IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 10.11.2009 CORAM THE HONOURABLE MR.JUSTICE F.M.IBRAHIM KALIFULLA and THE HONOURABLE MR.JUSTICE T.S.SIVAGNANAM W.A.NO.1611 OF 1997, 1380 to 1385 OF 2000 & W.P.Nos. 2416 to 2423 of 2001 and 17489 of 1995 and W.P.M.P.No.27672 of 1995 W.A.NO.1611 OF 1997 & 1380 to 1385/2000 Dalmia Cement (Bharat) Ltd., Dalmiapuram Tiruchirappalli .. Appellant in all WAs/ Petitioner -vs- 1. The Accounts Officer, Revenue Tamil Nadu Electricity Distribution (North) Tiruchirapalli. 2. The Superintending Engineer Tiruchirapalli Electricity Distribution (North)Circle Tiruchirapalli. 3. The Chairman Tamil Nadu Electricity Board Chennai. 4. The State of Tamil Nadu rep. By the Commissioner and Secretary to Government, Energy Department, Fort St.George, Chennai 9. .. Respondents/Respondents https://hcservices.ecourts.gov.in/hcservices/ W.A.NO.2416 to 2423/2001 and 17489/1995 Dalmia Cement (Bharat) Ltd., Dalmiapuram Tiruchirappalli .. Petitioner in all WPs -vs- 1. The Accounts Officer, Revenue Tamil Nadu Electricity Distribution (North) Tiruchirapalli. 2. The Superintending Engineer Tiruchirapalli Electricity Distribution (North)Circle Tiruchirapalli. ..Respondents 1 & 2 in WP 17489/1995 3. The Chairman Tamil Nadu Electricity Board Chennai. 4. The State of Tamil Nadu rep. By the Commissioner and Secretary to Government, Energy Department, Fort St.George, Chennai 9. 5.The Department of Industries, Government of Tamil Nadu, thro' is Secretary,Fort St.George, Chennai-9. 6.The Chief Electrical Inspector, Government of Tamil Nadu, Industrial Estate, Guindy, Chennai-32. ..Respondents in all WPS Writ Appeal 1611/97 filed under clause 15 of the Letters Patent against the Judgment dated 11.11.1997 rendered in W.P.No.12028 of 1995. WP 12028/95: This W.P. under Art.226 of the constitution of India praying to issue a writ of Certiorari to call for the records on the files of the second Respondent herein in letter No.SE/TEDC/N/TY/AO/R/RCS/A.1/F.HT/SC.4/F-Ex.Tax/0.6/95 dated 27.7.95 and quashing the proceedings of the second respondent herein in letter No.SE/TEDC/N/ TY/ AO/ R/ RCS/ A.1/ F.HT/ SC.4/F.Ex.Tax/0.6/95 dt.27.7.95. https://hcservices.ecourts.gov.in/hcservices/ WA 1380 to 1385/2000 filed against Judgment dated 23.1.2998 in WP 10485 to 10490/1995 WP No.10485/95: to issue a writ of Mandamus directing the respondents herein to forbear from raising further demands towards tax under the Tamil Nadu Electricity (Taxation on consumption) Act 1962 on the consumption of self generated electricity in the factory of the petitioners at Dalmiapuram,Tiruchirappalli District. WP No.10486/1995: to issue a writ of Certiorarified Mandamus to call for the records on the files of the first respondent herein in Bill No.2763 dt.29.3.95 quashing the demand of the first respondent herein and direct the first respondent herein to refund the sum of Rs.1,14,205/- collected towards tax on the consumption of self-generated electricity for the period from 27.2.95 to 26.3.95. WP 10487/95 to 10489/95:- to issue a writ of Certiorarified Mandamus to call for the records on the files of the first respondent herein in Bill No.2796 dated 29.4.95 (WP 10487/95) Bill No.2891 dated 29.5.95 (W.P.10488/95) Bill Mo.2862 dated 29.6.95 (WP 10489/95) quashing the demand of the first respondent and direct the first respondent herein to refund the sum of Rs.2,71,923 (WP 10487/95) Rs.83514/- (WP.10488/95) Rs.58,213/- (WP 10489/95) Collected towards tax on the consumption of self generated electricity for the period from 27.3.95 to 26.4.95 (WP 10487/95) 27.4.95 to 26.5.95 (WP 10488/95) 27.5.95 to 26.6.95 (WP 10489/95) respectively. WP 10490/95: to issue a writ of Certiorarified Mandamus to call for the records on the files of the fourth respondent herein in his communication in Letter No.2768/B1/94-3 dated 8.2.1995 quashing the communication in Letter No.2768/B1/94-3 dated 8.2.95 of the fourth respondent herein and direct the said fourth respondent to pass orders exempting tax payable under the Tamil Nadu Electricity (Taxation on consumption) Act 1962 on the energy captively produced and consumed in the cement factory of the petitioners at Dalmiapuram, Tiruchirappali. WP 