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Delhi High Court
Tata Power Delhi Distribution Limited vs Municipal Corporation Of Delhi & Anr on 13 May, 2025
Author: Sachin Datta
Bench: Sachin Datta
$~J
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Judgment pronounced on:13.05.2025
+ W.P.(C) 14299/2022, CM APPLs. 43654/2022, 43656/2022
TATA POWER DELHI DISTRIBUTION LIMITED .... Petitioner
Through: Mr. Sandeep Sethi, Sr. Adv. along
with Mr. Anupam Varma, Mr. Nikhil
Sharma and Ms. S. Akshata, Advs.
versus
MUNICIPAL CORPORATION OF DELHI & ANR. .... Respondents
Through: Mr. Sanjay Poddar, Sr. Adv. along
with Mr. Sidhanth Nath (SC for
MCD), Mr. Govind Kumar, Mr. R. R.
Panda, Mr. Saksham Kaushik, Mr.
Bhavishya Makhija and Mr. Shivam
Sharma, Advs. for R-1/MCD.
Mr. Sanjeev Mahajan and Mr. Pranjal
Tandon, Advs. for R-2.
CORAM:
HON'BLE MR. JUSTICE SACHIN DATTA
JUDGMENT
1. The present petition has been filed under Article 226 of the
Constitution of India seeking the following prayers –
“(a) Quash and set-aside:
(i) MCD’s communication dated 29.09.2022 bearing No.EE(E)
/MCD/Planning/2022-23/103 issued by the Assistant Engineer
(Electrical), Planning Division, MCD to Tata Power Delhi Distribution
Ltd.
(ii) Letter dated 20.09.2022 bearing No.EE/(E)/MCD /Planning/2022-
23/102 issued by the Assistant Engineer (Electrical), Planning
Division, MCD to Tata Power Delhi Distribution Ltd.
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(iii) Notice of Demand bearing No.EE(E)/MCD/Planning/2022-23/73
dated 31.08.2022 issued by the Assistant Engineer (Electrical),
Planning Division, MCD to TPDDL under Section 154 of the DMC Act
to the Tata Power Delhi Distribution Ltd.
(iv) Letter dated 10.08.2022 bearing no.EE(E) /MCD /Planning/2022-
23/65 issued by Assistant Engineer (Electrical), Planning Division,
MCD to Tata Power Delhi Distribution Ltd.
(b) Direct the MCD not to raise any Demand of Interest/LPSC collected by
the Petitioner on delayed payment of Electricity Tax by Petitioner’s
Consumers; and
(c) Pass any other orders or directions as this Hon’ble Court may deem fit
and proper in the facts and circumstances of the present case.”
2. The petitioner (Tata Power Delhi Distribution Limited) is an
electricity distribution licensee engaged in retail distribution of electricity to
consumers in North and North-Western regions of the National Capital
Territory of Delhi. The petitioner took over from the Delhi Vidyut Board in
2002 and has since been collecting charges from consumers for retail supply
of electricity.
3. By way of the impugned demand notice dated 31.08.2022 (hereinafter
‘the impugned demand notice’) issued by the Assistant Engineer (Electrical),
Planning Division, Municipal Corporation of Delhi [MCD / respondent
no.1] under Section 154 of the Delhi Municipal Corporation Act, 1957
(hereinafter ‘the DMC Act‘), the respondent no.1 has raised a demand for
recovery of Rs. 15.06 crores towards the Late Payment Surcharge
(hereinafter ‘LPSC’) levied by the petitioner on the outstanding arrears of
electricity tax collected by the petitioner from retail consumers of electricity
in the period between 01.07.2002 and 31.03.2022. The said impugned
demand notice reads as under –
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Digitally Signed By:ROHIT
KUMAR PATEL
Signing Date:18.05.2025
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“MUNCIPAL CORPORATION OF DELHI
OFFICE OF THE ASSISTANT ENGINEER (ELECTRICAL)
ROOM NO.30, 1ST FLOOR, AMBEDKAR STADIUM
NEW DELHI 110002No.EE(E)/MCD/Planning/2022-23/73 Date: 31.08.2022
NOTICE OF DEMAND
Chief Executive Officer,
TATA Power Delhi Distribution Ltd.,
NDPL House, Hudson Lines Kingsway Camp,
New Delhi-110009.
Notice of Demand under Section 154 of DMC Act-1957
Please take notice that the Commissioner demands from TATA Power
Delhi Distribution Limited, the sum of Rs.15,06,00,000 (Fifteen Crores Six
Lakhs only) due from TATA Power Delhi Distribution Limited on account
of Late Payment Surcharge on electricity tax recovered by it, from the
consumers of its licensed area (Copy of letter dated 10.08.2022 enclosed),
for the period July 2002 to March 2022, commencing on the 1st day of July
2002 and ending on 31st day of March 2022, and that if, within thirty days
from the service of this notice, the said sum is not paid to the
Commissioner at 9th Floor, SPM Civic Centre, New Delhi or sufficient
cause for non-payment is not shown to the satisfaction of the
Commissioner a warrant of distress or attachment will be issued for the
recovery of the same with costs.
Dated this 31st day of August, 2022.
-sd-
Assistant Engineer (Electrical)
Planning Division MCD,
Municipal Corporation of Delhi,
Email [email protected]”
4. In the present case, it is not disputed that –
(i) Electricity tax is levied on retail consumers of electricity in Delhi
under Section 113(2)(d) of the DMC Act.
(ii) The task of collection of electricity tax from retail consumers is
entrusted to the petitioner / distribution licensee by the Municipal
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KUMAR PATEL
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Corporation of Delhi in terms of the Delhi Municipal Corporation
(Assessment and Collection of Tax on the Consumption, Sale or
Supply of Electricity) Bye-Laws, 1962.
(iii) The amount collected as electricity tax by the petitioner from retail
consumers in terms of the Delhi Municipal Corporation
(Assessment and Collection of Tax on the Consumption, Sale or
Supply of Electricity) Bye-Laws, 1962 is required to be passed on
to the MCD/respondent no.1.
(iv) In addition to collection of electricity tax and the charges for
supply of electricity to retail consumers, the petitioner also collects
a ‘Late Payment Surcharge’ (LPSC) on account of delayed
payment of the bill/s. The amount of LPSC charged in the bill/s
also includes LPSC on the electricity tax component as well.
5. By way of the impugned demand notice, the respondent no.1 has
sought to recover the aforesaid ‘LPSC on the electricity tax’ which has been
collected by the petitioner from retail consumers.
6. In the aforesaid conspectus, the question that falls for the
consideration of this Court is whether the ‘LPSC on electricity tax’ is
required to be refunded to the MCD (along with the principal amount of
electricity tax collected on behalf of the MCD) or whether it is permissible
for the petitioner to retain the same.
SUBMISSIONS ON BEHALF OF THE PETITIONER
7. Learned senior counsel for the petitioner has contended that the MCD
has no statutory right to seek refund of a part of the LPSC collected by the
petitioner from its consumers. It is submitted that LPSC, collected by the
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petitioner from its consumers is not a statutory levy under the Delhi
Municipal Corporation Act, 1957 (DMC Act) or under the Delhi Municipal
Corporation (Assessment and Collection of Tax on consumption, Sale or
Supply of Electricity) Bye-Laws, 1962 (DMC E-Tax Bye-Laws).
