{"id":113130,"date":"2010-05-06T00:00:00","date_gmt":"2010-05-05T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/bharat-vs-state-on-6-may-2010"},"modified":"2016-08-12T01:59:14","modified_gmt":"2016-08-11T20:29:14","slug":"bharat-vs-state-on-6-may-2010","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/bharat-vs-state-on-6-may-2010","title":{"rendered":"Bharat vs State on 6 May, 2010"},"content":{"rendered":"<div class=\"docsource_main\">Gujarat High Court<\/div>\n<div class=\"doc_title\">Bharat vs State on 6 May, 2010<\/div>\n<div class=\"doc_author\">Author: K.A.Puj,&amp;Nbsp;<\/div>\n<pre>   Gujarat High Court Case Information System \n\n  \n  \n    \n\n \n \n    \t      \n         \n\t    \n\t\t   Print\n\t\t\t\t          \n\n  \n\n\n\t \n\t \n\t \n\t \n\t \n\t \n\t \n\t\n\n\n \n\n\n\t \n\nSCA\/373\/2001\t 2\/ 18\tJUDGMENT \n \n \n\n\t\n\n \n\nIN\nTHE HIGH COURT OF GUJARAT AT AHMEDABAD\n \n\n \n\n\n \n\nSPECIAL\nCIVIL APPLICATION No. 373 of 2001\n \n\nWith\n\n\n \n\nSPECIAL\nCIVIL APPLICATION No. 6220 of 2001\n \n\n \n \nFor\nApproval and Signature:  \n \nHONOURABLE\nMR.JUSTICE K.A.PUJ\n \n \n=========================================================\n<\/pre>\n<p><span class=\"hidden_text\">1<\/span><\/p>\n<p>Whether<br \/>\n\t\t\tReporters of Local Papers may be allowed to see the judgment ?\n<\/p>\n<p><span class=\"hidden_text\">2<\/span><\/p>\n<p>To be<br \/>\n\t\t\treferred to the Reporter or not ?\n<\/p>\n<p><span class=\"hidden_text\">3<\/span><\/p>\n<p>Whether<br \/>\n\t\t\ttheir Lordships wish to see the fair copy of the judgment ?\n<\/p>\n<p><span class=\"hidden_text\">4<\/span><\/p>\n<p>Whether<br \/>\n\t\t\tthis case involves a substantial question of law as to the<br \/>\n\t\t\tinterpretation of the constitution of India, 1950 or any order<br \/>\n\t\t\tmade thereunder ?\n<\/p>\n<p><span class=\"hidden_text\">5<\/span><\/p>\n<p>Whether<br \/>\n\t\t\tit is to be circulated to the civil judge ?\n<\/p>\n<p>=========================================================<\/p>\n<p>BHARAT<br \/>\nPETROLEUM CORPN LTD &#8211; Petitioner(s)<\/p>\n<p>Versus<\/p>\n<p>STATE<br \/>\nOF GUJARAT &amp; 3 &#8211; Respondent(s)<\/p>\n<p>=========================================================<\/p>\n<p>Appearance<br \/>\n:\n<\/p>\n<p>MR<br \/>\nGN SHAH for<br \/>\nPetitioner(s) : 1,MS MINOO A SHAH for Petitioner(s) : 1,<br \/>\nGOVERNMENT<br \/>\nPLEADER for Respondent(s) : 1, 4,<br \/>\nRULE SERVED for Respondent(s) :\n<\/p>\n<p>2,<br \/>\nMR PREMAL R JOSHI for Respondent(s) :\n<\/p>\n<p>3,<br \/>\n=========================================================<\/p>\n<p>CORAM<br \/>\n\t\t\t:\n<\/p>\n<p>HONOURABLE<br \/>\n\t\t\tMR.JUSTICE K.A.PUJ<\/p>\n<p>Date : 6\/05\/2010<\/p>\n<p>CAV JUDGMENT <\/p>\n<p>\tThe Special Civil<br \/>\n\tApplication No.373 of 2001 is filed by Bharat Petroleum Corporation<br \/>\n\tLtd., praying for quashing and setting aside the communications<br \/>\n\tdated 16.1.1999 and 9.3.1999 as well as the order passed by the<br \/>\n\trespondent No.4 on 3.1.2001.  The petitioner  has also prayed for<br \/>\n\tdeclaration that the determination by the respondent No.2 that the<br \/>\n\tIndustrial Undertaking of the petitioner at Hariyala is liable to be<br \/>\n\tassessed at 60% of the consumption charges of electricity and for<br \/>\n\twhich no reason have been given and hence the said determination is<br \/>\n\tvoid, illegal and have no legal effect.