M/S.Sri Satya Sai Ice Factory vs. The State Of Andhra Pradesh

Held

The Court, by referring to a common order passed by a Division Bench of the same High Court in W.P.No.29672 of 2023 & batch dated 26.06.2025, held that G.O.M.S.NO. 7, dated 08.04.2022, is struck down. The Division Bench found that while the amendment to Section 3 of the Duty Act, empowering the government to fix rates between six paise and one rupee per unit, was upheld, the power to categorize consumers for fixing different rates was struck down. Consequently, the fixation of different rates for different categories of consumers by the government had to be set aside. The proviso to Section 3, fixing a minimum rate of 6 paise per unit, was held to be valid. The Court also struck down G.O.Ms.No.22, dated 23.10.2024, as it permitted the collection of duty fixed under the struck-down G.O.Ms.No.7. However, the government was entitled to collect duty at the rate of 6 paise per unit. G.O.Ms.No.277, dated 09.12.1994, which was not challenged, remains in force, permitting licensees to recover duty at 6 paise per unit. The writ petition was disposed of in terms of this order.

Facts

The petitioner, M/s. Sri Satya Sai Ice Factory, challenged the action of the State of Andhra Pradesh (1st respondent) in issuing G.O.M.S.NO. 7 dated 08-04-2022, which exorbitantly increased the electricity duty levy from Rs. 0.06 per unit to Rs. 1.00 on energy sales to commercial and industrial consumers. The petitioner argued this was a colourable exercise of power under Section 3(1) of the Andhra Pradesh Electricity Duty Act, 1939. Consequently, the 2nd respondent, Andhra Pradesh Eastern Power Distribution Corporation Limited (APEPDCL), levied electricity duty at the enhanced rate, reflected in L.T. bills from April 2022. The petitioner sought to set aside the G.O. and the consequential bills, and to direct the refund or adjustment of excess duty paid. An interim order suspending the G.O. was passed on 06.02.2024.

Key Issues

1. Whether G.O.M.S.NO. 7, dated 08-04-2022, issued by the 1st respondent, is valid, considering it increased electricity duty from Rs. 0.06 to Rs. 1.00 per unit for industrial and commercial consumers, and whether this action was a colourable exercise of power under Section 3(1) of the Andhra Pradesh Electricity Duty Act, 1939? 2. Whether the consequential action of the 2nd respondent in levying electricity duty at the enhanced rate, as reflected in L.T. bills from April 2022, is arbitrary, illegal, and violative of fundamental rights, principles of natural justice, the National Tariff Policy 2016, and the common order on Tariff for Retail Sale of Electricity for FY 2022-23 passed by the Andhra Pradesh Electricity Regulatory Commission? Petitioner's arguments: The G.O. was an arbitrary, illegal, unjust, unfair, unreasonable, and excessive increase in electricity duty, violating constitutional rights, principles of natural justice, and relevant policies and orders. The increase was a colourable exercise of power under Section 3(1) of the Act. Respondents' arguments: The judgment notes that learned counsel for both sides submitted the issue was covered by a common order of the Division Bench in W.P.No.29672 of 2023 & batch. The judgment then proceeds to discuss the findings of that Division Bench order.