8. It is submitted that the MCD is only entitled to levy a “tax on the
consumption, sale or supply of electricity” in terms of Section 113(2)(d) of
the DMC Act, 1957 and in the absence of a specific provision for the levy of
interest / LPSC on the delayed payment of electricity tax, the MCD cannot
be permitted to raise a demand for LPSC on the electricity tax component,
by implication. The petitioner has also relied upon the judgment of the
Supreme Court in V.V.S. Sugars v. Government of A.P. & Ors. 1999 4 SCC
192 to contend that interest can be levied and charged on the delayed
payment of tax only if the statute that levies and charges the tax also
contains a substantive provision in this behalf.
9. It is submitted that the Delhi Municipal Corporation (Assessment and
Collection of Tax on the Consumption, Sale or Supply of Electricity) Bye-
Laws, 1962 also does not envisage any provision by which the MCD is
entitled to levy interest / LPSC on the electricity tax component.
10. It is further contended that till date, the MCD has not
provided/prescribed any rate for levy of interest / LPSC on the delayed
payment of electricity tax. Reliance in this regard is placed on the judgment
dated 04.04.2018 being W.P.(C) 1461/2013 titled Power Grid Corporation
of India vs. EDMC to contend that since the charging and computing
provisions together form an integrated code, a levy cannot be imposed in the
absence thereof. In the context of the present case, it is contended that since
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KUMAR PATEL
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the DMC (Assessment and Collection if Tax on the Consumption, Sale or
Supply of Electricity) Bye-Laws, 1962 do not specifically provide for levy
of interest / LPSC on delayed payment of electricity tax nor fixes any rate of
interest on delayed payment of electricity tax, the same cannot be levied
thereunder.
11. It is submitted that Section 155 of the DMC Act, 1957, which entitles
the MCD to levy a penalty not exceeding 20% in case of a default in
payment of a tax, is also not applicable to the present case inasmuch as the
same is in the nature of a one-time levy and is not in the nature of a
recurring levy.
12. Next, it has been contended that the collection of LPSC on the
electricity tax component recovered by the petitioner from its consumers,
cannot be construed to be “a mode of recovery of electricity dues” and as
such, the same does not fall within the purview of Bye-Law 7(6) of the
Delhi Municipal Corporation (Assessment and Collection of Tax on
consumption, Sale or Supply of Electricity) Bye-Laws, 1962. 1
13. It is submitted that the levy of LPSC by the petitioner is regulated
under the provisions of the Electricity Act, 2003 read with the Delhi
Electricity Regulatory Commission (Supply Code and Performance
Standards) Regulations, 2017 [hereinafter ‘the DERC Supply Code’] and the
tariff orders passed by the Delhi Electricity Regulatory Commission
(DERC). It is submitted that pursuant to Regulation 42, 46 and 48 of the
DERC Supply Code 2017, the consumer is required to deposit the entire
1
“7. Time and manner of collection and payment –
(6) If the electricity tax is not paid within the prescribed period, the licensee may take such further action
for the recovery of the same as it is empowered to take for the recovery of its own dues on account of
electricity charges.”
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amount of the bill raised by the petitioner and upon failure to do so within
the stipulated time period / due date, the petitioner would be entitled to
charge the LPSC on the said unpaid dues. It is submitted that the LPSC
levied by the petitioner is defined under Section 2(37) DERC Supply Code,
2017 2 as a monetary charge raised by the petitioner against its consumers for
delayed payment of electricity dues beyond the due date, in terms of the
Tariff Orders passed by the Hon’ble DERC. In the present case, the quantum
/ rate of LPSC has been determined by the DERC as 1.5% per month. The
levy of LPSC will be proportionate to the number of days for which the bill
amount continues to remain outstanding beyond the due date. The payments
received from the consumer shall be adjusted towards the dues in the order
of, first, the arrears of electricity charges and corresponding arrears of
electricity duty/tax followed by the current electricity charges and
corresponding current electricity duty/tax, then the miscellaneous charges
and finally the late payment surcharge.
14. As such, it is submitted that the LPSC collected by the petitioner is
construed as the petitioner’s non-tariff income and a part of the financing
cost incurred by the petitioner in the tariff collected from the consumers.
Further, the petitioner submits that it transfers the benefit of collecting LPSC
to its consumers by reducing the Aggregate Revenue Requirement (ARR). It
is submitted that the levy as well as apportionment of the LPSC levied and
collected by the petitioner is strictly in terms of the Regulations issued by
the DERC and therefore there arises no occasion for the MCD to raise a
claim as regards a portion of such LPSC. Furthermore, the petitioner has
2
“Late Payment Surcharge (LPSC)” means the monetary charge levied as per provisions of the Tariff
Orders, on a consumer, for the period of delay in payment of its bills beyond due date.
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neither been directed by the DERC to deposit the LPSC collected from
consumers on delayed payment of electricity tax nor is the petitioner
required to show bifurcation of the LPSC collected by it. Reliance in this
regard is placed on the judgment dated 30.10.2010 of the Appellate Tribunal
for Electricity in NDPL v. DERC in Appeal No. 153/2009.
15. Furthermore, the petitioner relies on the judgement of the Supreme
Court in K.C. Ninan v. Kerela State Electricity Board & Ors. [Civil Appeal
No. 2109-2110 of 2004] to contend that LPSC is not a mode of recovery of
electricity dues for the petitioner as there are other modes of recovery
provided under Section 56 Electricity Act read with the Regulation 46, 50
and 51 of the DERC Supply Code. On this basis, it is submitted that
collection of LPSC is in terms of the Electricity Act, 2003 and the DERC
Supply Code 2017 and the regulatory treatment of the said amount is in
terms of the DERC (Terms and Conditions for Determination of Tariff)
Regulations, 2017 as well as the tariff orders passed by the DERC. The
petitioner does not collect LPSC in the capacity of an agent of the MCD but
as an electricity distribution licensee in terms of its distribution license
issued by the DERC.
16. Lastly it is submitted that the demand raised by the respondent no.1
for LPSC on the electricity tax component is barred by limitation pursuant to
Section 455 DMC Act, 1957 inasmuch as the impugned demand relates to
LPSC levied on electricity tax for the past 20 years i.e. from 01.07.2022 to
31.03.2022 whereas the period of limitation provided under Section 455
DMC Act for raising a demand thereunder is only for 3 years.
17. It is further submitted that the MCD has failed to place on record any
document which shows that the MCD came to know of the LPSC being
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levied on the electricity tax component by the petitioner only on 10.08.2022,
as alleged by it. Reliance in this regard is placed on the judgment in Bharat
Singh v. State of Haryana (1988) 4 SCC 534.
18. In this regard, the petitioner further submits that the demand for the
LPSC on the electricity tax component is arbitrary and without any factual
basis inasmuch as pursuant to Section 153 of the DMC Act, the MCD is
required to raise a bill when any tax has become due, however, the MCD has
failed to raise any such bill in terms thereof or quantify the alleged amount
due on the basis of any rational justification. Instead, the MCD has
arbitrarily assessed the quantum of the amount due towards LPSC on the
electricity tax component as a pro-rata percentage of 4% of the total LPSC
collected by the petitioner.
SUBMISSIONS BY THE MCD/RESPONDENT NO.1
19. Mr. Sanjay Poddar, learned senior counsel for the respondent
no.1/MCD contends that MCD is entitled to raise a demand towards the
LPSC levied by the petitioner. It is pointed out that LPSC is levied, inter
alia, on the outstanding arrears of electricity tax.
20. It is submitted that the MCD is entitled to levy and collect electricity
tax on sale and supply of electricity under Section 113 of the DMC Act to
the extent of charging the rate of 5% as fixed vide an MCD Resolution dated
30.06.1992 pursuant to Section 150 of the DMC Act.
