JSA secures 5-year electricity duty exemption for UltraTech Cement Limited’s captive coal mine

JSA successfully represented UltraTech Cement Limited (“UTCL”) before Hon’ble Madhya Pradesh High Court at Jabalpur in securing exemption from payment of Electricity Duty for 5 years for its captive coal mine.

To promote industrialization, the State of Madhya Pradesh granted a 5-year exemption to new High-Tension consumers, from payment of Electricity Duty if a new connection was taken on or before 03.03.2019 (cut-off date).

While UTCL completed all formalities (including laying and handing over the electricity supply line) before the cut-off date for securing a new connection, the line was charged by the distribution licensee and supply given to UTCL only after the cut-off date. The exemption was denied because of this delay in charging.

UTCL challenged this denial of exemption before the Energy Secretary, Govt. of Madhya Pradesh (being the appellate authority under the MP ED Act, 2012) on the ground that UTCL’s obligations were completed within the cut-off date and charging of line was not necessary to qualify as a ‘consumer’. However, no exemption was granted. UTCL then approached Hon’ble Madhya Pradesh High Court.

Hon’ble Madhya Pradesh High Court held that UTCL’s captive coal mine qualifies for the exemption since:

  • The line was handed over to the distribution licensee before deadline. There is no role thereafter to be played by UTCL.
  • As per MP ED Act read with the Electricity Act, 2003, UTCL had attained the status of a ‘consumer’ after its line was connected with the works of a licensee for purpose of receiving electricity.
  • The Notification applied to ‘new HT consumers’, and it did not stipulate that electricity supply ought to be started to qualify for exemption.

This Judgment clarifies that supply of electricity is not sine qua non to qualify as a ‘consumer’ under the ED Act read with Electricity Act. The decision of the HC could provide relief to several other entities who are dealing with delay on part of the licensee, due to which fiscal benefits are being denied.

Our Litigation Team Comprised Lead Partner – Abhishek Munot, Partner – Kunal Kaul and Senior Associate – Samikrith Rao Puskuri.