The Bombay high court (HC), on Thursday, held that all non-profit educational institutes and healthcare services — public and private —are exempt from payment of electricity duty under section 3(2) (iii) of Maharashtra Electricity Duty Act, 2016.
A division bench of justices SC Dharmadhikari and Makarand Karnik held that all non-profit education and health services, “irrespective of whether it is rendered by public body or private body”, is covered by the exemption clause under section 3(2) (iii) of the act.
The bench then struck down a demand made by a power company seeking ₹3.41 crore from Shri Vile Parle Kelwani Mandal (SVPKM) towards electricity duty at the rate of 21% of the consumption charges.
The educational institute approached the HC after the companies informed it in June 2018 that they had received a letter from the state Industries, Energy and Labour Department which stated that as per the act, charitable institutions imparting education or training in academic or technical subjects were not entitled to exemption from electricity duty from September 1, 2016.
The private electricity suppliers then raised separate bills for the period from September 2016 to August 2018, and demanded ₹3.41 crore towards electricity duty.
SVPKM argued that the state law and judiciary department had wrongly interpreted section 3(2) of the Maharashtra Electricity Duty Act, 2016.
It argued that the exemption granted to educational institutes run by charitable institutes under the Maharashtra Electricity Duty Act, 1958 continued under the 2016 enactment, although a different wording was used.
The HC accepted SVPKM’s argument and held that the legislature did not intent to restrict the exclusion to only government or local body-run premises. It said services in the fields of health and education, rendered by local bodies or by institutions like SVPKM, would be covered by the exclusionary clause.