21. It is submitted that since it was not feasible for the MCD to collect
electricity tax from lakhs of consumers by presenting a bill under Section
153 of the DMC Act, the Delhi Municipal Corporation (Assessment and
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Collection of Tax on the Consumption, Sale or Supply of Electricity) Bye-
Laws 1962 were framed and pursuant to which, the power to collect the
same was delegated to the distribution licensees such as the petitioner.
22. It is contended that as per Bye-law 3(2) of the Delhi Municipal
Corporation (Assessment and Collection of Tax on Consumption, Sale or
Supply of Electricity) Bye-Laws, 1962, the respondent no.1/MCD has the
first charge on the electricity tax collected and the same is in the nature of a
debt due to the MCD. It is emphasized that the petitioner is an agent of the
respondent no.1, by operation of law, and this legal relationship of principal
and agent is still continuing.
23. It is submitted that the collection of LPSC is a step taken pursuant to
authorization conferred by Bye-law 7(6) of the DMC E-Tax Bye Laws, in
terms whereof, if the tax is not paid within the period fixed by the licensee,
the licensee is required to take such further action for recovery of the tax
dues as it is empowered to take, to recover its own dues on account of
electricity charges.
24. It is submitted that in terms of the Electricity Act, 2003 read with the
DERC Supply Code, 2017, the petitioner is entitled to undertake the
following actions –
(a) To charge LPSC as defined in the Regulations 2 (37), 42 and 46 of the
said Supply Code.
(b) Issue Notice, under section 56(1) of the said Act and Chapter 6 of the
DERC Supply Code, and disconnection of electricity supply thereafter.
25. It is submitted that the petitioner being the agent of the MCD has been
empowered to collect either LPSC and/or to disconnect the electricity supply
for non-payment of electricity tax. The respondent no.1 refutes the
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KUMAR PATEL
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submission that the petitioner is not empowered to collect LPSC on
electricity tax under the DMC Act 1957 or the Delhi Municipal Corporation
(Assessment and Collection of Tax on the Consumption, Sale or Supply of
Electricity) Bye Laws 1962 and that instead, it is empowered to collect
LPSC on electricity tax in terms of the Electricity Act 2003 read with the
DERC Supply Code 2017. In this regard, a three-fold submission is made
which is as under –
i. Firstly, it is submitted that the amount collected by the petitioner as
electricity tax as well as the LPSC on electricity tax belongs to the MCD
despite the same being collected by the petitioner. Upon receiving the
said monies, the petitioner is required to return the same to the MCD and
not hold it for its own use. It is contended that in terms of settled law, an
agent merely holds the money on behalf of the principal in trust and is
bound to return the same to the principal (MCD). The use of such
monies is also to be done only in terms of the authority and directions of
the principal on whose behalf such monies are collected.
ii. Secondly, it is submitted that the interpretation of Bye Law 7(6), as
propounded by the petitioner, if accepted, would render the said
provision nugatory and would militate against the settled proposition
that no word or provision of a statute should be considered as redundant
or superfluous. Furthermore, it is submitted that the aforesaid Bye Law
is applicable only where there is a delay in making payment by the
consumer and the petitioner has been unable to clarify as to what else
was required to be undertaken by the petitioner under the said provision
apart from collecting LPSC on electricity tax.
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iii. Thirdly, it is submitted that the petitioner’s contention is not only
dishonest but also contrary to the petitioner’s duty as an agent of the
MCD (principal) in terms of Section 218 of the Indian Contract Act.
26. It is submitted that the contention that the LPSC collected by the
petitioner has been adjusted as non-tariff income in the Aggregate Revenue
Requirement (ARR) of the petitioner is liable to be rejected for the
following reasons:
a. Admittedly the petitioner collected the said LPSC on electricity tax on
behalf of the MCD and has not separately accounted for the same till it was
detected on or around 10.8.2022.
b. Admittedly, this was also not disclosed to the DERC at any point of time
or at the time of including the same in the alleged Aggregate Revenue
Requirement (ARR).
c. Admittedly, this amount has been allegedly included by the Petitioner in
ARR without any directions/authority from the MCD.
27. It is submitted that on account of non-disclosure of the levy of LPSC
on electricity tax by the petitioner, the DERC has considered a consolidated
amount of LPSC in the tariff order after deducting the financing cost of
LPSC. Furthermore, the petitioner has wrongly factored LPSC as non-tariff
income in the ARR of the petitioner in the previous years to be adjustable in
the ARRs of subsequent years. The petitioner as an agent of the MCD was
not entitled to use or appropriate funds without the authority of the principal.
28. The respondent has also refuted that the demand of LPSC collected by
the petitioner on the electricity tax component on behalf of the MCD, is
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barred by limitation. Reliance in this regard is placed on Article 4 to the
Schedule of the Limitation Act, 1963.3
29. It is submitted that the impugned demand made by the MCD
(principal) against the petitioner (agent) for the funds collected by the
petitioner towards LPSC on electricity tax was made only after the MCD
came to know of such funds being collected in August, 2022. It is submitted
that LPSC was never demanded and refused prior to 10.08.2022.
Furthermore, the fact that a levy was being made by the petitioner on the
electricity tax was not disclosed specifically to any other agency and was in
fact suppressed by the petitioner from being detected. In the cases covered
by Article 4 to the Schedule of the Limitation Act, the limitation period
would start from the date on which the negligence or the misconduct of the
agent is discovered. It is submitted that in terms of Article 4 to the Schedule
of the Limitation Act, the knowledge of the “plaintiff” must be actual
knowledge of the MCD as to the collection and retention of the LPSC on
electricity tax by the petitioner, and as per the MCD, the date on which the
MCD got actual knowledge of such an amount being collected by the
petitioner is 10.08.2022. Reliance in this regard is placed on a catena of
judgments including K.N. Rao & Anr. v. Composite Securities Ltd. & Ors.
2022 SCC OnLine Delhi 292, Sankaranaraynana Ayyar v. Trichender
Dharampalipana SA Kthithara Bhajanaisabha through its Secretary,
Thomman Theresia v. Pothen Chako AIR 1957 Kerala 155, Kishori Lal
3
4. Other suits by principals against Three years When the neglect or misconduct
agents for neglect or misconduct. becomes known to the plaintiff.
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Makundi Lal Jauhari Mal & Ors. AIR 1927 All 436, Jaganji v. Bandan
AIR 1930 All 397, A.C. Mukherji v. Municipal Board of Benares and
Daulat Ram v. Bharat National Bank Ltd. (2) (1894) 1 Ch. 617, 638.
30. It is further submitted that even assuming that non-disclosure as
regards collection of LPSC on electricity tax was on account of a mistake on
the part of the petitioner, in such a case, the provision of Section 17 of
Limitation Act would apply and the limitation would start when the mistake
is discovered. In this regard reliance is placed on the judgment of the
Supreme Court in Assistant Engineer (D 1) Ajmer Vidyut Vitaran Ltd. &
Ors. Versus Rahumutullah Khan @ Rahamutuallah Khan [SLP (Civil)
No.5190/2019] which has been followed in Prem v. Uttar Haryana
VijliVitran Nigam Ltd. & Ors. 2021 SCC OnLine SC 870.
31. It is submitted that the petitioner after collecting the LPSC on
electricity tax from the consumers has been withholding the same from the
MCD. The petitioner has unjustly enriched itself at the cost of the MCD,
which is not permissible in law. Thus, the MCD is entitled to invoke the
special provisions of Section 154 of the DMC Act which has been enacted
for speedy recovery of government dues, without taking recourse to the
ordinary process of recovery proceedings, which can be undertaken only
when the MCD is unable to effect recovery by such special provisions.
