IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 17 - 10 - 2006 CORAM: THE HONOURABLE MR.JUSTICE S.J.MUKHOPADHAYA AND THE HONOURABLE MR.JUSTICE F.M.IBRAHIM KALIFULLA W.A.No.701 of 1999 & C.M.P.No.6929 of 1999 & V.C.M.P.No.9026 of 1999 1. Tamilnadu Electricity Board, rep. through its Chairman, No.800, Anna Salai, Chennai-2. 2. The Member (Distribution), Tamilnadu Electricity Board, No.800, Anna Salai, Chennai-2. 3. The Superintending Engineer, Virudhunagar District Electricity Distribution Circle, Tamilnadu Electricity Board, Virudhunagar - 626 001. .. Appellants vs. M/s.Aruppukottai Sri Jayavilas Ltd., rep. by Chairman, No.2, Pillaimar Street, Aruppukottai. .. Respondent Writ Appeal filed under Clause 15 of the Letters Patent against the order dated 25.2.1999 in W.P.No.2389 of 1998. Petition presented to this Court under Article 226 of the Constitution of India to issue a writ of certiorarified Mandamus calling for the records of the second respondent in his proceedings reference Letter No.560/SE/IEMC/EECT) AEE.2/AE.2/2005, dated 30.12.1997 and to quash the same and direct the respondents to grant Tariff concession to M/s.Aruppukottai Sri Jayavilas Ltd. "B" Unit at Yamilpadi Village, Tiruchuli Taluk, Virudhunagar District bearing H.T. SC.No.150 Virudhunagar District Electricity Distribution Circles for the full period of three years from 27.3.1995 to 26.9.1998 as per G.O.Ms.No.102 PW (Electricity) dated 24.1.1992 trating the same as "New Industry". For appellants: Mr.P.S.Raman, Addl. Advocate General for Mr.J.Ravindran https://hcservices.ecourts.gov.in/hcservices/ For respondent: Mr.K.Alagirisamy,Senior Counsel for Mr.S.Navaneethakrishnan & Mr.S.Kadarkarai JUDGMENT F.M.IBRAHIM KALIFULLA, J. The Chairman, the Member (Distribution) and the Superintending Engineer of the Tamil Nadu Electricity Board, are the appellants herein. 2. The challenge in the Writ Appeal is to the order of the learned single Judge, who by the impugned order dated 25.2.1999, passed in W.P.No.2389 of 1998, while setting aside the order of the second appellant dated 30.12.1997, directed the appellants to treat the 'B' Unit of the respondent as a 'new industry' and to pass appropriate orders and to take consequential steps for the grant of tariff concession. 3. Brief facts which are required to be stated are as follows: (a) The respondent own a cotton spinning Mill located at Melakandamangalam Village, Aruppukottai Taluk, Virudhunagar District with High Tension Service Connection (hereinafter referred to as "HTSC") No.68. The said Mill is called as 'A' Unit. Subsequently, the respondent established a new spinning Mill at Tamilpadi Village, Tiruchuli Taluk, which is known as 'B' Unit. The service connection of the 'B' Unit which was also HTSC, had the number H..T.S.C.No.150. The said 'B' Unit went into commercial production from 1.9.1995 and for billing purposes, the meter-reading was taken on and from 27.9.1995. (b) Under the provisions of the Tamil Nadu Revision of Tariff Rates of Supply of Electrical Energy Act, 1978 (Tamil Nadu Act 1 of 1979), the Government of Tamil Nadu, by way of amendment to the Schedule to the said Act in respect of high-tension industries' tariff rates, used to fix the rates by the issuance of Government Orders. While making such amendment to the tariff rates, the State Government also used to announce the tariff concession for high- tension industries coming under the category of High Tension Tariff- I. Such tariff concession was being extended and periodically altered by issuance of different Government Orders. (c) During the relevant point of time, when the respondent commenced operation of its 'B' Unit on 27.9.1995, the relevant Government Order in operation was G.O.Ms.No.29, Energy (A.2) Department, dated 31.1.1995. The amendment to the Schedule to Tamil Nadu Act 1 of 1979 under the said G.O. came into force on and from 1.2.1995. The said G.O. was in respect of the registered factories, among other industries, the textile industry, falling under High https://hcservices.ecourts.gov.in/hcservices/ Tension Tariff-I. The rate per KWH and rate per KVA in respect of such industries functioning in the Madras Metropolitan area and Non- Metropolitan area, were separately fixed. It also provided for tariff concession in the case of new industries to be set up in the areas other than the Madras Metropolitan areas, which was to be charged for the first three years from the date the consumer is being given the service connection under high tension tariff. (d) By way of an explanation to Clause (a) of the said Schedule as amended, it was stated that for the purpose of electricity tariff concession for new industries, the term 'new industries' should be taken to mean a new investment by any entrepreneur including by an existing industry in any area other than the Madras Metropolitan areas, subject however to the condition that the assets other than cash of the existing industry, are not transferred and