Court Declares Section 3(1)(xi) of the Himachal Pradesh Electricity (Duty) Act, 2009 Unconstitutional
In a landmark judgment, the Himachal Pradesh High Court has quashed the imposition of electricity duty on electrical energy generated by diesel generating sets for self-consumption, ruling it unconstitutional. The Division Bench, comprising Justices Vivek Singh Thakur and Ranjan Sharma, held that Section 3(1)(xi) of the Himachal Pradesh Electricity (Duty) Act, 2009, which allows for the levy of duty on self-generated energy for own consumption, is beyond the legislative competence of the State.
The case was brought before the court by M/s Ruchira Papers Ltd., challenging the levy of electricity duty on energy generated by diesel generators for their own use. The petitioner contended that such a levy was arbitrary and exceeded the scope of Section 3 of the 2009 Act, which does not authorize the imposition of duty on energy that is generated and consumed by the consumer.
The court concurred with the petitioner, stating that Section 3 of the Act only permits the levy of duty on energy consumed by the Board, licensee, electricity trader, or generating company, or supplied by them to the consumer. The court further clarified that the legislative competence of the State, as per Entry 53 of List II (State List) of the Seventh Schedule to the Constitution of India, does not extend to taxing the generation of electricity for self-consumption.
In its defense, the Himachal Pradesh State Electricity Board argued that the levy was a fiscal policy matter within the State's legislative competence and aimed at promoting sustainable energy usage by discouraging the use of polluting diesel generators. However, the court found these arguments unconvincing, emphasizing that the Act did not provide for such a levy on self-generated power.
The judgment sets a significant precedent regarding the limits of the State's power to impose duties on electricity and reinforces the principle that taxation powers must be exercised within the confines of the law.
Bottom line:-
Levy of electricity duty on electrical energy generated by diesel generating sets for self-consumption by a consumer is beyond the scope of Section 3 of the Himachal Pradesh Electricity (Duty) Act, 2009, as the Act does not empower the State to levy duty on self-generated and self-consumed electricity.
Statutory provision(s): Himachal Pradesh Electricity (Duty) Act, 2009 Section 3, Constitution Of India - Entry 53 of List II, Bharatiya Nyaya Sanhita, Bharatiya Nagarik Suraksha Sanhita, Bharatiya Sakshya Adhiniyam
M/s Ruchira Papers Ltd. v. HPSEBL, (Himachal Pradesh)(DB) : Law Finder Doc id # 2955890
