Principal Commissioner Of Income Tax, Rohtak v. Dakshin Haryana Bijli Vitran Nigam Ltd

ITA Nos. 17, 30, 51, 33, 105, 119 and 87 of 2021 (O&M) IN THE HIGH COURT OF PUNJAB AND HARYANAAT CHANDIGARH Date of decision : 03.08.2022 ITA Nos. 17, 30, 51, 33, 105, 119 and 87 of 2021 (O&M) 7.ITA-87-2021 (O&M) Principal Commissioner of Income Tax, Rohtak .... Appellant Versus Dakshin Haryana Bijli Vitran Nigam Ltd. .... Respondent CORAM: HON'BLE MR. JUSTICE TEJINDER SINGH DHINDSAHON'BLE MR. JUSTICEK PANKAJ JAIN Present:Mr. Vaibhav Gupta, Jr. Standing Counselfor the appellant. FE AE AE PANKAJ JAINJ. These seven appeals at the instance of revenue involvecommon issue. Question relates to applicability of Section 43B of theIncome-tax Act, 1961 (hereinafter referred to as ‘1961 Act’) to theelectricity duty collected by the assessee as per the provisions of PunjabElectricity (Duty) Act, 1958 (hereinafter referred to as ‘1958 Act’). Factsare being taken from ITA-33-2021| ? Assessee iS a licensee under the Electricity Act, 2003engaged in the distribution of power in State of Haryana. Assessee filedreturn for the assessment year 2008-09 declaring nil income,Assessment under Section 143(3) was completed on 23.12.2010 at nilincome. Commissioner Income Tax revised the same exercising powerunder Section 263 of the 1961 Act. Assessment order dated 30.01.2014was passed under Section 143(3)/263 of the 1961 Act whereby certaindeductions were disallowed and added back. onAggrieved by the order, assessee approached CIT (Appeals).The appellate authority deleted disallowance made by A.O. w.r.t,electricity duty under Section 43B of the 1961 Acct. 4The matter was taken before the Income Tax AppellateTribunal (hereinafter referred to 'Tribunal') by both the parties. Tribunalvide order dated 19.02.2020 (Annexure A-3) upheld the order passed byCIT(A) on the issue of applicability of Section 43B of the 1961 Act. 5 Counsel for the revenue claims that since the assessee in thepresent case was following mercantile system of the accounting, thusprovision of Section 43B of the 1961 Act will be applicable to theamounts covered under electricity duty as held by Gujarat High Court inITA No.57 of 1989titled as‘Commissioner of [Income-lTax vs.Ahmedabad Electricity Co. Ltd.'reported as(2003) 181 CTR-Guj-22). 6]We have heard learned counsel for the appellant(s) and havegone carefully gone through the record of the case. 7As per section 43B(a) of the 1961 Act, a deductionotherwise allowable under the Act in respect of any sum payable by theassessee by way of tax, duty, cess or fee, by whatever name called, underany law for the time being in force, shall be allowed (irrespective of theprevious year in which the liability to pay such sum was incurred by theassessee according to the method of accounting regularly employed byhim) only in computing the income referred to in Section 28 of theprevious year in which such sum is actually paid by him. 8 Thus, the question arises as to whether the amount towardselectricity duty is payable by the assessee or it is merely a collectionagency discharging its duty under a statutory arrangement. QOIn the year 1958, State legislature enacted the PunjabElectricity (Duty) Act, 1958. Section 2(b), (d), 3, 4, 5, 9 and 10 read as under:- @2 Definitions. In this Act, unless the contextotherwise requires,- (b)“consumer” means a person, other than a licensee, who is supplied with energy- (1)by a licensee; or (11)by the Board; 3.Electricity duty on energy supplied to consumer or licensees by Board, etc. {(1) There shall be levied and paid to the StateGovernment on the energy supplied by the Board to aconsumer or a licensee a duty, to be called the"electricity duty", computed at the following rates,namely:- (1)where the energy is supplied to a domesticconsumer, not exceeding twenty-eightpaise per unit;consumer, not exceeding twenty-eightpaise per unit; QOIn the year 1958, State legislature enacted the PunjabElectricity (Duty) Act, 1958. Section 2(b), (d), 3, 4, 5, 9 and 10 read as under:- @2 Definitions. In this Act, unless the contextotherwise requires,- (b)“consumer” means a person, other than a licensee, who is supplied with energy- (1)by a licensee; or (11)by the Board; 3.Electricity duty on energy supplied to consumer or licensees by Board, etc. {(1) There shall be levied and paid to the StateGovernment on the energy supplied by the Board to aconsumer or a licensee a duty, to be called the"electricity duty", computed at the following rates,namely:- (1)where the energy is supplied to a domesticconsumer, not exceeding twenty-eightpaise per unit;consumer, not exceeding twenty-eightpaise per unit; (11)Where the energy is