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Power to remove difficulties. * * * * STATEMENT OF OBJECTS AND REASONS. I Act 14 of 1959.—Different rates of taxation on consumption of electricity have been in force since the Reorganization of States in the several areas of the State and it has been considered necessary to have a uniform tax structure all over the State. This uniform structure could not however be introduced until the tariff structure was made uniform. The State Electricity Board has introduced a uniform tariff structure all over the State with effect from 1st July 1959. As it was necessary to introduce the uniform tax structure simultaneously with the introduction of uniform rates, an Ordinance was promulgated on 23rd June 1959. This Ordinance is generally on the lines of the Mysore Electricity (Taxation on Consumption) Act, 1950 as amended by the Mysore Electricity (Taxation on Consumption) Amendment Act, 1957. The present Bill is intended to replace the Ordinance. (Published in Karnataka Gazette (Extraordinary) Part IV-2A dated 4th August 1959, as No. 65 at page. 8.) II Amending Act 10 of 1970.—Section 3 of the Mysore Electricity (Taxation on Consumption) Act, 1959 provides for the levy of a tax on units of electrical energy consumed every month calculated at a rate not exceeding three paise per unit of energy as may, by notification be specified by Government in respect of different classes of consumers. It is now proposed to enhance the tax on consumption of electricity leviable by Government. The total rate including tax charged to the different classes of consumers at present is lower than the rates in other States and it is also necessary to raise resources to meet the Government’s share of expenditure for the Fourth Plan. In order to give effect to this proposal, it is necessary to amend section 3 of the Act. Hence this Bill. (Published in Karnataka Gazette (Extraordinary) Part IV-2A dated 28th March 1970 as No. 110 at page 3.) III Amending Act 10 of 1979.—The rate of interest on belated payment of electricity tax was not exceeding 12% per annum. The rate of interest on belated payment of electricity charges due to Karnataka Electricity Board was raised from 12% to 15% in 1972. The difference in the two rates of interest has given rise to some confusion in raising the demand and maintaining accounts by the Karnataka Electricity Board. In order to overcome this difficulty, pointed out by Karnataka Electricity Board, it was proposed to enhance the rate of interest on belated payment of electricity tax also from 12% to 15%. As the Karnataka Legislative Assembly was not in session, an Ordinance was promulgated for the said purpose. This Bill seeks to replace the said Ordinance. (Published in Karnataka Gazette (Extraordinary) Part IV-2A, dated 24th January 1978, as No. 81, at page. 3.) IV Amending Act 5 of 1982.—Liability to collect and pay the tax under the Karnataka Electricity (Taxation on Consumption) Act, 1959 is on the licensee who is now required to keep separate entries relating to each consumer. In order to simplify the accounting procedure the licensee may show in his accounts only the total units of energy consumed and supplied by him to the consumers and the tax payable thereon. It is also proposed to increase the maximum rate of interest chargeable on arrears of tax from 15% to 24%. Hence the Bill. (Published in Karnataka Gazette (Extraordinary) Part IV-2A dated 3rd February 1982 as No. 73 at page 4.) V Amending Act 25 of 1984.— The total rate including tax charged to the different classes of consumers in this State is lower than those in some neighbouring States and it is necessary to raise additional resources to meet the Government share of expenditure for the sixth plan. It is therefore proposed to amend section 3 of the Karnataka Electricity (Taxation on Consumption) Act, 1959 to enhance the upper limit of tax on consumption of electricity leviable by Government from six paise to eight paise per unit of energy. Hence the Bill. (Obtained from L.A. Bill No. 6 of 1984.) VI Amending Act 15 of 1985.—The Government of India have abolished the Central Excise Duty on electricity with effect from 1st October 1984. The proceeds of the excise duty were being transferred entirely to the State Government by the Government of India. In order to compensate the loss to the State Government on account of abolition of Excise Duty on electricity, the electricity tax has been enhanced with effect from 1st October 1984 to commensurate with the loss caused thereof. As the matter was urgent and since the Legislative Assembly was not in session an Ordinance was promulgated providing for enhancement of electricity tax from 8 paise to 12 paise. This Bill seeks to replace the said Ordinance. (Published in Karnataka Gazette (Extraordinary) dated 25th March 1985, as No. 164 at page 3.) VII Amending Act 13 of 1990.—For attracting industries to our State by rendering the products competitive, special agreements were entered into. They provided for very low concessional tariff rates and occasionally for reimbursement of the part of the tax collected from the consumer. For quite sometime past our State has experienced acute shortage of power, necessitating import of energy from other States at very high rates. The cost of generation, transmission and also overhead charges have steeply increased. It has been noticed that instead of ploughing the concessions availed of for the purpose of rendering the products competitive the industries have desisted from passing on the benefits to the consumers of the products. This has contributed to their unjust enrichment at the cost of the consumer of the products and in a manner detrimental to public interest. In Order to remedy the situation the Electricity Supply (Karnataka Amendment) Bill, 1981 was enacted for the purpose of amending section 49 of the Electricity Supply Act, 1948. It was understood that this enactment, apart from granting power to impose an uniform tariff rate would also absolve the State Government from the burden imposed by the contract to reimburse the tax collected above at certain rates. The validity