Industrial Benefit Scheme Extended By State Government Can't Be Withdrawn By Electricity Department On Basis Of Audit Objection: Patna High Court

The High Court reiterated so after finding that the subsidy granted to the petitioner by the State government in the form of Industrial Incentive policy was withdrawn simply based on an audit objection.

Single Bench of Justice G. Anupama Chakravarthy observed that “the Intensive Policy, which was being extended to the petitioner cannot be withdrawn based on the audit report”.

Facts of the case

The petitioner/ assessee, engaged in the business of manufacture & sale of iron rods, had taken electrical connection from the Bihar Electricity Board. In the year 2006, the State of Bihar came out with an incentive policy to accelerate the industrial growth, and the petitioner's Industrial Unit seeking the benefit under the Industrial Incentive Policy, approached the High Court. The petition was disposed of, by passing a direction to constitute a committee for grant of incentive to the petitioner. Resultantly, the petitioner filed an application before the Financial Controller of the Bihar State Electricity Board for refund of excess minimum monthly charges collected against KVA demand at the earliest, which was allowed with refund of Rs.92,30,806/- in the year 2011.

After lapse of four years of order passed by the Chief Engineer, while disallowing the benefit of Incentive Policy 2006, the petitioner was served with supplementary provisional electricity bill, based on an audit objection, suggesting that no industrial unit would be eligible for benefit of Industrial policy, in case of tampering/theft, which comes under unlawful activities. The petitioner protested the disallowance of the benefit already granted under Industrial Incentive Policy, 2006 as well as provisional electricity bill.

Observation of the High Court

The Bench referred to the decision of Shanta Mani Hand Made Paper Industries Vs. The State of Bihar & Ors [CWJC No. 2941 of 2010], where it was observed that “Raising a punitive bill is a stigma on the consumer and cannot be carried out in such mechanical manner on the basis of an audit objection which is no more than an opinion as expressed by an Auditor”.

The Bench also referred to the decision in case of Binay Kumar Singh Vs. State of Bihar [2011(1) PLJR 1064], wherein it was observed that once the consumer has exercised the option of voluntary declaration under Bihar Electric Supply Code, 2007, then it cannot be reopened by filing FIR by the Vigilance, in view of statutory bar under the Supply Code.

Further, in case of Hira Lal Hari Lal Bhagwati vs. CBI [(2003)5 SCC 257], it was reiterated that u/s 91 of KVSS, making a declaration is conclusive as to the matter stated therein and cannot be reopened for proceeding under any law for time being in force, except on the ground of false declaration by the declarant, added the Bench.

The Bench found that the petitioner's Industries had made an application for availing the benefit of Industrial Intensive Policy 2006 and for the benefit of AMG/MMG for the period of five years, which was rejected, forcing the petitioner to approach the High Court, which directed for formation of a committee to grant benefit of Intensive Policy.

However, even though the petitioner was refunded an amount, the benefit was withdrawn and provisional bill was raised based on the audit objection and opinion of Senior counsel of Patna High Court.

Since the petitioner has not committed theft of electricity or has not used the electricity for unauthorized purpose, the Bench observed that “Once the State Government has extended the benefit under the particular scheme, the same cannot be withdrawn by the Electricity Department basing on the audit report”.

The benefit was extended to the petitioner based on the High-Powered Committee report, including the members of Energy Department, and in the absence of any evidence of theft being committed by the petitioner, the benefit of Intensive Policy cannot be withdrawn, added the Bench.

Hence, the High Court allowed the application and quashed the notices & order for energy bill.

Case followed:

Shanta Mani Hand Made Paper Industries Vs. The State of Bihar & Ors [CWJC No. 2941 of 2010]

LL Citation: 2024 LiveLaw (Pat) 76

Counsel for Petitioner/ Assessee: Y.V. Giri and Raju Giri

Counsel for Respondent/ Revenue: Vinay Kirti Singh, Venkatesh Kirti, Akhileshwar Singh and Prabhat Kumar

Case Title: M/s Balmukund Concast Limited versus Bihar State Power holding Company Limited & ors

Case Number: Civil Writ Jurisdiction Case No.1878 of 2015

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