Jharkhand High Court Quashes ‘Net Charges’ Electricity Duty, Calls 2021 Amendments Unconstitutional
Pali Hill Breweries Pvt. Ltd. & Others v. State of Jharkhand & Others
The High Court of Jharkhand has struck down amendments to the State’s electricity duty law, holding that the levy of duty on “net charges” was unconstitutional.
Under the Bihar Electricity Duty Act, 1948 (as adopted by Jharkhand), electricity duty was levied on a per-unit basis — calculated on units of electricity consumed or sold. The Jharkhand Electricity Duty (Amendment) Act, 2021 changed this method and imposed duty as a percentage of “net charges,” leading to a sharp increase in liability for consumers. The amendment also empowered the State Government to alter rates and categories through notification, and the 2021 Rules were given retrospective effect.
The Court held that the charging section of the parent Act permitted levy only on units of energy, not on “net charges.” Introducing a new basis of taxation without amending the charging section was ultra vires and violated Article 265 of the Constitution.
It further ruled that granting the executive unrestricted power to amend rates and categories amounted to excessive delegation. The retrospective application of the Rules was also declared invalid.
Accordingly, the amendments imposing duty on “net charges” were quashed
.