supplied to acommercial consumer, not exceedingtwenty-eight paise per unit; andcommercial consumer, not exceedingtwenty-eight paise per unit; and (111)where the energy is supplied to any othercategory of consumers, not exceeding fiftyper cent on the price of energy so suppliedin a month.category of consumers, not exceeding fiftyper cent on the price of energy so suppliedin a month. as the State Government may, from time to time bynotification, specify in this behalf; Provided that the State Government may specifydifferent slabs for different categories of consumerand specify different rates for each slab ; Provided further that if such a consumer uses anypart of the energy so supplied to him for a domesticor commercial purpose, - (a)where a separate meter is installed formeasuring energy so used for domestic orcommercial purpose, the rate of electricitymeasuring energy so used for domestic orcommercial purpose, the rate of electricity ITA Nos. 17, 30, 51, 33, 105, 119 and 87 of 2021 (O&M) duty on the part of the energy so used shallbe as notified under clause (1) or clause(11), as the case may be, and (b)where a Separate meter is not installed formeasuring energy so used for domestic orcommercial purpose, the rate of electricityduty on the whole of energy so supplied,including the energy so used, shall be asnotified under clause (1), (iv)where the energy is supplied to any consumer,not being a licensee, through a temporary connectionor a temporary extension of an existing connectionfor the purpose of illumination on the occasion of amarriage or other religious or social function, at suchrate not exceeding ten rupees per unit of the energySO supplied, as the State Government may, from timeto time by notification, specify in this behalf,notwithstanding anything to the contrary containedin the preceding clause; and (v)where the energy is supplied to a licensee,twenty-five per cent on the price of energy sosupplied in a month. Provided that on the supply of energy which is soldby a licensee not being a licensee specified in sub-clause (11) or clause (d) of section 2, - (a)to a domestic consumer or a commercialconsumer the rate of electricity duty on theenergy so sold shall be as notified underclause (1) or clause (11), as the case may beconsumer the rate of electricity duty on theenergy so sold shall be as notified underclause (1) or clause (11), as the case may be (b)to any other category of consumers andsuch a consumer uses any part of theenergy so sold to him for a domestic orcommercial purpose, -such a consumer uses any part of theenergy so sold to him for a domestic orcommercial purpose, - (i)where a separate meter is installed formeasuring energy so used for domestic ormeasuring energy so used for domestic or commercial purpose, the rate of electricityduty on the part of the energy so used perunit shall be as notified under clause (1) orclause (11), as the case may be, andduty on the part of the energy so used perunit shall be as notified under clause (1) orclause (11), as the case may be, and (b)to any other category of consumers andsuch a consumer uses any part of theenergy so sold to him for a domestic orcommercial purpose, -such a consumer uses any part of theenergy so sold to him for a domestic orcommercial purpose, - (i)where a separate meter is installed formeasuring energy so used for domestic ormeasuring energy so used for domestic or commercial purpose, the rate of electricityduty on the part of the energy so used perunit shall be as notified under clause (1) orclause (11), as the case may be, andduty on the part of the energy so used perunit shall be as notified under clause (1) orclause (11), as the case may be, and (11)where a Separate meter is not installed formeasuring energy so used for domestic orcommercial purpose, the rate of electricityduty on the whole of energy so suppliedincluding the energy so used, per unit shallbe as notified under clause (1), andmeasuring energy so used for domestic orcommercial purpose, the rate of electricityduty on the whole of energy so suppliedincluding the energy so used, per unit shallbe as notified under clause (1), and (c) to any consumer, through a temporaryconnection or a temporary extension of anexisting connection for the purpose ofillumination on the occasion of a marriageor other religious or social function, therate of electricity duty, on the energy sosold per unit shall be as specified in clause(iv).|connection or a temporary extension of anexisting connection for the purpose ofillumination on the occasion of a marriageor other religious or social function, therate of electricity duty, on the energy sosold per unit shall be as specified in clause(iv).