of the Act was unsuccessfully challenged by the Indian Aluminium Company Ltd., before the High Court and the appeal preferred by it is pending before the Supreme Court. However, in Writ Petition Nos. 27361 and 27362 of 1981, the High Court held that the above amendment touched only the tariff under the Taxation Act and did not govern the contractual terms for reimbursement or indemnification towards the hike in the rate of tax on consumption. It has also held that the reimbursement or indemnification cannot be refused on the grounds other than statutory. The proposed law is intended to provide a statutory ground to absolve the State Government from the liability to make reimbursement and indemnification, with a view to prevent the unjust enrichment of the industry at the expense of the consumer of the goods and with a view to conserve the resources of the State for promoting the interests of the public at large. Hence the Bill. (Published in Karnataka Gazette (Extraordinary) Part IV-2A dated 29th March 1990 as No. 157 at page 66 and 67.) VIII Amending Act 7 of 1998.—Section 4 of the Karnataka Electricity (Taxation on Consumption) Act, 1959 requires every Licensee to collect and pay to the State Government the Electricity tax payable under the Act. But, this requirement is not applicable to consumption of energy generated by means of generators not exceeding 5 kilowatts in capacity. Rule 47A was inserted in the Indian Electricity Rules, 1956 in the year 1995 which requires that every consumer or occupier shall obtain approval in writing of the Inspector before commissioning a generating plant of a capacity exceeding 10 kilowatts. In view of the aforesaid amendment to the Indian Electricity Rules, it was considered necessary to enhance the existing limit of 5 Kw to 10 Kw by amending Section 4 of the Karnataka Electricity (Taxation on Consumption) Act, 1959. As the matter was urgent and the Karnataka Legislative Council was not in session, the Karnataka Electricity (Taxation on Consumption) (Amendment) Ordinance, 1997 was promulgated to achieve the above object. This Bill seeks to replace the said ordinance. (Published in Karnataka Gazette (Extraordinary) Part IV-2A dated 25th August 1998 as No. 339 at page 2.) IX Amending Act 27 of 2001.- It is considered necessary to amend the Karnataka Electricity Board (Recovery of Dues) Act, 1976 and the Karnataka Electricity (Taxation on Consumption) Act, 1959 to incorporate the consequential changes necessitated on account of the enactment of the Karnataka Electricity Reform Act, 1999. Hence the Bill. (Vide L.A. Bill No. 16 of 2001 File No. SAMVYASHAE 19 SHASANA 2001) X Amending Act 7 of 2003.- To give effect to the proposals made in the Budget Speech, it is considered necessary to amend the Karnataka Agricultural Income Tax Act, 1957, the Karnataka Sales Tax Act, 1957, the Karnataka Entertainments Tax Act, 1958, the Karnataka Tax on Professions, Trades, Callings and Employment Act, 1976, the Karnataka Tax on Luxuries Act, 1979, the Karnataka Tax on Entry of Goods Act, 1979 and the Karnataka Electricity (Taxation on Consumption) Act, 1959. Hence the Bill. (L.A. Bill No. 9 of 2003) XI Amending Act 5 of 2004.- During the review of power sector by the Chief Minister on 4th September, 2003, it was decided to increase the hours of 3 phase power supply in rural areas to 6 hours a day along with 10 hours of single phase supply. This would require additional purchase of power and would impose additional financial burden on KPTCL and the State Government. Hence, it was decided to levy electricity tax on energy consumed through captive power generation at the rate of 25 paise per unit of energy. As the matter was urgent and both the Houses of the Karnataka State Legislature were not in Session the Karnataka Electricity (Taxation on Consumption) (Amendment) Ordinance, 2003 was promulgated. This Bill seeks to replace the above Ordinance. Hence the Bill. (LA Bill No.5 of 2004) (Entry 53 of List II of the Seventh Schedule to the Constitution of India) XII Amending Act 31 of 2013.- It is considered necessary to amend the Karnataka Electricity (Taxation on Consumption) Act, 1959,- (1) to levy and collect tax on sale of electricity also; (2) to classify the auxiliary consumption, captive consumption and to levy different rates of electricity tax on consumption of electricity by such class of consumers; (3) to levy of electricity tax on supply of electricity by non-licencee to others; (4) to provide a provision for appeal by the aggrived person on the orders of Inspecting Officer or Chief Electrical Inspector; and (5) certain other consequential amendments are also made. Hence, the Bill. [L.A. Bill No.5 of 2013, File No. Samvyashae 68 Shasana 2012] [Entries 53 of List II of the Seventh Schedule to the Constitution of India.] XIII Amending Act 24 of 2018.- To give effect to the proposals made in the Budget Speech of 2018-19, the taxation on consumption of Electricity is proposed to be increased from 6% to 9%. Therefore, it is considered necessary to amend the Karnataka Electricity (Taxation on Consumption or Sale) Act, 1959. Certain other consequential amendments are also made to give clarity to captive Consumption. Hence the Bill. [L.A. Bill No.03 of 2018, File No. Samvyashae 17 Shasana 2018] [entry 53 of List II of the Seventh Schedule to the Constitution of India.] 1[KARNATAKA]1 ACT No. 14 OF 1959. (First published in the 1[Karnataka Gazette]1 on the Tenth day of September, 1959.) THE 1[KARNATAKA]1 ELECTRICITY (TAXATION ON CONSUMPTION 2[OR SALE]2) ACT, 1959. (Received the assent of the Governor on the Twenty-fifth day of August, 1959.) (As Amended by Karnataka Acts 10 of 1970, 10 of 1979, 5 of 1982, 25 of 1984, 15 of 1985, 13 of 1990, 7 of 1998, 7 of 2003, 5 of 2004, 31 of 2013 and 24 of 2018) An Act to provide for the levy of tax on the consumption 2[or sale]2 of electrical energy in the 1[State of Karnataka]1. WHEREAS it is expedient to provide for the levy of tax on consumption 2[or sale]2 of electrical energy in the 1[State of Karnataka]1; BE it enacted by the 1[Karnataka]1 State Legislature in the Tenth Year of the Republic of India as follows:—