M/S Greenko Sumez Hydro Energies PVT LTD vs. The State Of Hp And Others

Held

The Court held that the Himachal Pradesh Water Cess on Hydropower Electricity Generation Act, 2023, is beyond the legislative competence of the State Government and is therefore ultra vires the Constitution, violating Articles 246 and 265. The reasoning was that the Act, while identifying the taxable event, the person liable to pay tax, and the rate of tax, critically failed to prescribe the 'measure of tax' – the value on which the tax rate would be applied. Section 15 of the Act and the subsequent Notification dated 26.08.2023 were found to be deficient in this regard, with the measure of tax being vague. The Court also found that the delegation of power to fix rates lacked legislative policy or guidance. Consequently, the Himachal Pradesh Water Cess on Hydropower Electricity Generation Rules, 2023, were also quashed. The Court declared Sections 10 and 15 of the Act, as applied to existing projects, ultra vires. The Court ordered the refund of any water cess recovered from the petitioners and quashed recovery notices. The issue of promissory estoppel was rendered academic.

Facts

Numerous writ petitions were filed by various hydropower generation companies, including N.H.P.C. Ltd., Malana Power Company Ltd., and N.T.P.C. Ltd., challenging the Himachal Pradesh Water Cess on Hydropower Electricity Generation Act, 2023, and the associated Rules, 2023. The petitioners argued that the Act was unconstitutional and beyond the legislative competence of the State Government. The State of Himachal Pradesh and its authorities were the respondents. The core of the dispute revolved around the validity of the levy of water cess on hydropower generation. The procedural history involves the filing of multiple writ petitions before the Himachal Pradesh High Court, which were heard together.

Key Issues

1. Whether the Himachal Pradesh Water Cess on Hydropower Electricity Generation Act, 2023, is beyond the legislative competence of the State Government, and thus ultra vires the Constitution, particularly in light of Articles 246 and 265 of the Constitution of India? The petitioners contended that the Act fails to lay down essential components of a taxing statute, specifically the 'measure of tax' (the value to which the rate is applied), rendering it vague and unconstitutional. They relied on the Supreme Court's decision in M/s Govind Saran Ganga Saran vs. Commissioner of Sales Tax and others. The petitioners also argued that the delegation of power to fix rates without legislative policy or guidance makes the Act unconstitutional. The respondents' arguments are not explicitly detailed in the provided text, but their defense would likely involve asserting the State's legislative power and the validity of the cess. 2. Whether the doctrine of promissory estoppel is applicable in this case? This issue was rendered academic by the Court's decision on the first issue.