Allowed¶27

Chamundi Steel Casting (India) v. State of Tamilnadu, Rep.by

Madras HC10 Mar 2026WP/38185/2002

Case brief

AI extract

What is this about?

Chamundi Steel Casting (India) Ltd. v. State of Tamil Nadu & TNEB (Madras HC, 10.03.2026, W.P.No.38185 of 2002): certiorari allowed, quashing the Chief Electrical Inspector's demand notice dated 11.07.2002 for electricity tax (August 1999 - January 2002), maximum demand charges and 35% energy tax raised against a captive furnace-oil power consumer claiming G.O.Ms.1201 exemption; demand held unsubstantiated (no basis shown for Rs.1,12,35,000/- maximum demand charge) and unexplainedly delayed until 2002; no costs.

What did the court decide?

Writ of certiorari allowed; the impugned demand notice (second respondent's letter No.9955/A1/2002 dated 11.07.2002) quashed; no costs awarded. ¶27

Chamundi Steel Casting (India) Vs State of… — Writ and Judicial Review | Madras HC (2026)

What the court decided

AI extract

Outcome

Writ of certiorari allowed; the impugned demand notice (second respondent's letter No.9955/A1/2002 dated 11.07.2002) quashed; no costs awarded.

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Issue for consideration

Whether the petitioner, a captive generating unit whose production commenced in 1995, enjoyed exemption under G.O.Ms.1201 (exempting own-consumption generating units from electricity charges for five years from commencement) so that electricity charges were not payable until 2002, notwithstanding the Department's stand that no exemption was given. +1 more

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Ratio / Principle

The learned counsel representing the Electricity Board was unable to produce any record to explain why the demand for electricity tax was not raised until 2002.

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Key takeaways

There was no material to substantiate the demand of maximum demand charge of Rs.1,12,35,000/-, which ought to have been based on an agreement between the consumer and the Electricity Board.ratio¶26
For the above reasons the court was unable to uphold the impugned demand raised by the Electricity Board; accordingly the writ petition was allowed, the impugned demand notice was quashed, and there were no costs.ratio¶27

Detailed headnote1 paragraphs

Madras High Court (order authored by Dr. Justice G. Jayachandran, sitting with Mr. Justice R. Sakthivel), 10.03.2026 - W.P.No.38185 of 2002 under Article 226 seeking certiorari: ALLOWED. The Chief Electrical Inspector to Government's letter No.9955/A1/2002 dated 11.07.2002, demanding from captive-generating consumer Chamundi Steel Casting (India) Ltd. electricity tax for August 1999 to January 2002, maximum demand charges of Rs.1,75,37,768/- and approximately Rs.61,38,219/- as 35% tax on the price of energy, was quashed with no costs. Though the Department's detailed counter denied any exemption under G.O.Ms.1201 (which exempted own-consumption generating units from electricity charges for five years from commencement; the petitioner claimed commencement of production in 1995, i.e., coverage till 2002) and asserted dues of Rs.4,44,77,657/- plus interest of Rs.63,33,511/- at 12% per annum, the court declined to uphold the demand because counsel for the Electricity Board could produce no record explaining why the tax demand was not raised until 2002, and because no material substantiated the maximum demand charge of Rs.1,12,35,000/-, which ought to have been founded on an agreement between the consumer and the Board.

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IN THE HIGH COURT OF JUDICATURE AT MADRAS

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DATED: 10.03.2026

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CORAM:

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THE HONOURABLE DR. JUSTICE G.JAYACHANDRAN and THE HONOURABLE MR. JUSTICE R.SAKTHIVEL

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W.P.No.38185 of 2002

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Chamundi Steel Casting (India) Ltd., Rep.by its Manager M. Muniraj .. Petitioner

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Vs.

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1.State of Tamil Nadu, Rep.By Secretary, Energy Department, Fort St. George, Chennai. 2.The Chief Electrical Inspector to Government, Thiru-Vi-Ka Industrial Estate, Guindy, Chennai 600 032. 3.Tamil Nadu Electricity Regulatory Commission, Rep.by Chairperson 17,3rd Main Road, Seethammal Colony, Alwarpet, Chennai-18. 4.The Chairman, Tamil Nadu Electricity Board, 800, Anna Salai, Chennai 600 002. .. Respondents 1/6

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https://www.mhc.tn.gov.in/judis

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PRAYER:

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PRAYER: Writ Petition filed under Article 226 of the Constitution of India, praying to issue a Writ of Certiorari, calling for the records of the second respondent in his letter No.9955/A1/2002 dated 11.07.2002 and quash the same.

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For Petitioner : Mr.K.Jayachandran For Respondents : Mr.P.Muthukumar Additional Advocate General Asst.by Mr.R.Kumaravel Additional Government Pleader

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ORDER

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[ Order of the Court was made by Dr.G.JAYACHANDRAN., J. ]

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The petitioner is a captive consumer of energy. Admittedly, it generates electricity using furnace oil as fuel for its manufacturing unit as per G.O.Ms.1201 dated 18.06.1970. Units that generate power from generating sets for their own consumption were exempted from paying electricity charges for a period of five years from the date of commencement.

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2. Claim of the writ petitioner is that they commenced the production in the year 1995. Therefore, the exemption under G.O.Ms.1201,

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2/6

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https://www.mhc.tn.gov.in/judis

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which applies to them till 2002. However, the impugned order demands electricity tax for the period from August 1999 to January 2002. Furthermore, the demand for Rs.1,75,37,768/- as maximum demand charges plus 35% tax on the price of energy which comes around Rs.61,38,219/-, is liable to be quashed.

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3. A detailed counter was filed by the Department, wherein it is stated that the petitioner company was not given any exemption as per G.O.Ms.1201 and the company is liable to pay the electricity tax dues, which, as per the enclosed statement, amount to Rs.4,44,77,657/- along with interest of Rs.63,33,511/- with 12% per annum till the date of payment.

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4. A perusal of the counter-affidavit mainly relies upon the

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provision of the new Electricity Act, 2003. It further states that the G.O.Ms.1201 and G.O.Ms.2072, dated 19.11.1969 were issued in the exercise of powers conferred under the State under Electricity Act, 1962.

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5. The learned counsel representing for the Electricity Board was unable to produce any record to explain why the demand for electricity tax

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3/6

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https://www.mhc.tn.gov.in/judis

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was not made till 2002. Admittedly, the units commenced production during the relevant period; however, there is no material to substantiate the demand of maximum demand charge of Rs.1,12,35,000/- which ought to have been based on agreement between the consumer and the Electricity Board.

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6. For the above said reasons, we have unable to uphold the impugned demand by the Electricity Board. Hence, this Writ Petition is allowed and the impugned demand notice is hereby quashed. No costs.

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[Dr.G.J., J.] & [R.S.V., J.] 10.03.2026

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Index : Yes/No Neutral Citation: Yest/No Speaking or Non-speaking order rpl To

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1.The Secretary, State of Tamil Nadu, Energy Department, Fort St. George, Chennai.

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2.The Chief Electrical Inspector to Government, Thiru-Vi-Ka Industrial Estate, Guindy, Chennai 600 032.

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4/6

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https://www.mhc.tn.gov.in/judis