The KARNATAKA ELECTRICITY (TAXATION ON CONSUMPTION OR SALE) ACT, 1959

² Inserted by Act of 31of 2013 w.e.f.05.03.2013.

Adapted by the Karnataka Adaptations of Laws Order, 1973, w.e.f.01.11.1973.

1. Short title, extent and commencement.- (1) This Act may be called the 1[Karnataka]1 Electricity (Taxation on Consumption 2[or sale]2) Act, 1959.

² Inserted by Act of 31of 2013 w.e.f.05.03.2013.

1. Adapted by the Karnataka Adaptations of Laws Order, 1973, w.e.f.01.11.1973.

1. (2) It extends to the whole of the 1[State of Karnataka]1.
2. (3) The provisions of this Act, except section 13, shall be deemed to have come into force on the first day of July, 1959. 1. Adapted by the Karnataka Adaptations of Laws Order, 1973, w.e.f.01.11.1973.

1[(1) ‘Auxiliary consumption’ means electricity consumed by any electrical apparatus situated in a generating station, for generating electricity, including Captive Generating Plant, Co-Generating Plant or any other generating plant excluding any building used for housing the operating staff of a generating station;

(1A) 'Captive consumption' means electricity consumed for own use to the extent of not less than fifty one percent of 2[the electricity generated by own generating plant or a captive generating plant]2 situated within the State of Karnataka determined on an annual basis.

Provided that in respect of an association the own consumption of members to the extent of fifty one percent of the electricity generated shall be proportionate to their ownership share in the power plant, within a variation of ten percent determined on an annual basis. but does not include,-

1. (a) the electricity consumed in any building used for housing the operating staff; and
2. (b) the auxiliary consumption; and
3. (c) losses sustained in transformation and transmission.” (1B) ‘Chief Electrical Inspector to Government' means the Chief Electrical Inspector to Government appointed by the State Government under sub section (1) of Section 162 of the Electricity Act, 2003 (Central Act 36 of 2003) who is the head of the Department of Electrical Inspectorate;]1 1[(1C) “consumer” includes a local Authority, company or any other person to whom electricity is supplied by a licensee or by any other person on payment of charges or otherwise, and a licensee or other person who consumes electricity generated by himself, but does not include a licensee to whom electricity is supplied for supply to others, and the word “consume” with its grammatical variations shall be construed accordingly; Explanation.- Where a licensee to whom electricity is supplied for supply to others, himself consumes any part of the electricity he shall be deemed to be a consumer in respect of electricity so consumed;]1 1[(2) ‘electricity’ means electrical energy,-
4. (a) generated, consumed, transmitted, supplied or traded for any purposes; or
5. (b) used for any purpose except the transmission of message. (2A) 'electricity charges’ means, the electricity consumption charges payable by the consumer at the prescribed rates on the units of electricity supplied to such consumer; (2B) ‘Inspecting Officer’ means any officer appointed by the State Government as Inspecting Officer under section 6 of this Act)]1. (3)“licensee” means,- 1[(a) any person who has been granted or deemed to have been granted a license under section 14 of the Electricity Act, 2003 (Central Act 36 of 2003) and includes any person who had obtained sanction in accordance with section 14 of the Karnataka Electricity Reforms Act, 1999 (Karnataka Act 25 of 1999);]1 1[(b)]1
6. (c) the State Government when it is engaged in the business of supplying 1[electricity]1; 1[(3A) ‘non-licensee’ means any person not being a licensee who generates electricity either for his own consumption or for supply to any other person for a charge or otherwise, where license is not required as per the provisions of the Electricity Act, 2003 (Central Act 36 of 2003), rules and regulations made thereunder;]1

¹ Inserted by Act of 31of 2013 w.e.f.05.03.2013.

² Substituted by Act 24 of 2018 w.e.f.19.07.2018

¹ Substituted by Act 31 of 2013 w.e.f. 05.03.2013.

¹ Substituted by Act 31 of 2013 w.e.f. 05.03.2013.

