Under Section 42(4) Captive consumer/Captive users are not liable to pay Additional Surcharges: Supreme Court of India

Sub-section (4) of Section 42 shall be applicable only in a case where the State Commission permits a consumer or class of consumers to receive a supply of electricity from a person other than the person – distribution licensee of his area of supply. So far as captive consumers/captive users are concerned, no such permission of the State Commission is required, and by operation of law namely Section 9 captive generation and distribution to captive users is permitted. Such an observation was made by the Hon’ble Supreme Court before Hon’ble Justice M.R. SHAH & Hon’ble Justice SANJIV KHANNA in the matter of Maharashtra State Electricity vs M/s. JSW Steel Limited & Ors [CIVIL APPEAL NOS. 5074-5075 OF 2019]

The facts of the case were that a petition before the State Commission for MYT approval for FY 2014-2015, provisional truing up of ARR for FY 2015-2016, and Multi-Year Tariff for 3rd Control Period FY 2016-2017 to FY 2019-2020. The State Commission held that the additional surcharge leviable under Section 42(4) of the Electricity Act, 2003  is not applicable to captive users to the extent of their self-consumption from such plants. The appellant submitted its revised Review Petition being Case No.195 of 2017 for approval of final true-up of ARR for FY 2015-2016 and 2016-2017, provisional true-up of ARR for FY 2017-2018, and approval for a revised forecast of ARR for FY 2018-2019 and 2019-2020, inter alia, including the prayer “to approve additional surcharge for all open access consumers including those sourcing power from CPPS as proposed for FY 2018-2019 to FY 2019-2020”. the State Commission passed the order holding that an additional surcharge is leviable under Section 42(4) of the Act, 2003 on the captive consumers/captive users. Aggrieved and dissatisfied. The respondents approached the Appellate Tribunal, which allowed the said appeals. Aggrieved the original appellate preferred the present appeal.

The Hon’ble Supreme Court observed that consumers defined u/s 2(15) of the Act, 2003, and the captive consumers are different and distinct and they form a separate class by themselves.

Additionally, the Hon’ble Supreme Court held that “In the case of the captive consumers/captive users, they have also to incur the expenditure and/or invest the money for constructing, maintaining or operating a captive generating plant and dedicated transmission lines. Therefore, as such the Appellate Tribunal has rightly held that so far as the captive consumers/captive users are concerned, the additional surcharge under sub-section (4) of Section 42 of the Act, 2003 shall not be leviable.”

Finally, the Hon’ble Supreme Court dismissed the appeal.

Click Here To Read The Judgment.

Judgment Reviewed by: Rohan Kumar Thakur

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