Court Rules First Amendment Act and Related Rules Ultra Vires; Upholds Second Amendment for Captive Power Plants
In a significant ruling, the Jharkhand High Court has declared the first amendment to the Jharkhand Electricity Duty Act, 1948, and the related 2021 rules as ultra vires, marking a pivotal moment in the state's legislative landscape. The judgment, delivered by a division bench comprising Chief Justice Tarlok Singh Chauhan and Justice Rajesh Shankar, was in response to a batch of writ petitions challenging the validity of Sections 2 and 3 of the Jharkhand Electricity Duty (Amendment) Act, 2021, and the corresponding rules.
The court found that the amendments, which altered the methodology for levying electricity duty from a unit-based to a percentage-based calculation on net charges, were inconsistent with the parent Act of 1948. The provision allowing the executive to modify categories or rates in the Schedule was also deemed invalid due to excessive delegation of legislative function, lacking statutory authority and procedural compliance with mandatory publication requirements.
The bench underscored that the charging section of the parent Act envisaged duty based on units of energy consumed or sold, not on net charges. The first amendment was thus held to be in conflict with the Act's core provisions and violative of Articles 14 and 265 of the Constitution, which safeguard equality before the law and prohibit unauthorized taxation, respectively.
Conversely, the court upheld the second amendment act, which revised the electricity duty for captive consumers to a unit-based calculation of 50 paise per unit. This amendment was deemed intra vires, aligning with the parent Act's provisions, and was found reasonable and non-arbitrary.
The court also quashed electricity bills raised under the first amendment and directed that amounts collected under the invalid provisions be adjusted against future liabilities for captive power plants and electricity consumers under any distribution licensee.
Bottom Line:
Electricity Laws - The 1st Amendment Act, 2021 and the Rules, 2021, which altered the methodology of levying electricity duty from unit-based to percentage-based on net charges, held ultra vires to the parent Act, 1948, and violative of Articles 14 and 265 of the Constitution. However, the 2nd Amendment Act, 2021, which revised electricity duty for captive consumers to a unit-based calculation, upheld as intra vires and valid.
Statutory provision(s): Articles 14 and 265 of the Constitution of India, Jharkhand Electricity Duty (Amendment) Act, 2021, Sections 2 and 3, Electricity Duty Rules, 2021, Bihar Electricity Duty Act, 1948, Jharkhand Electricity Duty (Amendment) Act, 2021 (2nd Amendment Act)