SUBMISSIONS BY DERC/RESPONDENT NO.2
32. Learned counsel for the respondent no. 2/DERC made the following
submissions –
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i. It is submitted that pursuant to Section 61 of the Electricity Act,
2003, the DERC is conferred with the power to specify the terms and
conditions for determination of tariff. In terms of Section 86 of the
Electricity Act, 2003, the DERC is vested with the powers to inter
alia determine tariff for generation, supply, transmission, wheeling
of electricity, wholesale, bulk or retail sale within the State pursuant
to the process for determination of tariff as provided under Section
62 and 64 of the Electricity Act, 2003. Pursuant to Section 45 of the
Electricity Act, the price to be charged by the distribution licencee
for the supply of electricity by it in accordance with Section 43 of
the Electricity Act shall be as per the tariff which is fixed from time
to time.
ii. It is submitted that LPSC is defined under Regulation 2(37) of the
DERC Supply Code as a monetary charge as per provisions of the
tariff orders and under Regulation 42 of the DERC Supply Code,
recovery of arrears can be made along with an interest / LPSC.
Section 56 of the Electricity Act, 2003 provides for the
disconnection of electricity supply upon default of payment of
arrears of electricity charges and does not bear any mention of
electricity tax.
iii. It is submitted that the tariff orders as referred to in Regulation 2(37)
of the DERC Supply Code are also passed in context of electricity
tariff and do not relate to electricity tax, which is entirely within the
domain of the DMC Act.
iv. It is submitted that the DERC discharges its functions in terms of the
Electricity Act read with the DERC Supply Code and does not have
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the jurisdiction or the authority to deal with electricity tax which is
entirely regulated under the DMC Act.
v. It is submitted that the power of the distribution licensees to recover
electricity tax is derived from Section 113 of the DMC Act read with
the DMC E-Tax Bye Laws and the same is not derived from the
Electricity Act or the Regulations made thereunder. The distribution
licensee only acts as a collection agency of electricity tax on behalf
of the MCD and the levy, assessment and collection of electricity tax
would necessarily fall under the DMC Act. Accordingly, any
payment collected towards the late payment of electricity tax would
necessarily have to be dealt with under the DMC Act itself.
vi. It is submitted that LPSC levied on tariff as provided under the
electricity bill payable by the consumers cannot be equated with the
LPSC levied on electricity tax inasmuch as the former is entirely
covered under the Electricity Act read with the regulations made
thereunder whereas the latter is entirely covered under the DMC Act.
vii. It is submitted that the DERC has not dealt with the issue of
collection of LPSC charges on the electricity tax component as the
same was never submitted before the respondent no. 2 in such a
form.
REASONING & CONCLUSION
33. The first question that arises for consideration is whether Tata Power
Delhi Distribution Ltd. (petitioner) can retain with itself any amount
collected towards LPSC on electricity tax (whether collected in the past or
for the future) as ‘non-tariff income’ in terms of the Electricity Act, 2003
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read with the DERC Supply Code.
34. This issue has been amply clarified by the Delhi Electricity
Regulatory Commission (hereinafter ‘the DERC’) in its counter-affidavit
dated 20.09.2023 and its written submissions. In the said counter-affidavit,
filed on behalf of the DERC, it has been categorically stated as under:
“7. That while the respondent no.2 discharges the function in terms of
Electricity Act, 2003, it however does not deal or regulate the levy of
Electricity Tax as the same fall in the domain of the Municipal Authorities.
As such Electricity Tax levy and collection is not under the purview of the
respondent no.2.
8. That since the Respondent No.2 does not deal with the or regulate the
levy of Electricity Tax as such none of regulations framed under Section
181 of the 2003 Act deal with the Electricity Tax or late payment
surcharge upon the same. It is for this reason that DERC Supply Code,
Business Regulation issued from time to time or Tariff order does not deal
with late Payment surcharge on Municipal Tax.
9. That in term of Section 45 of Electricity Act, 2003 price to be charged
by the distribution licence for the supply of electricity by him in pursuance
to Section 43 shall be in accordance with such tariff fixed from time to
time.
10. That in pursuance to the same, the Respondent No.2 has issued DERC
Supply Code, 2017. Regulation 2(3) of the said Code deals with Late
Payment Surcharge (LPSC). The same reads as under:
Late Payment Surcharge (LPSC) means the monetary charge levied as
per provisions of the Tariff orders/ on a consumer, for the period of delay
in payment of its bills beyond due date
11. That the said late Payment Surcharge is towards delay in payment of
Tariff which the consumer is required to pay as per the Electricity Bill
raised by the Transmission Company. Since the Respondent No.2 does not
have the jurisdiction to fix or regulate Electricity Tax as such there is no
provision for levy of LPSC on delayed payment of Electricity Tax in the
DERC Supply Code or any other regulation of DERC.
12. That in respect of the Electricity Tax, the Petitioner, as a distribution
licencee, acts only as a collection agency for the MCD and is required to
collect the Electricity Tax as per the provision of DMC E-Tax Bye-laws.
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KUMAR PATEL
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The role of the petitioner in respect of Electricity Tax is limited to that
only.
13. That the Respondent No.2 has not dealt with the issue of Late Payment
Surcharge upon Electricity Tax collected by Petitioner as the same were
never submitted by the petitioner in the said form. The petitioner had been
submitting the LPSC charges upon the Electricity Bill and not furnishing
LPSC charges upon the Electricity Tax and therefore LPSC charges were
approved on the premise that the same were in term of Regulation 2 (37)
of DERC Supply Code.
14. That since the levy, assessment and collection of Electricity Tax falls
under provision of DMC Act as such any payment collected towards late
payment of the same would also have to be dealt with in accordance with
Delhi Municipal Act, 1957.
15. That the contention of the Petitioner that Respondent No.2 has not
directed the Petitioner to deposit the LPSC collected on delayed payment
of E-Tax from consumer with the MCD is not a correct statement of fact. It
is submitted that the Petitioner has never submitted the LPSC collected on
Municipal Tax as a separate item and therefore there was no occasion for
the Respondent No.2 to deal with the same and consequently no directions
have been passed either to retain or to deposit the same with MCD.
As submitted hereinabove, the respondent no.2 has no jurisdiction to fix
or regulate the Electricity Tax and therefore would have no jurisdiction
to deal with late payment surcharge on the same and the same have to be
dealt in accordance with Delhi Municipal Act, 1957.
16. That Respondent No.2 submits that LPSC levied and collected on tariff
provided in Electricity Bill cannot be equated with the LPSC levied on
Electricity Tax as the first one is covered under the Electricity Act,2003
and Regulation framed thereunder and Electricity Tax is covered under
Delhi Municipal Act,1957.
17. That in view the above, the respondent no.2 submits that reliance of
the petitioner upon the Tariff Code, 2017, Regulation or Tariff Order is of
no consequence as the same does not deal with levy, assessment and
collection of Municipal Tax or collection of late payment surcharge on
Municipal Tax.”
35. Thus, it has been clearly brought out that the DERC has not
sanctioned or permitted the petitioner to collect ‘LPSC on electricity tax’
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from retail consumers inasmuch as the same is beyond the remit of the
DERC. The petitioner has only been authorised to collect LPSC on the
delayed payment of bills raised by it for supply of electricity to retail
consumers. The same is evident from a perusal of the DERC Supply Code,
2017 which has been framed pursuant to Section 50 of the Electricity Act,
2003. Regulation 46(2) of the DERC Supply Code specifically provides that
the petitioner (distribution licensee) is entitled to charge LPSC on the
outstanding amount of the bill in terms of “the rates notified by the
Commission in applicable tariff order”.4
36. Since the DERC is not concerned with and has no jurisdiction over
the electricity tax collected by the petitioner, there is no question of any
tariff order issued by the DERC being construed as contemplating or
authorising recovery / collection of ‘LPSC on electricity tax’.
