Zuari Cement Limited vs. The State Of Andhra Pradesh

Held

The High Court disposed of the writ petition in terms of a common order passed by its Division Bench in W.P.No.29672 of 2023 & batch dated 26.06.2025. The Division Bench's order upheld the amendment to Section 3 of the Electricity Duty Act, 1939, by Act 23 of 2024, granting the government power to fix duty rates between six paise and one rupee per unit. However, it set aside amendments granting power to identify consumer categories for tariff fixing. The proviso for a minimum duty of 6 paise per unit was unaffected. Amendments to Section 7 by Act 23 of 2024 were struck down. Crucially, G.O.Ms.No.7, dated 08.04.2022, was struck down, but the government was permitted to collect duty at the rate of 6 paise per unit from the date Act 10 of 2021 was published until the rate was modified legally. G.O.Ms.No.22, dated 23.10.2024, was also struck down, but G.O.Ms.No.277, dated 09.12.1994, remained in force, allowing licensees to recover duty at 6 paise per unit.

Facts

Zuari Cement Limited (Petitioner) filed a writ petition challenging G.O.Ms.No.7, Energy (Power-III) Department, dated 08.04.2022, which levied electricity duty at Re 1/- per unit on energy sales to industrial and commercial consumers. The Petitioner sought to declare this notification as illegal, arbitrary, and in violation of constitutional provisions, and to set aside consequential demands for electricity duty levied by the Southern Power Distribution Company of Andhra Pradesh Ltd. (Respondent No. 2). The Petitioner also sought a refund or adjustment of excess electricity duty collected. The writ petition was filed under Article 226 of the Constitution of India.

Key Issues

1. Whether G.O.Ms.No.7, Energy (Power-III) Department, dated 08.04.2022, levying electricity duty at Re 1/- per unit on energy sales to industrial and commercial consumers, is vitiated by colorable exercise of power, gross overreach, illegality, arbitrariness, and violation of Articles 14 and 19(1)(g) of the Constitution, and whether it interferes with the statutory policy notifications of the Central Government and the powers of the State Electricity Regulatory Commission. 2. Whether the consequential action of the 2nd Respondent in levying and collecting electricity duty on the Petitioner's HT bills from April 2022, without previous sanction from the State Government under Section 7(1) of the Electricity Duty Act, 1939, is illegal, arbitrary, and unauthorized. Petitioner's arguments: The Petitioner contended that the impugned notification was illegal, arbitrary, and violated constitutional provisions. They argued that it constituted a colorable exercise of power and an overreach, interfering with central government policies and the regulatory powers of the State Electricity Regulatory Commission. They also argued that the collection of duty was unauthorized due to lack of proper sanction. Respondent's arguments: The judgment does not explicitly record arguments from the Respondent side. However, it notes that the issue was covered by a common order of the Division Bench.