Allowed

Steel Authority of India (Bokaro Steel Plant) through Rajeev Gupta v. the State of Jharkhand through the Commissioner of Commercial Taxes

Jharkhand HC1 May 2023WPC/666/2023

Case brief

AI extract

What is this about?

This bench allowed a batch of writ petitions, holding that review proceedings initiated without the statutory sanction from the Commissioner of Commercial Taxes were void ab initio. The court set aside impugned review and appellate orders, directing refund of recovered penalties.

What did the court decide?

Review orders and Appellate Orders were set aside; consequential penalty was ordered to be refunded or adjusted in future bills.

Steel Authority of India (Bokaro Steel Plant) through… — GST and Indirect Tax | Jharkhand HC (2023)

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IN THE HIGH COURT OF JHARKHAND AT RANCHI

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W.P. (T) No. 666 of 2023 with W.P. (T) No. 556 of 2023 with W.P. (T) No. 667 of 2023 with W.P. (T) No. 668 of 2023 with W.P. (T) No. 728 of 2023 with W.P. (T) No. 736 of 2023 with W.P. (T) No. 789 of 2023 with W.P. (T) No. 790 of 2023 with W.P.(T) No. 809 of 2023 with W.P.(T) No. 1134 of 2023 with W.P.(T) No. 1149 of 2023

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Steel Authority of India Ltd. (Bokaro Steel Plant), through its Authorized signatory-cum-Deputy General Manager (F&A-S&IT), Rajeev Gupta.

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…….. Petitioner (in all cases)

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Versus

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The State of Jharkhand, through the Commissioner of Commercial Taxes, having its office at Utpad Bhawan, Kanke Road, P.O. Ranchi University, P.S. Gonda, District-Ranchi.

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The Additional Commissioner of Commercial Taxes (Appeal), Dhanbad Division, Dhanbad, having its office at Lubi Circular Road, Opposite Court Compound, P.O. & P.S. Dhanbad, District-Dhanbad.

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Joint Commissioner of Commercial Taxes (Appeal), Dhanbad Division, Dhanbad, having its office at Lubi Circular Road, Opposite Court Compound, P.O. & P.S. Dhanbad, District-Dhanbad.

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Deputy Commissioner of Commercial Taxes, Bokaro Circle, Bokaro, having its office at Bokaro, P.O. & P.S. Bokaro, District-Bokaro.

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Assistant Commissioner of Commercial Taxes, Bokaro Circle, Bokaro, having its office at Bokaro, P.O. & P.S. Bokaro, District-Bokaro.

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Commercial Taxes Officer, Bokaro, Circle, Bokaro, having its office at Bokaro, P.O. & P.S. Bokaro, District-Bokaro. ……… Respondents (in all cases)

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CORAM: Hon’ble Mr. Justice Rongon Mukhopadhyay Hon’ble Mr. Justice Deepak Roshan

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For the Petitioner : Mr. Sumeet Gadodia, Advocate Mrs. Shilpi Sandil Gadodia, Advocate Mr. Ranjeet Kushwaha, Advocate Mrs. Akansha Mittal, Advocate For the Respondents : Mr. Sachin Kumar, AAG-II Mr. Ashok Yadav, GA Mr. Rahul Saboo, G.P.-II

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07/01.05.2023 The present batch of writ petitions involve common questions of law and with the consent of the parties, the same were heard together and are being disposed of by the instant order.

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2. Common issues involved in the writ petitions are “Whether initiation of review proceedings against the Petitioner-company was void ab initio and nonest in the eye of law in absence of requisite sanction being obtained by Commissioner of Commercial Taxes, Jharkhand in terms of the provisions contained under Section 9A(4) of the Bihar Electricity Duty Act, 1948 (as adopted) read with Rules 14(10) and 14(11) of the Bihar Electricity Duty Rules, 1949”? Other incidental issue involved is “Whether the order passed by the Appellate Authority remanding the matter back to the Assessing Authority for de-novo adjudication is required to be interfered with by this Court on the ground that when the very initiation of the proceeding for review was void ab initio and nonest; no jurisdiction could have been conferred by the Appellate Authority to the Assessing Authority by passing order of remand”?

