VIDYUT
OMBUDSMAN
5th Floor, Singareni Bhavan, Red Hills, Hyderabad –500 004.
Dated: 18-12-2006
Present: S. Surya Prakasa Rao, Ombudsman
Appeal No 17
of 2006
Between
M/s. Hindustan Petroleum
Corporation Ltd.
Represented by Chief Manager
- VSPL
VR-ATP Area, Naval Base Post
Visakhapatnam – 530 014
...…..
Appellant
and
1. Superintending
Engineer/Operation/EPDCL/Visakhapatnam
2. Chief General
Manager/RAC/EPDCL/Visakhapatnam
3. Chief General
Manager/O&CS/EPDCL/Visakhapatnam
……. Respondents
This appeal dated 29th
January 2006 (received on30-06-2006) filed by M/s Hindustan Petroleum
Corporation Ltd (herein after called as the appellant or consumer), against (i)
the order dated 02-06-2006 in C.G.No. 16/2006 (Visakhapatnam District) and (ii)
the order dated 03-06-2006 in C.G.No.40/2006 (East Godavari District), both of
the Forum for Redressal of Grievances of Consumers (herein after called as the
Forum or CGRF), EPDCL visakhapatnam coming up for consideration before the
Ombudsman and having stood over till this day, the Ombudsman issues the
following: -
O R D E R
2. The facts on record in this case are narrated herein
briefly.
HT service
connection No.308 of Visakhapatnam
circle:
The
consumer availed HT supply at 33 KV for a contracted maximum demand (CMD) of
2500 KVA, which was sanctioned and released under HT category– II on
24-06-1998. (The CMD was derated to 2000 KVA and restored to 2500KVA and again
derated to 1800KVA at the request of consumer at different points of time). But
the billing was done under HT category-I right from the date of release of
supply on 24-06-1998. On detection of billing under wrong category, the
SE/Operation/Visakhapatnam (respondent No.1) issued demand notice on 25-05-2005
for payment of about Rs.3.66 crores towards the shortfall amount of billing
between HT category –I and HT category – II, duly enclosing the calculation
sheets for arriving at the amount. The representation made by
the consumer against the said demand notice were not accepted by the
respondents. The consumer then filed a complaint before the Forum of SPDCL on
17-01-2006 against the re-classification from HT category – I to HT category –
II, that too retrospectively. The Learned Forum rejected the complaint of the
consumer in its order dated 02-06-2006 in CG No.16 of 2006.
HT SC. No. 388 of Rajahmundry Circle:
The
consumer availed HT supply at 33 KV for a CMD of 1600 KVA with effect from
06-03-1999 under HT category I.
Subsequently pursuant to an inspection by the DPE officials of
visakhapatnam on 23-08-2005, the ADE/Operation/Rural, Rajahmundry (RJM) issued
notice to the consumer in his letter dated 17-09-2005 about the
re-classification of the service in to HT category-II assessed the short billed
amount as about Rs.1.78 crores for the period from March 1999 to August 2005
and gave calculation for the same. In the said notice the ADE, advised the
consumer to make a representation to the SE/Operation/RJM if there is any
objection for this notice. The consumer made representation to SE/Operation/RJM
in his letter dated 26-09-2005 to restore HT category – I. The decision of the
SE/Operation/RJM on the said representation is not available in the material on
record in this case. The consumer then filed a complaint before the Forum of
EPDCL on 16-02-2006 against the re-classification and retrospective billing.
The learned Forum of EPDCL rejected the complaint in its order dated 03-06-2006
in CG.No.40/2006.
As
the learned Forum rejected both the complaints the consumer filed this common
appeal against the above two orders.
3. It may be mentioned here that this appellant filed
two other appeals (No.16 in respect of the HT service at Vijayawada and No.18 in respect of the HT
service at Nalgonda). As required under
clause 8(1)(C) and clause 11 of the Regulation No.1 of
2004 of the Hon’ble APERC, the Ombudsman endeavoured to promote a mutually
acceptable settlement by convening a meeting between the parties herein along
with respondents in the other two Appeals of this appellant, on 25-07-2006 in
the office of Ombudsman at Hyderabad. The respondents sought time for consultation
with respective managements for responding to the deliberations that occurred
in the meeting. However no response was
received from either of the parties and hence the Ombudsman took up further
proceedings in the appeal by issuing notice for filing counters/rejoinders and
fixing the hearing on 11-10-2006, which was later postponed to 10-11-2006 at
the request of the respondents in this appeal (No.17 of 2006), as all these 3
appeals were agreed to be agreed to be heard together as the appellant was one
and the same and issues are more or less same.
