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Assessees' challenge to the tribunal's order

11. The assessees submit that all the electricity companies to whom the goods have been sold by them fulfill all the requirements laid down in Rule 11(XII) of the DST Rules.They urge that the Indian Electricity Act, 1910 (hereafter "the 1910 Act") was the first Indian law which codified the rights and obligations in regard to generation and distribution of electricity. These rights were found not to be adequate and the Electricity Supply Act 1948 ("the Supply Act") was enacted with the objective of creating Boards throughout India for better generation and distribution of electricity by the States. The Act prescribed that various Boards and the DVB were automatic licensees under the 1910 Act. Section 26 of the Supply Act provided that Boards shall have all the powers and obligations of a licensee under the 1910 Act and the Act deemed to be the license of the Board for purposes of 1910 Act. Thus, the Delhi Vidyut Board (DVB) is a licensee under the 1910 Act, as Section 26 of the Supply Act deems DVB to be a licensee for the purpose of the 1910 Act. Section 26 of the Supply Act is relied on to say that the Board had ―all the powers and obligation of a licensee under the Indian Electricity Act, 1910, and this Act shall be deemed to be the licence of the Board for the purposes of that Act:...‖

13. Provisions of the DERC Act (Section 14) enabled creation of companies for generation, transmission and distribution and transfer of existing generating stations, transmission and distribution systems; Section 15 provided for transfer of assets, liabilities, etc. of DVB to the newly formed companies; the transfer of rights was framed under Delhi Electricity Reform (Transfer Scheme) Rules, 2001 (hereinafter referred to as "the 2001 Rules"). These Rules were framed in exercise of powers conferred by Section 60 read with Sections 15 & 16 of the DERC Act. As a consequence of these provisions, three entities, i.e. BSES Yamuna Power Ltd., BSES Rajdhani Power Ltd. and NDPL were created. The DVB got unbundled into six companies naming GENCO, the holding Company, Delhi Transco Ltd., BSES Yamuna Power Ltd., BSES Rajdhani Power Ltd. and NDPL, with all DVB's rights, liabilities and proceedings devolving on them. The assessees relied on the decision of the Supreme Court in Delhi Electricity Regulatory Commission v. BSES Yamuna Power Ltd. & Others, 2007 (3) SCC 33 to say that the unbundling process resulted in transfer of rights and liabilities of DVB to the DISCOMs and other entities. They also relied on Rules 10(1) and 10(2) of 2001 Rules stating that within sixty days of the effective date of transfer, i.e. 30.06.2002, the DISCOMs and Transco had to apply to the Commission constituted under the DERC Act for grant of licence to undertake the business of distribution and retail supply of electricity (DISCOMS) and to undertake the business of transmission and bulk supply of electricity (Transco). This application was duly made and the licence was also granted to the DISCOMs in March, 2004 and to Delhi Transco Ltd. in May 2003.The assessee submitted that the fact of license was granted in March, 2004 is acknowledged by this Court in the case of Suresh Jindal v. BSES Rajdhani in LPA 256/2006. Reliance was also placed on Rules 10 (1) and 10 (2) stating that they provide that from the date of transfer and till grant of license by DERC, the DISCOMs could exercise the rights of erstwhile DVB under the Supply Act and also undertake the electricity distribution and retail supply business as the Board did prior to the effective date of transfer. They also relied on provisos to submit that the Rule 5(2) of the 2001 Rules also provides for the same effect. Rule 5(2) reads as follows:

48. From the relevant provisions, it is clear that the Delhi Vidyut Board (DVB) was deemed to be a licensee under the 1910 Act. This is because the Delhi Electricity Control Order ("DECO") of 1959 was framed under provision of section 22 B of 1910 Act read with notification of Central Government dated 10.11.1959 to regulate transmission, distribution and utilisation of electricity and for maintaining the supply and securing equitable distribution of energy by all concerned in the Union Territory of Delhi. When functions to deal with electricity were delegated to Municipal Corporation of Delhi (MCD) under the Delhi Municipal Corporation Act 1957 as licensee, the Delhi Electricity Supply Undertaking (DESU) was functioning as undertaking of MCD and no Board was in existence. It was felt time and again that restrictions imposed under the provisions of DECO 1959 and by linking the policy for grant of electricity connections with building bye-laws impeded DESU/ DVB from freely granting electricity connections in terms of actual requirements of applicants. Genuine applicants faced difficulties and many were tempted to resort to drawing electricity by unfair means, causing loss of revenue. The restrictions imposed had not yielded the desired result of enforcing Bye-laws of various government agencies. The Govt of NCT Delhi considered various difficulties and approved certain amendments in DECO 1959. Eventually, fresh regulations were framed under Section 79 of the Supply Act (1948) and a new undertaking (DVB) formed which took over the functions as licensee under the 1919 Act.

50. In the DERC Rules, "Board" was defined to mean DVB constituted under Section 5 of the Supply Act; Rule 2(f) defined DISCOMs to mean as companies with the principal object of engaging in the business of distribution and supply of electricity in the area as specified in Part II of Schedule H.―Transferee‖ was been defined in Rule 2(r) to mean "GENCO", "TRANSCO", "DISCOMS" and "PPCL", in whom the undertaking or undertakings or the assets, liabilities, proceedings and personnel of the DVB stood transferred.