Ongc Tripura Power Company LTD vs. State Of Tripura And Anr

Held

The Court held Section 4(4)(d) of the Tripura Electricity Duty Act, 2019, to be unconstitutional and ultra vires, finding it to be beyond the legislative competence of the State legislature. The Court reasoned that the State's power to levy taxes on the sale or purchase of goods is restricted to intra-State sales, and inter-State sales fall under the purview of the Union Government's taxing powers, as per the constitutional scheme. The Court clarified that no duty shall henceforth be levied or collected on the petitioner's inter-State sale of electricity. Regarding the duty already collected, the Court declared it illegal but held that a refund would only be permissible to the extent the petitioner could establish that the duty burden was not passed on to the purchasers or end consumers. This factual determination was entrusted to the Secretary, Finance, Government of Tripura, who was directed to verify the petitioner's accounts and order refund for the un-passed-on duty. The Court applied the principle of unjust enrichment, stating that a refund cannot be granted if the tax burden has been passed on, as it would lead to a windfall gain for the petitioner.

Facts

The petitioner, ONGC Tripura Power Company Ltd. (OTPC), challenged the constitutional validity of Section 4(4)(d) of the Tripura Electricity Duty Act, 2019. This provision sought to levy electricity duty on electricity sold outside the State. OTPC generates electricity and sells a significant portion to other north-eastern states and traders through bilateral contracts or power exchanges. The State initially contended that the sales were intra-State, but later argued that the State legislature had the competence to levy duty on inter-State sales due to amendments to the Seventh Schedule of the Constitution. The petitioner sought a declaration that the provision was unconstitutional and consequential refund of duty already collected.

Key Issues

1. Whether Section 4(4)(d) of the Tripura Electricity Duty Act, 2019, which levies duty on electricity sold outside the State, is unconstitutional and beyond the legislative competence of the State legislature, particularly in light of Entry 54 of List-II and Entry 92-A of List-I of the Seventh Schedule to the Constitution? Petitioner's arguments: The petitioner contended that the State legislature lacks the competence to levy duty on inter-State sale of electricity, relying on the Supreme Court's decision in State of Andhra Pradesh v. National Thermal Power Corporation Ltd. They argued that the levy on inter-State sales falls outside the State's taxing powers. Revenue/State's arguments: The State argued that amendments to Entry 54 of List-II and Entry 92-A of List-I of the Seventh Schedule conferred competence on the State legislature to levy duty on inter-State sales of electricity. They asserted that the impugned provision was within their legislative ambit. 2. To what extent is the petitioner entitled to a refund of electricity duty already collected under the impugned provision, considering the principle of unjust enrichment?