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3. Petitioner-company is primarily engaged in the business of manufacture of Iron and Steel and the present batch of writ applications pertain to its Bokaro Steel Plant situated in the District of Bokaro. Assessment years involved in the batch of the writ petitions pertain to 2012-13 to 2016-17.

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4. Petitioner, in respect of the aforesaid assessment years, purchased electricity from Damodar Valley Corporation primarily for its manufacturing activity and also supplied electricity to residential colonies, commercial complexes, government premises and offices/hospitals/ malls/hotels, school, etc. and there was liability towards payment of electricity duty by the Petitionercompany on electricity consumed and supplied by it, in terms of the provisions of the Bihar Electricity Duty Act (as adopted) including its amendment by Jharkhand

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Electricity Duty (Amendment) Act, 2011. Consumption of electricity by the Petitioner was categorized into three heads, namely; (1) Construction/Industrial Consumption, (2) Domestic Consumption, and (3) Non-Domestic/ Commercial Consumption.

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5. For the period in dispute, Petitioner-company duly discharged its electricity duty liability and assessment orders were passed in respect of each financial year accepting Returns of the Petitioner and the discharge of electricity duty made by it. 6. However, after passing of the assessment orders, an audit objection was raised by the office of the Accountant General, Jharkhand, and, in the audit objection, primarily it was alleged that Petitioner has discharged the liability of electricity duty towards Domestic Consumption as well as NonDomestic/Commercial Consumption at incorrect rate of duty. It was also indicated in the audit objection that on certain purchases of electricity, Petitioner has not paid electricity duty and has, thus, not accounted for the said charges in its books of accounts.

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7. On the basis of the aforesaid audit objection, review proceeding under Section 9A(4) of the Electricity Duty Act was initiated by the Assessing Authority against the Petitioner-company. Although assessment years pertained to the periods 2012-13 to 2016-17, the audit objection was categorized by the Assessing Authority under three different heads i.e. (1) Domestic Consumption of electricity, (2) Non-Domestic Consumption of electricity, and (3) Incorrect accounting of charges of electricity. Thus, separate review proceedings were initiated in respect of all the aforesaid categories.

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8. Details of the assessment orders including initiation of review proceedings and passing of the review orders have been captured in the following tabulated chart in respect of all the writ petitions:-

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(i) Details of Proceeding related to Domestic Consumption of Electricity

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Sl. Nos.	Period	Case No.	Date of Original Assessment order	Date of initiation of Review Proceeding	Date of Review Order
1.	2012-13	W.P.(T) No. 556 of 2023	22.03.2016 An. 2,Pg.52	20.07.2020 An.3,Pg.55	31.08.2020 An.8,Pg.65
2.	2013-14	W.P.(T) No. 667 of 2023	31.03.2017 An.2,Pg.52	20.07.2020 An.3,Pg.55	31.08.2020 An.8,Pg.66
3.	2014-15	W.P.(T) No. 1149of 2023	21.03.2018 An.2,Pg.52	20.07.2020 An.3,Pg.55	31.08.2020 An.8,Pg.65
4.	2015-16	W.P.(T)No.	20.02.2019	20.07.2020	31.08.2020

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728 of 2023	An.2,Pg.51 An.3,	Pg.52	An.7,Pg.62

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(ii) Details of Proceeding related to Non-Domestic Consumption of Electricity

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Sl. Nos.	Period	Case No.	Date of Original Assessment order	Date of initiation of Review Proceeding	Date of Review Order
1.	2012-13	W.P.(T) No. 736 of 2023	22.03.2016 An. 2,Pg.54	20.07.2020 An.3,Pg.55	31.08.2020 An.8,Pg.66
2.	2013-14	W.P.(T) No.	31.03.2017	20.07.2020	31.08.2020
		666 of 2023	An.2,Pg.52	An.3,Pg.55	An.8,Pg.66
3.	2014-15	W.P.(T) No.	31.03.2018	20.07.2020	31.08.2020
		1134 of 2023	An.2,Pg.51	An.3,Pg.54	An.8,Pg.65
4.	2015-16	W.P.(T) No.	20.02.2019	20.07.2020	31.08.2020
		790 of 2023	An.2,Pg.51	An.3,Pg.52	An.7,Pg.62

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(iii) Details of Proceeding related to Purchase of Electricity:-

