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Judgment
N.V.Anjaria, J
Whether the appellant company which came into existence as the resulting company pursuant to a scheme of demerger, is entitled to the benefit of
exemption in payment of electricity duty by getting itself treated as “new industrial undertaking’ under Section 3 of the Bombay Electricity
Duty Act, 1958, on the footing that the demerged company was granted such exemption certificate - is the question posed for examination in the
present Letters Patent Appeal.
The Letters Patent Appeal is directed against judgment and order of learned Single Judge dated 2.8.2016 dismissing Special Civil Application No.
3107 of 2009. What was prayed in the said petition by the appellant petitioner was to issue a writ of mandamus against the respondents to refund the
amount of Rs. 7,02,320/- with interest.
Outlining the relevant facts, upon a scheme of demerger approved by this court as per order dated 8.5.2003 passed in Company Petition No. 405 of
2009, one M/s. Veekay Prints Pvt. Ltd. became demerged Company and the petitioner-Krishna Terine Prints Pvt. Ltd. came out as a resulting
company. The demerged M/s. Veekay Prints Pvt. Ltd. had got issued in its favour certificate dated 21.6.2000 of exemption from the payment of
electricity duty, for the period from 21.6.1999 to 11.8.2004. Respondent No.5-Dakshin Gujarat Vij Company-the licensee, raised demand for recovery
of Rs. 7,02,320/- towards electricity duty on 8.12.2005. On 27.3.2006, respondent No.5 issued notice for disconnection of electricity. The petitioner
company made representations before respondent No. 4 authority for waiver of the amount. The request was turned down. Respondent No.5 directed
the petitioner to make payment or to face the disconnection of electricity. It appears on 19.2.2008, the petitioner made payment under protest and then
requested for refund.
3.1 The petitioner unsuccessfully made representations, thereafter filed the Special Civil Application. In the petition, it was contended inter alia by the
petitioner that the demerged company M/s. Veekay Prints Pvt. Ltd. was a new industrial undertaking since the year 1988 and that it was holding the
exemption certificate. It was submitted that under the provisions of the Bombay Electricity Duty Act, 1958, in particular under sub clause (b) of clause
(vii) of subsection (2) of section 3 of the Act by way of an incentive, every new industrial undertaking is treated eligible for exemption from payment
of electricity duty.
3.2 The petitioner relied on clause 9(c) in the scheme of demerger to submit that all the certificate clearances granted and existed in favour of the
demerged company would automatically ennure and extend for the resulting company. Therefore, it was submitted that duty exemption could be
availed by the petitioner on the basis of the said certificate. It was the further case that since this court in the scheme of demerger directed transfer of
all benefits to the present petitioner which was earlier available to the demerged company, the petitioner company is entitled to the benefit of
exemption for the period from April, 2004 to August, 2004.
3.3 A further contention was raised in the petition that as the Bombay Electricity Duty Act provided for granting exemption to a new industrial
undertaking from payment of electricity duty in respect of generation of electricity by the industrial undertaking with the help of diesel generating sets,
the petitioner had applied for grant of exemption to its new 1300 KVA Captive Generating Plant. The application was rejected on the ground that the
exemption to the two diesel generating sets installed by M/s. Veekay Prints Pvt. Ltd. was earlier given and that the petitioner was not entitled to the
exemption for the said captive generating plant. The petitioner had challenged the decision of respondent No.4 authority refusing the benefit before
this court by way of filing Special Civil Application No. 4097 of 2007 which came to be rejected by this court by order 29.8.2007. While rejecting the
petition contention of respondent No. 4 authority was upheld that the petitioner was not a new industrial undertaking and therefore benefit of
exemption granted to M/s. Veekay Prints Pvt. Ltd. in respect of its two diesel sets was valid upto 1.8.2004 and the petitioner company could not be
considered for such exemption. According to the petitioner, the same analogy would have to be adopted. Dealing with this contention right now, the
same was wholly misconceived and totally misplaced, and further that it may rather work against the petitioner for getting the benefit of exemption
from the electricity duty. Be as it may. The crux of the case is what is discussed hereinafter.
