Jharkhand HC Strikes Down Electricity Duty Amendments, Calls Levy on ‘Net Charges’ Unconstitutional

The Jharkhand High Court has struck down key amendments to the Jharkhand Electricity Duty law that had radically altered the basis of levy of electricity duty. The Bench of Chief Justice and Justice Rajesh Shankar held that electricity duty cannot be imposed on the basis of “net energy charges” when the parent statute authorises levy only on units of electricity consumed or sold. A large batch of writ petitions filed by industrial consumers, captive power producers, and industry associations, including manufacturing, mining, steel, power-intensive units and high-tension consumers. The petitioners had challenged the constitutional validity of the Jharkhand Electricity Duty (Amendment) Act, 2021, subsequent amendments, and the Jharkhand Electricity Duty (Amendment) Rules, 2021 Prior to the 2021 amendment, electricity duty in Jharkhand—governed by the Bihar Electricity Duty Act, 1948 as applicable to the State—was levied strictly on the basis of units of electricity consumed or sold, at rates specified per unit in the Schedule. However, the 2021 amendment introduced a new mechanism whereby electricity duty was computed as a percentage of “net charges” payable for electricity consumption. The petitioners argued that this change resulted in an exponential increase in their electricity duty liability. One illustration placed before the Court showed that for a high-tension consumer, electricity duty increased from around ₹5,500 under the per-unit regime to over ₹55,000 in a single month after the amendment—nearly a tenfold rise Accepting the petitioners’ submissions, the High Court held that Section 3 of the parent Act authorises levy of electricity duty only on the basis of “units of energy consumed or sold.” The Court observed that the charging section does not contemplate levy on the value, price, or net charges of electricity. The Bench ruled that the State could not, through an amendment to the Schedule or subordinate legislation, introduce a completely new basis of taxation without amending the charging provision itself. Any such levy, the Court said, would be ultra vires the parent statute and violative of Article 265 of the Constitution, which mandates that no tax shall be levied or collected except by authority of law The Court also took exception to the proviso inserted by the 2021 amendment, which empowered the State Government to add, alter, or amend categories and rates of electricity duty through notification. The Bench held that this amounted to excessive delegation of essential legislative functions, as no guidelines or limits were prescribed for exercise of such power. According to the Court, allowing the executive to effectively determine the basis and rate of taxation without legislative oversight violates the doctrine of separation of powers and exposes consumers to arbitrary and potentially confiscatory levies, offending Article 14 of the Constitution Rejecting the State’s defence, the Court reiterated the settled principle that machinery or procedural provisions cannot be stretched beyond the scope of the charging section. Reading Sections 3 and 4 of the parent Act harmoniously, the Bench concluded that the statutory scheme envisages electricity duty strictly on a per-unit basis and nothing more. The Court further noted that if the legislature intended to levy duty on the value or price of electricity, it was incumbent upon it to expressly amend the charging section, as done in other States’ electricity duty laws. In the absence of such an amendment, the impugned levy was unsustainable in law. Allowing the writ petitions, the High Court declared the impugned provisions of the Jharkhand Electricity Duty (Amendment) Act, 2021 and the related rules to be unconstitutional. The Court also granted consequential relief, paving the way for refund of electricity duty collected under the invalidated regime, subject to applicable law and verification. Case Details Case Title: M/s. Pali Hill Breweries Private Limited Versus The State of Jharkhand Case No.: W.P.(T) No.3228 of 2021 Date: 05.01.2026 Counsel For Petitioner: M.S. Mittal, Sr. Advocate Counsel For Respondent: Sachin Kumar, AAG-II Click Here To Read Order Read More: IRS Prabha Bhandari Accused Of Taking Rs. 70 Lakh Bribe Files Bail Application

Jharkhand HC Strikes Down Electricity Duty Amendments, Calls Levy on ‘Net Charges’ Unconstitutional

Membership Required

Latest articles

JURISHOUR | TAX LAW DAILY BULLETIN : 15 AUGUST, 2026

CBIC Promotion Hierarchy: From Inspector and Superintendent to Principal Chief Commissioner — A Detailed Guide to the Career Structure

ITAT Quashes Reassessment as Section 148 Notice Issued Beyond Limitation Period

GST Refund Can’t Be Withheld During Tribunal Appeal Without Specific S. 54(11) Order: Patna High Court

More like this

JURISHOUR | TAX LAW DAILY BULLETIN : 15 AUGUST, 2026

CBIC Promotion Hierarchy: From Inspector and Superintendent to Principal Chief Commissioner — A Detailed Guide to the Career Structure

ITAT Quashes Reassessment as Section 148 Notice Issued Beyond Limitation Period

About us

Company

Categories