\n<\/p>\n<p>\tThe brief facts of the<br \/>\n\tcase are that the petitioner established (Liquid Petroleum Gas) LPG<br \/>\n\tBottling Plant at Hariyala, Taluka : Matar, Dist. Kheda on<br \/>\n\t14.4.1994. Right from its establishment the State Government has<br \/>\n\tbeen treating the Industrial Undertaking of LPG Bottling Plant of<br \/>\n\tthe petitioner as an Industrial Undertaking under Section-2 of the<br \/>\n\tBombay Electricity Duty Act and collects electricity duty of 20% of<br \/>\n\telectricity consumed by the petitioner every month. The respondent<br \/>\n\tissued notice on 14.5.1999 to the petitioner to revise this<br \/>\n\tclassification of the Industrial Undertaking for the purpose of<br \/>\n\telectricity duty. Thereafter, as per the instruction of State<br \/>\n\tGovernment, differential duty was demanded from the petitioner to<br \/>\n\tthe tune of Rs.33,80,176.56 ps., failing which the power supply will<br \/>\n\tbe disconnected.\n<\/p>\n<p>\tThe petitioner filed<br \/>\n\tSpecial Civil Application No.3466 of 1999 before this Court<br \/>\n\tchallenging the communication dated 9.3.1999 demanding recovery of<br \/>\n\tdifferential amount of electricity duty from the petitioner.  The<br \/>\n\tsaid petition was disposed of by this Court on 6.5.1999 directing<br \/>\n\tthe petitioner to file Appeal before the Appellate Authority within<br \/>\n\ttwo weeks from the date of the said order and further directing to<br \/>\n\tdeposit 50% of the duty amount claimed from the petitioner.  The<br \/>\n\tpetitioner filed an Appeal No.2 of 1999 before the Appellate<br \/>\n\tAuthority which came to be dismissed n 3.1.2001.\n<\/p>\n<p>\tBeing aggrieved by the<br \/>\n\tsaid order, the present petition was filed.\n<\/p>\n<p>\tThis Court has issued<br \/>\n\trule on 20.4.2001 and directed the petitioner to make the payment of<br \/>\n\tremaining amount within a period of six weeks from the date of the<br \/>\n\tsaid order and the respondents were restrained from disconnecting<br \/>\n\tthe electric supply.  The Court has also made it very clear that the<br \/>\n\tpayments made and\/or to be made by the petitioner shall be subject<br \/>\n\tto the result of the petition and in case the amount paid by the<br \/>\n\tpetitioner would be ordered to be refunded to the petitioner,<br \/>\n\tappropriate order as regards payment of interest would be passed by<br \/>\n\tthe Court.  Pursuant to this order, the petitioner made payment of<br \/>\n\tthe remaining amount.\n<\/p>\n<p>\tThe Special Civil<br \/>\n\tApplication No.6220 of 2001 is filed by Hindustan Petroleum<br \/>\n\tCorporation Ltd., seeking declaration that the determination by the<br \/>\n\trespondent No.2 that the Industrial Undertaking of the petitioner at<br \/>\n\tVillage : Piludar is liable to be assessed at 60% of the consumption<br \/>\n\tcharges of electricity is void, illegal and of no legal effect and<br \/>\n\talso praying for quashing and setting aside the communication dated<br \/>\n\t23.11.1998 and directing the respondent to refund the differential<br \/>\n\tamount of electricity duty illegally collected from the petitioner.\n<\/p>\n<p>\tThe brief facts of the<br \/>\n\tcase are that the petitioner has established its LPG Bottling Plat<br \/>\n\tat Village : Piludra, Taluka : Ankleshwar, Dist. Bharuch and the<br \/>\n\tpetitioner was paying electricity charges and electricity duty at<br \/>\n\t20% of the consumption charges. The petitioner made an application<br \/>\n\tto the respondents for exemption from payment of electricity duty on<br \/>\n\t29.4.1998. The petitioner provided all necessary details on 7.5.1998<br \/>\n\tregarding various processes carried out by the petitioner at the<br \/>\n\tplant.  