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Sl. Nos.	Period	Case No.	Date of Original Assessment order	Date of initiation of Review Proceeding	Date of Review Order
1.	2013-14	W.P.(T) No.	31.03.2017	17.07.2020	12.09.2020
		668 of 2023	An.1,Pg.35	An.2,Pg.38	An.6,Pg.48
2.	2014-15	W.P.(T) No.	21.03.2018	17.07.2020	12.09.2020
		809of 2023	An.1,Pg.35	An.2,Pg.38	An.6,Pg.48
3.	2016-17	W.P.(T) No.	03.02.2020	17.07.2020	12.09.2020
		789of 2023	An.1,Pg.34	An.2,Pg.35	An.6,Pg.45

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9. The case of the Petitioner is that the very initiation of the review proceedings against the Petitioner by its Assessing Officer is contrary to the provisions of Section 9A(4) of the Electricity Duty Act read with Rules 14(10) and 14(11) of the Electricity Duty Rules, as the proceedings have been initiated by the successor in office of the original Assessing Officer without obtaining previous sanction in writing of Commissioner of Commercial Taxes, and, except for the Assessment Year 2016-17, review proceedings have been initiated beyond the period of limitation of twelve months without obtaining sanction of the Commissioner of Commercial Taxes.

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10. The Petitioner challenged separate review orders passed by the Assessing Authority before the first Appellate Court and specifically contended, inter alia, that initiation of re-assessment proceedings in absence of sanction order of Commissioner of Commercial Taxes was void ab initio. Reliance was also placed by the Petitioner upon a decision of the Coordinate Bench of this Court in the case of Tata Steel Ltd., Jamshedpur Vs. State of Jharkhand decided on 04.12.2019, wherein, under identical facts and circumstances of the case, this Court set aside

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the order passed in review proceedings which was initiated in violation of Section 9A(4) of the Electricity Duty Act and Rules 14(10) and 14(11) of the Electricity Duty Rules.

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However, learned Appellate Authority, despite such objection being raised by the Petitioner, merely remanded the matter back to the Assessing Authority for fresh adjudication of the review proceedings.

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11. Mr. Sumeet Gadodia, Advocate, assisted by Mr. Ranjeet Kushwaha, Advocate for the Petitioner, while advancing arguments, assailed the order passed by the Appellate Authority in all the writ petitions by contending, inter alia, that once plea has been raised before the Appellate Court that the very initiation of review proceedings was void ab initio and nonest in the eye of law for want of sanction from the Commissioner of Commercial Taxes, it was not open for the Appellate Authority to remand the matters back to the Assessing Authority for proceeding de-novo afresh.

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12. It has been submitted that, in fact, the order of remand passed by the Appellate Authority has an effect of conferring jurisdiction upon the Assessing Authority to initiate a fresh review proceeding which, otherwise, was not maintainable in view of statutory bar contained under section 9A(4) of the Electricity Duty Act read with Rules 14(10) and 14(11) of the Electricity Duty Rules.

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13. Learned counsel for the petitioner further invited our attention to the provisions of the Act and the Rules and contended, inter alia, that the Act contains substantive provisions for initiation of review proceeding by the authority passing the order or by its successor in office, which is subject to the rule as may be prescribed. Under the Rules, specific provisions have been incorporated providing, inter alia, that an order shall not be reviewed after more than twelve months of passing of the order except with the previous sanction of the Commissioner recorded in writing. Further reliance has been placed upon the Rules to contend that the review order passed by the predecessor in office cannot be reviewed by an authority being successor in office except with the previous sanction of the Commissioner.

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It has been contended that the review orders passed for the assessment years 2012-13 to 2015-16 were not only barred by limitation as the said orders were passed beyond twelve months of passing of the original assessment orders, but also in respect of the said orders which were passed by the successor in office,

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no previous sanction of the Commissioner was obtained. For the assessment year, 2016-17, it was submitted that the review order was passed within a period of twelve months and was within limitation, but since the said order was passed by the successor-in-office, previous sanction of the Commissioner was required in terms of Rule 14(11) of the Rules, which was not obtained, and, under the said circumstances, review order was not sustainable in the eye of law.

