TMI Blog2017 (5) TMI 264X X X X Extracts X X X X X X X X Extracts X X X X ..... pecifically dealt by the High Court and the Government. The condition which was found lacking for applicability of the notification was that generating sets were not purchased or installed or commissioned during the period from 01.01.1991 to 31.12.1992. The High Court has recorded categorical finding that the generating sets have been commissioned in the month of August 1995. Another reason given by the High Court was that no application was made within 180 days of application of the notification dated 27.02.1992 or even from the date of installation of generating sets i.e. August 1995. Even if the second reason given by the High Court is ignored, nonfulfillment of condition no.(a) of notification dated 27.02.1992 clearly entailed rejection of claim under notification dated 27.02.1992. There is no foundation or basis laid down even in this appeal to assail the finding recorded by the High Court that generating set was not purchased from 01.01.1991 to 31.12.1992. We thus do not find any error in rejection of claim of appellant under the notification dated 27.02.1992. - Civil Appeal No. 4842 of 2017 ( Arising Out of SLP (Civil) No. 34384 of 2016 ) - - - Dated:- 2-5-2017 - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... W. There was, however, a change in the Power Policy of Government of India, in the year 1991-92, which allowed the participation of private sector in power generation. Government of Gujarat also, with a view to give effect to that policy, issued a Notification dated 27.02.1992 under Section 3 of the Bombay Electricity Duty Act, 1958(hereinafter referred to as 1958 Act). The appellant no.1 Company, therefore, abandoned its plan to set up the said Captive Power Plant of 300 MW in Combined Cycle Mode and in place and instead thereof, promoted and incorporated a separate generating company under the name and style of ESSAR Power Limited , the appellant no.2 is a Special Purpose Vehicle promoted by the appellant no.1 company for supply of power to the appellant no.1 company as well as to the Gujarat Electricity Board. 3. The Government of Gujarat issued an Order dated 16.06.1995 agreeing in principle to the demand of appellant no.2 to set up 510 MW generating station at Hazira. The appellant no.2 started production of electricity w.e.f. 08.08.1995. The appellant no.1 held equity shares of 42% of appellant no.2 company. Out of 515 MW, 300 MW capacity has been allocated to GEB (Gujara ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant no.1 shall further pay from 01.05.2010 a sum of ₹ 15 Crores every month against the outstanding dues of electricity. 5. The Letters Patent Appeal ultimately came to be dismissed by Division Bench on 07.09.2016 against which judgment the present appeal has been filed. 6. We have heard Shri Mihir Joshi, Senior Advocate for the appellants and Shri C.A.Sundram, Senior Advocate appearing for the respondents. 7. Learned Counsel for the appellants contends that the issue is squarely covered in its favour by a decision of this Court in A.P. Gas Power Corporation Ltd. Versus AP State Regulatory Commission and another, (2004) 10 SCC 511, wherein it was held, inter alia, that the electricity generated by a Special Purpose Vehicle and consumed by the participating member to the extent of its equity contribution would amount to captive consumption of electricity. The High Court in the impugned judgment, however, distinguished the aforesaid judgment of this Court on the ground that in that case the parties were governed by a Memorandum of Understanding ( MoU ) which was not there in the present case and secondly, on the ground that ESIL was purchasing 215 MW of power from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The appellant has rightly been denied the benefit of exemption as claimed under the notification dated 27.02.1992. The condition of the notification dated 27.02.1992 specifically states that the generating set or sets shall have to be purchased or installed or commissioned during the period beginning from 01.01.1991 and ending on 31.12.1992. This does not cover order placed for the purchase of generating set. Since ESSAR Steel has merely placed the order for generating set but neither purchased nor installed or generated within the period specified in the aforesaid notification, it is not fulfilling this condition and hence not entitled for benefits of the said notification. In case of purchase, property in goods is transferred to the owner, here, in given case, property in goods cannot be considered as transferred when same is simply ordered. 10. Learned Counsel for the parties have placed reliance on various judgments of this Court in support of their respective submission which shall be referred to while considering the submissions in detail. 