The petitioner has also provided information on 15.5.1998<br \/>\n\tregarding manufacturing process of LPG Bottling Plant sought by the<br \/>\n\trespondents. On 10.7.1998 further details regarding the<br \/>\n\tmanufacturing process carried out by the petitioner were provided.<br \/>\n\tDespite this fact, in November, 1998 the petitioner was informed by<br \/>\n\trespondent No.1 that electricity duty at 60% of the electricity<br \/>\n\tconsumed would be charged as the activities undertaken at the plant<br \/>\n\tfall under the residuary clause. On 23.11.1998, the petitioner was<br \/>\n\tcalled upon to pay with retrospective effect from January, 1997 to<br \/>\n\tJanuary, 1998 electricity duty at 60% amounting to Rs.8,27,278.62<br \/>\n\tps. No opportunity was given to the petitioner and only with a view<br \/>\n\tto avoid disconnection the said payment was made under protest and,<br \/>\n\tthereafter the present petition was filed.\n<\/p>\n<p>\tThis Court has issued<br \/>\n\trule on 17.8.2001 and directed to be heard alongwith Special Civil<br \/>\n\tApplication No.373 of 2001 and Special Civil Application No.5400 of<br \/>\n\t2001.\n<\/p>\n<p>\tMs.Minoo A. Shah, learned<br \/>\n\tadvocate appearing for the petitioners in both these petitions, has<br \/>\n\tsubmitted, over and above adopting the arguments canvassed by<br \/>\n\tMr.Nanavati in Special Civil Application No.5400 of 2001, that the<br \/>\n\tpetitioners have obtained the registration of Industrial<br \/>\n\tUndertaking.  They have also obtained necessary licenses from the<br \/>\n\tController of Explosives, Baroda under the provisions of the<br \/>\n\tExplosives Act for storing compressed gas in pressure vessels. There<br \/>\n\tis no dispute about the fact that the petitioners&#8217; undertakings are<br \/>\n\tIndustrial Undertakings as defined under Section-2(bb) of the Act.<br \/>\n\tThe manufacturing process is also being done at the plant of the<br \/>\n\tpetitioner. Bulk LPG is stored in plant of the petitioners and<br \/>\n\tmanufacturing process of refilling of LPG in cylinder is carried out<br \/>\n\tat the LPG Bottling Plant. The Government of India in exercise  of<br \/>\n\tpowers conferred by Sections-5 and 7 of the Indian Explosives Act,<br \/>\n\t1884 has made rules known as Gas Cylinder Rules, 1981.  The Rule-2,<br \/>\n\tSub-clause-xxv defines the expression &#8216;manufacturing of gas&#8217; as<br \/>\n\tunder:-\n<\/p>\n<p> manufacturing<br \/>\n\t\tof gas means filling of a cylinder with any compressed gas and also<br \/>\n\t\tincludes transfer of compressed gas from one cylinder to any other<br \/>\n\t\tcylinder.\n<\/p>\n<p>She<br \/>\n\thas, therefore, submitted that filling of LPG Gas Cylinder is<br \/>\n\tevidently a process of manufacture and, therefore, the petitioners<br \/>\n\tare Industrial Undertakings consuming high tension energy as<br \/>\n\tprovided by Section-3(1), Clause 5(a) of the Schedule to the Act and<br \/>\n\tas such the respondents had initially correctly levied duty at 20%<br \/>\n\tof the consumption charges.\n<\/p>\n<p>\tMs. Shah further<br \/>\n\tsubmitted that the Act does not authorize the Assessing Officer to<br \/>\n\tchange the classification of the consumer of electricity, once such<br \/>\n\tclassification has been made by the Assessing Officer.  