Cess on power projects quashed
HP court order saves PSEB 820 cr
By Our Legal Correspondent

CHANDIGARH, Oct 11 — In a significant judgement the cess imposed by the Himachal Pradesh Pollution Control Board on hydroelectric projects of the Punjab State Electricity Board and Haryana State Electricity Board, was quashed today by the Himachal Pradesh High Court as per the decision reported here today, saving the Punjab State Electricity Board Rs 820 crore.

A Division Bench comprising Ms. Justice Kamlesh Sharma and Mr Justice Surinder Sarup of the Himachal Pradesh High Court quashed the notification dated April 16, 1993 whereby the hydroelectric generating projects were included in Schedule I of the Water (Prevention of Control of Pollution) Cess Act, 1977.

Through this notification, the state pollution control boards were authorised to levy cess on water consumed by hydroelectricity projects if the projects were allegedly causing pollution after water consumption. On this basis, the HP Pollution Control Board had demanded a cess amounting to crores of rupees for the various hydroelectric projects situated in Himachal Pradesh, including the Bhakra Nangal project, Dehar project, Pong Dam and Shanen power project which were under the financial control of the PSEB. The state of Haryana and National Thermal Project Corporation were also affected by the action of the HP Pollution Control Board.

The PSEB, NTPC, HSEB and the Bhakra-Beas Management Board challenged this notification before the HP High Court. The PSEB which was the most affected, had filed three separate writ petitions.

The main grounds taken in the petitions were that the notification could not be acted upon since the mandatory provisions enshrined under Section 16 (1) and 16 (2) of the Water (Prevention of Control of Pollution) Cess Act, 1977, had not been followed Section 16 (1) and (2) provided that before a notification could be enforced it had to be laid before Parliament and the Union Government was required to get its approval. It was submitted before the High Court that no such approval had been taken for the case as provided under the Act.

It was further urged before the court that no pollution was being caused by these projects in the process of generating electricity and water was simply falling on the turbines which made the turbines move at great speed resulting in power generation. Water was then left in the same state. Various other legal objections were raised before the court urging that there was no method to gauge the consumption since no meters had been installed. Besides, no standards had been fixed on violation of which the Pollution Control Board could levy cess.

The PSEB was represented by Mr H.S. Mattewal Punjab Advocate-General, with Mr Deepak Sibal, the HSEB by the then Advocate-General, Mr H S Hooda, while the BBMB was represented by Mr D S Nehra with Mr Bawa. The Union of India was represented by the Additional Solicitor-General of India, Mr Kirat Rawal, the state of Himachal Pradesh by its Advocate-General and the HP Pollution Control Board was Ms Shyama Dogra.