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Reliance has been placed upon the Judgment passed by Coordinate Bench of this Court in the case of Tata Steel Ltd., Jamshedpur vs. State of Jharkhand dated 04.12.2019, wherein this Court, by considering the provisions of Section 9A(4) of the Act read with Rules 14(10) and 14(11) of the Rules, has held that if orders of review are passed beyond twelve months and/or by an officer being successor-in-office, sanction of the Commissioner of Commercial Taxes is required and, in absence of the sanction by the Commissioner, review orders are not sustainable in the eye of law.

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Further reliance was placed upon the order dated 29.06.2021 passed in Special Leave Petition (Civil) Diary No. 24435 of 2020 (State of Jharkhand Vs. Tata Steel Ltd.) and it was contended that the Special Leave Petition filed by the State of Jharkhand against the order decided in the case of Tata Steel Ltd. (supra) was dismissed by the Hon’ble Apex Court.

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Reference was also made to the Counter Affidavit filed on behalf of Respondent-State of Jharkhand in all the writ petitions and it has been contended that in the Counter Affidavit, there is no denial of the fact that review order has been passed without obtaining sanction of the Commissioner of Commercial Taxes.

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14. Per contra , Mr. Sachin Kumar, learned AAG-II advanced arguments on behalf of Respondent-State of Jharkhand and opposed the prayer made in the writ applications for quashing/setting aside the Appellate Orders passed by the Appellate Authority. By placing reliance upon the Appellate Order, it has been contended, inter alia, that Appellate Authority, after taking into consideration the submissions of the Petitioner, has merely remanded the matters back to the Assessing Authority to decide the matters afresh and to also consider the Judgment delivered in the case of Tata Steel Ltd. (supra) while passing fresh review orders.

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It has been intensely argued by Mr. Sachin Kumar that the Appellate Authority has already looked into grievances of the Petitioner, and, after recording the submissions of the Petitioner, remanded the matter back to the Assessing

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Authority to pass fresh adjudication order after taking into consideration the order passed by Coordinate Bench of this Court in the case of Tata Steel Ltd., and hence, there is no occasion for the Petitioner for being aggrieved by the said order and, accordingly, it has been submitted that present writ applications are not maintainable at the behest of the Petitioner.

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However, during the course of argument, it was not disputed that review order has been passed without obtaining sanction of the Commissioner in writing, however, on the contrary, it was contended that in the earlier order passed by this Court in the case of Tata Steel Ltd. (supra) also, the matter has been remanded back to the Assessing Authority and, hence, the Appellate Court has not committed any illegality in remanding the matter back to the Assessing Authority. 15. We have considered rival submissions of the parties and have carefully perused the records of the case including provisions of Section 9A(4) of the Electricity Duty Act and Rules 14(10) and 14(11) of the Excise Duty Rules. Section 9A of the Act reads as under:-

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“9A. Appeal;-- (1) Any licensee or other person objecting to an order or assessment with or without penalty passed under this Act, or the rules made thereunder may, within a prescribed period and in the prescribed manner, appeal to the prescribed authority against such order of assessment or penalty or both:

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Provided that no appeal shall be entertained by such authority unless it is satisfied that twenty percentum of the duty assessed or such amount of duty as the appellant may admit to be due from him, whichever is greater has been paid.

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Provided further that where the prescribed authority revises any order of its motion, no proceeding for such revision shall be initiated at any time except before the expiry of two years from the date of the said order.

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(2) Subject to such rules as may be prescribed, the appellate authority may, in disposing of an appeal under sub-section (1)—

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(a) confirm, reduce, enhance or annual the assessment or penalty; or both; or

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(b) set aside the assessment or penalty, or both, and direct the assessing authority to make a fresh

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assessment after making such further inquiry as may be directed by the appellate authority;

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(3) Subject to such rules as my be prescribed and for reasons to be recorded in writing the prescribed authority may, upon application or of its own motion, revise any order passed under this Act or the rules made thereunder:

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Provided that no order of assessment shall be revised upon application on the assessee, unless an order under sub-section (2) has been previously passed in respect of such order.—

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Provided further that where the prescribed authority revises any order of its own motion, no proceeding for such revision shall be initiated at any time before the expiry of two years from the date of the said order.

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(4) Subject to such rules as may be prescribed, any order passed under this Act or the rules made thereunder may be reviewed by the authority passing it or by its successor-in-office.”

