In an adverse verdict for the Sukhvinder Singh Sukhu-led administration, the Himachal Pradesh High Court, stationed in Shimla, declared the water cess as constitutionally invalid on Tuesday. The court asserted that the legislative assembly of Himachal Pradesh lacks the constitutional authority to enact such legislation.
The directive issued by the state government concerning the water cess statute stands nullified following this judicial pronouncement. The High Court bench, presided over by Justice Tarlok Singh Chauhan and Justice Satyen Vaidya, was the authoritative voice behind these declarations.
Hydro-power corporations brought this legislation into question in the High Court, with Advocate Abhishek Manu Singhvi presenting the case on their behalf. Abhishek Manu Singhvi, who previously contested for a Rajya Sabha seat on behalf of the Congress party in Himachal Pradesh, spearheaded the legal arguments.
As per the recent decree from the High Court, the state government is now barred from continuing the collection of water cess. It is anticipated that the Sukhwinder Singh Sukhu-led government will seek redress in the Supreme Court.
Upon assuming office, the Congress-led government, under Sukhwinder Singh Sukhu, imposed a water cess on hydro-power projects within the state, aiming to bolster revenue. The government aspired to generate a minimum annual revenue of Rs 1,000 crore from this initiative. Additionally, a dedicated Water Commission was established, collecting water cess from various enterprises. Numerous power corporations, including the Sutlej Hydropower Corporation, contested this legislation in the Himachal Pradesh High Court.
It is worth noting that around Rs 30 crores in cess had already been amassed from select companies operating in the Jamahimachal region. Himachal Pradesh boasts 172 hydro-power entities, of which approximately 35 firms had remitted a cess ranging from Rs 27 to 30 crore. The remaining companies were served notices by the Commission to fulfill their cess obligations in a phased manner.
The Himachal government contended that it possesses jurisdiction over the water from the state’s rivers. Counsel for the government argued that, akin to Jammu & Kashmir and Uttarakhand, which derive revenue from water cess, Himachal Pradesh deserves its due.
During the court proceedings, the National Thermal Power Corporation, BBMB, NHPC, and SJVNL asserted that, based on agreements with the Center and the state, they provide 12 to 15 percent of electricity to the state free of charge. Consequently, they argued that the imposition of cess contradicts constitutional provisions.
On April 25, 2023, the Center communicated to the Chief Secretaries of all states, urging them to abandon the pursuit of collecting water cess. The Center’s stance was grounded in its belief that such endeavors ran afoul of constitutional principles.