The action<br \/>\n\tof the Assessing Officer in changing the classification is<br \/>\n\tarbitrary, illegal and also opposed to principle of natural justice.<br \/>\n\tEven otherwise, the Assessing Officer cannot change the<br \/>\n\tclassification with retrospective effect, once the classification<br \/>\n\thas already been made and electricity duty has been paid and<br \/>\n\tcollected accordingly.\n<\/p>\n<p>\tMs. Shah has further made<br \/>\n\tan alternative submission without prejudice to her main submission<br \/>\n\tthat the plant of the petitioner is an Industrial Undertaking, that<br \/>\n\tthe activities carried out at the plat of the petitioners would fall<br \/>\n\tunder the activities of a  service undertaking&#8217; as defined in<br \/>\n\tSection 2(bb)(a) of the Act. The plant can be deemed to be a service<br \/>\n\tundertaking as the activity of the plant includes reconditioning,<br \/>\n\trestoring, reserving or cleaning LPG received in bulk at the plant<br \/>\n\tand subsequently producing LPG filled cylinders by using carousel<br \/>\n\ttype auto filling system after reconditioning, repairing, restoring<br \/>\n\tetc., for making it usable for domestic, commercial or industrial<br \/>\n\tpurposes and prior to such activities the petitioner is preserving<br \/>\n\tLPG Gas in bulk at storage tanks till the  aforesaid processes are<br \/>\n\tcarried out. She has, therefore, submitted that the action of the<br \/>\n\trespondent authorities demanding the differential duty from the<br \/>\n\tpetitioners is required to be quashed and set aside.\n<\/p>\n<p>\tMs. Shah has further<br \/>\n\tsubmitted that even otherwise the issue is concluded by the recent<br \/>\n\tdecision of this Court rendered on 25.11.2009 in the case of  Vadilal<br \/>\n\tGases Pvt. Ltd., Vs. State of Gujarat (Special Civil Application<br \/>\n\tNo.9691 of 2000)<br \/>\n\twherein the Court after considering the nature of process undertaken<br \/>\n\tby the petitioner took the view that the petitioner unit is a<br \/>\n\tmanufacturing unit within the definition of the Act and hence the<br \/>\n\tpetitioner is required to pay only 10% duty charges and not 60%<br \/>\n\tcharges as demanded by the respondent. The Court further held that<br \/>\n\tthe finding of the authority that there is no manufacturing process<br \/>\n\tis without any basis. The Court has allowed the petition and<br \/>\n\tquashed the order passed by the respondent authorities and<br \/>\n\trespondents were directed to credit the excess payment made by the<br \/>\n\tpetitioner in the future bills. She has, therefore, submitted that<br \/>\n\tsince these two cases<br \/>\n\tare identical with the said case, the petitions deserve to be<br \/>\n\tallowed and the respondent authorities are directed to refund the<br \/>\n\tamount with interest.\n<\/p>\n<p>\tAn<br \/>\n\taffidavit-in-reply is filed on behalf of Electricity Company.<br \/>\n\tMr.Premal Joshi, learned advocate appearing for the respondent<br \/>\n\tElectricity Company has submitted that electricity consumption of<br \/>\n\tthe petitioners falls under Item No.7 of Schedule-I to the Act as<br \/>\n\tthe activities of LPG refilling carried out by the petitioners does<br \/>\n\tnot get covered under definition of Industrial Undertaking or<br \/>\n\tservice undertaking as per Section 2(bb) or 2(ee) of the Act<br \/>\n\trespectively. As such the petitioners are not covered under the<br \/>\n\tdefinition of Industrial Undertaking and, therefore, question of<br \/>\n\texemption from payment of electricity duty as per Section<br \/>\n\t3(2)(vii)(b) does not arise. He has further submitted that during<br \/>\n\tthe course of inspection it was noticed that energy was consumed by<br \/>\n\tthe petitioner Company through HTP connection over and above of LPG<br \/>\n\trefiling only at their plant and no manufacturing activity as<br \/>\n\tdefined in Section-2(bb) of the Act was carried out by the<br \/>\n\tpetitioners.  