2416/2001: to issue a writ of certiorarified Mandamus, quashing the letter No.21493/MIB.II/96-2 dated 9.5.97 of the Respondent No.5, and directing the respondents to grant exemption to the petitioners from payment of electricity tax on consumption of self generated power using furnace oil at par with the exemption granted to consumption of self-generated power using low sulphur heavy stock oil under G.O.Ms.No.1484 dated 25.7.84. https://hcservices.ecourts.gov.in/hcservices/ WP 2417/2001: to issue a writ of Certiorarified Mandamus quashing of the letter No.13370/14/95 dated 12.10.95 of Respondent No.6 and directing the respondents to apply the reduced rate of 5.5.% under G.O.Ms.No.878 dated 29.6.1974 for charging electricioty tax on consumption of self-generated power by the petitioners and raise demands only on that bases. WP 2418/2001: to issue a writ of Mandamus directing the respondent to determine the tax payable by the petitioners after providing for/deducting the electricity consumed/lost in the distribution of the power, whether generated by the petitioners themselves or received from the Tamil Nadu Electricity Board. WP 2419/2001: to issue a writ of Mandamus directing the respondents to exempt the cement industry from payment of electricity tax in the same manner as the paper, textile chemical and sugar industries have been exempted under G.O.Nos.850,851 and 852 dated 20.5.88 and G.O.No.1246 dated 1.8.88 respectively. WP 2420/2001: to issue a writ of Mandamus directing the respondent to refund the excess amounts received by them under the demands made in respect of the period between July 1995 to October 1995, and November 1995 to December 1997. WP 2421/2001: to issue a writ of certiorari quashing Bill No.477 dated 29.7.98 of the 1st Respondent demanding electricity tax of Rs.3,61,738/- for during the period 1.7.98 to 9.7.98 during which period there was a power cut contrary to G.O.No.456 dated 17.3.1973. WP 2422/2001: to issue a writ of certiorari quash the letter No.SE/T.EDC/N/TR/AO/RCS/A1/F.HT.SC.4/E.TAX/D 247/2000 dated 30.3.2000 of the Respondent No.2. WP 2423/2001: to issue a writ of Mandamus directing the Respondents refund the amount received in excess over whatever is legally due to them and paid under protest by the petitioner for the period January 1998 to September 1999 pursuant to the interim order dated 12.12.1997 in W.A.No.1611 of 1997. WP 17489/1995: to issue a writ of Certiorari quashing the demand of the first respondent herein in Bill No.3013 dated 29.11.95 in so far as relating to the demand for electricity consumption tax on self generated electricity. https://hcservices.ecourts.gov.in/hcservices/ For Appellant : Mr.R.Krishnamurthy, Sr.Counsel for M/s R.Parthiban For Respondents: Mr.P.Srinivas- R1 to R3 Mr.G.Desinghu, Spl.G.P. - R4 C O M M O N J U D G M E N T T.S.SIVAGNANAM J. Since the issue involved in all these Writ Appeals and Writ Petitions raises a common question, they are taken up for disposal together. 2. The facts leading to the filing of the Writ Appeals and Writ Petitions before this Court are stated as hereunder: (a) The appellant is manufacturer of Portland Cement in their works situated at Dalmiapuram. The appellant is a consumer of electrical energy, which is supplied by Tamil Nadu Electricity Board. According to the appellant, due to acute power shortage, they were forced to go for captive power generating sets in order to maintain levels of production and to avoid shut down the appellant has installed 2 Nos. of 5000 KV and 2 Nos. of 2500 KVA Generating sets and those generating sets are running on Furnace Oil. (b) It is stated that under the provisions of Tamil Nadu Electricity (Taxation on Consumption) Act 1962, a tax is imposed on the consumption of energy and Section 3 of the Act is the charging section. Section 3-A was inserted by Tamil Nadu Act 32 of 1991, by which the additional tax on consumption was fixed at 5% of the price. The proviso to sub-section 1 would exclude the power captively generated by an industrial unit from the levy of additional tax; section 5 of the Act provides for payment of Electricity Tax; sub-section (2) of Section 5 of the Act provides for payment of tax on energy