M/S. Sms Pharmaceuticals LTD. vs. The State Of Andhra Pradesh

Held

The High Court disposed of the writ petition in terms of a common order dated June 26, 2025, passed by a Division Bench in W.P.No.29672 of 2023 & batch. The Division Bench's order upheld the amendment to Section 3 of the Electricity Duty Act by Act 23 of 2024, granting power to the government to fix duty rates between six paise and one rupee per unit. However, it set aside amendments granting power to identify consumer categories for fixing tariff rates. The proviso for a minimum duty of 6 paise per unit in the absence of notified rates was upheld. Amendments to Section 7 by Act 23 of 2024 were struck down. Crucially, G.O.Ms.No.7, dated April 8, 2022, was struck down. The government was permitted to collect duty at 6 paise per unit from the date Act 10 of 2021 was published until the rate was modified lawfully. G.O.Ms.No.22, dated October 23, 2024, was also struck down, with G.O.Ms.No.277, dated December 9, 1994, remaining in force, allowing licensees to recover duty at 6 paise per unit, subject to exemptions.

Facts

The petitioner, M/s. SMS Pharmaceuticals Ltd., filed a writ petition challenging G.O.Ms.No.7, Energy (Power-III) Department, dated April 8, 2022, which levied electricity duty at Re 1/- per unit on energy sales to industrial and commercial consumers. The petitioner argued this G.O. was vitiated by colorable exercise of power, overreach, illegality, arbitrariness, and violated Articles 14 and 19(1)(g) of the Constitution. They also challenged the consequential action of the Eastern Power Distribution Company of Andhra Pradesh Ltd. (EPDCL) in levying and collecting this duty without prior sanction from the State Government under Section 7(1) of the Electricity Duty Act, 1939. The petitioner sought to set aside the notification, demands, and requested a refund or adjustment of the excess duty collected.

Key Issues

1. Whether G.O.Ms.No.7, dated April 8, 2022, levying electricity duty at Re 1/- per unit on industrial and commercial consumers, is vitiated by colorable exercise of power, gross overreach, illegality, arbitrariness, and in violation of Articles 14 and 19(1)(g) of the Constitution, and whether it interferes with statutory policy notifications of the Central Government and the State Electricity Regulatory Commission. 2. Whether the consequential action of the 2nd Respondent in levying and collecting electricity duty from April 2022, based on the impugned G.O., is illegal, arbitrary, and unauthorized without previous sanction from the State Government under Section 7(1) of the Electricity Duty Act, 1939. Petitioner's arguments: The petitioner contended that G.O.Ms.No.7 was illegal, arbitrary, and discriminatory, violating constitutional provisions. They also argued that the collection of duty by EPDCL was unauthorized due to lack of proper sanction. Respondents' arguments: The respondents did not explicitly record their arguments in the provided text. However, the judgment indicates that the issue was covered by a common order of the Division Bench.