The petitioners were thereafter given show cause<br \/>\n\tnotices and differential duty was demanded.\n<\/p>\n<p>\tMr.Joshi further<br \/>\n\tsubmitted that the petitioners received bulk LPG through pipeline<br \/>\n\tdirectly from ONGC, Ankleshwar and ONGC, Hazira in their factory.<br \/>\n\tThere are no predominant manufacturing activities. The only activity<br \/>\n\tcarried out by the petitioners is simply refilling of the LPG.  The<br \/>\n\tsaid activity is nothing else but simply refilling of the LPG which<br \/>\n\tis required to be viewed accordingly. Since no predominant<br \/>\n\tmanufacturing activities are carried out by the petitioner and LPG<br \/>\n\tmanufacturing activity is carried out by the petitioner and LPG<br \/>\n\tmanufacturing activity is carried out by other public sector<br \/>\n\tundertaking, namely, ONGC, Ankleshwar and ONGC, Hazira ad only<br \/>\n\trefilling is done by the petitioner, they cannot claim the benefit<br \/>\n\tof being an industrial undertaking. He has, therefore, submitted<br \/>\n\tthat the respondent authorities have rightly demanded the<br \/>\n\telectricity duty at the rate of 60% from the petitioners.\n<\/p>\n<p>\tMr.Joshi further<br \/>\n\tsubmitted that the definition of Industrial Undertaking in the<br \/>\n\tpresent case is required to be applied under the Bombay Electricity<br \/>\n\tDuty Act, 1958 only. The definitions of Industrial Undertaking under<br \/>\n\tother Acts i.e. Factories Act, 1948 or the Indian Explosives Act,<br \/>\n\t1948 has no relevance. The important factor for levy of electricity<br \/>\n\tduty is based on the nature of consumption defined under Part-I of<br \/>\n\tSchedule-I to the Bombay Electricity Duty Act, 1958 and hence the<br \/>\n\trate of electricity duty is applicable to the petitioner under Item<br \/>\n\tNo.7 as a residuary clause.\n<\/p>\n<p>\tHaving heard the learned<br \/>\n\tadvocates appearing for the parties and having considered their<br \/>\n\trival submissions in light of the statutory provisions and decided<br \/>\n\tcase law on the subject and having judiciously examined the<br \/>\n\tdecisions\/orders under challenge, the Court is of the view that the<br \/>\n\trespondent authorities are not justified in collecting\/adjusting<br \/>\n\tand\/or enforcing the recovery of electricity duty at the rate of 60%<br \/>\n\tby reclassifying the electrical energy consumed by the petitioners<br \/>\n\tfor their activities. The Court has at length discussed this issue<br \/>\n\tin Special Civil Application No.5400 of 2001 decided today and for<br \/>\n\tthe reasons stated and findings recorded therein, the petitions<br \/>\n\tdeserve to be allowed and are accordingly allowed.\n<\/p>\n<p>\tApart from the said<br \/>\n\treasoning, one more point which is in favour of the petitioners is<br \/>\n\tthat as per the definition of  industrial undertaking  given in<br \/>\n\tSection 2(bb) of the Act, the petitioners&#8217; activities fall within<br \/>\n\tthe ambit of this definition.  