Supreme Court Refuses To Interfere With HC Ruling Allowing JSW Steel's Rs 47.47 Crore Electricity Duty Refund

The Supreme Court on Tuesday refused to interfere with a Bombay High Court ruling directing Maharashtra authorities to refund Rs 47.47 crore in electricity duty to JSW Steel, upholding the company's claim to exemption till August 2019 under the State's incentive scheme.

A Bench of Justices B.V. Nagarathna and Ujjal Bhuyan dismissed the State of Maharashtra's special leave petitions challenging the April 2 judgment.

“We have heard learned senior counsel for the petitioners and learned senior counsel for the respondents/caveators. We do not find any reason to interfere with the impugned order(s). The Special Leave Petitions are hence dismissed.”

The dispute arose after Maharashtra authorities denied continuation of electricity duty exemption to JSW Steel beyond August 5, 2012, despite the extension of its eligibility certificate till August 5, 2019 under the Mega Project incentive scheme.

The Bombay High Court had held that the exemption granted to JSW Steel was directly linked to the validity of its eligibility certificate and therefore continued automatically when that certificate was extended.

“The plain language of the Notification, read with the language of the Addenda III and the language of the Eligibility Certificate, leaves no doubt that the exemption granted under Section 5A of the BEDA,1958 [by issuing the Notification], is directly linked to the Eligibility Certificate. In fact, the language of the Notification clearly suggests that the intention of the State was to directly link the benefit of the exemption under the Act with the Eligibility Certificate granted under the Scheme. Therefore, so long as the Eligibility Certificate was valid (the period of Eligibility of the said project as mentioned in the Eligibility Certificate), the Notification was to operate. .”

The State had argued that while JSW Steel's sales tax incentives were extended, electricity duty exemption required a separate government notification and could not continue automatically.

Rejecting this, the High Court held that the exemption notification expressly applied for the “period of eligibility” mentioned in the eligibility certificate, making the State's refusal to honour the benefit arbitrary and contrary to promissory estoppel.

The High Court, consequently, directed Maharashtra authorities to refund Rs 47.47 crore collected from JSW Steel as electricity duty between August 2012 and August 2019.