Deciding Authority: Supreme Court of India
Date of Judgement: 29th January, 2003
Bench: Justice M.B. Shah & Justice Arun Kumar
Facts of the Case: the respondent is engaged in manufacture of portland cement. It installed a manufacturing plant in the year 1960 with a capacity of producing 660 metric tones of clinker per day. The respondent added one more kiln in 1965 and increased its production capacity to 1000 metric tones. By August 1969 the respondent installed further machinery in a new building erected within the same premises to further increase its production capacity. The respondent installed a new kiln along with separate silos, lepol and nodulizers, coal mill and cement mill. This unit started manufacturing cement on 24 June, 1971. The unit was using existing idle capacity of crushers, cranes, packing machines, coal mills, and raw mills. According to the case of the respondent, the new kiln set up in 1969 was a new industrial undertaking as contemplated by Section 3(2)(vii)(b) of the Act and as such was entitled to exemption from levy of electricity duty.
Judgement of the Case: This appeal is directed against a judgment dated 29th November, 1990 of the Gujarat High Court allowing a Writ Petition filed by the respondent seeking exemption from levy of electricity duty and for quashing the orders of the authorities under the Bombay Electricity Duty Act, 1958) whereby exemption had been denied to the respondent. The High Court held that the respondent had set up a new industrial undertaking as contemplated under the Act and was entitled to exemption from electricity duty under Section 3 (2) (vii) (b) of the said Act. The State Government has filed the present appeal against the said judgment of the High Court.
The Supreme Court held that the respondent company when it initially started had a production capacity of 660 metric tonnes which was subsequently increased to 1000 metric tonnes. In 1969-70 by setting up the alleged new unit, production capacity of the company more than doubled. But as already seen this unit is not self contained. It is not an independently viable unit. It is dependant on various items of plant and machinery and mills of the existing unit. Further respondent was having two kilns and third is added. This leads to the inevitable conclusion that the new unit is an expansion of an existing undertaking in the State. Once it is held to be a case of expansion, the claim for exemption from electricity duty, set up by the respondent, completely falls to the ground. In the facts and circumstances of the case we are clearly of the view that the respondent is not entitled to exemption from electricity duty. The High Court failed to apply the real test which emerges from the judgment of this Court in Textile Machinery Corporation (supra) which was affirmed in a subsequent decision in Bajaj Tempo Ltd, Bombay Vs. Commissioner of Income Tax, Bombay City-III, Bombay [1992 (3) SCC 78]. Accordingly, this appeal is allowed. The judgment of the High Court under appeal is set aside. The respondent is held not entitled to exemption from electricity duty. In the facts of the case there will be no order as to costs.
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