M/S Sree Dinakar Fabrics PVT LTD vs. 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 power to the government to fix duty rates between six paise and one rupee per unit. However, it set aside amendments to Section 3 by Act 10 of 2021 and Act 23 of 2024, which granted power to identify consumer categories for tariff fixing. The proviso to Section 3, stipulating a minimum duty of 6 paise per unit in the absence of notified rates, was left 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. The government was held entitled 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 lawfully. G.O.Ms.No.22, dated 23.10.2024, was also struck down, with G.O.Ms.No.277, dated 09.12.1994, remaining in force, permitting licensees to recover duty at 6 paise per unit.

Facts

The petitioner, M/s Sree Dinakar Fabrics Pvt Ltd, challenged 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 argued this was an illegal and arbitrary exercise of power, interfering with central government notifications and the State Electricity Regulatory Commission's functions. They also challenged the consequential action by the Eastern Power Distribution Company of Andhra Pradesh Ltd (EPDCL) in levying this duty without prior sanction under Section 7(1) of the Electricity Duty Act, 1939. The petitioner sought a declaration that the G.O. and the demands were illegal, and requested a refund or adjustment of excess duty paid. The dispute pertains to electricity duty levied from April 2022 onwards.

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 industrial and commercial consumers, is vitiated by colorable exercise of power, gross overreach, interference with central government policy, illegality, arbitrariness, and violation of Articles 14 and 19(1)(g) of the Constitution, turning on Section 3 of the Electricity Duty Act, 1939. 2. Whether the consequential action of the 2nd Respondent in levying and collecting electricity duty 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 contentions: The G.O. was an illegal, arbitrary, and unreasonable exercise of power, constituting hostile discrimination and violating constitutional provisions. The levy was unauthorized due to lack of prior sanction under Section 7(1) of the Electricity Duty Act, 1939. Revenue/State's contentions: Not recorded in the judgment.