3.4 Respondent No.2-Accountant General, Gujarat, filed its affidavit to contest the petition. It was stated that petitioner M/s. Krishna Terine Prints
Pvt. Ltd. came into existence by a scheme of demerger of M/s. Veekay Prints Pvt. Ltd. in the year 2002 and it enjoyed the exemption from the
payment of electricity duty for the period from April, 2004 to August 2004, on the ground that the said benefit was granted to the demerged company-
M/s. Veekay Prints Pvt. Ltd. for the period 21.6.1999 to 11.8.2004. It was contended that the petitionerâ€"the resulting company was not the same
unit. The ownership of the petitioner had changed and thus the benefit of exemption enjoyed by it between the period from April, 2004 to August 2004
was erroneously availed resulting into non-levy of duty to the tune of Rs.7.02 lakhs. It was contended that as per the conditions of the certificate and
more particular condition No. 11(2) of the rules, the said aspect was brought to the notice of the competent authority-the Collector by raising objection
in exercise of powers under section 16 of the Comptroller and Auditor General of India (Duties, Powers and Conditions of Service) Act, 1971. It was
stated that thereafter the competent authority had taken the appropriate steps to recover the electricity duty.
3.5 Learned Single Judge dismissed the petition as per the impugned judgment and order and did not grant relief of refund of the amount of electricity
duty already paid by the petitioner under protest for the period in question. The dismissal of the petition led the petitioner to file the present Letters
Patent Appeal.
Heard learned advocate Mr. Jenil Shah for the appellant, learned Assistant Solicitor General of India Mr. Devang Vyas for respondent No.2,
learned Assistant Government Pleader Mr. Sahil Trivedi for respondent No. 3 and 4 Authorities, and learned advocate Ms. Lilu K. Bhaya for
respondent No.5. On behalf of the appellant, virtually the same set of contentions were advanced before us which were canvassed in the Special Civil
Application. On the other hand, learned counsels for the respondents defended the judgment and order of the learned Single Judge.
The petitioner company was the product of a scheme of demerger of M/s. Veekay Prints Pvt. Ltd. to become a resulting company. The appellant
petitioner firstly rested its case for exemption in the electricity duty on the conditions of the scheme of demerger, in particular condition No. 9(c). This
condition in the scheme read as under, “…it is clarified that upon the coming into effect of this Scheme, all consents, permissions, licenses,
certificates, clearances, authorities given by, issued to or executed in favour of the Demerged Company shall stand transferred to the Resulting
Company as if the same were generally given by, issued to or executed in favour of the Resulting Company, and the rights and the benefits under the
same shall be available to the Resulting Companyâ€.
5.1 Learned Single Judge rightly viewed that the aforesaid condition incorporated in the scheme of demerger was with regard to the provisions of the
Companies Act. It was observed that the benefit extended under the provisions of the Bombay Electricity Duty Act, could not be availed on the basis
of such condition or observations and that the same was not binding to the respondents, which had granted the exemption and that exemption would
not fall within the purview. In taking view that the aforesaid condition in the scheme would not cover or encompass for the petitioner the benefit of
exemption from electricity duty, learned Single Judge could not be said to have committed any error.
5.2 The benefit which the petitioner sought for, was to be made available on the basis of the provisions of Bombay Electricity Duty Act, 1958. The
relevant provisions of the said Act, would be decisive aspect to consider whether they merit the grant of exemption to the petitioner in payment of
electricity duty, claimed for by the petitioner-the resulting co.
