Law & Justice

J&K High Court Declares Hydropower Water Tax Unconstitutional, Cancels Notices to Firms

By Naveed Iqbal

The High Court of Jammu & Kashmir and Ladakh ruled on Thursday that the government cannot impose a tax on water used for hydropower generation in the Union Territory. The court struck down provisions of the Jammu and Kashmir Water Resources (Regulation and Management) Act, 2010, stating that the act’s attempt to tax electricity generation was beyond the legislative competence of the former State of J&K and therefore ultra vires the Constitution. It also quashed demand notices issued against Mass N Ergy Private Limited, Magpie Hydel Construction Operation Industries, and Choudhary Power Projects Private Limited. The division bench, consisting of Justice Rajnesh Oswal and Justice Sanjay Dhar, had earlier reserved judgment after hearing a writ petition challenging the 2010 act and its rules. Petitioners had argued that the legislation sought to levy water usage charges for electricity generation, which was beyond the State Legislature’s competence. The court noted that water usage and electricity generation are inseparable events and that the levy effectively targets electricity generation rather than water use. It emphasized that Entry 17 of List-II, which relates to water, is a regulatory entry and does not grant the State power to impose a tax on water, and that there is no corresponding taxing entry for water in List-II of Schedule VII.