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16. Rule 14 of the Rules reads as under:-

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“14. Appeal, revision and review.—(1) An appeal against an order of assessment, with or without penalty shall lie to the Joint Commissioner or the Deputy Commissioner specially authorized in this behalf.

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(2) An application for the revision of an appellate order passed by the Joint Commissioner or Deputy Commissioner specially authorized in this behalf shall lie to the tribunal.

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(3) Omitted.

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(4) The application for the revision of any order passed under the Act or these rules, other than an order of assessment with or without penalty or any order passed under sub-rules (1) or (2) of this rule shall be presented—

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(a) to the Joint Commissioner, if the order sought to be revised is one passed by the Deputy Commissioner.

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(b) to the Commissioner, if the order sought to be revised is one passed by the Joint Commissioner.

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(c) to the Tribunal, if the order sought to be revised is one passed by the Commissioner.

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xxx xxx xxx

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(10) Save with the previous sanction of the Commissioner recorded, in writing an order, other than order passed by the Commissioner, shall not be reviewed more than twelve months after the date of passing of the order which is sought to be reviewed.

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(11) No authority below the rank of Commissioner, shall review an order which has been passed by its predecessors in office, except with the previous sanction of the Commissioner.”

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17. According to Section 9A(4), the prescribed authority, to review an order, would be the officer who has passed the order or its successor in office. Section 9A(4) of the Electricity Duty Act is to be read with Rules 14(10) and 14(11) of the Electricity Duty Rules, which clearly prescribe that for reviewing any order other than the order passed by the Commissioner, sanction of the Commissioner in writing is required and such review cannot be made beyond the period of 12 months from the date of passing of the order sought to be reviewed, and, an order can be reviewed by the officer who is successor in office of the officer who has passed the order sought to be reviewed only with previous sanction of the Commissioner even if the order is sought to be reviewed within a period of twelve months.

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18. Aforesaid proposition of law has been authoritatively laid down by the Coordinate Bench of this court in the case of Tata Steel Ltd. (supra) and the said decision was challenged by the State of Jharkhand before the Hon’ble Apex Court and their S.L.P. has also been dismissed.

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19. We are in respectful agreement with the ratio laid down in the aforesaid Judgment of Tata Steel Ltd. (supra) and we find no reason to disagree with the same.

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20. We further find that there is no substance in the contention of the Respondent-State that in the case of Tata Steel Ltd. (supra) , this Court remanded

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the matter back to the Assessing Authority for passing fresh review order. On the contrary, a bare perusal of the said order would reveal that penalty orders were set aside and it was merely recorded that this court has not stopped any authority to exercise his powers permitted under the law.

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21. It is a trite law that an order, which is bad from its inception itself, cannot be cured by subsequent action. In the present case, before the Appellate Authority, the Judgment of this Court in the case of Tata Steel Ltd. was duly placed on record, but despite the said fact, the Appellate Authority, instead of setting aside the order of review as not sustainable in the eye of law, has remanded the matter back to the Assessing Authority for reconsideration. This, in our view, cannot be endorsed, as reviewing authority cannot be clothed with jurisdiction which it, otherwise, did not have at the time of initiation of review proceedings.

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22. In view of the foregoing reasons, the review orders dated 31.08.2020 and 12.09.2020 as well as the Appellate Orders dated 23.12.2022 in respect of the Period 2012-13, 2013-14, 2014-15, 2015-16 and 2016-17 are set aside. Consequently, penalty amount deposited/recovered from the Petitioner-company, if any, is directed to be refunded/adjusted in future bills towards Electricity Duty. 23. We make it clear that we have not stopped any authority to exercise its powers permitted under the law.

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24. Accordingly, all the writ applications are allowed with aforesaid directions and observations. All Interlocutory applications also stand disposed of.

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(Rongon Mukhopadhyay, J)

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(Deepak Roshan, J)

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Amardeep/-

Steel Authority of India (Bokaro Steel Plant) through Rajeev Gupta v. the State of Jharkhand through the Commissioner of Commercial Taxes

Case brief

What is this about?

What did the court decide?

Steel Authority of India (Bokaro Steel Plant) through Rajeev Gupta v. the State of Jharkhand through the Commissioner of Commercial Taxes

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

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