The Punjab and Haryana high court has directed the state of Punjab to refund octroi collected from the union of India reiterating that under Article 287 of the Constitution, no tax can be levied on electricity consumed by the government of India.
“The respondent (Punjab State Electricity Board) in view of Article 287 of the Constitution of India was prohibited from charging any tax on sale to petitioner, electricity for its consumption.The petitioner is part of government of India, and it has purchased electricity for its consumption. Despite knowing the fact that sale of electricity to government of India cannot be subjected to tax, the state government collected octroi and deposited with local body,” the HC has observed.
Division bench comprising Justice Sanjeev Prakash Sharma and Justice Jagmohan Bansal has passed these orders while hearing a plea filed by the union of India.
The facts of the case are that Military Engineering Service (MES) looks after supply of electricity within cantonment. The electricity is purchased from Punjab State Electricity Board (PSEB). The Board during 2000-07 charged Rs 4,57,342 as octroi duty on the electricity consumed by petitioner.
Representing the centre, advocate Tajeshwar Singh Sullar , submitted that as per petitioner, in terms of Article 287 of the Constitution of India, no tax can be levied on consumption of electricity by government of India or sale of electricity to be consumed by government of India. According to the counsel, the centre had made various representations to Punjab government to the effect that in view of Article 287 of the Constitution of India, octroi cannot be charged on sale of electricity which has been consumed by government of India.
The HC was informed that the Punjab government during the period in question supplied electricity to other central government organizations like Diesel Locomotive Works, Patiala but octroi was not charged, however, petitioner who is part of Ministry of defence was subjected to octroi duty.
After hearing the plea, the HC directed the Punjab government to refund Rs 4,57,342 to the centre within eight weeks.