India: Karnataka High Court Rules On Entitlement Of Software Industries To Concessional Rate Of Power Tariff Under HT2(A) Category

On 27 November 2017, the Karnataka High Court (Court) in Cognizant Technology Solutions India Pvt Ltd v. Bangalore Electricity Supply Company and others (WP 36174/2017) decided issues regarding the entitlement of software development industries to concessional power tariff under HT 2(a) category i.e., industrial tariff. The Court also decided on the validity of various circulars of the Government of Karnataka (Government) and Bangalore Electricity Supply Company (BESCOM/Respondent), which prescribed the fulfilment of certain terms and conditions in order to qualify for the concessional tariff and consequent, imposition of commercial tariff on the ground of non-fulfilment of the procedural requirements.

Factual background

Cognizant Technologies Private Limited (Cognizant/Petitioner) had set up a 100% software oriented unit under the Software Technology Park Scheme (STP Scheme).

BESCOM, issued a demand notice dated 26 July 2017 (Demand Notice), demanding payment of commercial tariff on the ground that the Petitioner was not entitled to the concessional power tariff since it failed to obtain requisite certificates from the Director of Information Technology and Biotechnology (ITBT), as stipulated in various circulars issued by the Government and BESCOM.

The Demand Notice included a threat of disconnection of supply of electricity in the event the Petitioner failed to pay commercial tariff. Aggrieved by the demand notice, the Petitioner filed the writ petition challenging, in particular, the demand notice issued by BESCOM and in a larger context, the validity of the various circulars.

Main contentions of the Petitioner

  • The Petitioner is registered with the Software Technology Parks of India (STPI) under the STP Scheme as a "software industry" and a certificate to that effect was issued by STPI on 3 July 2000.
  • The Millennium IT Policy, 2000 (Millennium Policy) of the Government treats software companies as industrial consumers, and not commercial consumers and electricity tariff applicable to such industrial consumers will be levied on such companies.
  • Subsequently, on 6 December 2006, the Director of KBITS (a society established to achieve the objectives contained in the Millennium Policy) issued a certificate, stating that the Petitioner is entitled to HT2(a) tariff.
  • On 7 November 2007, Secretary, ITBT issued a communication, expressly stating that the Petitioner is entitled to concessional power tariff from 3 July 2000, by virtue of being registered under the STP Scheme.
  • Being entitled to the concessional power tariff, the benefit cannot be withdrawn by issuance of circulars by the Government or BESCOM, which are contrary to the Millennium IT Policy and the earlier circulars of the Government.
  • BESCOM has not challenged the status of the Petitioner, as a "software industry" and as such, the benefit of concessional tariff cannot be taken away.
  • When a department of the Government grants the benefit of concessional tariff to the Petitioner, BESCOM, which is a fully owned Government company cannot issue circulars to the contrary.  Such actions, in fact, have the effect of nullifying the benefit extended to software industry.

Main contentions of the Respondent

  • The right of the Petitioner to seek concessional power tariff was subject to it making an application to KBITS as per the circular of the Government dated 10 January 2002 and verification by KBITS of the power requirements of the Petitioner.
  • Cognizant, having made an application to KBITS only in 2006, is entitled to concessional tariff after the application was made and not prior to it.
  • The Electricity Ombudsman, in a similar case, held that the requirement of making such application to KBITS cannot be done away with and benefit of concessional tariff cannot be extended without there being an application.
  • When the right of concessional tariff is subject to fulfilment of certain requirements, the same ought to be fulfilled without which the benefit cannot be extended.

Decision of the Court

The Court, after hearing the parties, allowed the writ petition holding that Cognizant being in the business of software development is entitled to concessional power tariff. The Court observed that the Petitioner had obtained all relevant certificates from the STPI, Department of Industries and Commerce, and also from the Director of ITBT. The Court further noted that the certificate issued by the Director of ITBT did not find or observe that the Petitioner was not engaged in the business of software development throughout or that the Petitioner was not carrying on any other incidental or ancillary business other than software development.  Therefore, the Court held that consumption of power and levy of tariff could not be segregated into two or more parts i.e., concessional tariff under HT2(a) for part of the consumption and commercial tariff for the remaining.

The Court held that merely insisting upon the Petitioner to obtain such certificate from the Director of ITBT in 2002 when the Millennium Policy was introduced does not disentitle Petitioner when it claims that it was engaged in software development throughout. The Court also found that the ground of non-compliance of conditions stipulated in the circulars of government and BESCOM was not reasonable, plausible nor sufficient to ignore or brush aside the certificates issued by other departments of Government. The Court went on to hold that the contention of BESCOM has no merit or substance and therefore allowed the writ petition with costs.


The circulars of Government and BESCOM, which prescribed conditions contrary to the Millennium Policy had created havoc and consequent demand notices raised huge demands on the software industry. Such reversal of policy had, in fact, discouraged and dampened the software industry in Karnataka. The judgment of the Court has, in effect, nullified all the circulars of the Government and BESCOM which were contrary to the Millennium Policy and affirmed the entitlement of an industry engaged in software development to concessional power tariff.

The content of this document do not necessarily reflect the views/position of Khaitan & Co but remain solely those of the author(s). For any further queries or follow up please contact Khaitan & Co at

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions