CHENNAI: The Ministry of Power cannot disconnect the power grid connectivity of Tangedco over non-payment of Rs 184 crore income tax arrears, which was long overdue, as it would cause an electricity crisis for the entire State, held the Madras High Court and directed the Central Electricity Regulatory Commission (CERC) to settle the dispute amicably.
Stating that the High Court cannot conduct a roving inquiry, since it requires adjudication of facts concerning the documents and evidence, a division bench of Justice SM Subramaniam and Justice K Rajasekar said since tax-related claims are the components of tariffs, it can be adjudicated by the CERC, and disposed of an appeal moved by Tangedco.
The NLC India Ltd, under the Union Ministry of Coal, raised an invoice under Praapti (Payment Ratification and Analysis in Power procurement for bringing Transparency in Invoicing of generators), claiming Rs 184 crore from Tangedco. It stated that it is entitled to claim the long-due unpaid tax on income from core activity as per the provisions of the Central Electricity Regulatory Commission (Terms and Conditions of Tariff) Regulations, 2004. Aggrieved by the invoice, the Tangedco moved a petition before the HC.
Senior counsel P Chidambaram submitted for the appellant that the invoice raised by NLC is unsustainable as it is a time-barred claim. Income tax disputes do not fall under section 79 of the Electricity Act, 2003. Hence, the CERC lacks jurisdiction to adjudicate the dispute.
Another senior counsel, Arvind P Datar for NLC, relied upon Central Electricity Regulatory Commission (Terms and Conditions of Tariff) Regulations, 2004 and submitted that tax on income from the core activity of the generating company (NLC), is to be computed as an expense and should be recoverable from beneficiaries; in this case the Tangedco.
Tangedco is liable to pay income tax on account of the pendency of disputes, delay occurred, and it cannot raise a ground relating to limitation, he added.