generated by industry; section 12 provides for exemption from tax; section 13 empowers the Government to notify exemption and reduction and section 15 deals with Rule making power. (c) It is further submitted that the Government of Tamil Nadu has been periodically notifying the exemption from payment of Electricity Tax and by G.O.Ms.No.878 dated 29.6.1974, issued in exercise of the powers conferred under section 13(1) of https://hcservices.ecourts.gov.in/hcservices/ the Act r/w Rule 14 of the of the Tamil Nadu Electricity (Taxation on Consumption) Rules 1964 (hereinafter referred as 'the Rules'), the Government reduced the rate of tax to 5.5.% for Cement manufacturers like the appellant. (e) By G.O.Ms.No.333 dated 1.3.1997, the Government granted exemption from payment of Consumption Tax for self generated electrical energy using diesel oil. By G.O.Ms.No.1484 DATED 25.7.1984, exemption was also extended to self generating Units using Low Sulphur Heavy Stock (LSHS). That the exemption was granted to encourage industries to set up their generating plants so that the burden on the Electricity Board was less. By G.O.Ms.No.850 dated 20.5.1988, exemption was given for electricity captively declared by Paper Industry, irrespective of the fact they use by G.O.Ms.No.851, similar exemption was also granted for Textile Industry and by G.O.Ms.No.852, similar exemption was granted to Chemical Industry. The period of five years stipulated in the said Government Orders were extended subsequently. (f) It is submitted that the appellant and similarly placed Cement Industries submitted a memorandum to the Government on 14.3.1994. The petitioner on 12.1.1995, submitted a representation to the Chief Electrical Inspector stating that they were using Captive Generators during the power cut and furnished details. At that juncture, the Government by order dated 8.2.1995, rejected the request made by the appellant. On 8.3.1995, the appellant submitted a further representation to the Government followed by another representation to the Chief Electrical Inspector on 5.4.1995. Subsequent representations were also rejected by the Government by a Government Letter dated 9.5.1997 by stating that the Government have examined the appeal carefully and have decided that exemption sought for by Cement Industry cannot be granted. (g) Therefore, the appellant had filed the following Writ Petitions seeking for the relief as set out hereunder: (i) W.P.No.2416 of 2001, to quash the order rejecting the exemption and to direct the respondents to grant exemption from tax on consumption of self-generated power using furnace oil on par with diesel oil and LSHS; (ii) W.P.No.2417 of 2001 to quash the letter dated 12.10.1995 and to direct the respondents to apply the reduced rate of 5.5.% under G.O.Ms.No.878 dated 29.6.1974; (iii) W.P.No.2418 of 2001 for issue of a writ of mandamus to direct the respondent to determine the tax after providing for/deducting the electricity consumed/lost in the https://hcservices.ecourts.gov.in/hcservices/ distribution of power; (iv) W.P.No.2419 of 2001 for issue of a writ of mandamus to direct the respondent to exempt cement industry in the same manner as Paper, Textile, Chemical and Sugar; (v) W.P.No.2420 of 2001 for issue of a writ of mandamus directing the respondent to refund excess amount received by them for the period between July 1995 and October 1995 & November 1995 and December 1995; (vi) W.P.No.2421 of 2001 for issue of a writ of certiorari to quash the bill dated 29.7.1998 demanding electricity tax of Rs.3,61,738/-, during the power cut which was contrary to G.O.Ms.No.456 dated 7.3.1973; (vii) W.P.No.2422 of 2001 for issue of a writ of certiorari to quash the demand vide bill dated 30.3.2000 for Rs.40,86,926/- being the difference between 5.5% already collected and 10.25% to be collected as per the order of the High Court dated 12.12.1997 ; (viii) W.P.No.2423 of 2001 for issue of a writ of mandamus directing the respondent to refund the amount received in excess of whatever is legally due and paid under protest pursuant to an interim order dated 12.12.1997 in W.A.No.1611 of 1997. (ix) W.P.No.12028 of 1995 challenging the demand dated 27.71995 