Supreme Court stays Himachal Pradesh High Court order to refund water cess levied on hydropower companies in state

The order comes as big relief to Himachal Government which intended to generate around Rs 2,000 crore annually by levying water cess

A Bench led by Chief Justice of India DY Chandrachud issued notice to National Thermal Power Corporation and others and posted the matter for further hearing on July 11. File photo

Tribune News Service

Satya Prakash

New Delhi, May 23

In a big relief to the Himachal Pradesh Government, the Supreme Court has stayed a Himachal Pradesh High Court order requiring it to refund water cess levied on hydropower companies in the state.

Acting on a petition filed by the State of Himachal Pradesh against the March 5 verdict of the high court, a Bench led by Chief Justice of India DY Chandrachud issued notice to National Hydroelectric Power Corporation (NHPC) and others and posted the matter for further hearing on July 11.

“The direction in the impugned judgments and orders for refund of the cess collected shall remain stayed, pending further orders,” the Bench said in its May 17 order.

The stay order comes as a big relief to the Himachal Government which intended to generate around Rs 2,000 crore annually by levying water cess on more than 170 hydel power projects in the state.

The high court had ordered refund of the amount recovered from hydel projects under the Himachal Pradesh Water Cess on Hydropower Electricity Generation Act, 2023 as water cess in four weeks.

The high court had also set aside the notices issued to the power generation companies by the state government and the Himachal Pradesh State Commission for Water Cess on Hydropower Generation.

Besides Himachal Pradesh, Uttarakhand, Jammu and Kashmir and Sikkim have imposed water cess on hydropower generation even as the Union Power Ministry termed it illegal and dozens of power producers challenged its validity.

The Himachal Pradesh High Court had set aside the water cess levied on hydropower generation companies, terming it unconstitutional and beyond the legislative competence of the state.

“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 in terms of Articles 246 and 265 of the Constitution of India and, thus, rendered ultra vires,” the high court had said.

It had declared ultra vires Section 10 and section 15 of the Himachal Pradesh Water Cess on Hydropower Electricity Generation Act, 2023 that were applicable to the existing projects. The high court also had quashed the Himachal Pradesh Water Cess on Hydropower Electricity Generation Rules, 2023.

The August 26, 2023 notification of the state government failed to prescribe the measure of tax and instead proceeded to prescribe the tariff rate without any indication or measure on which such tariff rate would be applied, the high court had noted.

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