4. In this
appeal the appellant while raising similar contentions as in the case of appeal
No. 16 of 2006, rightly framed the following 3 issues for consideration in this
appeal:
|
(i)
|
Classification:
|
Whether the service is to be
classified under HT category – II?
|
|
(ii)
|
Re-classification
|
Whether
the respondents have the power to reclassify the service as per clause
5 and 10 of the agreement read with
clause 35 of the Terms and Condition of
Supply? (herein after called as TCS)
|
|
(iii)
|
Retrospective
billing
|
Whether
the respondents can resort to retrospective billing in the face of Section
56(2) of Electricity Act 2003.?
|
In view of the issues framed above and in as much as
all the relevant aspects of all these 3 issues are adequately dealt in the
order dated 14-12-2006 of
this Ombudsman in appeal No. 16 of 2006 of this appellant, I am not giving
details of the contentions of appellant which are more a less same in all the
appeals. For all the grounds mentioned in the appeal, the appellant requested
to set aside the two orders of the Forum and restore HT category I for these
two services and to order refund the excess amount paid, with interest.
5. The SE/Operation/Visakhapatnam, (respondent No.1)
filed the counter in respect of S.C.No.308 of Visakhapatnam circle, on behalf
of the Responsdents, which was received on 18-10-2006. In this counter, the
SE/Operation/Visakhapatnam stated as follows in respect of the issues concerned
in this appeal.
(i)
The Estimate was
sanctioned under HT category II only.
(ii)
The service was
classified under HT category II when supply was released on 24-06-1998.
(iii)
The billing is
done under HT category I inadvertently from the date of release of supply (i.e.
from 24-06-1998.)
(iv)
The claim with
re-trospective effect is justified as per clause 35 of the TCS read with clause
5 of the agreement.
(v)
This is not a
case of re-classification but a case of wrong billing. Hence the demand for
short-billed amount is fully justified.
(vi)
The two years
period specified u/s 56(2) of the Electricity Act 2003 is to be counted from
date of detection of the claim only.
For all the reasons mentioned above, the
SE/Operation/ Visakhapatnam
requested to uphold the retrospective claim for shortfall towards the
difference between category - II and category - I
6. The SE/Operation/RJM has filed the counter in respect
of S.C.No.388 of Rajahmundry circle. In this counter, the SE/Operation/RJM has
stated as follows in respect of the issues in appeal:
(i) The
service was released on 06-03-1999 under HT category – I and bills were issued
under the same category till August 2005.
(ii) The DPE
officials have noticed during the inspection on 23-08-2005 that the supply is
used for transportation of Petroleum products which falls under HT category II.
(iii) The claim
with retrospective effects is justified as per clause 35 of TCS read with clause
5 of the agreement.
(iv) The two years period specified u/s 56(2) of the
Electricity Act 2003 is to be counted from date of detection of the claims
only.
For all the reasons stated above, the
Se/Operation/RJM (on behalf of respondents 2to3) requested to allow the
supplemental claim towards difference between HT category – I and HT category –
II from the date of release of supply.
7. The appellants have filed separate
rejoinders against each of the counters in respect of SC.No.308 of
Visakhapatnam circle and S.C.No.338 of RJM circle, on 01-11-2006. The replies
are almost identical as the issues concerned are more or less same.
In
these rejoinders while reiterating the grounds in appeal, the appellant stated
that the respondents have failed to take note of the clarification given by the
erstwhile APSEB in Memo date 22-06-1998. The appellant also cited an order
dated 04-08-2006 of the Chief Engineer (Electricity), PWD of Maharastra Govt
for refund of Electricity Duty paid by HPCL at commercial rate instead of
Industrial rate. Asserting that the respondents erred in law in refusing to
classify the services under HT category – I having regard to the principles of
law laid down by the APEX court, the appellant sought refund of the excess
amount paid with 12% interest.