37. There is no manner of doubt that the collection of ‘LPSC on
electricity tax’ is not authorized under the DERC Supply Code, 2017 or
under any tariff order, issued by the DERC.
38. The petitioner has also not been authorized to retain ‘LPSC on
electricity tax’ by any other law.
39. As such, under any circumstance, there can be no question of the
petitioner being allowed to retain the ‘LPSC on electricity tax’. There is no
question of the petitioner treating such amount/s as part of its ‘non-tariff
income’ for the purpose of working out its Aggregate Revenue Requirement
(ARR) for any tariff year. If the same has been done by the petitioner in any
4
46. Payment of bills and charges for delayed payments:-
….
(2) Subject to Regulation 45 (5), if the consumer fails to remit the bill amount on or before the due date, the
Licensee shall be entitled to recover Late Payment Surcharge on the outstanding amount of the bill at the
rates notified by the Commission in applicable Tariff Order.
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KUMAR PATEL
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previous tariff year, the same is erroneous. It is incumbent on the DERC to
take note of the same and pass appropriate order/s.
40. Once it is held that it is impermissible for the petitioner to retain any
part of the ‘LPSC on electricity tax’ with itself, the next question that arises
for consideration is whether the same is required to be passed on / refunded
to the MCD (for past and future period), or whether the same be refunded to
the consumers from whom it was collected (since, in any event, the
petitioner cannot be allowed to retain the same).
41. In this regard, it is necessary, at the outset, to consider the legislative
scheme pursuant to which the petitioner has been authorised to levy and
collect electricity tax from consumers on behalf of the MCD.
42. Under Section 113 of the DMC Act, 1957, the MCD is entitled to
impose certain taxes which are set out therein. The said provision reads as
under:-
“113. Taxes to be imposed by the Corporation under this Act.–(1) The
Corporation shall, for the purposes of this Act, levy the following taxes,
namely:–
(a) property taxes;
(b) a tax on vehicles and animals;
(c) a theatre tax;
(d) [* * *]
(e) a duty on the transfer of property; and
220(f) a tax on building applications payable along with the application
for sanction of the building plan.
(2) In addition to the taxes specified in sub-section (1), the Corporation
may, for the purposes of this Act, levy any of the following taxes,
namely:–
(a) an education cess;
(b) a local rate on land revenues;
(c) a tax on professions, trades, callings and employments;
(d) a tax on the consumption, 221[sale or supply] of electricity;
(e) a betterment tax on the increase in urban land values caused by the
execution of any development or improvement work;
(f) a tax on boats; and
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KUMAR PATEL
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(g) tolls.
(3) The taxes specified in sub-section (1) and sub-section (2) shall be
levied, assessed and collected in accordance with the provisions of this
Act and the bye-laws made thereunder.”
43. In terms of Section 113(3), levy, collection and assessment of
electricity tax is to be carried out in terms of the provisions of DMC Act and
the Bye laws made thereunder.
44. For the purpose of assessment and collection of tax on the
consumption, sale or supply of electricity, the MCD has framed Delhi
Municipal Corporation (Assessment and Collection of Tax on the
Consumption, Sale or Supply of Electricity) Bye-Laws, 1962 (hereinafter
“DMC E-Tax Bye-Laws”). The purport of the same is to regulate the
assessment and collection of electricity tax.
45. By virtue of Bye-Law 3(1)(b) 5 of the DMC E-Tax Bye Laws, the
distribution licensee (petitioner) is authorised to collect electricity tax on
behalf of the MCD. This provision is the only basis for the distribution
licensee (petitioner) to collect electricity tax from the consumers.
46. Bye-Law 3(2) of the DMC E-Tax Bye-Laws 6 provides that the MCD
electricity tax shall be the first charge on the amount recoverable by the
distribution licensee (petitioner) for the electricity supplied by it to the retail
consumers and the same shall be a debt due by the distribution licensee
5
3.Collection of Electricity Tax (1) Where within the limits of the Corporation:
(b) electricity is supplied by any licensee other than the Delhi Electricity supply undertaking, the
electricitytax shall be collected by that licensee on behalf of the Corporation.
6
3. Collection of electricity Tax. (2) The licensee who collects any tax under sub-clause (b) of Clause (1)
shall pay the tax so collected to the General Manager (Electricity) within such time and in such manner as
prescribed in these by-laws. The tax so paid shall be a first charge on the amount recoverable by the
licensee for the electricity supplied by him an shall be a debt due by him to the Corporation.
Provided that the license shall not be liable to pay the tax in respect of any electricity supplied by him for
which he has been proved to be unable to recover his own charges.
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Digitally Signed By:ROHIT
KUMAR PATEL
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(petitioner) to the MCD.
47. Bye-Law 7(1) of the DMC E-Tax Bye-Laws 7 provides that the
distribution licensee (petitioner) shall recover the electricity tax along with
its own charges for supply of electricity as a separate item in the bill of
charges for electricity supplied to the retail consumers. Additionally, the
distribution licensee (petitioner) shall pay to the MCD the electricity tax so
collected by it, within a period of 40 days from the expiry of the month for
which it the electricity tax was levied (prescribed period).
48. Bye-Law 7(6) of the DMC E-Tax Bye Laws 8 contemplates that if the
electricity tax is not paid within the prescribed period as stated in terms of
Bye Law 7(1), the distribution licensee (petitioner) may take such further
action for recovery of the same as it is empowered to take for recovery of its
own dues on account of electricity charges.
49. The central issue now is whether levy of ‘LPSC on electricity tax’ can
be construed to be “an action for recovery of its own dues on account of
electricity charges” in terms of Bye-Law 7(6) of the DMC E-Tax Bye Laws.
50. In this regard, it is pertinent to consider the statutory scheme under
7
7. Time and manner of collection and payment. – (1) A licensee operating within the limits of the
Corporation shall include the electricity tax leviable under the Act as a separate item the bill of charges for
the electricity supplied by him and shall recover the same from the consumer along with his won charges
for the supply of such electricity. The consumer shall pay the tax payable by him to the licensee within the
period fixed by the licensee for recovery of his own charges. A licensee other than the Delhi Electric
Supply Undertaking shall pay the tax so collected within 40 days after the expiry of the month for which it
is levied to the General Manager (Electricity).
Provided that, without prejudice to any other obligations imposed upon him by these bye-laws, the licensee
may himself pay the tax instead of recovering the same from the consumer.
8
7. Time and manner of collection and payment –
…
(6) If the electricity tax is not paid within the prescribed period, the licensee may take such further action
for the recovery of the same as it is empowered to take for the recovery of its own dues on account of
electricity charges.
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Digitally Signed By:ROHIT
KUMAR PATEL
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the Electricity Act. The power to recover charges and expenditure incurred
by the distribution licensee for supply of electricity is provided under
Section 45 and 46 of the Electricity Act, 2003 respectively. 9 Under Section
50 of the Electricity Act, 10 it is provided that an electricity supply code shall
be framed to govern, inter alia, the recovery of electricity charges by the
distribution licensee.
51. To this effect, the DERC Supply Code has been framed by the Delhi
Electricity Regulatory Commission (DERC – State Commission / respondent
no.2) under Section 181 read with 46, 50 and 57 of the Electricity Act. The
framework of the DERC Supply Code is as follows –
(i) Under Regulation 38 of the DERC Supply Code, the licensee is
entitled to raise bills upon the consumer for the consumption of
9
45. Power to recover charges. —
(1) Subject to the provisions of this section, the prices to be charged by a distribution licensee for the
supply of electricity by him in pursuance of section 43 shall be in accordance with such tariffs fixed from
time to time and conditions of his licence.