¹ Substituted by Act 31 of 2013 w.e.f. 05.03.2013.

¹ Omitted by Act 31 of 2013 w.e.f. 05.03.2013.

¹ Substituted by Act 31 of 2013 w.e.f. 05.03.2013.

¹ Inserted by Act of 31of 2013 w.e.f.05.03.2013.

1. (4) “notification” means a notification published in the Official Gazette; 1[(4a) 'supply' in relation to electricity includes sale of electricity to a licensee or consumer. Provided that sale does not include where electricity supplied to licensee for supply to others]1. (5)“prescribed” means prescribed by rules made under this Act. 1[(6) 'unit’ means one kilowatt hour of electricity being measured by means of energy meter or trivector meter or any of the methods adopted to measure electricity]1.

¹ Inserted by Act of 31of 2013 w.e.f.05.03.2013.

¹ Inserted by Act of 31of 2013 w.e.f.05.03.2013.

4[3[(1)]3 Subject to the provisions of this Act, there shall be levied and paid to the State Government electricity tax on advolorem basis at 5[nine percent]5 on the charges payable on electricity sold to or consumed by, any consumers (excluding arrears) when electricity is supplied by licensee or non-licensee through licensee or otherwise; 5[Provided that when any person,-

1. (a) consumes electricity generated by himself, the person shall be liable to pay the electricity tax on the rate of charges of electricity levied by the licensee to other similar category of consumers;
2. (b) supplies at the rate less than the rate of charges of electricity levied by the licensee to other consumers or free of cost, the consumer shall be liable to pay the electricity tax on the rate of charges of electricity levied by the licensee to other similar category of consumers.]5 except,-
   • (i) the consumers under agricultural (irrigation pump sets upto and inclusive of ten horse power);
   • (ii) Bhagya Jyothi and kutira jyothi categories upto the extent of free consumption allowed by the State Government from time to time; and
   • (iii) the consumers covered under sub-section (2).]4 2[1[(2) Subject to the provisions of this Act, there shall be levied and paid to the State Government by every non licensee electricity tax on all the units of electricity consumed by himself at such rates specified by the State Government, by notification, from time to time but not exceeding the rates specified below, namely:-
3. (a) electricity tax not exceeding 50 paise per unit on captive consumption;
4. (b) electricity tax not exceeding 25 paise per unit on auxiliary consumption in a generating station whether Captive Generating Plant or cogeneration plant or otherwise, for the auxiliary loads exceeding 50 Kilo Watts.”.]1 ]2

¹ Substituted by Act 7 of 2003 w.e.f. 1.4.2003.

² Substituted by Act 5 of 2004 w.e.f. 16.10.2003.

³ Renumbered by Act 5 of 2004 w.e.f. 16.10.2003.

⁴ Substituted by Act 31 of 2013 w.e.f. 05.03.2013.

⁵ Substituted by Act 24 of 2018 w.e.f. 19.07.2018.

¹ Inserted by Act 5 of 2004 w.e.f. 16.10.2003.

² Substituted by Act 31 of 2013 w.e.f 05.03.2013.

1[(1)Every licensee shall collect and pay to the State Government at the time and in the manner prescribed, the electricity tax payable under this Act,-

1. (a) on the electricity charges included in the bill issued by him to the consumer. The tax so payable shall be a first charge on the amounts recoverable by the supplier for the electricity supplied by him and shall be a debt due by him to the State Government: Provided that where the licensee has been unable to recover the amounts due to him for the electricity supplied by him he shall not be liable to pay tax in respect of the electricity so supplied;
2. (b) on the units of electricity supplied to consumers by non licensee through the licensee.]1

