The Supreme Court of India suspended the refund of water cess to power firms in Himachal Pradesh. This decision overturns a previous ruling by the High Court that had directed the state to refund the collected cess. The suspension impacts several hydroelectric projects in the region. The court’s order aims to address the legalities surrounding the imposition and refund of the water cess.
New Delhi: The Supreme Court recently suspended a directive from the Himachal Pradesh High Court, which mandated the state government to reimburse water cess imposed on hydroelectric power companies within the state.
This directive a component of a High Court judgment that invalidated the Himachal Pradesh Water Cess on Hydropower Generation Act of 2023.
A Bench consisting of Chief Justice of India DY Chandrachud and Justices JB Pardiwala and Manoj Misra declined to grant a stay on the High Court’s ruling to invalidate the Act. However, the Supreme Court issued a notice regarding the State’s appeal and has temporarily suspended the High Court’s order to reimburse any water cess collected by the State from power companies in Himachal Pradesh.
The order stated,
“The notice is issued, returnable on July 11, 2024. The directive in the challenged judgments and orders regarding the reimbursement of the collected cess will be suspended until further instructions,”
In 2023, the Himachal Pradesh government introduced the Himachal Pradesh Water Cess on Hydropower Generation Act. The primary objective of this legislation to improve the state’s revenue generation by imposing a water cess on hydropower production. At the time of the law’s passage, there were 172 hydropower projects operating in the state. However, the legislation faced strong opposition from the power generation companies.
Subsequently, a group of 39 power generation companies filed petitions in the Himachal Pradesh High Court, challenging the validity of this law. The companies argued that the state lacked the legislative competence to enact such a law. The state government’s defence, that since water is a subject matter under the state’s purview, as per Entry 17 of List-II, the state had the necessary legislative authority to introduce this law.
The Union government, on the other hand, supported the stand taken by the power generation companies.
In March of this year, the High Court ruled that the Act imposed a tax on the generation of electricity, which, beyond the state’s competence. As a result, the court quashed the law and ordered the state to refund the cess amounts collected from the power generation companies.
This decision has now been challenged by the Himachal Pradesh government through an appeal, which will be heard by the Supreme Court in July.
The state of Himachal Pradesh represented by a team of senior lawyers, including Dinesh Dwivedi, Anup Rattan, and Kapil Sibal, as well as the Additional Advocate General Vaibhav Srivastava. They assisted by a group of advocates, including Sugandha Anand, Krishnam Mishra, Aprajita Jamwal, Nishant Singh, Vineeta Tiwari, Puneet Rajta, Shimpy Arman Sharma, Pooja Sushil Sharma, and Rajnandini.
On the other side, Himachal Sorang Power Pvt. Ltd. represented by Senior Advocate Dr. Aditya Sondhi, Advocate-On-Record Geet Ahuja, and Advocates Chaitanya Ahuja, Meghna TM, and Navami Krishnamurthy.
Read Also: Himachal HC Extends Anticipatory Bail for Ashish Sharma & Rakesh Sharma
Solicitor General Tushar Mehta, along with Advocates Adarsh Tripathi, Vikram Singh Baid, and Ajitesh Garg, represented the National Hydroelectric Power Corporation (NHPC).
Senior Advocate Dama Seshadri Naidu, with a team comprising Advocates Divyakant Lahoti, Mallika Luthra, Shreya Gokel, Praveena Bisht, Vindhya Mehra, Kartik Lahoti, Kumar Vinayakam Gupta, and Shivangi Malhotra, appeared on behalf of Everest Power.
Senior Counsel Devashish Bharuka and Sujit Ghosh represented subsidiaries of the Greenko Budhil Hydro Power Private Limited Group.
Read Order: [State of Himachal Pradesh and ors vs NHPC Ltd and anr].