(2) The charges for electricity supplied by a distribution licensee shall be–
(a) fixed in accordance with the methods and the principles as may be specified by the concerned State
Commission;
(b) published in such manner so as to give adequate publicity for such charges and prices.
(3) The charges for electricity supplied by a distribution licensee may include–
(a) a fixed charge in addition to the charge for the actual electricity supplied;
(b) a rent or other charges in respect of any electric meter or electrical plant provided by the distribution
licensee.
(4) Subject to the provisions of section 62, in fixing charges under this section a distribution licensee shall
not show undue preference to any person or class of persons or discrimination against any person or class
of persons.
(5) The charges fixed by the distribution licensee shall be in accordance with the provisions of this Act and
the regulations made in this behalf by the concerned State Commission.
46. Power to recover expenditure. — The State Commission may, by regulations, authorise a distribution
licensee to charge from a person requiring a supply of electricity in pursuance of section 43 any expenses
reasonably incurred in providing any electric line or electrical plant used for the purpose of giving that
supply.
10
50. The Electricity supply code.–The State Commission shall specify an electricity supply code to
provide for recovery of electricity charges, intervals for billing of electricity charges, disconnection of
supply of electricity for non-payment thereof, restoration of supply of electricity, measures for preventing
tampering, distress or damage to electrical plant or electrical line or meter, entry of distribution licensee or
any person acting on his behalf for disconnecting supply and removing the meter, entry for replacing,
altering or maintaining electric lines or electrical plants or meter and such other matters.
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Digitally Signed By:ROHIT
KUMAR PATEL
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electricity for every billing cycle based on actual meter readings.
(ii) Under Regulation 46(1) of the DERC Supply Code, the full
amount of the outstanding bill is required to be paid by the
consumer on or before the due date.
(iii) If the bill remains outstanding even after the due date has passed,
pursuant to Regulation 46(2), the licensee is entitled to recover
arrears from the consumer by charging a ‘late payment
surcharge’ 11 on the outstanding amount of the bill as per the rates
notified in the applicable tariff orders issued by the DERC.
Regulation 46(2) of the DERC Supply Code reads as under-
“46. Payment of bills and charges for delayed payments:-
(1) The consumer shall pay to the Licensee the full amount of the
bill on or before the due date indicated therein, for which the
Licensee shall issue a receipt.
(2) Subject to Regulation 45(5), if the consumer fails to remit the
bill amount on or before the due date, the Licensee shall be entitled
to recover Late Payment Surcharge on the outstanding amount of
the bill at the rates notified by the Commission in applicable Tariff
Order.
(3) The Late Payment Surcharge shall be charged proportional
to the number of days of delay in receiving payment from consumers
by the distribution Licensee. Any adjustment on account of Late
Payment Surcharge shall be done in the next bill.
(4) If the consumer fails to remit the amount within due date, the
Licensee may disconnect the supply in accordance with the
procedure specified in the Regulations.
Provided that the licensee may permit the consumer to remit the
11
Regulation 2 (37) –
Late Payment Surcharge (LPSC)” means the monetary charge levied as per provisions of
the Tariff Orders, on a consumer, for the period of delay in payment of its bills beyond
due date;
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KUMAR PATEL
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amount of bill with the Late Payment Surcharge as specified in the
sub-regulation (2) above within an extended period of thirty days
from the due date specified in the bill.”
(iv) If the arrears of the licensee remain outstanding even after levy of
LPSC, under Regulation 46(4) read with Regulation 42(4) of the
DERC Supply Code12 and Section 56(2) of the Electricity Act, the
licensee is entitled to disconnect the supply of electricity of the
consumer and initiate recovery proceedings against the said
defaulting consumer.
52. A perusal of the above statutory framework reveals that the
dispensation for levy of ‘late payment surcharge’ has been created with a
view to ensure “payment of bills and charges for delayed payments”, as is
evident from the very caption of Regulation 46 itself. In terms thereof, the
distribution licensee (petitioner) can effect recovery of its own dues towards
electricity charges in terms of the provisions of the Electricity Act, 2003
read with the DERC Supply Code by resorting to the following measures:-
(i) levy LPSC, i.e. a monetary charge for the delay in payment of a
12
42. Recovery of Arrears –
(4) Subject to Section 56 (2) of the Act, if the consumer fails to remit the amount of arrears with interest or
Late Payment Surcharge, as the case may be, by the due date indicated in the bill or in the demand notice,
the Licensee may disconnect the supply of electricity after giving notice and initiate proceedings for the
recovery of the arrears in accordance with the relevant legal provisions.
46. Payment of bills and charges for delayed payments –
…..
(4) If the consumer fails to remit the amount within due date, the Licensee may disconnect the supply in
accordance with the procedure specified in the Regulations. Provided that the licensee may permit the
consumer to remit the amount of the bill with Late Payment Surcharge as specified in the sub-regulation (2)
above within an extended period of thirty days from the due date specified in the bill.
56. Disconnection of supply in default of payment: –
….
(2) Notwithstanding anything contained in any other law for the time being in force, no sum due from any
consumer, under this section shall be recoverable after the period of two years from the date when such
sum became first due unless such sum has been shown continuously as recoverable as arrear of charges for
electricity supplied and the licensee shall not cut off the supply of the electricity.
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Digitally Signed By:ROHIT
KUMAR PATEL
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bill beyond the due date;
(ii) if the arrears remain outstanding even thereafter, the
distribution licensee is entitled to disconnect the electricity supply to
the defaulting consumer and initiate recovery proceedings against the
defaulting consumer for the outstanding dues.
53. By virtue of Bye-Law 7(6) of DMC E-Tax Bye-Laws, 1962, the
aforesaid regime has to be followed by the distribution licensee (petitioner)
for recovery of the MCD electricity tax as well.
54. The levy of LPSC is a step in aid of recovery of the principal amount
of electricity charges due to the distribution licensee (petitioner). Just as the
distribution licensee (petitioner) imposes LPSC as a means to secure
payment of its dues, equally, even for the recovery of the MCD electricity
tax, the petitioner is bound to impose LPSC for recovery of outstanding dues
towards MCD electricity tax, payable by defaulting consumers.
55. The purport of Bye-Law 7(6) of the DMC E-Tax Bye Laws is clearly
to ensure that the distribution licensee (petitioner) follows an identical
regime for recovery of MCD Electricity Tax as it follows for the recovery of
its own dues towards its dues. The same will be wholly defeated if the
distribution licensee (petitioner) is held entitled to levy LPSC in respect of
its own dues, but not in respect of the MCD electricity tax. Moreover, Bye-
Law 7(6) does not contemplate any differential treatment as regards
collection of ‘LPSC on electricity tax’ vis-a-vis collection of LPSC on dues
of the petitioner.
56. In fact, it is the case of the petitioner itself that it has been collecting
LPSC on the outstanding arrears of MCD electricity tax. The purport thereof
could not possibly have been to illegally misappropriate the said amount
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Digitally Signed By:ROHIT
KUMAR PATEL
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since the petitioner is, in any event, not entitled to retain the same with itself
or appropriate it as part of its income. The same was obviously collected
since the petitioner is obliged to accord similar treatment for the purpose of
realization of MCD electricity tax vis-à-vis for realization of its own dues.
There is, therefore, no scope for the petitioner to resist refund of the same to
MCD, or to contend that collection of LPSC on electricity tax is outside the
purview of bye-law 7(6).