11. We have considered the submissions of Learned Counsel for the parties and perused the records. 12. From the facts which hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n dated 27.02.1992 and subsequently on 12.04.2001 has again claimed exemption under Section 3(2)(vii)(a) (i) of 1958 Act. The exemption from payment of duty as claimed by the appellant is in two parts. Firstly, under Section 3(2)(vii)(a)(i) of 1958 Act and secondly, under the notification dated 27.02.1992. We proceed to examine both the claim separately. Claim under Section 3(2)(vii)(a)(i) 14. Section 3 of 1958 Act deals with duty on units of energy consumed . SubSection 2 enumerates various circumstances under which duty shall not be leviable on the units of energy consumed. Section 3(2)(vii)(a)(i) and 3(3) is quoted below: 3. Duty on units of energy consumed... ... ... (2) Electricity duty shall not be leviable on the units of energy consumed......... (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 gene ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been permitted as a special case to supply power to its sister concerns viz. ESSAR Steel Ltd. and ESSAR Oil Ltd, hereinafter jointly and severally referred to as ESSAR Group Companies . AND WHEREAS ESTL which is engaged in the manufacture of Steel products at Hazira, intends to purchase electrical output generated by the Generating Station equivalent to 138 MW capacity in the Open Cycle mode and 215 MW capacity in Combined Cycle mode operation (hereinafter collectively or severally referred to as the Allocated Capacity ) on the terms and conditions set forth in this Agreement. 16. Article 3 of the PPA dated 01.06.1996 between ESSAR Power Limited and ESSAR Steel Limited reads as under: 3.1 ALLOCATION OF CAPACITY The allocation of capacity shall be as under: (a) During Open Cycle mode operation prior to commissioning of the Combined Cycle mode operation the Company shall allocate: 138 MW to the ESTL; and 192 MW to GEB (b) During Combined Cycle mode 215 MW to the ESTL; and 300 MW to GEB .......... .................. 17. Even assuming appellant no.1 and appellant no.2 are jointly generating the energy for the use of in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , if there is any excess power generated by EPL, the each may be purchased by the Board, at a price decided by the Board subject to the norms laid down by GoI from to time. It is, therefore, requested that GEB may take further necessary action in the matter. 19. We have noticed above that Power Purchase Agreement allocated the energy to the Gujarat Electricity Board to the extent of 58% and 42% power supply was to be given to sisters concern i.e. ESSAR Gujarat, ESSAR Steel and ESSAR Oil as a special case. It is well settled that taxing statute are to be strictly construed specifically the exemption notification. It has been held that the statutory provisions providing for exemption has to be interpreted in the light of words employed in it and there cannot be any addition or substraction from the statutory provision. This Court in Commissioner of Central Excise, SuratI versus Favourite Industries, 2012 (7) SCC 153, while considering exemption notification issued under Central Excise Tariff Act, 1985 laid down following in paragraph 35 to 40: 35. The notification requires to be interpreted in the light of the words employed by it and not on any other basis. There c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for which MODVAT credit facility has been availed of. Such a construction, as has been suggested by the learned counsel for the respondents, would amount to addition of the words only out of or purely out of the base paper and cannot be countenanced. The notification has to be construed in terms of the language used therein. It is well settled that unless literal meaning given to a document leads to anomaly or absurdity, the golden rule of literal interpretation shall be adhered to. (emphasis supplied) 40. In CCE v. Mahaan Dairies, this Court has held: (SCC p. 800, para 8) 8. It is settled law that in order to claim benefit of a notification, a party must strictly comply with the terms of the notification. If on wording of the notification the benefit is not available then by stretching the words of the notification or by adding words to the notification benefit cannot be conferred. The Tribunal has based its decision on a decision delivered by it in Rukmani Pakkwell Traders v. CCE. We have already overruled the decision in that case. In this case also we hold that the decision of the Tribunal is unsustainable. It is accordingly set aside. (emphasis s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y to industrial undertakings with whom it is not jointly generating the energy. Judgment of this Court in State of U.P. and Renusagar Company, thus, has