8. As mentioned in para 3 above, it was
agreed during the reconciliation meeting held on 25-07-2006 that all the 3
appeals will be heard together as the issues involved are more or less the
same. Accordingly the parties in all the 3 appeals (Nos.16,17
and 18 of 2006) were heard on 10-11-2006. Sir D.P. Bhave, Advocate and learned
counsel for the appellants, presented the issues involved in these appeals. He
dealt at length the basis for classification, power to re-classify and power to
re-classify with retrospective effect and effect of section 56(2) of
Electricity Act 2003 etc. He stated that the activity of the consumer cannot be
disected, and oil-pumping activity is part of the Industrial activity of the
appellant who is an Industrial consumer. He also stated that the terms of the
Agreement do not empower the respondents to change the category. When his attention was invited to the
provisions under clause 35 of the Terms & Conditions of Supply in the
matter of power to re-classify the services, the learned advocate said that the
said provisions are not made available and requested for copy of the same to
enable them to file rejoinder on this aspect. The respondent in Appeal No.17 of
2006 has been requested to provide the same to the appellant. The Learned counsel also provided a copy of
the judgment of Hon’ble High court of Gujarat and stated that this matter is
covered by the said judgment. He also
handed over a book-let containing the written submissions on behalf of the
appellant, copies of which were also handed over to the respondents.
On behalf of respondents:
The
respondent No.1 in appeal No.16/2006,
Respondent No.2 and 3 in
appeal No. 17/2006,
and
Respondent No.1 in appeal No.18/2006,
have
attended the hearing on 10-11-2006. They have stated that they will submit
written submissions on the issues raised in the hearing. But no further written submissions are filed
by the respondents, except furnishing the copies of certain documents like HT
requisition, sanction letter, Test Report etc. as required by the Ombudsman
during the hearing. Hence, the
submissions as filed in the counters are considered for the stand of the
Respondents.
9. In the background of the above rival contentions, the issues for
consideration in this appeal are:
(i)
Whether the activity of pumping of petroleum
products overlong distances (from Visakhapatnam
to Hyderabad)
falls under Industrial Category HT category - I or residual category HT category – II.
(ii)
Whether the
respondents have the power to re-classify the consumer into another category
subsequent to the release of supply under a category?
(iii)
Whether the
respondents are entitled to re-classify the services (after release of supply)
with a retrospective date and issue back billing demand.
10. These issues were thoroughly dealt in
paras 12 to 14 of the order of this Ombudsman in Appeal No.16 of 2006 of this
appellant. The relevant paras are appended as Annexure to this order. The
various decisions of the Hon’ble Supreme Court and also a judgment of Hon’ble
High court of Gujarat cited by appellant in support of its contentions on the
classification, power of re-classification etc. have also been examined and
discussed in the said order of this Ombudsman.
The
order dated 04-08-2006 of the Chief Engineer, PWD, Maharastra Govt., cited by
the appellant has no relevance to the matter in this appeal. The Electricity
duty is leviable as per the provisions of the Electricity Duty Act of the
respective State Governments. This is more a Tax Law than an Electricity Law.
The
duty need not necessarily follow a category or a class. For example the
Electricity Duty is levied uniformly for all categories of consumers in some
states including A.P. It does not mean
that all consumers should be treated as a same class for the purpose of tariff
for the electricity consumed also. Hence
there is no merit in the contention of the appellant on this basis.
In
view of the above and in accordance with the discussion contained in para 12 to
14 of the order dated 14-12-2006 of this Ombudsman in Appeal No.16 of 2006 of
this appellant, I hold that the two services i.e. S.C.No 308 of Visakhapatnam
and S.C.No.388 of RJM are not entitled for classification under HT category I,
and they fall under the residual category i.e. HT category – II and the
respondents are entitled to re-classify them under the said HT category– II
prospectively as per the notices issued on 25-05-2006 and 17-09-2005 in respect of S.C.No.308
of Visakhapatnam and S.C.No.388 of RJM respectively.
The
only issue to be decided in the light of discussion made therein is whether the
respondents have complied with the principles of natural justice in the process
of re-trospective billing. This aspect is examined here under.
Retrospective billing
11. HT
S.C.No.308, visakhapatnam:
In this case the SE/Operation/Visakhapatnam issued a
notice on 25-05-2005 demanding the
appellant to pay Rs.3.66 crores being shortfall amount towards the difference
between billing under HT category – II and HT category – I for the period from
24-06-1998 to April 2005. In the said notice it was also stated that the
SC.No.308 will be billed under HT category – II from May 2005 onwards. The said
notice has two specific contents:
(i)
The reason for
this demand of shortfall amount is given as that the service was released under
the HT category – II for pumping of petroleum products, but billed under HT
category – I from the date of release of supply.
