ESSAR STEEL INDIA LTD. AND ANR. versus STATE OF GUJARAT AND ANR.

Citation: [2017] 4 S.C.R. 767 · Decided: 02-05-2017 · Supreme Court of India · Bench: A.K. SIKRI · Disposal: Dismissed

Cited by 1 judgment(s) · cites 1 · see the full citation network in Lexace

Judgment (excerpt)

[2017] 4 S.C.R. 767 
ESSAR STEEL INDIA LTD. AND ANR. 
v. 
STATE OF GUJARAT AND ANR. 
(Civil Appeal No. 4842 of2017) 
MAY02,2017 
[A. K. SIKRI AND ASHOK BHUSHAN, JJ.] 
Bombay Electricity Duty Act, 1958: 
A 
B 
s.3(2)(vii)(a) and s.3(3) - Claim for exemption from duty by 
appellant no.I under the provisions of s.3(2)(vii) and also under 
C 
the notification dated 27.02.1992 issued uls.3(3) of 1958 Act- Held: 
Appellants sold 58% of installed capacity to the Electricity Board -
Therefore, exemption u/s.3(2)(vii)(a) is not available since the energy 
was not generated jointly with the Board - Further, appellant is not 
entitled to the benefit of exemption as claimed under notification D 
dated 27.2.1992 as th.e said notification specifically provided that 
generating sets should have been purchased or installed or 
commissioned during the period beginning from 1.1.1991 and ending 
31.12.1992 while the generating sets in question were commissioned 
in August 1995 - Electricity. 
Dismissing the appeal, the Court 
E 
HELD: I. Claim under Section 3(2)(vii)(a)(i) 
1.1 Section 3 of 1958 Act deals with "duty on units of 
energy consumed". Sub-Section 2 enumerates various 
circumstances under which duty shall not be leviable on the units 
F 
of energy consumed. The keywords in the statutory scheme are 
"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 undertaking which are jointly generating the energy." 
The appellant no.I is a separate registered company which holds 
42% equity shares of the appellant no.2. The appellant no.2 has 
G 
been constituted as a Special Purpose Vehicle for generating 
electricity. The appellant no.2 is a generating company within 
the meaning of Section 2(4A) of Electricity (Supply) Act, 1948. 
[Paras 14, 15] [776-8-C; 777-A-C] 
767 
H 
768 
SUPREME COURT REPORTS 
[2017] 4 S.C.R. 
A 
1.2 Even assuming appellant no.1 and appellant no.2 are 
jointly generating the energy for the use of industrial undertaking 
which are jointly generating the energy, the Gujarat Electricity 
Board to whom 300 MW has been allocated cannot be held to be 
industrial undertaking which is jointly generating the energy with 
B appellant. The Statutory scheme for grant of exemption has to be 
strictly construed. The appellant no.2 is not jointly generating 
energy with Gujarat Electricity Board and it is selling the energy 
to the extent of 300 MW to Gujarat Electricity Board. The letter 
of the State Government dated 05.06.1995 stated that if there is 
any excess power generated by EPL, the same may be purchased 
C by the Board at the price decided by the Board. The Power 
Purchase Agreement allocated the energy to the Gujarat 
Electricity Board to the extent of 58°,(o 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 
D statute are to be strictly construed specifically the exemption 
notification and 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. The statutory provisions of Section 3(2)(vii)(a) 
thus have to be strictly construed and in event the condition of 
E generating energy jointly with any other industrial undertaking 
is not fulfilled, the claim has to be rejected. [Paras 17-20] [778-
E-F; 779-A-B, F-G; 781-H; 782-A] 
1.3 In the present case, there is no dispute to the fact that 
appellant No.2 was created as a Special Purpose Vehicle by 
F 
appellant No.1 itself. Had appellant No.2 would have been 
supplying energy to appellant No.1 only, the claim deserved 
consideration. But present is a case where the appellant no.2 is 
supplying energy to industrial undertakings with whom it is not 
jointly generating the energy. The High Court although has noted 
the fact that in the present case there is no such Memorandum 
G of Understanding between EPL and ECL but the judgment of the 
High Court is not based only on the above premise rather High 
Court has clearly found that conditions stipulating under Section 
3(2)(vii)(a)(i) of 1958 Act are not satisfied, hence, appellant no.1 
is not entitled for exemption. High Court rightly came to t~e 
H 
ESSAR STEEL INDIA LTD. AND ANR. v. STATE OF GUJARAT 
769 
ANDANR. 
conclusion that conditions as enumerated in Section 3(2)(vii)(a) A 
are

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