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Judgment
B.S. Patil, J.—Petitioner is a Company incorporated under the provisions of the Companies Act, 1956. It provides software development services. As per the Circular dated 10.11.2006 issued by the BESCOM regarding application of concessional tariff, industries or establishments engaged in software development have been extended benefit of industrial tariff without short claims or back billing charges. This benefit was extended to the petitioner - Company. The said benefit was extended based on the Certificate dated 28.11.2001 issued by the Joint Director, District Industries Centre, Bangalore Urban District, Department of Industries & Commerce, produced at Annexure-B.
It appears, in a dispute involving another Software Company by name M/s. Tavanth Technologies Private Limited, Electricity Ombudsman - respondent No. 2 herein passed an order dated 24.06.2013 wherein an observation was made stating that benefit extended to the petitioner herein on the basis of the Certificate issued by the Department of Industries and Commerce appeared to be erroneous because the said Certificate issued by the Department of Industries and Commerce was addressed to the Commercial Tax Department for grant of exemption of Entry Tax and Purchase Tax and that there was no mention regarding supply of power to the petitioner under HT-2(a). Respondent No. 2 persuaded himself, in the said proceedings, to make an observation that BESCOM should not have acted on such certificate and therefore, they have to verify once again and take action to withdraw the benefit extended to the petitioner herein and send compliance report to the Ombudsman.
It is necessary to notice here that petitioner was not a party before the 2nd respondent - Electricity Ombudsman. It had no opportunity of being heard. Despite the same, such adverse order was passed by the 2nd respondent. It is on the basis of this order passed by the 2nd respondent, BESCOM has now issued the impugned demand notice vide Annexure-E demanding back billing charges.
Sri Aditya Sondhi, learned Senior Counsel appearing for the petitioner submits that respondent -BESCOM was not right and justified in acting on the basis of the observations made by respondent No. 2 in a matter to which petitioner was not a party. He further contends that without hearing the petitioner and without verifying the records and documents, the impugned demand notice has been issued, which is against the principles of natural justice. He also points out that respondent No. 2 had proceeded on the basis of the Certificate issued by the Department of Industries and Commerce dated 28.11.2011 as is evident from paragraph 22 of his order dated 24.06.2013 which is incorrect because the Certificate was indeed dated 28.11.2001. He has also invited the attention of the Court to the Registration Certificate issued by the Directorate of Information Technology and Bio-technology registering the petitioner as a Software Development Company and also to the Entrepreneurs Memorandum Part II Acknowledgement issued by the Joint Director, District Industries Centre as per Annexure-H on 09.12.2013 wherein the date of commencement of the petitioner - Software Company has been shown as 16.03.2000. It is contended that with effect from 16.03.2000, petitioner has been in software development business. Learned Senior Counsel has also placed reliance on the order dated 24.01.2013 passed by this Court in W.P. Nos. 10978-10979/2012 (GM-KEB).
Learned counsel for respondents 1 & 3 urged that in view of the directions issued by the 2nd respondent, impugned demand notice has been issued. It was open for the petitioner to file objections to the demand notice. Instead of taking such a recourse, petitioner has straightway rushed to this Court.
Having heard the learned counsel for both parties, I find that entire action initiated by BESCOM and the impugned demand notice issued is based on the order dated 24.06.2013 passed by the 2nd respondent. The said proceeding had been initiated by one M/s. Tavanth Technologies Private Limited. Petitioner herein was not a party to the said proceedings. M/s. Tavanth Technologies Private Limited intended to take advantage of the benefit extended to the petitioner - Company claiming parity. Respondent No. 2 herein goes into the correctness or otherwise of the benefit extended to the petitioner and passes an adverse order against the petitioner including even issuing a direction to the BESCOM to withdraw the benefit extended to the petitioner and directing it to send a compliance report. Such an order, as rightly contended by the learned Senior Counsel for the petitioner passed behind the back of the petitioner, without hearing it, cannot be made basis for issuing a demand notice that too without verifying the factual position by affording an opportunity to the petitioner.
If at all any mistake was committed by the BESCOM, it is for the BESCOM to give notice to the petitioner, provide an opportunity to it to have its say in the matter and consider the documents to be produced by the petitioner before taking recourse to any action for back billing.
The facts and circumstances of the case reveal that petitioner was extended the benefits based on the Certificates issued. It is not the case of the respondent - BESCOM that those Certificates were obtained illegally. Even if those Certificates were issued for the purpose of granting exemption of Entry Tax and Purchase Tax and were addressed to the Commercial Tax Department, those Certificates cannot be summarily rejected. The fact to be established is whether the petitioner - Company was engaged in software business during the relevant period. That can be examined by providing an opportunity to the petitioner to produce relevant Certificates.
Therefore, this writ petition is allowed. Impugned demand notice is set aside. Liberty is reserved to the respondent - BESCOM to call upon the petitioner to produce relevant Certificates and thereafter, consider the matter and pass a reasoned order regarding the entitlement of the petitioner for the benefits under the Circular keeping in mind the order dated 24.01.2013 passed by this Court in W.P. Nos. 10978-10979/2012.