a possible view based upon material on record, we are not Page 47 of 50 Downloaded on : Fri Feb 10 20:48:39 IST 2023 C/LPA/1068/2016 CAV JUDGMENT DATED: 09/02/2023 inclined to interfere with.
40. At this stage, the decisions which have been pressed into service by the learned counsel appearing for the appellant-company that object of the exemption cannot be ignored; there must be a liberal construction when beneficial provision is made; the explanation object has to be kept in mind; and then tried to canvass that exemption is a vested and constitutional right and such privilege cannot be curtailed and by applying principle of promissory estoppel, a case is tried to be put up. To examine this stand, we have gone through the decisions which are referred to and relied upon by the learned counsel for the appellant reported in (2004) 6 SCC 408, (2012) 7 SCC 153, (2007) 5 SCC 447 and rest of the judgments, and found that facts are quite different and distinct as compared to the present case on hand, more particularly, when appellant-company has accepted with open eyes the exemption certificates which have been granted in Form No.H while seeking registration of GT-1 and GT-2, and said stand having been accepted and acted upon for more than a decade, this distinct circumstance prevailing is not possible to be ignored by us while examining the ratio laid down in the decisions which are cited before us by the learned counsel appearing for the appellant. Hence, on an overall analysis of material on record, we are unable to extend any assistance to the appellant company on the basis of the case laws which Page 48 of 50 Downloaded on : Fri Feb 10 20:48:39 IST 2023 C/LPA/1068/2016 CAV JUDGMENT DATED: 09/02/2023 have been cited before us. Hence, no judgment, as indicated above, would come to the rescue of the appellant, Hence, we deem it proper not to entertain the stand of the appellant-company. At this stage, we may recollect the proposition of law laid down by the Hon'ble Apex Court on the principle of precedent in which it has been stated that if the facts are different, even one additional fact may make a lot of difference in applying the ratio laid down in a decision. Hence, applying such principle, and keeping this principle in mind, we are unable to accept the stand of the appellant and we found that appeals are merit less and they deserve to be dismissed.
41. In respect of the cognate matter, since no separate arguments are canvassed by the learned counsel for the appellant-company and the facts are interwoven to the lead petition, out of which the letters patent appeal we have examined, we are not inclined to pass a separate order but the said appeal relates to the cognate petition of 2004 as indicated above is also disposed of with the present order.
42. Accordingly, we proceed to pass the following;
ORDER The Letters Patent Appeal No1068 of 2016 and Letters Patent Appeal No.1069 of 2016 are hereby dismissed and we affirm the common Page 49 of 50 Downloaded on : Fri Feb 10 20:48:39 IST 2023 C/LPA/1068/2016 CAV JUDGMENT DATED: 09/02/2023 CAV judgment which has been passed by the learned Single Judge dated 24.08.2016 in Special Civil Application No. 2683 of 2004 with Special Civil Application No.8320 of 2009. All pending applications stand consigned to records. No order as to costs.
(ARAVIND KUMAR,CJ) (ASHUTOSH SHASTRI, J) Vahid Page 50 of 50 Downloaded on : Fri Feb 10 20:48:39 IST 2023