In a setback to Chief Minister Sukhvinder Singh Sukhu led Congress government in the state, the Himachal Pradesh High Court has declared ‘water cess’ as unconstitutional.
The Sukhu government, soon after assuming charge, had decided to impose ‘Water Cess’ on power projects to generate Rs 1800 crore in the cash-strapped state.
Water Cess on Hydropower Generation Bill was introduced in the Assembly on March 14, 2023 and was passed two days later on March 16.
The government had also set up a Water Commission that issued notice to 173 power producing companies to collect the Rs 871 crore water cess. While some private companies submitted to it and started paying water cess to the state government, public sector companies moved the HC stating it as unconstitutional and urging the court to quash the same.
The Division Bench comprising Justice Trilok Chauhan and Justice Satyen Vaidya deciding on the writ petition filed by 40 hydropower companies of the state that challenged the Water Cess in the HC last year, has declared it unconstitutional.
In its 100-page judgement, the HC stated that 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 ultra vires the Constitution.
The Division Bench ordered the respondents to refund the amount, if any, recovered by the respondents from the petitioners under the provisions of Himachal Pradesh Water Cess from Hydro Power Generation Act, 2023 and Rules framed thereunder are ordered to be refunded within four weeks from today.