| (2)There shall be levied for and paid to the StateGovernment the electricity duty at the rate of oneand half naye paise per unit also by -Government the electricity duty at the rate of oneand half naye paise per unit also by - (a) a licensee generating energy himself or theenergy supplied by him to the consumers;andenergy supplied by him to the consumers;and (b) a person generating energy for his own useOr consumption on the energy used orconsumed by him in a month.Or consumption on the energy used orconsumed by him in a month. (3)Nothing in sub-sections (1) and (2) shall applyto the consumption or sale of energy which is-to the consumption or sale of energy which is- (a)[consumed by or sold to the Governmentof India for consumption by_ thatGovernment; or|of India for consumption by_ thatGovernment; or| (b) consumed in the construction, maintenanceOr operation of any railway by theGovernment of India or a railway companyOr operation of any railway by theGovernment of India or a railway company 7 operating that railway, or sold to thatGovernment or any such railway companyfor consumption in the construction,maintenance or operation of any railway. (4)For the purpose of computing the electricityduty under this section the consumption shown bythe meters starting after the first meter reading datefalling after the commencement of this Act shall betaken into account. {Provided that for the purpose ofcomputing the electricity duty at rateSpecified in section 3 of the PunjabElectricity (Duty) Amendment Act, 1963,the consumption shown by the meterscommencing with the first meter readingdate falling after the first day of April,1963, shall be taken into account: Provided further that, for the periodcommencing with the first April, 1963, andending with the first meter reading datefalling after the first day of April, 1963,the electricity duty shall be computed as ifthe Punjab Electricity (Duty) AmendmentAct, 1963, had not been enacted] ACollection and payment of electricity duty.' The electricity duty shall be collected and paid to theState Government by the Board or a licensee or aperson who generates energy for his own use orconsumption as the case may be: {Provided that for the purpose ofcomputing the electricity duty at rateSpecified in section 3 of the PunjabElectricity (Duty) Amendment Act, 1963,the consumption shown by the meterscommencing with the first meter readingdate falling after the first day of April,1963, shall be taken into account: Provided further that, for the periodcommencing with the first April, 1963, andending with the first meter reading datefalling after the first day of April, 1963,the electricity duty shall be computed as ifthe Punjab Electricity (Duty) AmendmentAct, 1963, had not been enacted] ACollection and payment of electricity duty.' The electricity duty shall be collected and paid to theState Government by the Board or a licensee or aperson who generates energy for his own use orconsumption as the case may be: 5.Licensee not to reimburse himself fromconsumer without sanction ot StateGovernment.- No licensee shall, without theprevious sanction of the State Government andsubject to such conditions as the State Governmentmay impose, recover from any person to whom 8 energy is sold, the duty which falls to be paid by thelicensee [under this Act]. Explanation.- Where the State (Governmentpermits a licensee to charge duty from the consumer,the duty shall not be deemed to be part of the pricecharged for the energy by the licensee. QO.Recovery of duty.- Any duty due under thisAct or penalty imposed under section 8 whichremains unpaid, whether by a consumer to the Boardor by the Board or a licensee or a person generatingenergy for his own use or consumption to the StateGovernment, shall be recoverable as an arrears ofland revenue or by deduction from amounts payableby the State Government to the Board or the licenseeor such person. 10.Power to disconnect supply for non-payment of duty.- Where a consumer or a licenseefails to pay the electricity duty to the Board or aconsumer fails to pay such duty to a licensee who isauthorised to recover the duty from the consumersunder section 5, the Board or the licensee mayexercise the power conferred on a licensee by sub-section (1) of section 24 of the Indian ElectricityAct, 1910, for the recovery of any charge or sum duein respect of energy supplied by it or him.” 10.From the bare reading, it is thus clear that the liability to payelectricity duty lies on the consumer. Further, the electricity duty is to bepaid to the State Government. 