no application in the facts of present case. 24. Learned Counsel for the appellant has placed reliance on judgment of this Court in A.P. Gas Power Corporation Ltd. Versus A.P. State Regulatory Commission Another, 2004 (10) SCC 511. In the above case, the State Government of Andhra Pradesh and Andhra Pradesh Electricity Board had mooted the idea of setting up of 3 X 33 MW gasbased Combined Cycle Power Station for establishing a generating station. It was decided to invite private participation in the venture. A Memorandum of Understanding dated 17.10.1988 and on 19.04.1997 was entered according to which Andhra Pradesh State Electricity Board had to have 26% shares in the new company to come up as A.P.GPCL and rest of the participating industries were to have different percentage of shares and the power so generated by company was to share proportionately among the shareholding participating companies and their sister concerns. The question which fell for consideration before this Court was as to whether A.P.GPCL was required to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cipating industries but not the participating industries themselves. 37. To support the view taken by us, a decision of this Court referred to by the respondents may be cited as in State of U.P. Vs. Renusagar Power Co. This case, however, was decided in a slightly different fact situation. M/s Hindustan Aluminium Corporation Ltd. was established in 1959 on assurance of providing cheap electricity to it. In the year 1964, however, M/s Renusagar Power Co. Ltd. was established as a wholly owned and subsidiary of M/s Hindustan Aluminium Corporation Ltd. It was generating electricity, but incorporated separately and had its own separate Memorandum of Understanding and Articles of Association. To raise the revenue for the State, the U.P. Electricity (Duty) Act, 1952 was enforced to levy a duty on the consumption of electricity. Several amendments were, however, incorporated from time to time and ultimately a provision was inserted providing that there would be levied and paid to the State Government a duty called electricity duty on the energy sold to a consumer by a licensee/Board/the Central Government. The duty on consumption of electricity was leviable even though it may be fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us ESSAR Power Limited, 2016(9) SCC 103, has also been referred to. The above case was a case where parties to the present appeal were at issue and appeal was filed by Gujarat Urja Vikas Nigam, successor of Gujarat Electricity Board under Section 125 of the Electricity Act against the Order of Appellate Tribunal of electricity. The appellant had filed the petition before the Gujarat Electricity Regulatory Commission for adjudication of the dispute arising out of Power Purchase agreement. The appellant had sought compensation for wrongful allocation of electricity by EPL to the sister concerned i.e. ESSAR Steel Limited in preference to the appellant. The Commission had occasion to examine various clauses of Power Purchase Agreement dated 30.05.1996 between the parties. This Court rejected the contention of the EPL that it could sell power to ESL beyond its allocated capacity. In the paragraph 22 of the judgment following was held: 22. The agreement clearly contemplates the proportion of allocation of a capacity. EPL has to fuel and operate the generating station to meet the requirement of electric output that can be generated corresponding to the allocated capacity. The appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he notification dated 27.02.1992 was issued in exercise of power conferred by Section 3(3) of Bombay Electricity Act, 1958. The relevant part of the notification dated 27.02.1992, is as follows: NOTIFICATION Sachivalaya Gandhinagar 27th February, 1992 BOMBAY ELECTRICITY DUTY ACT, 1958 No. GHC/92/10/JCP/1188/2594/K In exercise of the powers conferred by Sub Section (3) of the Section 3 of the Bombay Electricity Duty Act,1958(Bom. XL of 1958), the Government of Gujarat hereby remitted with effect on and from the date of publication of this notification in the Official Gazette. In the whole of the State of Gujarat, the Electricity Duty payable under item (6) of Part I of Schedule II to the said Act, on the energy consumed for motive power and lighting for Industrial purposes by industrial under takings which generate energy jointly for their own use either by establishing an independent joint company solely for this purpose or on prorata cost sharing basis, for a period of ten years from the date of commissioning of the generating sets subject to the following terms and conditions namely: (a) The generating set or sets shall have been purchased and inst ..... X X X X Extracts X X X X X X X X Extracts X X X X
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