APHC010461722012 IN THE HIGH COURT OF ANDHRA PRADESH AT AMARAVATI (Special Original Jurisdiction) WEDNESDAY, THE THIRD DAY OF SEPTEMBER TWO THOUSAND AND TWENTY FIVE PRESENT THE HONOURABLE MS JUSTICE B. S. BHANUMATHI WRIT PETITION NO: 10198 OF 2012 Between: M/s. GMR Energy Limited, 220 MW Barge Mounted Power Plant PB N0.5, Besides Port Administrative Office kakinada. East Godavari District - 533 001. ...Petitioner AND Government of Andhra Pradesh, rep by its Secretary, Energy Department, Secretariat, Hyderabad. The Chief Electrical Inspector to Government of, Andhra Pradesh, O/o. CEI to Government of Andhra Pradesh, D.No. 5-17-6,1/16, Brodipet, 1. 2. Guntur-522002. (Cause Title is amended as per the Court Order dt.26.06.2024 vide orders passed in I.A.No.01 of 2024) ...Respondents Petition under Article 226 of the Constitution of India praying that in the circumstances stated in the affidavit filed therewith, the High Court may be pleased to issue an appropriate writ, order or direction more particularlyone in the nature of Writ of Mandamus declaring the action of the second respondent in determining that the petitioner company is liable to pay electricity duty under the Andhra Pradesh Electricity Duty Act, 1939 on the sales of energy made by it to the trading licensees as illegal, without authority of law and in violation of the provisions of the Act and consequently set aside the demand raised by the second respondent against 1/ED3/KKD16/D.N0.675/12, Dated 31-01-2012. the petitioner in Lr.No.CEIG/Duty- LA NO: 1 OF 2012(WPMP 12907 OF ?ni9 Petition under Section 151 CPC in the affidavit filed i praying that in the circumstances stated m support of the writ petition, the High Court pleased to stay of collection of electricity duty respondent may be demanded by the second Lr.No.CEIG/Duty-1/ED3/KKD16/D.No.675/12, 31-01-2012 pending disposal of the writ in Dated petition. Counsel for the Petitioner: SRI D.V.SIVADARSHAN Counsel for the Respondent No.1: GP FOR ENERGY Counsel for the Respondent No.2: THE ADVOCATE GENERAL The Court made the following: f APHC010461722012 IN THE HIGH COURT OF ANDHRA PRADESH AT AMARAVATI [3311] (Special Original Jurisdiction) Wednesday, the third day of September, two thousand and twenty five Present The Honourable Ms. Justice B. S. Bhanumathi Writ Petition No.10198 of 2012 Between: M/s. G.M.R. Energy Limited ...Petitioner and Government of Andhra Pradesh and others ...Respondents Counsel for the petitioner: 1.D.S. Sivadarshan Counsel for the respondents: 1 .G.P. for Energy 2.The Advocate General The Court made the following: 2 BSB, J W.P.No.10198 of 2012 i ORDER: This writ petition under Article 226 of the Constitution of India is filed seeking the following relief:- “...to issue an appropriate writ, order or direction more particularly one in the nature of Writ of Mandamus declaring the action of the second respondent in determining that the petitioner company is liable to pay electricity duty under the Andhra Pradesh Electricity Duty Act, 1939 on the sales of energy made by it to the trading licensees as illegal, without authority of law and in violation of the provisions of the Act and consequently set aside the demand raised by the second respondent against the petitioner in Lr.No.CElG/Duty-l/ED3/KKD- 16/D.N0.675/12, dated 31-01-2012 and pass such other appropriate order or orders as this Hon’ble Court may deem fit and proper in the interest of justice.” The case of the writ petitioner, in brief, is this; The petitioner is a public limited company registered under the Companies Act, 1956 with the Registrar of Companies, Karnataka, Bangalore. The petitioner set up a barge mounted power plant of 220 MW capacity at Tannirbavi, Panambur, Mangalore, Karnataka for generation of electrical energy with naphtha as fuel and started generation of power in April, 2001. The petitioner entered into a power purchase agreement with Karnataka Power Transmission Corporation Limited (K.P.T.C.L.). On expiry of the term of the agreement, the plant was operating as a merchant plant and entered into an agreement with M/s. G.M.R. Energy Trading Limited on 16.10.2008, for sale of energy 2. a. 3 BSB,J W.P.No.10198 of 2012 V generated by the petitioner. Subsequently, by way of amendment, the tenure of the agreement was extended upto 31.10.2012. The petitioner desired to relocate the barge mounted plant from Mangalore, Karnataka to Kakinada, Andhra Pradesh. Accordingly, the generation activitywas stopped at the Mangalore plant in November 2009. It was relocated at Kakinada in April, 2010 and started generation activity from the month of August, 2010 and selling the power generated by it to M/s. G.M.R. Energy Trading Limited which, in turn, is selling the energy to DISCOMS and others. As per the Entry 53 of List 11 of the Schedule-VII to the Constitution of India, the state legislature is competent to impose taxes on consumption or sale of electricity. The State of Andhra Pradesh enacted the ‘Andhra Pradesh Electricity Duty Act, 1939 (“Act of 1939”, for short) providing for levy of electricity duty on certain sales and consumption of electrical energy by licensees in the state of Andhra Pradesh. As per Section 3 of Act of 1939, every licensee, as defined under Section 2(b) thereof, shall pay every month electricity duty within its parameters. The definition of licensee includes, by reference, the provisions