M/S Gangdari Hydro Power 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. The Court found that the Act failed to lay down the 'measure of tax,' which is a critical component of any taxing statute, as established in M/s Govind Saran Ganga Saran vs. Commissioner of Sales Tax and others. While the Act identified the taxable event, the person liable to pay tax, and the rate of tax, it failed to specify the value or measure on which the rate would be applied. The Court also noted that Section 15 of the Act and the subsequent notification dated 26.08.2023, which fixed tariff structures, did not prescribe the measure of tax. The Court further found that the delegation of power to fix rates without legislative policy or guidance was unconstitutional. Consequently, the Himachal Pradesh Water Cess on Hydropower Electricity Generation Rules, 2023, and specific sections of the Act made applicable to existing projects were also quashed. The question of promissory estoppel was rendered academic. The Court directed the refund of any water cess recovered from the petitioners.

Facts

Numerous writ petitions were filed before the Himachal Pradesh High Court 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 Rules framed thereunder. The petitioners argued that the Act and Rules were 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.

Key Issues

1. Whether the Himachal Pradesh Water Cess on Hydropower Electricity Generation Act, 2023, is beyond the legislative competence of the State Government, particularly in light of Articles 246 and 265 of the Constitution of India? The petitioners contended that the Act suffers from excessive delegation of essential legislative functions, lacks clarity on the 'measure of tax,' and fails to provide adequate guidelines for the delegated authority, rendering it unconstitutional. They relied on the Supreme Court's decision in M/s Govind Saran Ganga Saran vs. Commissioner of Sales Tax and others. The respondents' arguments are not explicitly recorded in the provided text, but their stance would be to defend the validity of the Act and the levy. 2. Whether the principle of promissory estoppel is applicable in this case? This issue was rendered academic by the Court's findings on the first issue.