Srinagar, Oct 30: The High Court of Jammu and Kashmir and Ladakh has struck down provisions of the Jammu and Kashmir Water Resources (Regulation and Management) Act, 2010, insofar as they impose water-usage charges on hydropower projects, holding that the levy amounted to a tax on electricity generation beyond the legislative competence of the erstwhile state legislature.
A Division Bench comprising Justice Rajnesh Oswal and Justice Sanjay Dhar allowed a batch of petitions filed by independent power producers challenging the statutory provisions and demand notices issued for recovery of water-usage charges.
The court quashed the consequential demand notices against the petitioners and restrained the government from imposing any tax on electricity generation under the guise of water-usage charges or any other levy.
The petitioners had argued that the charges imposed under the 2010 legislation were, in substance, a tax on electricity generation rather than a fee for the use of water. They also contended that hydropower generation involves non-consumptive use of water, which passes through turbines before returning to the river.
The court observed that the levy was linked to electricity generation rather than the actual volume of water used. It held that the erstwhile state legislature lacked the constitutional competence to impose such a tax when the law was enacted.
The Bench also rejected the argument that the subsequent adoption of the legislation under the Jammu and Kashmir Reorganisation Act, 2019, could cure the constitutional defect.
Reacting to the judgment, Peoples Democratic Party legislator Waheed Ur Rehman Para described the ruling as a major financial setback for Jammu and Kashmir. In a post on X, he claimed that the decision could cost the Union Territory around ₹1,000 crore and questioned the government’s handling of the legal battle.
Para also referred to the absence of an Advocate General for nearly two years and questioned the government’s preparedness to defend Jammu and Kashmir’s financial interests, linking the issue to the broader question of the case for restoration of statehood.
The ₹1,000-crore figure cited by Para could not be independently established from the available information. The immediate financial implications of the judgment, including the total amount of revenue affected, remain to be ascertained. [KNT]
