Power Grid's subsidiary moves HC over Rs 872 cr tax demand

A subsidiary of Power Grid Corporation of India Ltd has moved the Delhi High Court against the Income Tax department's demand of Rs 872 crore as tax on charges collected by it from defaulting states.
In its petition, Power System Operation Corporation Limited (POSOCO), said the Central Electricity Regulatory Commission (CERC) has devised a commercial mechanism to penalise those who breach discipline of the grid, while drawing power, and compensating those impacted by such breach.
It said that under the commercial mechanism devised by CERC, POSOCO levies unscheduled interchange charges, congestion charges, market splitting congestion amount and reactive energy charge on those in breach of grid discipline.

The petition, filed through advocate Sumeet Pushkarna, also said that the surplus of the money collected under the various heads is transferred into the Power System Development Fund (PSDF) and it is not utilised by it for any other purpose other than to develop and maintain the power grid.
The case is likely to be heard by the high court on Monday.
POSOCO consists of five Regional Load Despatch Centres and a National Load Despatch Centre (NLDC) was formed in March 2010 to handle the power management functions of Power Grid Corporation of India Ltd.

It has said that the funds collected by it by penalising those who breach the grid discipline is public money and "the demand of income tax on such income by the income tax department is not justified".

In its petition, POSOCO contended that the income tax department "has failed to appreciate that the said amount is public money and not personal income of the petitioner".
It has sought setting aside of the income tax department's demand notice "wherein funds in PSDF has been considered as income of the petitioner which is erroneous as the same is public money".