Water Cess on Hydrogen Generation Is Set Aside by the Himachal Pradesh High Court
The Himachal Pradesh High Court declared the Act invalid and beyond the state government’s legislative purview and thereby overturned the imposition of a water cess on hydropower generation today.
A 100-page ruling in the case was written by a Division Bench of the High Court, which was presided over by Justices Tarlok Singh Chauhan and Satyen Vaidya. According to Articles 246 and 265 of the Indian Constitution, “the provisions of the Himachal Pradesh Water Cess on Hydropower Electricity Generation Act, 2023, are declared to be beyond the legislative competence of the state government and, thus, rendered ultra vires,” the ruling states. The Himachal Pradesh Water Cess on Hydropower Electricity Generation Rules, 2023, have been declared void by the court. The Himachal Pradesh Water Cess on Hydropower Electricity Generation Act, 2023, Sections 10 and 15, which were applied to the ongoing projects, were deemed extra vires by the court.
The court judgment is a major setback to the Himachal government’s plans to bring in around Rs 2,000 crore in income a year. About 175 hydroelectric plants in the state of Himachal Pradesh were subject to a water cess, which the Union Power Ministry also declared unlawful. It has faced opposition from energy providers. Aside from Himachal Pradesh, water restrictions on hydroelectric production have been enforced by Uttarakhand, Jammu & Kashmir, and Sikkim.
The Himachal Pradesh Water Cess on Hydropower Electricity Generation Act, 2023, stipulated that the revenue obtained from hydropower projects in the form of water cess must be reimbursed within four weeks, as per the court’s judgment. The Himachal Pradesh State Commission and the state government’s notifications regarding water cess on hydropower generation were also declared unlawful by the court, which likewise set them aside.
The court noted that the August 26, 2023, announcement had not specified the tax measure; instead, it had specified the tariff rate without providing a measure or indication of how the tariff rate would be implemented.