shown as assets of the new industry. (e) Under Clause (aa) of the said amended Schedule, it is mentioned that the tariff concession should be made applicable to expansion of industry also, to be set up in any City, Municipality, Town-ship or Panchayat Union limit other than the Madras Metropolitan area in which the main industry is functioning. Hereagain, it is stipulated that the assets other than cash of the existing industry, are not transferred and shown as the assets of the expanded Unit. (f) Further, by way of explanation to Clause (aa), what is meant by 'expansion' has been stated to mean that an increase in production of such expanded Unit, which results in an increase of 25% or more in the consumption of electricity by the industry with reference to the highest electricity consumption of such industry in the three completed financial years preceding the application. (g) Under Clause (c) of the said amended Schedule, it has been specifically stated that the new industries to be set up in the Madras Metropolitan areas shall not be eligible for any tariff concession. (h) The respondent applied for tariff concession for its 'B' Unit for a period of three years, namely from 27.9.1995 to 26.9.1998. However, the appellants took the stand that the 'B' Unit of the respondent can only be held to be an expansion of its 'A' Unit and since the 'B' Unit satisfied the conditions stipulated in the explanation to Clause (aa) of the amended Schedule as per G.O.Ms.No.29, dated 31.1.1995, only from 26.2.1996, it would be entitled for such tariff concession (i.e) between 26.2.1996 and 26.9.1998. In other words, the tariff concession extended to 'B' Unit of the respondent was restricted between 26.2.1996 and 26.9.1998. To put it differently, in view of the stand of the appellants that the 'B' Unit of the respondent was only by way of an expansion to its 'A' Unit, it was not entitled for full three years of tariff concession, but only from the date it satisfied the conditions stipulated in the explanation to Clause (aa) of the amended Schedule as per the said G.O.Ms.No.29, which date was noted https://hcservices.ecourts.gov.in/hcservices/ as 26.2.1996. (i) By order dated 10.12.1997, signed on 30.12.1997, the second appellant herein confirmed their earlier stand in their communication dated 27.4.1996 and refused to allow full period of three years by treating the 'B' Unit of the respondent as a 'new industry'. (j) When the said order of the second appellant was challenged in W.P.No.2389 of 1998, the learned single Judge, by order dated 25.2.1999, held that the rejection of the respondent's claim to treat its 'B' Unit as a 'new industry' for the grant of tariff concession on the ground that the machineries installed in the said 'B' Unit were identical to the one installed in the 'A' Unit of the respondent and the products manufactured in the 'B' Unit were also the same like that of the 'A' Unit, was not valid in law. Accordingly, the learned single Judge directed the appellants to treat the 'B' Unit of the respondent as a 'new industry' and grant the tariff concession on that basis. (k) The Writ Appeal preferred against the said order of the learned single Judge, came to be disposed of by the earlier Division Bench of this Court, by judgment dated 26.9.2003. In the said judgment, it was held that the consideration of the issue, namely whether 'B' Unit is by way of a new investment by the existing entrepreneur, namely 'A' Unit, or an expansion of 'A' Unit, would require scrutiny of very many material facts, which cannot be examined in Writ proceedings and that such exercise can be carried out only before the competent Civil Court. So saying, by the earlier judgment, the Division Bench set aside the order of the learned single Judge while dismissing the Writ Petition, and held that such decision was without prejudice to the right of the respondent to approach the Civil Court if they are so advised. (l) As against the above judgment of the Division Bench in the Writ Appeal dated 26.9.2003, a Special Leave Petition was preferred by the respondent herein before the Supreme Court of India in Civil Appeal No.899 of 2005 (arising out of SLP(C).No.1135 of 2004) and the said Civil Appeal came to be disposed of by the Supreme Court, by order dated 4.2.2005, holding as under: "Leave granted. Heard learned counsel for the parties. The Division Bench of the High Court while reversing the order of the learned Single Judge and dismissing the writ petition of the petitioner merely stated that the question whether 'B' unit of the company came into existence by new investment made by any entrepreneur including the existing industry could be gone into only in appropriate civil proceedings before the competent Civil Court. After hearing the learned counsel for the https://hcservices.ecourts.gov.in/hcservices/ parties, we do not find that the writ court was, in any way, inhibited from going into the facts on record for deciding the question whether the 'B' unit came into existence by new investment or it was merely an old unit so as to be denied the concessional tariff. In these circumstances, we allow this appeal and remit the writ appeal to the Division Bench for deciding the appeal afresh after hearing the parties on the disputed question." (m) In the light of the abovesaid order of the Supreme Court, we were obliged to hear this Writ Appeal again and render this judgment. 