The Government of India in exercise<br \/>\n\tof power conferred by Sections 5 and 7 of the Indian Explosives Act,<br \/>\n\t1884 has made Rules known as Gas Cylinder Rules, 1981.  The Rule-2,<br \/>\n\tSub-clause-xxv defines the expression &#8216;manufacturing of gas&#8217; which<br \/>\n\tmeans filling of a cylinder with any compressed gas and also<br \/>\n\tincludes transfer of compressed gas from one cylinder to any other<br \/>\n\tcylinder.  Thus, filling of LPG Gas Cylinder is evidently a<br \/>\n\tprocess of manufacture and, therefore, the petitioners are<br \/>\n\tIndustrial Undertakings consuming high tension energy as provided by<br \/>\n\tSection-3(1) and Clause 5(a) of the Schedule to the Act and as such<br \/>\n\tthe respondents had initially correctly levied duty at 20% of the<br \/>\n\tconsumption charges.\n<\/p>\n<p>\tThe petitioners&#8217; claim is<br \/>\n\tfurther supported by the decision of this Court in the case of<br \/>\n\t Vadilal Gas Pvt. Ltd., Vs. State of Gujarat (Special Civil<br \/>\n\tApplication No.9691 of 2000 decided on 25.11.2009)<br \/>\n\twherein the Court after considering the nature of the process<br \/>\n\tundertaken by the petitioner took the view that the petitioner unit<br \/>\n\tis a manufacturing unit within the definition of the Act and hence<br \/>\n\tthe petitioners require to pay only 10% duty charges and not 60%<br \/>\n\tcharges as demanded by the respondent.\n<\/p>\n<p>\tIn<br \/>\n\tthe above view of the matter, the communication dated 16.1.1999 and<br \/>\n\t9.3.1999 as well as the order passed by the respondent No.4 on<br \/>\n\t3.1.2001 in Special Civil Application No.373 of 2001 are hereby<br \/>\n\tquashed and set aside. Similarly the communication dated 23.11.1998<br \/>\n\tdemanding the differential duty from<br \/>\n\tthe petitioner of Special Civil Application No.6220 of 2001 is<br \/>\n\thereby quashed and set aside.\n<\/p>\n<p>\t In the above view of the<br \/>\n\tmatter, the respondent authorities are hereby directed to grant the<br \/>\n\trefund of the amount paid by the petitioners against differential<br \/>\n\tduty, with 9% interest per annum forthwith under intimation to the<br \/>\n\tpetitioners.  It is, however, open for the respondent authorities to<br \/>\n\tadjust this amount of refund against future liability of the<br \/>\n\tpetitioners towards electricity duty, under intimation to the<br \/>\n\tpetitioners.\n<\/p>\n<p>\t Subject to the above<br \/>\n\tdirection and observation, these two petitions are accordingly<br \/>\n\tallowed. Rule is made absolute to the above extent without any order<br \/>\n\tas to costs.\n<\/p>\n<p>\t\t\t\t\t\t\t     (K. A. PUJ,<br \/>\nJ.)<\/p>\n<p>kks<\/p>\n<p>\t\t   \u00a0\u00a0\u00a0<\/p>\n<p>\t\t   Top<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Gujarat High Court Bharat vs State on 6 May, 2010 Author: K.A.Puj,&amp;Nbsp; Gujarat High Court Case Information System Print SCA\/373\/2001 2\/ 18 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION No. 373 of 2001 With SPECIAL CIVIL APPLICATION No. 6220 of 2001 For Approval and Signature: HONOURABLE MR.JUSTICE K.A.PUJ ========================================================= 1 [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[16,8],"tags":[],"class_list":["post-113130","post","type-post","status-publish","format-standard","hentry","category-gujarat-high-court","category-high-court"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Bharat vs State on 6 May, 2010 - Free Judgements of Supreme Court &amp; 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