5.3 Section 3(2) of the Bombay Electricity Duty Act, 1958, as extracted in its relevant part, reads as under,
“3(2) Electricity duty shall not be leviable on the units of energy consumed, [i] to [iv] xxx xxx xxx
[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 case of an industrial undertaking which generates energy for its own use, five years from the 1st April, 1999, the date of commencement of the
Bombay Electricity Duty ( Gujarat Amendment ) Act, 1999, or the date of starting the generation of such energy, whichever is later;
(b) in case of new industrial undertaking established on or after the commencement date, which does not generate energy for its own use, five years
from the commencement date or the date on which industrial undertaking commences for the first time manufacture or production of goods,
whichever is later,
Provided that no new industrial undertaking shall be entitled for exemption from payment of electricity duty under this clause, unless it has obtained a
certificate regarding eligibility for such exemption in prescribed form by making an application therefore in such form, within such period and to such
officer as may be prescribed.
Explanation : For the purpose of this clause ""a new industrial undertaking"" means any industrial undertaking which:
[a] is not formed by the splitting up or the reconstruction of a business or undertaking already in existence in the State;
or
[b] is not formed by transfer to a new business or undertaking of a building, machinery or plant previously used in India for any industrial purpose of
such value in relation to total value of the aforesaid investments, as the State Government may, by notification in the Official Gazette, specify;
or
[c] is not an expansion of the existing business or undertaking is the State;
5.4 The object of the aforesaid provision which grants exemption to the new industrial undertaking from payment of electricity duty has its evident
object of providing an incentive to the industrial undertakings newly coming up or freshly established. Section-3(2)(vii)(b) contemplates that in case of
new industrial undertaking established on or after the commencement date, which does not generate energy for its own use, five years from the
commencement date or the date on which industrial undertaking commences for the first time manufacture or production of goods, whichever is
earlier, the electricity duty shall not leviable from such units. The proviso of the section says that such new industrial undertaking shall have to obtain a
certificate for availing such exemption.
5.5 What is important is the explanation attached to the section which highlights the concept of a new industrial undertaking for the purpose of the
provision. It inter alia provides that a new industrial undertaking is one which is not formed by splitting up or the reconstruction of business or
undertaking already in existence in the State. It further mentions that a new industrial undertaking is not one which is formed by transfer of a new
business. New undertaking is also one which is not an expansion of existing business or undertaking. Thus, the eligibility to be categorized as ‘a new
industrial undertaking’ is clearly and explicitly defined in the explanation. The explanation explains as to which kind of unit could be treated as a
‘new industrial undertaking’ for the purpose of applying the exemption clause.
Thus, looking to the explanation, a new industrial undertaking cannot be a one, which is formed by the splitting up or the reconstruction of business
or undertaking already in existence in the state. Secondly, a new industrial undertaking should not be one which is formed by transfer of a new
business or undertaking of a building, machinery or plant previously used in India. Thirdly, a new industrial undertaking is one which is not an
expansion of existing business or undertaking in the State. Considering the above concept, statutorily assigned by the legislature to a new industrial
undertaking, the petitioner company did not fall within the purview. The existence of the petitioner company was arranged pursuant to scheme of
demerger of M/s. Veekay Prints Pvt. Ltd.. The petitioner company was not a self born company. It was a resulting company bought into being out of
a demerger scheme. The scheme of demerger was a kind of reconstruction of business. The resulting company-the petitioner and the demerged
companyâ€"the M/s. Veekay Terine Prints Pvt. Ltd. were treated in the demerger scheme.
6.1 The petitioner being a creature of reconstruction of business, could not be said to be falling within the purview of the concept of a new industrial
undertaking envisaged in the explanation as above. Consequentially, the claim of the petitioner company to be treated as a new industrial undertaking
and to avail the exemption from payment of electricity duty for the period from April, 2004 to August, 2004 or for any period after it came into
existence, could be said to be not tenable in law. The petitioner not being a new industrial undertaking, was not entitled to the benefit of exemption
under the provisions of section 3 (2)(vii) of the Act.
The rejection of the prayer in the writ petition and the resultant dismissal of the writ petition by learned Single Judge was eminently just and legal.
The present Letters Patent Appeal stands meritless. The same is hereby dismissed. Notice is discharged. No orders as to costs.