4. We have heard Mr.P.S.Raman, learned Additional Advocate General appearing for the appellants and Mr.Alagirisamy, learned Senior Counsel appearing for the respondent. 5. In the course of his submissions, learned Additional Advocate General, after referring to G.O.Ms.No.29, Energy (A.2) Department, dated 31.1.1995 as well as the earlier G.O.Ms.No.102, Public Works (Electricity) Department, dated 24.1.1992, contended that the benefit of tariff concession extended to expansion of an existing Unit, can only relate to such expanded Unit which also manufactures the very same product. According to him, if the product manufactured in another Unit started by the same entrepreneur is identical to the product manufactured in the existing Unit, that can only be categorised as an 'expansion' of the existing Unit and the same can never be called a “new industry”. 6. To draw support to his submissions, learned Additional Advocate General would lay heavy stress upon the definition clause of 'expansion' in the Government Order and contend that for the purpose of the G.O., increase in production was the necessary criteria and the production would always be one and the same only in the case of 'expansion' and therefore, it will have to be held that the 'B' Unit which manufactured the very same product of 'Hank Yarn', which is manufactured by 'A' Unit, it can only be called as an 'expansion' of 'A' Unit and not a 'new industry'. 7. According to learned Additional Advocate General, there can never be a case of a new industry by the existing entrepreneur, if the product manufactured is one and the same, even if other conditions stipulated in the G.O. are satisfied. 8. Learned Additional Advocate General contended that the grant of advantage of benefit from the payment of electricity tax by treating the 'B' Unit as a 'new industry' under the Tamil Nadu Electricity (Taxation on Consumption) Act, by itself would not entitle the respondent to claim the benefits under the Tamil Nadu Act 1 of 1979, since the former legislation does not make any distinction between a 'new industry' and an 'expansion' of an existing industry for the purpose of granting exemption from levy of additional https://hcservices.ecourts.gov.in/hcservices/ electricity tax. 9. Learned Additional Advocate General however fairly placed before the Court the decision of the Supreme Court reported in AIR 1977 SC 1134 (T.M.Corpn., Calcutta vs. I.T.Commr., W.B.) and AIR 2003 SC 1132 (State of Gujarat vs. Saurashtra Cement and Chemical Industries Ltd.), where the expression 'expansion' or 'new industry' has been discussed in detail. 10. An extreme stand was also taken on behalf of the appellants that the 'B' Unit of the respondent was not entitled for any tariff concession either by way of 'expansion' or a 'new industry', since the 'B' Unit was established in different village, though falling under the same Panchayat Union. 11. As against the above submissions, Thiru.Alagirisamy, learned Senior Counsel appearing for the respondent, by tracing the history of tariff concession granted under different Government Orders, right from the one issued in G.O.Ms.No.861, dated 30.4.1982 to the one dated 31.1.1995 in G.O.Ms.No.29, pointed out that originally, the tariff concession was not made available for subsequent expansion or diversification of production in the year 1982. In the year 1988, such concession was extended even to a 'new industry' made by the entrepreneur of an existing industry, subject to the condition that there was no transfer of assets of the existing industry and shown as assets of the 'new industry'. It was pointed out that while making such a relaxation in the year 1988, the restriction, namely that such tariff concession would be applicable only once to a consumer for a new industrial undertaking and the same would not be available for any subsequent expansion or diversification of production. Learned Senior Counsel appearing for the respondent, then pointed out that in the year 1991 and 1992, extension of such tariff concession for any expansion of the industry within the City, Township, Municipality or Panchayat Union limits in which the main industry was functioning, was retained, meaning thereby that such concession would be available in case of expansion of the industry outside the areas in which the main industry was functioning. By referring to the subsequent G.Os. in G.O.No.1330, dated 17.9.1992 and G.O.No.313, dated 26.2.1993, learned Senior Counsel appearing for the respondent contended that a further relaxation came to be made in respect of expansion of industry also to be set up in the same City, Municipality, Township or Panchayat Union limits in which the main industry was functioning and the only exclusion was the areas where such industry was functioning within the Madras Metropolitan area. 12. Learned Senior Counsel also relied upon a communication of the appellants dated 11.10.1995, wherein, the appellants granted exemption to the respondent from levy of additional electricity tax for the period 27.9.1995 to 26.9.1998 (three years) treating the same as a 'new industry' by applying the appellants' Board Proceedings in Permanent B.P.