(ii)
The demand was
made in exercise of the power delegated under clause 35 of the TCS
The enabling power appears to have been misquoted or
wrongly quoted by the respondent No.1 in this notice. The clause 35 enables
revision of bills pursuant to wrong classification and not pursuant to a wrong
billing as such. The respondents have also stated in the counter that this is
not a case of wrong billing. The notice dated 25-05-2005 corroborates with this
view of the respondents. But they are not entitled to invoke the power
available under clause 35 of TCS for revising bills on this account
However the copies of documents furnished in the
letter dated 08-11-2006 of the
respondent No.1 reveals the following:
(a) The applicable tariff is originally typed as category
– II, but corrected as category – I by hand in the Test report dated 24-06-1998.
(b) The Test Report dated 27-10-1999 contains the
applicable Tariff typed as HT category –II
Thus the contention of the respondents that this is a
case of wrong billing only and not a wrong categorisation does not appear to be
correct in view of the evidence available from the HT Test Report dated
24-06-1998. The billing might have been done under HT category – I based on
such correction in the Test Report taken at the time of release of supply
on 24-06-1998. Further it was
also stated in the counter that at the time of deration from 2500KVA to 1800KVA
on 11-12-2004 it was mentioned at category - I.
In
view of the above the notice issued by the respondent No.1 on 25-05-2005 to the extent of billing under
HT category – II from the month of May 2005 is in order considering the
discussion made in paras 12 to 14 of the order dated 14-12-2006 of this
Ombudsman in Appeal No.16 of this appellant.
However
the demand made in the said notice dated 25-05-2005 for payment of about
Rs.3.66 crores towards short fall (back billing) amount towards differences
between the billing under HT category – II and HT category – I for the period
from 24-06-1998 to April 2005 is not tenable as no show cause notice was issued
providing opportunity to file objections if any along with hearing if required,
as stated in para 14.4 of the said order dated 14-12-2006. Hence the said notice is liable to be set
aside insofar as it relates to the retrospective billing for the period from
24-06-1998 to April, 2005. For the same
reasons, the above order dated 02-06-2006 of the learned Forum of EPDCL in C.G.
No.16 of 2004, insofar as it pertains to the demand of the respondents for
short billed amount is liable to be set aside.
12. HT service No.388 Rajahumundry.
The facts relating to service
indicate this as a clear case of reclassification pursuant to
a wrong classification. The discussion in para 12 of the order dated 14-12-2006
of this Ombudsman in Appeal No.16 of 2006 squarely applies to this service in
so far as “classification” and “power of reclassification” are concerned.
Regarding
retrospective re-classification and back billing, a show cause notice was
issued by the ADE/Operation/Rural/RJM on 17-09-2005 inviting objections if any
for the assessment of Rs. 1.78 crores towards retrospective billing from
March 1999 upto August 2005 at HT category – II rates instead of HT category –
I rates. The appellant was advised in the said notice to make representation if
any before SE/Operation/RJM. The appellant objected for the notice in his
representation dated 26-09-2005 and sought continuation under HT category –
I. There is no material on record to
show that this representation was disposed off with a reasoned order by the
SE/Operation/RJM.
This Ombudsman has set aside the
demand notice for retrospective billing in appeal No. 16 and also in respect of
HT S.C.No.308 of Visakhapatnam
in this appeal, as the principles of natural justice have not been followed. In
this case the process of retrospective revision of bills was initiated on a
legally tenable procedure by issue of an Assessment notice seeking objection if
any from the appellant and advising them to make representation to the
appropriate authority (SE/O/RJM). As the
process has not yet been completed, it is considered not necessary to interfere
in this process by giving an award at this stage. The Ombudsman considers it just and
reasonable to allow the competent authority i.e. SE/Operation/RJM to finalize
his proceedings on the representation made by the consumer pursuant to the
notice dated 17-09-2005, duly giving them another opportunity for filing fresh
representation if so desired by the consumer and also afford an opportunity of
hearing and pronounce his decision on such presentation of the consumer with a
speaking order. Till such time the SE/Operation/RJM shall not enforce the
notice dated 17-09-2005 of ADE/Operation/Rural/RJM, notwithstanding the order
dated 03-06-2006 of the learned Forum of APEPDCL, Visakhapatnam in C.G.No. 40/2006 which, in so
far as it concerns with the re-trospective billing demand, stands set aside.
13. Concluding the above discussion, I
decide the following award in this appeal.
HT S.C.No.308 Visakhapatnam Circle:
(i)
The re-classification and billing of the HT
service No. 308, Visakhapatnam
under HT category – II with effect from the billing month of May 2005 is in
order and is upheld.
(ii)
The Demand notice dated 25-05-2005 of the
SE/Operation/Visakhapatnam in so far as it relates to the payment of Rs. 3,66,34,747 is set aside.