of the Indian Electricity Act, 1910 and the Electricity (Supply) Act, 1948. The petitioner does not answer the description of the ‘licensee’ under Section 2(b) of the Act, 1939 and also the description of ‘licensee’ under Section 2(h) of the Indian Electricity Act, 1910 or Section 2(39) of the Electricity Act, 2003. Therefore, the petitioner is not a licensee liable to pay the electricity duty. In fact, the petitioner has not obtained any license under the Electricity Act, 2003 as there is no such requirement. b. While so, the respondent No.2, by letter dated 18.10.2010, issued a notice to the petitioner to file returns every month and pay electricitv c. 4 BSB,J W.P.No.10198 of 2012 A duty in accordance with Sections 3 and 4(1) of the Act, 1939 and also to submit particulars of consumption of electricity for self or sold, in Form- AA month-wise by 1S**" of every month in accordance with Rule 11 of the Andhra Pradesh Electricity Duty Rules, 1939 (in short, ‘the Rules, 1939’). While submitting the monthly returns, the petitioner mentioned about the generation particulars and the particulars of energy sold and also that the petitioner is not required to pay the duty. Suddenly, on 04.02.2012, the petitioner received a letter No.CEIG/Duty-1/ED3/KKD-16/ D.No. 675/12, dated 31.01.2012, issued by the respondent No.2 stating that in exercise of powers conferred under Rule 11 of the Rules, 1939, the petitioner was called upon to remit electricity duty on sales of the petitioner for the period from June, 2010 to December, 2011 amounting to Rs.11,06,17,863/- within one month and submit proof. Questioning the levy and demand of electricity duty, this writ petition was filed. f 3. A counter was filed by the respondent No.2 mainly contending as follows, while denying the liability disowned by the petitioner: The interpretation of the relevant provisions put forth by the petitioner is wholly misconstrued and deliberately misleading. As per the amendments made to Section 3(1) of the Act, 1939 in the year 2003, a duty calculated at the rate of six paise per unit is payable on and in respect of all sales of energy, except those stated therein. 4. The petitioner filed a rejoinder reiterating the proposition that cess / duty / tax cannot be levied on generation of electricity since it is beyond the purview of the state legislature as it is empowered to levy tax on consumption or sale of electricity. In this regard, a reference was made to the decision of the Supreme Court in M.P. Cement 5 BSB,J W.P.No.10198 of 2012 t Manufacturers Association Vs. State of M.P.^ that levy of cess production / generation of electricity by the State was ultra vires the Constitution. on The learned counsel for the petitioner vehemently contended that the State legislature has no capacity to levy tax on generation of electricity, and therefore, the levy proposed on the petitioner, which is a generating company as per Section 2(28) of the Electricity Act, 2003 and not a licensee as stated in the petition and the rejoinder, is not maintainable. He further referred to a decision, stating that the common High Court for the States of Telangana and Andhra Pradesh, in Rane Engine Valves Ltd. Vs. State of A.P. and ors^, held that the Act, 1939 dealt with levy of duty on the sale and consumption of electricity and that the state legislature cannot levy duty on electricity generated even by an indirect method. It was further submitted that even the Ministry of Power, Government of India, vide letter dated 25.04.2023, clarified that any levy of tax or duty on generation of electricity by a state government is illegal and unconstitutional and thereby, the States were requested to withdraw such levies immediately. Basing on the decision of the Constitution Bench of the Supreme Court in State of A.P. Vs. N.T.P.C. and others^ wherein, while interpreting Section 3 of the Act, 1939 it was held that Entry 53 of List II shall be read as ‘taxes on the consumption or sale for consumption of electricity’, he submitted that the duty imposed on the petitioner is unconstitutional and illegal as it is 5. 1 (2004) 2 see 249 2 2016 see Online Hyd 762 3 (2002) 5 see 203 /5; ■ • 6 BSB, J W.P.No.10198 of 2012 A supplying electricity to GETL which is an inter- State Trading Licensee and not consuming electricity supplied by the petitioner. 6. Thus, in nut shell, his argument is that the petitioner is not a licensee to impose duty under the Act, 1939; that a State cannot impose electricity duty on ‘generation’ of electricity; and that a State can impose tax or duty on ‘consumption’ or ‘sale for consumption’; and therefore, the levy of the duty on the petitioner which is generating the electricity and not consuming it or selling it for consumption, is illegal. On the other hand, the learned Advocate General contended that, as per Section 2(b)(iii) of the Act, 1939, licensee includes the N.T.P.C. or any other corporation engaged in the business of supplying energy and so the petitioner is a licensee as it has been supplying electricity to M/s G.M.R. Trading Limited. Nextiy, he submitted that it is factually incorrect that the duty was levied on generation of electricity. He further argued that as per the amended Section 3 of the 1939 Act, duty on sale of energy is also a duty and that if at all, the provision is to be read down, there must be a specific challenge made by taking a plea and it shall be made before a Division Bench dealing with the vires of any enactment. Since the learned counsel for the petitioner placed reliance on the decision in the case of N.T.P.C. (supra) about competency of the State to impose tax on consumption or sale for consumption of electricity and to read down such provision, the learned Advocate General placed reliance on the decision of the Supreme Court in State of Rajasthan & others Vs. Sanyam Lodha\ at paragraph No.12 wherein it was held that provision of any enactment can be read down when it is found to be unconstitutional, but such an occasion must arise 7. 