which was for a period from October 1992 to February 1995. [The said Petition came to be dismissed by an order dated 11.11.1997, as against which the appellant has filed W.A.No.1611 of 1997] ; (x) W.P.No.10485 of 1995 to forbear the authorities from raising demand. [This Writ Petition came to be dismissed on 23.1.1998 on the ground that the earlier Writ Petition No.12028 of 1995 was dismissed by an order dated 11.11.1997. As against the said order, the appellant has filed W.A.No.1380 of 1998]; (xi) W.P.No.10486 of 1995 to quash the order dated 8.2.1995, rejecting the prayer for exemption from tax to Cement Industry. [This Writ Petition was also dismissed following the order in W.P.No.12028 of 1995 and W.A.No.1381 of 1998 has been filed against the said order]; (xii) W.P.Nos.10487, 10488, 10489 and 10490 of 1995 have been filed challenging the Bills and seeking for refund. [These Writ Petitions were also dismissed following the earlier order and https://hcservices.ecourts.gov.in/hcservices/ as against which the appellant has filed W.A.Nos.1382, 1383, 1384 and 1385 of 1998]; (xiii) W.P.No.17489 of 1995 to quash the Bill dated 29.11.1995. This Court while admitting the Writ Petition by an order dated 20.12.1995, granted stay on condition that the condition to pay tax at the rate of 5.5% only and the said Writ Petition is also tagged along with the batch of cases. Therefore, it is seen that the appellant has filed the all the above matters as against the refusal to grant exemption from the Electricity Tax in respect of the power captively generated by them by using furnace oil. h) Mr.R.Krishnamurthy, learned Senior counsel for the appellant would contend that the appellant is generating the electricity using furnace oil and it is a high tension Industry and a power intensive Industry and it should be treated on par with other Industries namely Sugar Industry, Textile Industry and Paper Manufacturing Units. The learned Senior counsel would submit that under the various Government Orders, the other Industries have been totally exempted from the tax irrespective of the fuel used for captively generating power and there is no reasonable basis for adopting a different yardstick to Industries who are using furnace oil for the purpose of generating power. The learned Senior counsel would submit that the impugned order rejecting the request to grant exemption is a non-speaking order, devoid of any reasons and therefore, it has to be termed as arbitrary and violative of Article 14 of the Constitution of India. It is further submitted that refusing to grant exemption to Cement Industry is per se discriminatory and hence violative of Article 14 of the Constitution of India. Earlier the orders of exemption were also granted to Cement Industries when they, utilised diesel or LSHS but exemption was refused when the Industry utilised the furnace oil and such rejection of exemption is arbitrary and discriminatory. The learned Senior counsel would submit that the price of furnace oil is more than that of LSHS and the Indian Oil Corporation by their communication dated 8.3.1995 had stated that the availability of LSHS has come down by 50% and the same has resulted in inadequacy in supply to the existing customers as well and advised the appellant to continue to use furnace oil. Therefore, the learned Senior counsel would submit that they have been compelled to use the furnace oil on account of the non-availability of LSHS and hence the Government is not justified in denying exemption. i) The learned Senior counsel relied on Section 2(1) which defines the 'consumer' to mean with its grammatical variations and cognate expressions includes any person who https://hcservices.ecourts.gov.in/hcservices/ consumes energy whether generated by himself or supplied to him. In terms of explanation I to Section 2(1), where a licensee consumes energy, whether generated by himself or supplied to him, such licensee shall be deemed to be a consumer only in respect of the energy so consumed. j) it is further submitted that sections 3 defines 'energy intensive industries' and the said definition is an inclusive definition and the industries mentioned in clause (i) and (v) are only