HT S.C.No.388 Rajahmundry Circle:
(iii)
The re-classification of the HT service
No.388 Rajahumundry under HT category – II with effect from the billing month
of September 2005 is in order and is upheld.
(iv)
The assessment notice dated 17-09-2005
issued by the ADE/Operation/Rural/RJM for the back billing amount of
Rs.1,78,45,850 payable for the period from March 1999 to August 2005 shall not
be enforced till the SE/Operation/RJM issues orders as mentioned in para 12
above in accordance with law.
Orders of
the learned Forum of EPDCL:
(v)
The order dated 02-06-2006 in
C.G.No.16/2006 and the order dated 03-06-2006 in C.G.No.40/2006, of the learned
Forum of EPDCL, Visakhapatnam insofar as they are inconsistent with the award
under item (ii) and (iv) above, are set aside.
Thus the appeal is partly allowed as
above.
This
Order is signed by me on the 18th day of December 2006
VIDYUT OMBUDSMAN
ANNEXURE
(Paras 12 to 14 of Order
dated 14-12-2006
in Appeal.No.16 / 2006)
12. I will now deal with the above issues
considering all the contentions raised by the appellant as well as the
respondents
Classification:
12.1 Pumping activity an integral part of
Industrial activity of HPCL.
This is the crucial aspect in all the three (3)
appeals, which requires to be examined carefully. The relevant portion of the
description of HT Industrial category (i.e. HT category – I) is extracted here
under:
“This Tariff is applicable for supply to all HT
Industrial consumers. Industrial purpose shall mean manufacturing, processing
and/or preserving goods for sale, but shall not ………………….“
The above description does not cover the activity of
transport of goods through pumping (over long distances) and storing them
before sale. Thus it requires a reasonable interpretation and harmonious
construction of the relevant provisions. It may be of some help to examine the
existing classification of consumer categories from the viewpoint of any
activity of pumping being covered in any of the categories. The following questions can be framed for
this limited purpose.
(i) Whether
pumping of any fluid in any form is covered in any of the categories covered in
the Tariff Order issued by the APERC.
(ii)
Whether
there is any specific consumer or class of consumers who have composite
activities and of the same consumer has different activities whether such
different activities are classified under different categories?
Some
relevant provisions are given here under:
12.2 Pumping of water:
a)
Pumping of water-by-water works of
Municipalities with HT supply is classified under Industrial category (HT
category – I).
b)
Protected water supply schemes of all Local
bodies with Low Tension (LT) supply are classified under LT category VI (B).
c)
Pumping of water by Railways or Industries
as a subsidiary function is classified as Industrial activity (LT category –
III).
d)
Sewerage pumping by
Govt/Local bodies is
also classified as Industrial activity (LT category – III).
It appears from the above scheme of
classification that the electricity used for supply of protected water to the
public is given preference by classifying under Industrial category. Obviously the oil pumping networks are not
conceived in the course evolution of the classification of consumer categories
over the years in AP. But going by the provisions discussed above, it appears
that the pumping activities directly meant for civil amenities are sought to be
charged with lesser tariff. Pumping of petroleum products over long distances
for marketing purpose and storage before sale, is not
comparable to water/sewerage pumping activity, when the purpose of usage of
electricity is the consideration for the classification.
12.3 Composite activities:
Regarding
the composite activity of some organizations there is one case in the existing
tariff classification. Though Railways own and operate/maintain both the
Railway stations as well as Traction Services, the Railway stations are identified
as Non-Domestic/Commercial premises (LT category – II), while Traction activity is given an exclusive
category (HT category - V).
Thus treatment of the distinct activities undertaken by same owner (Person) in
a different manner for the purpose of electricity tariff is already in place in
the existing tariff structure.
12.4 Now I will take-up the main
contention of the appellant that the movement of petroleum products is an
integrated activity of the Industrial process as normally understood or
construed. The tariff description merely contains three processes viz.
Manufacturing,
Processing and/or
Preserving
The point of sale is not relevant in
the above description, when once the manufacturing process is over, the arrangements for movement for marketing location
assume a different character and can be treated as distinct activity, more so,
when such transport is to cover long distances of hundreds of miles. Such
activity requires exclusive arrangements distinct and different from
manufacturing process. In other words, the manufacture or production of
petroleum products is not dependent on this activity, which is more relevant
for marketing than for production. Even assuming that such movement is an
integral part of operations of HPCL as a company, this segment which is
distinct and different from manufacturing process could attract different
treatment in the present structure of electricity consumer classification.