4 (2011)^13 see 262 7 BSBJ W.P.No.10198 of 2012 when there is explicit challenge made to the validity of the provision. He pointed out that in that case, since there was no such challenge, the Supreme Court declined to take that challenge into consideration. He also placed reliance on the decision of the Supreme Court in Union of India and others Vs. Manjurani Routray & others^ at paragraphs No. 10 & 11, for the same proposition. Further, he distinguished application of decision in N.T.P.C. (supra) to the present case, stating that the decision dealt with imposition of electricity duty on inter-state sale of electricity and in that context, made the observation as there is apparent overlap between Entries 53 and 54 of the State List. It was further submitted that even on the basis of this decision, a State is competent to levy tax or duty on mere sale of electricity under Entry 54 of the State List, de hors consumption of the same and that there was no occasion to deal with interpretation of the provisions of the Act, 1939. In reply, the learned counsel for the petitioner reiterated the same contentions as were initially advanced and further submitted that the provision should be read down so as to bring it in conformity with the constitutional mandate. He further submitted that the ratio laid down by the Supreme Court while interpreting Entry 53 shall be followed irrespective of examining the provision of the Act, 1939 directly in that case. 8. As per Section 2(b)(iii) of the Act, 1939, licensee includes a corporation engaged in the business of supplying energy and so the petitioner is a licensee within the purview of the Act, 1939. 9. 5 (2023) 9 see 144 8 BSBJ W.P.No.10198 of 2012 A There is no dispute about the provision of Section 3(1) of the Act, 1939 which reads as follows: 10. Levy of a duty in certain sales of electrical energy (1) Save as otherwise provided in sub-section (2), every licensee in the State of Andhra Pradesh shall pay every month to the State Government in the prescribed manner, a duty calculated at the rate of six paise per unit of energy, on and in respect of all sales of energy except sales to the Government of India for consumption by that Government or sales to the Government of India or a railway company operating any railway for consumption in the construction, maintenance or operation of the railway effected by the licensee during the previous month at a price of more than twelve paise per unit and on and in respect to all energy which was consumed by the licensee during the previous months for purposes other than those connected with the construction, maintenance and operation of his electrical undertaking and which, if sold to a private consumer under like conditions, would have fetched a price of more than twelve paise per unit. Provided that no duty under this sub-section shall be payable on and in respect of sale of energy effected (a) by the Andhra Pradesh State Electricity Board to any other licensee; (b) by the National Thermal Power Corporation to the Andhra Pradesh State Electricity Board.” 3. 9 BSB,J W.P.No.10198 of 2012 5? In the light of the above provision, the electricity duty can be imposed even on sale within the State of Andhra Pradesh. Therefore, the contention that no electricity duty can be imposed on sale of electrical energy is not tenable. Insofar as competency of the state legislature to impose duty on sale of electrical energy is concerned, since there is no specific prayer made in the petition challenging the vires of the Section 3(1), the said question cannot be gone into as dealt with by in the cases of Sanyam Loda (supra) and Manjurani Routray (supra). If at all, such an express prayer is made, this may be challenged before a Bench having roster over the subject. By ignoring the amended provision in Section 3 of the Act, 1939, the petitioner-raised contentions whereas, since the provision is applicable to the State of Andhra Pradesh as in the case on hand, there is no merit in the contention of the petitioner as the action impugned is within the parameters of law. If at all, the petitioner intends to challenge the vires of law, the remedy is not covered by this petition. 11. In the result, the Writ Petition is dismissed. There shall be no order as to costs. Pending miscellaneous applications, if any, shall stand closed. 12. Sd/- SRI T-SRINIVASA RAO ASSISTANT REGISTRAR //TRUE COPY// SECTION OFFICER To 1. One CC to Sri B. Adinarayana Rao, Advocate [OPUC] One CC to Sri D.S. Sivadarshan, Advocate [OPUC Two CCs to GP for Energy, High Court of Andhra Pradesh [OUT] Two CCs to The Advocate General, High Court of A.P. [OUT] Two CD Copies 2. 3. 4. 5. Cnr HIGH COURT DATED;03/09/2025 ORDER WP NO. 10198 OF 2012 DISMISSING THE W.P. WITHOUT COSTS