¹ Substituted by Act 31 of 2013 w.e.f 05.03.2013

1. (2) A licensee may be granted a rebate of such amount, as may from time to time be determined by the State Government regard being had to the cost of collection of the electricity tax incurred by such licensee: Provided that the amount of rebate shall not exceed two per cent of the electricity tax collected by the licensee. 3[(3) Every person who consumes electricity generated by himself, and or who supplies electricity free of charge or otherwise to any other person through his own system, shall pay, or collect and pay, as the case may be, to the State Government, at the time and in the manner prescribed, the electricity tax payable under section 3 .2[ xxx]2]3
2. (4) When any consumer fails or neglects to pay at the time and in the manner prescribed, the amount of electricity tax due from him, the licensee or, as the case may be, the person supplying energy 2[ xxx ]2, may without prejudice to the right of the State Government to recover the amount under section 7, after giving not less than seven clear days’ notice in writing to such person, cut off supply of energy to such person; and he may, for that purpose, exercise the power conferred on a licensee by 3[sub-section (1) of section 56 of the Electricity Act, 2003 (Central Act 36 of 2003)]3, for the recovery of any charge or sum due in respect of energy supplied by him.
3. (5) Nothing in this section shall apply,-
   • (i) to any person who generates energy for the purpose of supplying it for the use of vehicles or vessels;
   • (ii) to the consumption of energy generated by means of generators not exceeding 1[ten kilowatts]1 in capacity.

¹ Substituted by Act 7 of 2003 w.e.f. 1.4.2003.

² Omitted by Act 7 of 2003 w.e.f. 1.4.2003.

³ Substituted by Act 31 of 2013 w.e.f 05.03.2013

¹ Substituted by Act 7 of 1998 w.e.f. 24.10.1997.

² Omitted by the Act 31 of 2013 w,e,f.05.03.2013.

³ Substituted by Act 31 of 2013 w.e.f 05.03.2013

Every licensee and every person not being a licensee referred to in sub-section (3) of section 4 shall keep books of account, in the prescribed form and submit to the State Government or to the prescribed officer, returns in such form and at such times as may be prescribed, 1[showing the units of energy consumed by him and the total units of energy supplied by him to consumers, and the 2[amount of tax payable thereon under section 3]2 and such other particulars as may be

prescribed]1.

¹ Substituted by Act 5 of 1982 w.e.f. 29.12.1981.

² Substituted by Act 7 of 2003 w.e.f. 1.4.2003.

(1) The State Government may, by notification, appoint Inspecting Officers to inspect the prescribed books of account kept under section 5.

1. (2) The Inspecting Officers shall perform such duties and exercise such powers as may be prescribed for the purpose of carrying into effect the provisions of this Act and the rules made thereunder.
2. (3) Every Inspecting Officer appointed under this section shall be deemed to be a public servant within the meaning of section 21 of the Indian Penal Code (Central Act XLV of 1860), and the Prevention of Corruption Act, 1947 (Central Act II of 1947).

Any sum due on account of electricity tax, if not paid at the time and in the manner prescribed, shall be deemed to be in arrears, and thereupon such interest not exceeding 1[twenty-four per cent]1 per annum which the State Government may by general or special order fix shall be payable on such sum; and the sum, together with any interest thereon, shall be recoverable either through a civil court or as an arrear of land revenue,

1. (i) if the sum was payable under sub-section (1) of section 4 either from the consumer or, subject to the proviso to the said sub-section from the licensee, at the option of the State Government;
2. (ii) if the sum was payable under sub-section (3) of section 4, either from the consumer or from the person supplying energy 2[ xxx ]2, at the option of the State Government, or from the person who generates energy for his own consumption. 1[(iii) the amount received or recovered towards the arrears of tax or revenue due to government shall be adjusted first towards penalty, balance if any towards the outstanding interest on the tax or revenue. After such adjustment the balance amount be adjusted towards tax or revenue;]1

¹ Substituted by Act 5 of 1982 w.e.f. 29.12.1981.

² Omitted by Act 31 of 2013 w,e,f.05.03.2013.

¹ Inserted by Act 31 of 2013 w,e,f.05.03.2013.

The State Government may, by notification, make an exemption or reduction in rate in respect of the tax payable under this Act,-

1. (i) on energy supplied or consumed for any specified purpose; or
2. (ii) by any class of consumers.

