Gencos have to pay duty, rules Hyderabad High Court

Hyderabad: Declaring Section 3-B of the AP Electricity Duty Act, 1939, as valid, the Hyderabad High Court has ruled that the captive power generation units in both TS and AP are liable to pay the duty levied at the rate of 0.25 paise per unit, consumed on the power generated by each unit. A division bench, comprising Acting Chief Justice Dilip B. Bhosale and Justice P. Naveen Rao, was dismissing a batch of writ petitions moved by captive power generating units of both states

The petitioners challenged the Constitutional validity of Section 3-B of the Act, introduced vide amendment No. 14 of 2003. This provision vests power in the government to impose duty at the rate of 0.25 paise per unit on consumption of electric energy by captive generating units. They said that the duty levied on the captive generating units’ amounts to levying tax on generation of electricity and only the Centre is competent to do so. However, the bench made it clear that in matters involving state finances, the court cannot direct to grant relaxation retrospectively.