illustrative and not exhaustive. It is submitted that in terms of section 3(1)(b)(iii), tax on consumption of energy in respect of High Tension Supply for cement industry had been fixed at 15% of the price of energy consumed. The learned Senior counsel would further submit that the Government ought to have invoked the powers under sections 12 and 13 of the Act and granted exemption to the appellant and ought not to have denied the benefit merely because the appellant had used the furnace oil for the purpose of generating power. k) It is further submitted that the object of granting exemption itself is only to relieve the Board from the burden and to encourage Industries to captively generate power. Mere use of furnace oil as the raw material for the purpose of generating power cannot form the basis for rejecting the request for exemption. Further, it is contended that no reasons are stated in the impugned order and even in the counter affidavit filed in the Writ Petitions, there is no reason mentioned as to why the appellant has been denied exemption when they used furnace oil for the purpose of generating electricity. On all these grounds, the learned Senior counsel would submit that the order of rejecting the request for exemption is illegal and consequently, the demand raised are also illegal and the order of the learned Judge dismissing the Writ Petitions is therefore not tenable. l) The learned Senior counsel placed reliance on the decision of the Hon'ble Supreme Court in PUNJAB DAIRY DEVELOPMENT BOARD AND ANOTHER Vs. CEPHAM MILK SPECIALITIES LTD., AND OTHERS reported in (2004) 8 SCC 621 for the proposition that there cannot be any discrimination in the matter of exemption and the decision of the Hon'ble Supreme Court in AASHIRWAD FILMS Vs. UNION OF INDIA AND OTHERS reported in (2007) 6 SCC 624, stating that even taxation statute are not immune from challenge based on Article 14 of the Constitution of India. 3. Per contra, Mr.P.Srinivas, learned Standing Counsel appearing for the Electricity Board would first contend that section 3 of the Act makes a clear distinction among Industries and in terms of section 3(1)(b)(iii), Cement Industry has been treated as a separate category even under the charging provision. https://hcservices.ecourts.gov.in/hcservices/ Therefore, the learned counsel would submit that the question of discrimination does not arise and the claim made by the appellant is baseless. 3.1 The learned counsel would further submit that in terms of section 3(1)(b)(iii), Cement Industries were required to pay 15% of the price of the energy consumed. But, subsequently, the Government by G.O.Ms.No.878 dated 29.6.1974 had reduced it to 5.5% and therefore, the appellant is bound to pay the same. 3.2 The learned counsel would further submit that the Cement Industry is not energy intensive industry in terms of section 2(3) of the Act and the type of industry which are covered under the said provision have been enumerated and it cannot be said to be an inclusive definition, but it is an exhaustive definition applicable only to such of those industries mentioned therein. The learned counsel would further submit that the power under section 13 of the Act for grant of exemption or rejection in respect of Electricity Tax payable could be exercised having regard to all or any of the circumstances set out in section 13(1) (a) to (c) of the Act. The learned counsel by relying upon Rule 14 of the Rules would submit that the appellant's case would not fall under any of those categories and there cannot be any claim for exemption. 3.3 The learned counsel during the course of argument attempted to explain as to what could be the reasonable basis for rejecting the request for grant of exemption when Industries use furnace oil as the fuel for generating industry. However, we cannot take into consideration the said submissions since not only the impugned order is devoid of reasons, but also the counter affidavit has not explained the basis for rejection of the request for exemption. Therefore, in our view at this stage of the matter, the respondents cannot be permitted to improve upon their case based on oral submissions. 