11.Section 4 casts duty on the licensee to collect the electricityduty from the consumers and to pay the same to the State Government.Licensee is only a collecting agency. It will be further apposite to noticehere that exercising powers under Section 13 of the 1958 Act, rules have ITA Nos. 17, 30, 51, 33, 105, 119 and 87 of 2021 (O&M)9 been framed. The rules called as Punjab Electricity (Duty) Rules, 1958prescribes for collection and payment of duty. Rules 9 and 10 read asunder:- @0 Duty leviable on the energy supplied by theBoard.- The duty leviable under sub-section (1) ofsection 3 of the Act on the energy supplied by theBoard to a consumer or a licensee, shall be collectedby the Board along with the [-] bills for the energysupplied and shall be deposited in GovernmentTreasury, Sub-Treasury or the State Bank of India, asearly as possible and |in no case later, than the 20thday of the following month]. 10.Duty leviable on the energy supplied by aeenerating licensee.- The duty leviable under clause(a) of sub-section (2) of section 3 of the Act shall bedeposited by a generating licensee in GovernmentTreasury, Sub-Treasury or the State Bank of Indiawithin 15 days of the close of the month to which theduty relates.” 12.Thus, the amount collected by the licensee as electricityduty leviable under 1958 Act is required to be deposited in theGovernment treasury by the licensee. 13.Section 43B is a non-obstente clause. It was inserted byFinance Act, 1983 with an intent to curb the malpractice at the hands ofcertain tax payers, who claimed statutory liability as a deduction withoutdischarging the same and pleaded mercantile system of accounting asdefence. 10.Duty leviable on the energy supplied by aeenerating licensee.- The duty leviable under clause(a) of sub-section (2) of section 3 of the Act shall bedeposited by a generating licensee in GovernmentTreasury, Sub-Treasury or the State Bank of Indiawithin 15 days of the close of the month to which theduty relates.” 12.Thus, the amount collected by the licensee as electricityduty leviable under 1958 Act is required to be deposited in theGovernment treasury by the licensee. 13.Section 43B is a non-obstente clause. It was inserted byFinance Act, 1983 with an intent to curb the malpractice at the hands ofcertain tax payers, who claimed statutory liability as a deduction withoutdischarging the same and pleaded mercantile system of accounting asdefence. 14)The argument raised by counsel for the appellant(s) thatSection 43B will be attracted merely for the reason that the appellant(s)is following mercantile system of accounting deserves to be rejected. ITA Nos. 17, 30, 51, 33, 105, 119 and 87 of 2021 (O&M)10The revenue is required to show that the duty, tax, cess or fee (in thepresent case electricity duty) is payable by the assessee. The relianceplaced on judgment passed by Gujarat High Court in AhmedabadElectricity Co. Ltd.'s case (Supra) is misplaced. In the said case, afterexamining the provision of Bombay Electricity Duty Act, 1958 it wasfound that the clear liability of the licensee is made out. It was underthose circumstances that the Court found that since electricity duty waspayable by the assessee and thus Section 43B was attracted. In thepresent case, there is no such provision contained in 1958 Act whichshows that the liability to pay the electricity duty rests upon the assessee,Rather Section 4 of the 1958 Act read with provisions contained in 1958Rules makes it abundantly clear that assessee is merely an agencyassigned with a statutory function to collect electricity duty from theconsumers and to pay the same to the State Government. Calcutta HighCourt in.ITA No.82 of 2004, decided on 14.05.2015titled as 'CESELtd. vs. CIT-II, Kolkata'reported as(2003) 262 ITR 9,afterexamining provision of Bengal Electricity Duty Act, 1935 held that:- “ye XK XX: 19|Thus, in our view, the electricity duty, notbeing a sum payable by the assessee as a primaryliability by way of tax, duty, cess or fee, Section 43Bis not attracted to the licensee/assessee in respect ofelectricity duty collected by it for being passed onthe State Government.” 15)In view of the discussion held hereinabove, we find that thequestion w.r.t. the applicability of Section 43B on the electricity duty,needs to be answered against the revenue and in favour of the assessee, ITA Nos. 17, 30, 51, 33, 105, 119 and 87 of 2021 (O&M) 16.Resultantly, present appeals are dismissed. 17.Since the main appeals have been decided, the pending civil miscellaneous applications, if any, also stand disposed off, 18)A photocopy of this order be placed on the files of other connected cases| (TEJINDER SINGH DHINDSA) JUDGE)03.08.2022Dinesh (PANKAJ JAIN)JUDGE Whether speaking/reasoned|YesWhether ReportableYes