Case: Secretary To Government  Vs. M/S. Peekay Re-Rolling Mills (P) Ltd

generate their power requirements in excess of 2500 KVA of contract load by own captive power." (emphasis supplied) 12. As stated above, according to the appellants, the word and in the above quoted clause should be read as or whereas, according to the respondent, clause 7 defines power intensive units to mean units whose total power requirement exceeds 2500 KVA of contract load and where the cost of power is more than 25% of cost of production of the items manufactured by the units. As stated above, the learned Single Judge has accepted the contention advanced on behalf of the appellants herein. However, this is an important aspect. The said clause 7 refers to the Load Factor and to the cost of power as percentage of cost of production. According to the appellants, the Cost Factor has no nexus with the object sought to be achieved, namely, lowering of consumption. According to the appellants, under clause 7 both the cost and the load factors were required to be taken into account so that in cases where the limit of 2500 KVA is not exceeded, investment is not discouraged. According to the appellants, if both the conditions were to be satisfied for making a unit power intensive unit then, in the present case, the said G.O. dated 26/27.11.1993 would not apply since during the relevant period the respondents unit did not incur expenses on account of cost of power exceeding 25% of the total cost of production. In the present case, the Division Bench has failed to consider the following aspects in the matter of interpretation of clause 7 of the said G.O. dated 26/27.11.1993. The reason for issuance of the said G.O. was to curb excess electricity consumption and not to curb additional investments. The underlying reason for issuance of the said G.O. was to restrict power consumption and not to restrict expansion of units in terms of additional investments. This is the basic argument advanced on behalf of the respondent in support of their contention that the word and in clause 7 should be read conjunctively. On the other hand, it is argued on behalf of the appellants that the word and in the said clause should be read as or since the reason for issuance of the said G.O. was to curb excess electricity consumption either by way of exceeding the prescribed ceiling of 2500 KVA or by way of additional investments (capital expenditure for additional facility). These aspects have not been considered by the Division Bench though it had been considered in favour of the appellants by the learned Single Judge.13. For the above reasons, we hold that the State Government was entitled to issue comprehensive G.O. dated 26/27.11.1993 on account of acute power shortage in the State. We further hold that the comprehensive G.O. applies across the board to all units which became power intensive units. To that extent, we find merit in the civil appeals filed by the State. However, since the Division Bench of the High Court has not examined the points referred to above, to that extent alone, we remit the matter to the Division Bench for its consideration. Subject to above, the civil appeals filed by the State stand allowed. There is no order as to costs. Civil Appeal No. 8034/04 [Sales Tax Officer & Ors. v. Premium Ferro Alloys Ltd.] 14. Although, the dates of events are different, the matter is similar on the question of withdrawal of tax exemption to the case just decided vide Civil Appeal Nos. 8031/04 and 8032-8033/04 concerning Secretary to Government & Ors. v. M/s Peekay Re-rolling Mills (P) Ltd.15. One of the points which arises for determination in the present case is whether Premium Ferro Alloys Ltd. is entitled to claim tax exemption on additional investments made after 24.11.1998. It is urged on behalf of the said company (respondent herein) that G.O. No. 169/98/ID dated 24.11.1998 by which the State Government modified the negative list by including all types of steel re-rolling mills, units manufacturing iron ingots, operated prospectively. In this connection reliance was placed on clause 3 of the said G.O.16. We do not find any merit in the above contention. We quote hereinbelow clause 2 and clause 3 of the said G.O. dated 24.11.1998. "2 The Director of Industries & Commerce has in his letter read above proposed some modifications to the negative list. The Government have examined the proposal of the Director of Industries & Commerce and decided to amend the G.O. read above by including the following industries also in the negative list.1. Metal Crushers including Granite Manufacturing Units.2. All types of steel Re-Rolling Mills, Units Manufacturing iron ingots.3. Ferro Silicon4. Calcium Carbide5. Cement Manufacturing6. Potassium Chlorate3. This order will be effective from the date of order and will be applicable to all units taking provisional registration or IEM/SIA as the case may be from the date of this order. All the conditions stipulated in the G.O. read above and subsequent amendments/clarifications issued thereon will be applicable to this order also." 17. Reading the above two clauses, it is clear that the G.O. dated 26/27.11.1993 got modified by G.O. dated 24.11.1998. Therefore, if the said G.O. dated 26/27.11.1993 is found to be applicable then the G.O. dated 24.11.1998 which is modification of the earlier G.O. dated 26/27.11.1993 would apply as a clarificatory G.O.. We may reiterate that in our judgment in Civil Appeal Nos. 8031/04 and 8032-8033/04 the question of interpretation of clause 7 of G.O. dated 26/27.11.1993 has been remitted to the High Court. However, as far as retrospectivity of G.O. dated 24.11.1998 is concerned, we are of the view that the said G.O. is clarificatory. Therefore, there is no merit in the contention raised on behalf of Premium Ferro Alloys Ltd. that the said G.O. dated 24.11.1998 is prospective and not retrospective.18. However, the issues, which we have remitted to the Division Bench in the earlier matters (Civil Appeal Nos. 8031/04 and 8032-8033/04), also arise in the present case.