4. We have carefully considered the respective submissions made by the learned counsel appearing on either side and perused the materials available on record. 5. The Tamil Nadu Electricity (Taxation on Consumption) Act came to be enacted for levy of tax on consumption of electrical energy in the State of Tamil Nadu. The Act defines under section 2(3) "Energy Intensive Industries". Section 3 is the charging section which requires that tax on consumption of energy has to be remitted on the rates mentioned under section 3 (1)(b). Sub clause (iii) of Section 3(1)(b) deals with High Tension supply for Cement Industry and the prescribed rate of tax is 15% of the price of energy cement. Section 5 of the Act https://hcservices.ecourts.gov.in/hcservices/ provides for payment of electricity tax; section 6 regarding obligation of the licensee to keep books of accounts and submit returns; section 7 deals with Inspecting Officers; section 8 deals with recovery; section 9 deals with decision of certain disputes; section 10 with penalties; section 11 deals with offences by companies; section 12 of the Act deals with exemption from tax and section 13 deals with power of Government to notify exemptions and reductions. As these two provisions are relevant for the purpose of the present case, they are extracted hereunder: "12. Exemption from tax -(1) Where energy under High Tension Supply is consumed in the process of manufacturing or producing the principal product in any industrial undertaking licensed under the Industries (Development and Regulation) Act, 1951 (Central Act LXV of 1951), no electricity tax shall be payable on the energy so consumed for a period of three years from the date of the commencement of the manufacture or production of the principal product in such undertaking. 13. Power of the Government to notify exemptions and reductions: (1) The Government may, by notification, make an exemption or reduction in rate, in respect of the electricity tax payable under this Act by any specified class of persons, having regard to all or any of the following maters, namely:- (a) the nature of the business or industry carried on by such class of persons; (b) the price of energy consumed in relation to the total cost of the manufacture or production of the principal product in any industrial undertaking owned or controlled by such class of persons; (c) such other matters as may be prescribed." 6. In terms of the powers conferred under section 15 of the Act, the Tamil Nadu Electricity (Taxation on Consumption) Rule 1964 (herein after referred to as 'the Rules') have been framed. Rule 14 of the said Rules would also be relevant, which reads as follows: "14. Exemption or reduction in ratio under section 13 – An exemption from or reduction in rate in respect of the electricity tax payable under the Act by any specified class of persons may be made by the Government having regard to the following matters, https://hcservices.ecourts.gov.in/hcservices/ namely :- (1) the price of energy paid by a consumer to a licensee from time to time for the energy supplied to him; (2) the area of supply; and (3) the nature of supply availed of, namely, High Tension Supply or Low Tension Supply." 7. On a reading of sections 12, 13, along with Rule 14 of the Rules, it is clear that the Government has power to issue notifications for making exemption or reducing the rate of electricity tax payable under the Act, by any specific class of persons, having regard to the nature of the business or industry carried on by such class of persons, the price of energy consumed in relation to the total cost of the manufacture or production of the principal product in any industrial undertaking owned or controlled by such class of persons and such other matters as may be prescribed. Further, in terms of section 13(2), any exemption under sub-section 1 may be subject to such restrictions and conditions as may be specified in the notification and in terms of Rule 14 such exemption or reduction in rate under section 13 may be made by the Government having regard to the three circumstances contemplated under Rule 14, which have been extracted above. Thus, for a person to eligible to seek for exemption, it is necessary