Notwithstanding anything contained in any law for the time being in force or in any judgment, decree or order of any Court or in any contract or instrument having force by virtue of any such law, but subject to section 8,-

1. (a) the performance of any contract by the State Government or the licensee in so far as it provides for reimbursement or indemnification in favour of the consumer, of or for any amount levied on or collected from him as tax under this Act shall be and shall be deemed always to have been dispensed with and any amount due or payable by the State Government or the licensee to a consumer by way of such reimbursement or indemnification under the contract, including the amount of interest, if any, shall be deemed to be wholly discharged.
2. (b) no Civil Court shall entertain any suit or proceeding against the State Government or the licensee for the recovery of any amount by way of such reimbursement or indemnification including interest, if any;
3. (c) all suits and proceedings (including appeals, revisions, attachments or execution proceedings) pending on the said date against the State Government or the licensee for the recovery of any such amount shall abate; Provided that nothing in this section shall entitle the State Government or the licensee for refund of any amount already paid by way of reimbursement or indemnification before the commencement of the Karnataka Electricity (Taxation on Consumption) (Amendment) Act, 1990]1.

¹ Inserted by Act 13 of 1990 w.e.f. 21.11.1980.

(1) If any person liable under section 5 to keep books of account or submit returns fails to keep or submit the same in the manner prescribed or obstructs 1[an Inspecting officer]1 in the exercise of his powers and duties under this Act, or contravenes any rule made under section 10, he shall, on conviction, be punished with fine which may extend to 1[five thousand]1 rupees.

¹ Substituted by Act 31 of 2013 w.e.f 05.03.2013.

1. (2) (a) Where an offence under sub-section (1) has been committed by a company, every person who, at the time the offence was committed, was in charge of, and was responsible to, the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly: Provided that nothing contained in this clause shall render any such person liable to any punishment provided in the aforesaid sub-section if he proves that the offence was committed without his knowledge or that he exercised all due diligence to prevent the commission of such offence.
   • (b) Notwithstanding anything contained in clause (a) where an offence under sub-section (1) has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to any neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly. Explanation.—For the purposes of this sub-section,—
   • (a) “company” means a body corporate, and includes a firm or other association of individuals; and
   • (c) “director” in relation to a firm means a partner of the firm.

(i) passed by any Inspecting Officer under the provisions of this Act, may appeal to the Chief Electrical Inspector to Government; and (ii) passed by the Chief Electrical Inspector to Government under the provisions of this Act, may appeal to the State Government. (2) The appeal shall be, in the prescribed form within such period, shall be verified in the prescribed manner, and shall be accompanied by a charges equal to five percent of the amount of the assessment objected to and challan for having remitted not less than twenty five percent of the electricity tax to be paid against assessment order under appeal.

¹ Inserted by Act 31 of 2013 w.e.f 05.03.2013.

1. (1) The State Government may, by notification, make rules to carry out the purposes of this Act.
2. (2) In particular and without prejudice to the generality of the foregoing power, the State Government may make rules,-
   • (a) prescribing the time and manner of payment of the electricity tax under sections 3 and 4;
   • (b) prescribing the form of the books of account to be kept and the times at which, the form in which and officers to whom the returns required by section 5 shall be submitted;
   • (c) prescribing the powers and duties of Inspecting Officers; and
   • (d) providing for any other matter for which there is no provision or insufficient provision in this Act and for which provision is, in the opinion of the State Government, necessary for giving effect to the provisions of this Act.

Every rule made under section 10 and every notification issued under section 8 or 14 shall be laid as soon as may be after it is made or issued before each House of the State Legislature while it is in session for a total period of thirty days which may be comprised in one session or in two or more sessions and if, before the expiry of the said period, either House of the State Legislature directs any modification in such rule or notification or directs that such rule or notification shall not have effect, and if the modification or direction is agreed to by the other House, the said rule or notification, as the case may be, shall thereafter have effect only in such modified form or be of no effect, as the case may be.