(F.B.).No.119, dated 17.6.1993. Learned Senior Counsel by drawing the attention of this Court to paragraphs 4 and 5 of the above referred to B.P., contended that when the said B.P. came to be issued by the appellants in tune with the definition of a 'new https://hcservices.ecourts.gov.in/hcservices/ industry', different yardstick applied by the appellants for granting the tariff concession under G.O.Ms.No.29, dated 31.1.1995, was erroneous in law and therefore, the same is liable to be set aside. 13. Having heard the learned counsel for the respective parties, for better appreciation of the issue in controversy, namely whether the 'B' Unit of the respondent would fall within the category of a 'new industry' or 'expansion' of its 'A' Unit, relevant Clauses in the amended Schedule as per G.O.Ms.No.29, as well as the B.P. dated 17.6.1993 need extraction. 14. In G.O.Ms.No.29, Energy (A.2) Department, dated 31.1.1995, the relevant Clauses are Clause (a), Clause (aa) and Clause (c)(i) to the amended Schedule, which are to the following effect: "(a) In the case of new High Tension Industries to be set up in the areas other than the Madras Metropolitan areas the following concessional tariffs shall be charged for the first three years from the date, the consumer is given service connection under high tension tariff:-- For the first year .. .. 60 per cent of the High Tension rates. For the second year .. .. 70 per cent of the High Tension rates. For the third year .. .. 80 per cent of the High Tension rates. For the fourth year .. .. Full tariff. The above concession shall apply to both unit rates and maximum demand charges. This concession shall not however, be applicable to an industry set up before the 3rd May 1989. The concession shall not also be applicable to a consumer, who utilises power from his own generating units or makes other arrangements for production purposes and utilises the power supplied by the Board for auxiliary purposes only: Provided that the High Tension Industries set up in any area (including industrially under developed area, notified as such by the Government) before the 3rd May 1989 which are availing tariff concessions or reduction under High Tension Tariff I as on the 2nd May 1989, shall continue to avail the said tariff concession or reduction until the expiry of the period of five years from the date the consumer is given service connection under High Tension Tariff I. Explanation.-- For the purpose of https://hcservices.ecourts.gov.in/hcservices/ electricity tariff concessions for new industries the term 'new industries' shall mean a new investment by any entrepreneur including by an existing industry in any area other than the Madras Metropolitan areas, provided the assets other than cash, of the existing industry, are not transferred and shown as assets of the new industry." "(aa) The tariff concession shall be applicable to expansion of industry also to be set up in any city, municipality, township or panchayat union limit other than the Madras Metropolitan areas in which the main industry is functioning, provided the assets other than cash of the existing industry are not transferred and shown as the assets of the expansion: Provided that the tariff concession shall be applicable only once, to a new industry or an expansion of the industry in the area comprising the satellite town of Maraimalai Nagar New Town developed by the Madras Metropolitan Development Authority, irrespective of the fact whether such industry has availed of such concession outside the area of Maraimalai Nagar earlier or not, and also whether such industry is considered new investment or not: Provided further that the concession for the expansion of industry shall not be applicable to the existing industry availing the concession for the additional load in the High Tension service for its expanded activity beyond the period of three years or five years, as the case may be, as specified in item (a) and the proviso thereto, respectively. Explanation -- The term "expansion" shall mean an increase in production which results in an increase in 25 per cent or more in the consumption of electricity by the industry with reference to the highest electricity consumption of such industry in the three completed financial years preceding the application." "(c)(i) The new industries to be set up in the Madras Metropolitan areas shall not be eligible for any tariff concessions." 