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]7. We are of the view that the State Government had the authority under Article 162 of the Constitution to issue G.O. dated 26/27.11.1993 withdrawing the tax exemption on account of acute power shortage in the State. However, for the reasons mentioned herein below, we are not examining the larger question of principle, namely, applicability of specific Notification under Section 10(1) of the 1963 Actcomprehensive Notification dated 26/27.11.1993 issued by the Ministry of Industries withdrawing all tax exemptions including those under Section 10(1) of the 1963 Act.8. We are proceeding on the basis that the comprehensive G.O. dated 26/27.11.1993 issued by the State Government on account of acute power shortage is applicable to the facts of the present case. It is undisputed that on 4.11.1993 the State Government had issued a statutory Notification under Section 10(1) inter alia granting exemption to medium scale units from payment of sales tax for seven years. Similarly, the State had given concessions under Electricity Act. It had promised subsidies. All these exemptions/concessions were withdrawn by G.O. dated 26/27.11.1993 by the Ministry of Industries on account of acute power shortage. We do not find any infirmity in the issuance of the said G.O. dated 26/27.11.1993.As stated above, according to the appellants, the word and in the above quoted clause should be read as or whereas, according to the respondent, clause 7 defines power intensive units to mean units whose total power requirement exceeds 2500 KVA of contract load and where the cost of power is more than 25% of cost of production of the items manufactured by the units. As stated above, the learned Single Judge has accepted the contention advanced on behalf of the appellants herein. However, this is an important aspect. The said clause 7 refers to the Load Factor and to the cost of power as percentage of cost of production. According to the appellants, the Cost Factor has no nexus with the object sought to be achieved, namely, lowering of consumption. According to the appellants, under clause 7 both the cost and the load factors were required to be taken into account so that in cases where the limit of 2500 KVA is not exceeded, investment is not discouraged. According to the appellants, if both the conditions were to be satisfied for making a unit power intensive unit then, in the present case, the said G.O. dated 26/27.11.1993 would not apply since during the relevant period the respondents unit did not incur expenses on account of cost of power exceeding 25% of the total cost of production. In the present case, the Division Bench has failed to consider the following aspects in the matter of interpretation of clause 7 of the said G.O. dated 26/27.11.1993. The reason for issuance of the said G.O. was to curb excess electricity consumption and not to curb additional investments. The underlying reason for issuance of the said G.O. was to restrict power consumption and not to restrict expansion of units in terms of additional investments. This is the basic argument advanced on behalf of the respondent in support of their contention that the word and in clause 7 should be read conjunctively. On the other hand, it is argued on behalf of the appellants that the word and in the said clause should be read as or since the reason for issuance of the said G.O. was to curb excess electricity consumption either by way of exceeding the prescribed ceiling of 2500 KVA or by way of additional investments (capital expenditure for additional facility). These aspects have not been considered by the Division Bench though it had been considered in favour of the appellants by the learned Single Judge.13. For the above reasons, we hold that the State Government was entitled to issue comprehensive G.O. dated 26/27.11.1993 on account of acute power shortage in the State. We further hold that the comprehensive G.O. applies across the board to all units which became power intensive units. To that extent, we find merit in the civil appeals filed by the State. However, since the Division Bench of the High Court has not examined the points referred to above, to that extent alone, we remit the matter to the Division Bench for its consideration. Subject to above, the civil appeals filed by the State stand allowed. There is no order as to costs.Although, the dates of events are different, the matter is similar on the question of withdrawal of tax exemption to the case just decided vide Civil Appeal Nos. 8031/04 andconcerning Secretary to Government & Ors. v. M/s PeekayMills (P) Ltd.15. One of the points which arises for determination in the present case is whether Premium Ferro Alloys Ltd. is entitled to claim tax exemption on additional investments made after 24.11.1998. It is urged on behalf of the said company (respondent herein) that G.O. No. 169/98/ID dated 24.11.1998 by which the State Government modified the negative list by including all types of steelmills, units manufacturing iron ingots, operated prospectively. In this connection reliance was placed on clause 3 of the said G.O.16. We do not find any merit in the above contention. We quote hereinbelow clause 2 and clause 3 of the said G.O. dated 24.11.1998.Reading the above two clauses, it is clear that the G.O. dated 26/27.11.1993 got modified by G.O. dated 24.11.1998. Therefore, if the said G.O. dated 26/27.11.1993 is found to be applicable then the G.O. dated 24.11.1998 which is modification of the earlier G.O. dated 26/27.11.1993 would apply as a clarificatory G.O.. We may reiterate that in our judgment in Civil Appeal Nos. 8031/04 andthe question of interpretation of clause 7 of G.O. dated 26/27.11.1993 has been remitted to the High Court. However, as far as retrospectivity of G.O. dated 24.11.1998 is concerned, we are of the view that the said G.O. is clarificatory. Therefore, there is no merit in the contention raised on behalf of Premium Ferro Alloys Ltd. that the said G.O. dated 24.11.1998 is prospective and not retrospective.18. However, the issues, which we have remitted to the Division Bench in the earlier matters (Civil Appeal Nos. 8031/04 andalso arise in the present case.