Consumption) Act, 1950 (Mysore Act XX of 1950), as in force in the Mysore Area, Part II of the Bombay Finance Act, 1932 (Bombay Act II of 1932) as in force in the 1[Belgaum Area]1 and the Madras Electricity Duty Act, 1939 (Madras Act V of 1939), as in force in the 1[Mangalore and Kollegal Area,]1 shall stand repealed:

Provided that such repeal shall not affect,-

1. (a) the previous operation of the said enactments or anything duly done or suffered thereunder;
2. (b) any right, privilege, obligation or liability, acquired, accrued or incurred under the said enactments; or
3. (c) any penalty, forfeiture or punishment incurred in respect of any offence committed against the said enactments; or
4. (d) any investigation, legal proceeding (including assessment proceeding) or remedy in respect of any such right, privilege, obligation, liability, forfeiture or punishment as aforesaid: and any such investigation, legal proceeding or remedy may be instituted, continued or enforced and any such penalty, forfeiture or punishment may be imposed as if this Act had not been passed. 1. Adapted by the Karnataka Adaptations of Laws Order, 1973, w.e.f. 01.11.1973.

Notwithstanding such appeal,-

1. (i) any right, privilege, obligation or liability acquired, accrued or incurred under the said Ordinance;
2. (ii) any penalty, forfeiture or punishment incurred in respect of any offence committed against the said Ordinance; and
3. (iii) any appointment, notification, order, rule or form, made or issued or anything done or any action whatsoever taken under the said Ordinance; shall be deemed to have been acquired, accrued or incurred, or made, issued, done or taken under this Act at the relevant time. 1. Adapted by the Karnataka Adaptations of Laws Order, 1973, w.e.f.01.11.1973.

(1) If any difficulty arises in giving effect to the provisions of this Act in consequence of the transition to the said provisions from the provisions of the enactments repealed by section 12 the State Government may, by notification, make such provisions as appear to it to be necessary or expedient for removing the difficulty.

1. (2) If any difficulty arises in giving effect to the provisions of this Act (otherwise than in relation to the transition from the provisions of the enactments repealed by section 12), the State Government may, by notification, make such provisions, not inconsistent with the purposes of this Act as appear to it to be necessary or expedient for removing the difficulty. NOTIFICATION No. DE 61 PSR 2001, Bangalore Dated 10th January, 2002. (Published in The Karnataka Gazette, Part IV-A Extraordinary No. 494 dated 4.4.2002.) In exercise of the powers conferred by sub-section (2) of section 1 of the Karnataka Electricity Board (Recovery of Dues) and other Law (Amendment) Act, 2001 (Karnataka Act No. 27 of 2001) the Government of Karnataka hereby appoints the 10th day of January 2002 to be the date on which all the provisions of the said Act shall come into force. By Order and in the name of the Governor of Karnataka, B.K. Srinivasa Rao Under Secretary to Government, Energy Department. ***** KARNATAKA ACT NO. 24 OF 2018 (First Published in the Karnataka Gazette Extra-ordinary on the 19th Day of July 2018) THE KARNATAKA ELECTRICITY (TAXATION ON CONSUMPTION OR SALE) (AMENDMENT) ACT, 2018 (Received the assent of the Governor on the 18th day of July 2018) An Act further to amend the Karnataka Electricity (Taxation on Consumption or Sale) Act, 1959. Whereas it is expedient further to amend the Karnataka Electricity (Taxation on Consumption or Sale) Act, 1959 (Karnataka Act 14 of 1959) for the purposes hereinafter appearing; Be it enacted by the Karnataka State Legislature in the sixty ninth year of the Republic of India as follows:- 1. Short title and commencement.- (1) This Act may be called the Karnataka Electricity (Taxation on Consumption or Sale) (Amendment) Act, 2018.
2. (2) It shall come into force at once. Sections 2 and 3 are incorporated in the principal Act