Indian Kanoon - Search engine for Indian Law

6. State Government framed Captive Power Policy, 2001 with salient features that Captive Power producer has to be consumer of the Electricity Board and should not owe any dues to it; it should draw at least 50% of electricity requirement from the Electricity Board; the permission to run Captive Power Plant would be for maximum period of ten years; wheeling power shall not be permitted other than for own use; storage and banking shall not be available; exemption in electricity-duty shall not be available; and energy development cess of 20 paise per unit shall be levied on Captive Power Plants to be recovered by the Electricity Board. Thus, the power policy requires industries to enter in to HT agreement for power consumption to the extent of at least 50%, though they did not require it from the Electricity Board. Further, major blow of policy is the imposition of energy development cess at the rate of 20 paise per unit, the Captive Power Plant produces for the industry.

The petitioners submit that under Section 3 of the Electricity Duty Act, 1949, liability to tax is on sale or consumption of electrical energy. The Electricity Board or any independent power project or generating company is also liable to pay electricity duty.

8. M.P. Upkar Adhiniyam, 1981, provides for levy of electrical energy development cess on every distributor of electrical energy, payable to the State Government at the rate of 1 paisa per unit on the total units of electrical energy sold or supplied to the consumer or consumed by himself or his employees.

"3 (2) Every producer producing electrical energy by his captive power unit or diesel generator set of capacity exceeding 10 kilowatt in total shall pay to the State Government an energy development cess at the rate of 20 paise per unit on the total units of electrical energy produced whether for sale or supply to a consumer or for consumption by himself or his employees during any month......"

The result of this amendment would be additional cost and virtually closer of the industries which are otherwise facing severe crisis. Section 3 (3) provides for placing the fund at the discretion of the State Government to be utilised for research and development in the field of energy including electrical energy as well as other conventional and non-conventional sources of energy, improving the efficiency of generation, transmission, distribution and utilization of energy including reduction of losses in transmission and distribution, research in design, construction, maintenance, operation and materials of the equipment used in the field of energy with a view to achieve optimum efficiency, continuity and safety, survey of energy sources including non-perennial sources to alleviate energy shortage, energy conservation programmes, extending such facilities and services to the consumers as may be deemed necessary, creation of a laboratory and testing facilities for testing of electrical appliances and equipments and other equipments used in the field of energy, programme of training conducive to achieve any of the above objectives, transfer of technology in the field of energy, any purpose connected with safety of electrical installations and any other purpose connected with improvement of generation, transmission, distribution or utilisation of electrical and other forms of energy, as the State Government may, by notification, specify. Even though it is claimed that energy development cess was being levied for purposes enumerated in it, there is no evidence of any such activity being undertaken by the State Government. Rather, these purposes are required to be fulfilled mainly by the Central Electricity Authority.

10. Petitioners assert that no part of aforesaid fund has been utilised for the purposes enumerated above. It is a taxing measure for augmentation of revenue to be spent at the sole discretion of the Slate. The Act provides for exemption in favour of certain categories like, Government of India, Railways, Rural Electrical Cooperative Society registered under the M.P. Cooperative Societies Act, 1960 and the local bodies including Municipal bodies and Panchayats for consumption in public street lamp or lamps in any market place or water works or other places of public resort maintained by such bodies apart from some other activities. It provides for collection through Electricity Board and then making the same available to the State Government which would deal with it as per Section 3 (3) of the Act of 1981. The Energy Development Cess levied under Section 3 (2) of the Ordinance/Act is unconstitutional, illegal and unaulhorised, therefore, deserves to be declared ultra vires and unconstitutional and the respondents mandamusscd not to levy and collect Energy Development Cess from the petitioners under Section 3 (2) of the Ordinance/ Acl.