(Example: Railway Traction)
12.5 Having come to the above conclusion,
in respect of the activity of movement of petroleum products from refinery at
Visakhapatnam to the points of sale upto Hyderabad, on the basis of the scheme
of electricity consumer classification as it existed, it is necessary to study
the relevance of the decisions of the Hon’ble Supreme court, cited by the
appellant in support of their contentions.
The appellant has relied mainly
on certain judgments of the Hon’ble Supreme court to drive his point, that,
movement of petroleum products upto place of storage from where they are sold
is an integrated activity of the Industry. These are discussed hereunder:
(a). The
appellant cited the case of Chowgule & co Pvt. Ltd. Vs Union of India 1993
(67) E.L.T. 34(sc) to press its point that the Industrial activity extends to
the place of point of storage or sale. I have carefully studied the said
Judgment. In that case, the Hon’ble Supreme court appreciated the point that
“processing” is done in the mechanical ore handling plant at the end point at
Marmagoa port by blending together different quantities of ore resulting in a
product which would have different physical and chemical composition.
Accordingly the Hon’ble court upheld inclusion of equipment used upto the end
point, namely Marmagoa
Harbour in the certificate
of registration. In this case of HPCL, no such process takes place at the
storage/sale point. This case law is therefore of no help to the appellant.
(b). Another case law cited by the
appellant is the Judgment of the Hon’ble Supreme court in DUNLOP India Ltd Vs
Union of India-1983(13) E.L.T 156 6(S.C), This case is cited by the appellant to press the point that
the consumer cannot be assigned a residuary category (HT category-II) when he
is eligible for a specific category (HT category-I-Industrial). I have
carefully studied the judgment of Hon’ble Supreme court in this case. In that
case the Hon’ble court is satisfied with the voluminous evidence in favour of
V.P. Latex being a component of SBR, which is admittedly classified under Rubber
raw. Accordingly the Hon’ble court set aside the order of the Authority, which
classified it in a category other than Rubber. The Hon’ble court made the
following observation in this case:
“……..when
an article has, by all standards a reasonable claim to be classified under an
enumerated item in the Tariff schedule, it will be against the very principle
of classification to deny it the parentage and consign it to an orphanage of
residuary charge”
In this case of HPCL there is no
such parentage for classification of pumping activity concerned with marketing
of petroleum products as discussed herein above. Hence this case law is of no
help to the appellant.
(c). During the course of hearing on
10-11-2006, the Learned counsel for the appellant handed over a copy of the
Judgment dated 13-05-1992 of Supreme court in Indian Aluminum Co. Ltd. Vs
Kerala State Electricity Board, to press his point that the Distribution
Licensees themselves are customers of HPCL products and higher tariff for this
activity hits them also. In this case, considering the use of Aluminum (being
the main material used in the wires for transmission and distribution of
electricity) in State Electricity Board (consumer) and the problems of the
supplier (Aluminum Industry), the Hon’ble court made the following observation:
“It was
noted that high rate of tariff and consequential increase in the price of
Aluminum caused prejudice to the Boards because Boards were consumers of
Aluminum to a considerable extent. It appears to us it is only desirable that
interest of both the Boards and the Aluminum industry are to be reconciled with
prognatic approach and the central Govt, the concerned state Govts and the
Boards should try to evolve a more realistic policy by which the interests of
both, the Boards and Aluminum industry are safe guarded to the extent
practicable.”
The observation of the Hon’ble
Supreme Court deserves utmost consideration wherever relevant. It is for the parties herein to come together
and decide on this course in mutual interest. The proportion of the cost of
such item in the total costs would naturally drive them in this direction.
(d). In the rejoinder, the appellant
cited the judgment of Hon’ble Supreme court in the case of Oswal Agro Mills ltd
Vs Collector of Central Excise reputed in 1993 (66) E.L.T.37 S.C. to press the
point that the HPCL is producer of petroleum products and hence it should be
understood as an industry only. In this case, the Hon’ble Supreme court while
observing that there is neither intendment nor equity in a taxing statute, went
on to say that there is no case for interpretation or construction except where
the words of statute admit of two meanings. The relevant paras of the judgement
as provided in the rejoinder are extracted hereunder:
“The object of parliament has to
be gathered from the language used in the statue. Where the words of the statue
are plain and clear there is no room for applying any of the principles of
interpretation, which are merely presumption in cases of ambiguity in the statue.
The courts would interpret them as they stand. The object and purpose has to be
gathered from such words themselves. Words should not be regarded as being
surplus nor be rendered otiose. Strictly speaking there is no place in such
cases for interpretation construction except where the words of statue admit of
two meanings [para 3].
