Ranchi|In a significant relief to Jharkhand’s industrial and power sectors, the has delivered a landmark judgment, declaring the Jharkhand Electricity Duty (First Amendment) Act, 2021 and the related Electricity Duty Rules, 2021 as unconstitutional and arbitrary.
The verdict was pronounced by a Division Bench comprising Chief Justice and Justice , after a consolidated hearing of more than 30 petitions, including those filed by .
The petitions were filed by large industrial units, captive power producers, steel and mining companies, and industry associations, challenging the state government’s decision. The petitioners were represented by Senior Advocate M.S. Mittal, along with advocates Salona Mittal and Lavanya Mittal.
Change in Levy Without Amending the Charging Section
In its ruling, the Court observed that the state government altered the method of calculating electricity duty without amending the charging section of the parent law—the Bihar Electricity Duty Act, 1948, which has been adopted by Jharkhand. Such a change, the Court held, is impermissible in law.
‘Net Charges’ Basis Held Illegal
The Bench clarified that electricity duty can be levied only on the basis of units of electricity consumed or sold. There is no legal provision to impose duty on the basis of “net charges,” nor is the term defined in the statute, rendering the mechanism vague and arbitrary.
The Court further noted that under the impugned regime, in at least one case, an industrial consumer faced an increase of nearly 1,000 percent in electricity duty, which was found to be unjust and unreasonable.
Power to Revise Rates by Notification Quashed
The High Court also struck down the provision that empowered the state government to revise electricity duty rates through notifications. It termed this an excessive delegation of legislative power without a clear policy framework. Linking electricity duty to tariff, the Court said, creates inequality among similarly placed consumers and violates Article 14 of the Constitution of India.
Second Amendment Act Upheld
However, the Court upheld the Jharkhand Electricity Duty (Second Amendment) Act, 2021. Under this amendment, captive power plants are liable to pay electricity duty at the rate of 50 paise per unit with effect from 17 February 2022. The Bench held that fixation of tax rates falls within the domain of the state’s economic policy and does not warrant judicial interference unless there is a constitutional violation.
Industry Welcomes the Verdict
The judgment is being widely viewed as a major relief for industries and electricity consumers in Jharkhand. Industry bodies believe the decision will reduce operational costs and help improve the overall investment climate in the state.