57. The matter can be looked at from another angle as well. The
distribution licensee (petitioner) is authorized to collect “late payment
surcharge (LPSC)” under the DERC Supply Code. By definition, surcharge
is referable to the levy/tax which is required to be collected. Black’s Law
Dictionary (9th Edition) defines “surcharge” as under:-
“An additional tax, charge, or cost, usu. one that is excessive.”
58. Thus, the nature of a surcharge is indistinguishable from the
underlying levy/tax, on which, the same is collected. It would be quite
incongruous to accept the petitioner’s contention that while on one hand, it
is bound to pass on/refund the principal amount of electricity tax to the
MCD, on the other hand, it would be entitled to itself pocket the “surcharge”
levied on the outstanding arrears of electricity tax collected by it. Such a
contention can never be accepted inasmuch as it would tantamount to
sanctioning an expropriation by the petitioner dehors any authority under
law.
59. There is also merit in the contention of the MCD that for the purpose
of collection of MCD electricity tax as also LPSC thereon, the distribution
licensee (petitioner) acts as an agent of the MCD. It is settled law that every
agent merely holds the money collected by it on behalf of the principal and
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is bound to render the amount for the collection so made by it. 13
60. An agent is required to apply the money so collected as per the
instructions and directions of the principal and is not entitled to retain or
apply the same contrary to the directions of the principal. The principal is
entitled to recover such money and/or also recover any loss suffered by it on
account of any act or omissions and commissions of the agent.
61. Thus, the monies collected by the distribution licensee (petitioner)
towards electricity tax and ‘LPSC on electricity tax’, belongs to the MCD,
although it was collected by the petitioner. It is the obligation of the
petitioner to return the same to the MCD.
62. Thus, for the aforesaid multiple reasons, the conclusion is irresistible
that the amount collected by the petitioner towards “LPSC on outstanding
arrears of MCD electricity tax” is liable to be refunded to the MCD.
DEMAND NOTICE DATED 31.08.2022
63. The impugned demand notice dated 31.08.2022 issued under Section
154 of the DMC Act, 1957 reads as under:-
“MUNICIPAL CORPORATION OF DELHI
OFFICE OF THE ASSISTANT ENGINEER (ELECTRICAL)
ROOM NO. 30, 1ST FLOOR, AMEDKAR STADIUM
NEW DELHI 110002No. EE(E)/MCD/Planning/2022-23/73 Date: 31.08.2022
NOTICE OF DEMAND
Chief Executive Officer,
TATA Power Delhi Distribution Ltd.,
NDPL House, Hudson Lines Kingsway Camp,
New Delhi-110009.
13
Section 218 Indian Contract Act, 1872 – Subject to such deductions, the agent is bound to pay to his
principal all sums received on his account.
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Digitally Signed By:ROHIT
KUMAR PATEL
Signing Date:18.05.2025
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Notice of Demand under Section 154 of the DMC Act-1957
Please take notice that the Commissioner demands from TATA Power
Delhi Distribution Limited, the sum of Rs. 15,06,00,000 (Fifteen Crores
Six Lakhs only) due from TATA Power Delhi Distribution Limited on
account of Late Payment Surcharge on electricity tax recovered by it, from
the consumers of its licensed area (Copy of letter dated 10.08.2022
enclosed), for the period July 2002 to March 2022, commencing on the 1st
day of July 2002 and ending on the 31st day of March 2022, and that if,
within thirty days from the service of this notice, the said sum is not paid
to the Commissioner at 9th Floor, SPM Civic Centre, New Delhi or
sufficient cause of non-payment is not shown to the satisfaction of the
Commissioner a warrant of distress or attachment will be issued for the
recovery of the same with costs.
Dated this 31st day of August, 2022.
-sd-
Assistant Engineer (Electrical),
Planning Division MCD,
Municipal Corporation of Delhi,
Email Id- [email protected]”
64. A perusal of the letter dated 20.09.2022 (appended as Annexure P/2 to
the present petition) reveals that the impugned amount has been assessed by
the MCD on the basis of “data available in the DERC Tariff order” for Tata
Power Delhi Distribution Limited (TPDDL / petitioner). The said letter
dated 20.09.2022 also observes that the actual amount can be verified from
the “billing and collection data” available with the petitioner. The said
communication reads as under –
“MUNICIPAL CORPORATION OF DELHI
OFFICE OF THE ASSISTANT ENGINEER (ELECTRICAL)
ROOM NO. 30, 1ST FLOOR, AMEDKAR STADIUM
NEW DELHI 110002No. EE(E)/MCD/Planning/2022-23/102 Date: 20.09.2022
Chief Executive Officer,
TATA Power Delhi Distribution Ltd.,Signature Not Verified
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Digitally Signed By:ROHIT
KUMAR PATEL
Signing Date:18.05.2025
21:39:01
NDPL House, Hudson Lines Kingsway Camp,
New Delhi-110009.
Sub: Payment of Late Payment Surcharge Levied & Collected on
Electricity Tax by TATA Power Delhi Distribution Limited regarding.
Dear Sir,
This is with reference to your letter no. TPDDL/Regulatory/2022-
23/PMG/380 dated 14.09.2022 and in continuation to our earlier letter
dated 10.08.2022 and 31.08.2022 regarding payment of late payment
surcharge levied and collected on electricity tax by TPDDL.
In this regard, we would like to mention that, electricity tax is an
item of electricity bill raised by TPDDL to its consumer under bye-law
7(1) of Delhi Municipal Corporation (Assessment and Collection of Tax
on Consumption, Sale or Supply of Electricity) Bye-Laws, 1962, which is
reproduced below.
“A licensee operating within the limit of the Corporation shall include the
electricity tax leviable under the Act as a separate item the bill of charges
for the electricity supplied by him and shall recover the same from the
consumer alongwith his own charges for the supply of such electricity. The
consumer shall pay the tax payable by him to the licensee within the
period fixed by the licensee for recovery of his own charges. The licensee
other than the Delhi Electricity Supply Undertaking shall pay the tax so
collected within 40 days after the expiry of the month for which it is levied
to the General Manager (Electricity).
Provided that, without prejudice to any other obligations imposed
upon him by these bye-laws, the licensee may himself if pay the tax instead
of recovering the same from the consumer.
However, TPDDL is depositing only the electricity tax, collected by
it to Municipal Corporation of Delhi, excluding the part of Late Payment
Surcharges levied on Electricity Tax, when a consumer pays after the due
date. The Late Payment Surcharge levied on Electricity Tax is a part of
the Electricity Tax/Statutory Levy.
We would also like to mention that, Notice of Demand had been
issued to the Distribution Licensees, BSES Rajdhani Power Limited and
BSES Yamuna Power Limited, operating within the limits of the
Corporation to deposit the late payment surcharge levied and collected by
them on electricity tax. The same has been deposited by both the
Distribution Licensees.
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W.P.(C) 14299/2022 Page 30 of 35
Digitally Signed By:ROHIT
KUMAR PATEL
Signing Date:18.05.2025
21:39:01
We have assessed the Late Payment Surcharge Levied and
Collected on electricity tax by TPDDL for the Period July-2002 to
March-2022 as R.s15,06,00,000/- (Rupees Fifteen Crores Six Lakhs
Only) on the basis of the data available in the DERC-Tariff Orders for
TPDDL. The same may be calculated on actual basis from the billing
and collection data available within TPDDL.
As this is a statutory levy and you have already collected it from
various consumers, we advise you to deposit the same to the Corporation,
failing which we will have no other option but to proceed under the
provisions of the Act.
-sd-
Assistant Engineer (Electrical),
Planning Division MCD,
Municipal Corporation of Delhi”
65. Vide order dated 13.05.2024 in the present writ petition, it was, inter
alia, directed as under:-
“3. In the meantime, the petitioner is directed to file an affidavit settingout the total
amount of LPSC on electricity tax collected for the period July2002 till March 2022. Let
the same be filed before the next date ofhearing.”