Interpretation of statute – Canons of: -
The task
of interpretation of the statue is not a mechanical one. It is more than mere
reading of mathematical formula. It is an attempt to discover the intention of
the legislature from the language used by it, keeping always in mind, that the
language is at best an imperfect instrument for the expression of actual human
thoughts. It is also idle to expect that the draftsman drafted it with divine
prescience and perfect and unequivocal clarity. Therefore, court would
endeavour to eschew literal construction if it produces manifest absurdity or
unjust result. When there is ambiguity in the word, statement and objects the
legislative history, the memorandum appended to Bill and the speech of the
mover of the Bill are relevant material to discover the intention of the
legislature. [AIR 1967 SC 643 (Constitution Bench) referred to] [Para
3,6]”.
In my humble opinion, the judgment
of Hon’ble Supreme court in the above case is not relevant to the case in
appeal as there is no ambiguity by way of two meanings in the description of
Industrial category in the existing Tariff classification. The pumping activity undertaken by HPCL for
movement of petroleum products over long distances across the state for
marketing purpose does not find place in the description of HT category – I and
hence falls in residual category as discussed in para (f) hereunder.
(e). Similarly the other case laws cited
by the appellant namely M.N. Dastur & Co. Ltd Vs. union of India decided by
Hon’ble Calcutta High court, and the Hon’ble Supreme court’s decisions in the
case of Takarranji and others etc, and in case of RSEB are of no help to the
appellant in this case where the activity of movement of products over long
distances can be identified as a distinct activity, different from production.
(f). In view of the aforesaid analysis, I
am of the definite view that a big project undertaken by a producer / manufacturer
for movement of goods for marketing purposes from one corner to the other
corner of a big state like AP, certainly assumes its own character of
“Transport” and not a “Manufacture” or “process” or “preservation” and hence it
deserves to be treated on par with transport activity. As Transport has no
separate classification (as in the case of Railway Traction), it has to fall in
the residual category i.e. HT category - II as per the consumer classification
specified in existing Tariff conditions.
Clarification
of erstwhile APSEB in 1998:
12.6 Now I will deal with the
clarification given by APSEB, in its Memo.No.CE(Comml)/ADE-2/Misc-Tariffs/D.No.511/98
dated 22-06-1998.
The sequence of
events in this Appeal (No. 16 of 2006) are as follows:
September
1996: Commencement of supply – under
HT category- II.
September
1999: Re-classified under HT-category
– I.
January
2005 : Again re-classified under HT-Category – II.
February 2005
: Retrospective
re-classification and back billing for arrears from September 1999 to
December-2004.
It may be seen from the above that
this HT service was billed under HT category – II at the time of release of
supply in 1996 and later converted into HT category - I from September 1999 to
December 2004, pursuant to a representation from the appellant.
I
do not agree that the clarification given by APSEB pertains to any of the
service connections of the appellant under VVSPL project in these appeals for
the following reasons:
(i)
This clarification appears to have been
issued on the basis of the activity of “preservation” rather than on the basis
of the activity of “pumping” for movement of petroleum products over long
distances for marketing purpose as in the case of VVSPL Project which was not
referred to in the said clarification.
(ii)
This is corroborated from the fact that a
common clarification was issued in respect of two oil companies i.e. both M/s.IOC and
M/s.HPCL in respect of their units at Kondapalli and Sanathnagar
respectively. It may be noted that M/s.HPCL’s connection at Sanathnagar is not covered in these appeals. Moreover the storage point under VVSPL
project at Hyderabad
is near Ghatkeshar and not at Sanathnagar.
Thus it is clear that the clarification given by the erstwhile APSEB is
not in respect of the activity of movement of petroleum products by pumping
overlong distances for marketing, the point in present appeals.
(iii)
The word “preservation” is commonly
understood as the activity of protecting any material from perishing / decay /
damage. The storage of oil in the Depots
may not come under the activity of “preservation” meant in the tariff
condition. Even if it covers storage
also, the storage is not an issue in these appeals as the power is used mainly
for pumping and movement of oil overlong distances.
Thus,
the clarification of erstwhile APSEB is of no help to the appellant in the
present case concerning the VVSPL project for movement of goods for marketing
purpose.
In view of the foregoing discussion,
I hold that the service connections availed by M/s.HPCL under the VVSPL project
are not entitled for classification under HT category – I (Industrial).
