Srinagar, Oct 30: The Jammu and Kashmir and Ladakh High Court has declared the imposition of water usage charges on hydropower projects unconstitutional, striking down the relevant provisions of the Jammu and Kashmir Water Resources (Regulation and Management) Act, 2010, and quashing all consequential government demand notices issued since 2010.
A division bench comprising Justices Rajnesh Oswal and Sanjay Dhar ruled that levying such charges on independent power producers amounted to imposing an impermissible tax on electricity generation, a subject beyond the legislative competence of the Union Territory legislature.
The court allowed a batch of writ petitions filed by independent power producers, including Mass N Energy Pvt Ltd, Magpie Hydel Construction Operation Industries Pvt Ltd and Choudhary Power Projects Pvt Ltd.
Examining the constitutional provisions, the bench observed that while the UT legislature has regulatory powers over water under Entry 17 of List II of the Constitution, it cannot impose a tax on electricity generation.
The court noted that the mechanism used to calculate the charges, based on head-height and turbine propulsion rather than the actual quantity of water consumed, demonstrated that the levy was essentially a tax on electricity generation rather than a regulatory fee for water usage.
Rejecting the administration’s argument that the Jammu and Kashmir Reorganisation Act2019, had given parliamentary backing to the 2010 legislation, the bench held that a law unconstitutional and void from its inception could not be validated through subsequent parliamentary adoption.
Declaring the relevant provisions ultra vires the Constitution, the court restrained the administration from imposing any future tax on electricity generation under the guise of water usage charges.
“The impugned enactment, to the extent it imposes water usage charges upon the petitioners, is held to be ultra vires the Constitution and is struck down to the said extent,” the court observed in its 50-page judgment.
The bench also described the administration’s attempt to defend the legislation as “an attempt in desperation” to save the impugned provisions. (Agencies)