66. Pursuant to the above directions, an affidavit has been filed on behalf
of the petitioner, inter alia, stating as under:
“10. As the law does not require the Petitioner to maintain separate
accounting records for LPSC on delayed payment of E-Tax from the
Petitioner’s Consumers and LPSC on other dues, the Petitioner does not
maintain the data with respect to bifurcation of the total amount of LPSC
collected by it. The Petitioner has notionally computed the LPSC on
Electricity Tax collected by it on account of delayed payment of E-Tax by
the Petitioner’s Consumers. It is respectfully submitted that:-
(a) An aggregate amount of Rs.353.82 Crores was recovered by the
Petitioner as the LPSC from 01.07.2002 to 31.03.2022.
(b) The ratio of the Electricity Tax collected by the Petitioner vis-à-vis
the Total Sales for a Financial Year is considered as the ratio of LPSC on
delayed payment of Electricity Tax by the consumer vis-à-vis the total
LPSC collected in the year.
(c) Based on the above assumption, an amount of Rs.14.63 Crores has
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W.P.(C) 14299/2022 Page 31 of 35
Digitally Signed By:ROHIT
KUMAR PATEL
Signing Date:18.05.2025
21:39:01
been computed by the Petitioner towards the LPSC on delayed payment of
E-Tax by consumers for the period 01.07.2002 to 31.03.2022. Since this is
a provisional/notional assessment, the Petitioner be not bound by these
figures. It is respectfully submitted that the present Affidavit and the
submission of the notional amounts may kindly not be treated as an
admission of any obligation or liability and is not concession. That the
computation of the notional LPSC collected by the Petitioner on delayed
payment of Electricity Tax by the electricity consumers is notional and
based on the assumption and basis as detailed in Annexure A/1. Though
sincere efforts have been made to ensure the correctness of the
computation, however, the notional computation may not be accurate to
give the exact amount of LPSC collected by the petitioner on delayed
payment of Electricity Tax by the electricity consumers. If any
unintentional errors or omissions are discovered, they will be promptly
addressed and corrected and the same might result in variation in the
notional computation. A detailed computation of the notional amount of
LPSC on delayed payment of E-Tax from the petitioner’s consumers is
annexed hereto and marked as Annexure A/1.”
67. It is evident from the perusal of the letter dated 20.09.2022 as also
from the above extracted portion of the affidavit filed by the petitioner in
compliance of the directions contained in the order dated 13.05.2024 passed
by this Court, that the exercise for verifying the actual amount of LPSC on
electricity tax liable to be refunded to the MCD has not yet been conducted
in accordance with the scheme of the DMC E-Tax Bye-Laws, 1962.
68. In this regard, the DMC E-Tax Bye-Laws contain the following
provisions:-
“4. Obligations to keep books of account and submit returns.- (a)
Every licensee other than the Delhi Electric Supply Undertaking, and
every person liable to pay electricity tax under Clause (3) of Bye-Law 3,
shall keep books of account in the forms prescribed in these bye-laws and
shall submit to the General manager (Electricity) returns in such forms
and within such time as are prescribed in these bye-laws, showing the
units of energy supplied, generated or consumed by him, as the case may
be, and the amount of tax payable thereon and recovered or paid by him
under bye-law 3.
8. Keeping of books of accounts. – The books of account to be kept under
Bye-law 4 shall include the following particulars :
(i) Name of consumer;
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W.P.(C) 14299/2022 Page 32 of 35
Digitally Signed By:ROHIT
KUMAR PATEL
Signing Date:18.05.2025
21:39:01
(ii) Address of consumer’s premises with a brief description thereof;
(iii) Number of units of electricity supplied;
(iv) Period of supply; and
(v) Amount of electricity tax chargeable.
Provided that the Commissioner may, for reasons to be recorded in
writing, exempt any person from maintaining separate account books and
allow him to add necessary columns in his existing books of account for
purpose of making necessary entries about demand and collection of
electricity tax.
10. Inspection of books of accounts. – The Commissioner or the General
Manager (Electricity) or such other officer as maybe appointed by the
Commissioner or General Manager (Electricity) as an inspecting officer
may, at any time, require a licensee to produce for inspection at the
registered or other office of the licensee such books and record in his
possession or control as may be necessary for ascertaining or verifying
the amount of electricity tax leviable under the Act.
11. Power of entry of inspecting officers. – The Commissioner, the
General Manager (Electricity) or an inspecting officer appointed under
bye-law 10 may enter any premises where electricity is, or is believed to
be, supplied by a licensee or is generated by a person other than a
licensee, for the purpose of:
(i) verifying the statements made in the books or account kept and returns
submitted by the licensee or such person;
(ii) verifying the reading of meters; or
(iii) verifying particulars or ascertaining information required in
connection with the levy of electricity tax.”
69. In the circumstances, it would be apposite for the MCD to conduct a
fresh exercise for an assessment of the actual amount of LPSC on the
outstanding arrears of electricity tax collected by the petitioner on the basis
of an inspection of the books of accounts which the petitioner is obliged to
maintain under Bye-Law 4 and 8 of the DMC E-tax Bye-Laws, 1962. The
MCD shall be entitled to issue a fresh demand notice on the basis thereof.
70. In the circumstances, while holding that the petitioner is obliged to
refund to the MCD, the LPSC collected by it on “electricity tax”, the
impugned demand notice bearing no.No.EE (E)/MCD/Planning/2022-23/73
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W.P.(C) 14299/2022 Page 33 of 35
Digitally Signed By:ROHIT
KUMAR PATEL
Signing Date:18.05.2025
21:39:01
dated 31.08.2022 is quashed with liberty to the MCD to issue a fresh
demand notice after inspecting the relevant records in terms of the Delhi
Municipal Corporation (Assessment and Collection of Tax on the
Consumption, Sale or Supply of Electricity) Bye-Laws, 1962, particularly,
Bye-Law 4, 8 and 10 thereof.
71. The petitioner is directed to make its books of accounts available for
inspection by the MCD, as and when required, for the purpose of the
aforesaid exercise.
72. Furthermore, on conclusion of the said exercise, the MCD shall be at
liberty to issue a fresh demand notice under Section 154 of the DMC Act,
1957. The said demand notice shall set out the amount recoverable from the
petitioner together with the year-wise calculation thereof. The said demand
notice shall also incorporate reasons/rationale in respect of the period for
which the recovery is sought to be made, particularly in light of the fact that
MCD intends to effect recovery of LPSC levied on the electricity tax since
01.07.2002.
73. It is clarified that an opportunity of hearing shall also be afforded to
the petitioner prior to issuance of the fresh demand notice under Section 154
of the DMC Act. The fresh demand notice that may be issued, shall be
accompanied by a reasoned order, dealing with the objections that may be
raised by the petitioner.
74. For the current and future tariff period/s, the petitioner is directed to
ensure that MCD electricity tax as also LPSC collected thereon, is passed
on/refunded to the MCD within a period contemplated under Bye-Law 7 of
the DMC E-Tax Bye-Laws, 1962.
75. The present petition is disposed of in the above terms. Pending
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W.P.(C) 14299/2022 Page 34 of 35
Digitally Signed By:ROHIT
KUMAR PATEL
Signing Date:18.05.2025
21:39:01
applications also stand disposed of.
SACHIN DATTA, J
MAY 13, 2025/dn, at
Signature Not Verified
W.P.(C) 14299/2022 Page 35 of 35
Digitally Signed By:ROHIT
KUMAR PATEL
Signing Date:18.05.2025
21:39:01
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