13 Power to re-classify:
Terms and
Conditions of Supply – Clause 35:
13.1 The next issue common for all the
appeals is about the power to re-classify and that too
with retrospective effect. The appellant strongly contends that the respondents
have no authority to re-classify the category once accepted. The condition 35 of Terms and Conditions of
Supply expressly provides for re-classification if it is subsequently observed
that the classification is not correct and also revise
the bills suitably even retrospectively.
During the hearing I have specifically sought the views of the learned
counsel for the appellant on the clause 35 of the Terms & Conditions of
Supply. The appellants have filed supplementary rejoinder on this aspect.
13.2 The appellant contends that the
Terms and Conditions of Supply of erstwhile APSEB u/s 49 of the Electricity
Supply Act 1948 have no legal sanctity or validity after the enactment of the
Electricity Act 2003. while citing various provisions of AP Electricity Reform
Act 1998 including section 56 of that Act, the appellant states that the Terms
and Conditions of Supply of APSEB is superseded in clear terms when the Reforms
Act of 1998 provided that, where 1998 Act makes specific provisions, section 49
of the Electricity (supply) Act of 1948 shall not apply in the state.
Accordingly the appellant asserts that condition 35 cannot and does not survive.
At one stage the appellant contended that the condition no 35 of the Terms and
Conditions of Supply did not survive after one year from the commencement of
the Electricity Act 2003 (i.e. beyond 2004) and eventually went on to assert
that the said condition No.35 died its natural death long before the
Electricity Act, 2003 came into force from 10-06-2003.
The essence of the written submissions of appellant respect of condition
35 of the Terms and Conditions of Supply can be summarized as follows:
(i)
The Terms and Condition of Supply notified
by the erstwhile APSEB and followed by APTRANSCO/DISCOMS did not survive beyond
one year from the commence of Electricity Act 2003, if
not prior to the said Act by virtue of this provisions of the Reform act 1998.
(ii)
Even if they survived, they have to be applied prospectively
but not retrospectively.
13.3 Before going into the merits of the
above contentions of the appellant, it will be convenient to construct the
relevant terms of the agreement and the, relevant provision of Terms and
Conditions of Supply which are extracted here under:
Clause of
2 of Agreement:
“Supply
of power: -
We the
above mentioned have requested the CPDC of AP. LTD to supply electricity at
specified voltage of supply as per tariffs for the purpose of Transportation,
storage and distribution of petroleum products and the Central Power
Distribution Company of Andhra Pradesh Ltd, agreed to afford such supply on the
terms and conditions notified by them from time to time under section 49 of the
Electricity (supply) Act, 1948 and those herein after mentioned”.
Clause 5
of Agreement:
“Obligation
to Comply with Requirement of Acts And Terms and Conditions of Supply: -
We further undertake to comply with all the requirements
of the Indian Electricity Act 1910, the Electricity (Supply) Act 1948, the
rules there Under provisions of the tariffs scale of Miscellaneous and General
charges and the terms and conditions of supply prescribed by the CPDC of AP.
Ltd from time to time and agree not to dispute the same”.
Clause 10
of Agreement:
“Supplier’s
right to vary the Terms of the agreement.
We agree
that the Company shall have the unilateral right to vary, from time to time,
tariffs, scale of general and miscellaneous charges and the terms and conditions
of supply under this agreement by special or general proceedings.
In
particular the company shall have the right to enhance the rates chargeable for
supply of electricity according to exigencies”.
Clause of
35 of Terms And Conditions Of Supply:
“Reclassification
of consumers and revision of bills: -
Where a consumer has been classified under a particular
category and is billed accordingly and it is subsequently observed that the
classification is not correct, the Board may after the classification and
suitably revise the bills if necessary even retrospectively”
It may be seen from the above
provisions of the agreement that the licensee is entitled to take recourse to
the Terms and Condition of Supply.
13.4 Coming to the issue whether they survived or
not after Reform Act of 1998, and the Electricity Act 2003, it is necessary to
trace the relevant events during the transition to the Reform regime, which are
abstracted hereunder:
31-01-1999: notification on commencement Reform Act issued
vide G.O.Ms.No.6 dated 27-01-1999 notified in A.P.Extraordinary Gazette
dated 31-01-1999.
30-01-1999: Provisional Licence granted by GOAP to
APTRANSCO for Transmission and Bulk Supply and for Distribution and retail
supply, vide G.O.Ms.No.11 dated 30-01-1999
01-02-1999: Reform Act came in force.
01-02-1999: Erstwhile APSEB restricted into two entities.
APGENCO and APTRANSCO vide G.O.Ms.No.9 dated 29-01-1999.