15. The relevant Clauses in B.P.No.119, dated 17.6.1993, is paragraphs 4 and 5(a), which read as follows: "4. The Government of Tamil Nadu in the https://hcservices.ecourts.gov.in/hcservices/ Tariff Notification issued under Section (4) of the Tamil Nadu Revision of Tariff Rates on Supply of Electrical Energy Act 1978 has defined new H.T. Industries as indicated below for the purpose of extending concessional tariff for a period of 3 years. "New Industries shall mean a new Investment by any entrepreneur including by an existing industry in any area other than Madras Metropolitan area provided the assets other than cash of the existing industry, are not transferred and shown as assets of the new industry". According to the above classification of new H.T. industry, the Board is allowing concessional tariff rates to the new H.T. industries eligible for such concessional tariff rates. 5. As the Government has defined new industries as above in respect of industries availing H.T. supply, the Board after careful consideration orders as indicated below for giving exemption from payment of additional electricity tax to the New Industries availing H.T. supply only. a. all the new H.T. industries as defined in the Tariff Notification issued by the State Government under Section (4) of the Tamil Nadu Revision of Tariff Rates on Supply of Electrical Energy Act 1978 and who have availed H.T. Supply on or after 30.7.92 may be allowed the Additional Electricity Tax exemption for a period of 3 years from the date of commencement of manufacture or production of the principal product." 16. In the case of the respondent, while its 'A' Unit was located at Melakandamangalam Village, Aruppukottai Taluk, Virudhunagar District, its 'B' Unit came to be located at Tamilpadi Village, Tiruchuli Taluk, Virudhunagar District, which commenced its commercial production from 1.9.1995. The service connection of the 'A' Unit was assigned the No. - H.T.S.C.No.68, while its 'B' Unit was assigned the No. - H.T.S.C.No.150. The tariff concession claimed by the respondent was for the 'B' Unit for the period 27.9.1995 to 26.9.1998 by treating it as a 'new industry'. 17. It is admitted that both 'A' Unit and 'B' Unit are manufacturing 'Hank Yarn'. It is also not in dispute that while both the 'A' Unit and 'B' Unit fall within the same Panchayat Union, namely Thiruchuli Panchayat Union, they were located in two different villages. https://hcservices.ecourts.gov.in/hcservices/ 18. In the abovesaid background, when the stipulations contained in G.O.Ms.No.29, dated 31.1.1995 are analysed, we find that Clause (a) of the amended Schedule in the said G.O.Ms.No.29, deals with the applicability of tariff concession to new industries. The relevant criteria to be considered for the grant of such tariff concession are : (a) Such tariff concession will be available to such new high tension industries set up in the areas other than Madras metropolitan areas. (b) Such concession shall not be applicable to an industry set up before 3rd May, 1989. (c) Such concession shall not be applicable to a consumer who utilises power from his own generating Units or by making other arrangements for production purposes and the power supplied by the Board is used only for auxiliary purposes. 19. If new industry is set up by way of new investment by any entrepreneur of an existing industry, such investment can only be by way of cash investment and not by way of transfer of assets other than cash and such assets shown as assets of the new industry. Such set up of new industry by the entrepreneur of an existing industry, should be in any area other than the Madras Metropolitan areas. 20. Under Clause (aa) of the amended Schedule in the said G.O.Ms.No.29, dated 31.1.1995, the relevant criteria stipulated for the grant of tariff concession applicable to expansion of any industry are: (a) Such expansion activity should be set up in any City, Municipality, Township or Panchayat Union limit other than the Madras Metropolitan areas. (b) Hereagain, the assets other than cash of the existing industry should not have been transferred and shown as the assets of the expanded Unit. 21. The proviso to the above Clause (aa) carves out yet another area, namely the Satellite Town of Maraimalai Nagar New Town, developed by M.M.D.A. (now known as "C.M.D.A.") and the proviso states that the tariff concession shall be applicable only once to a new industry or an expansion of the industry in the area comprising the said Satellite Town, irrespective of the fact whether such industry availed of such concession outside the area of Maraimalai Nagar earlier or not, and also whether such industry is considered new investment or not. Further, in order to qualify for claiming the concession as an 'expanded' Unit, the increase in production should result in a minimum