The Himachal Pradesh High Court has restrained the state government from taking coercive action against the Punjab State Power Corporation Limited (PSPCL) under the newly introduced Specially Assessed Land Revenue regime. A Division Bench comprising Justice Vivek Singh Thakur and Justice Ranjan Sharma issued the interim direction while issuing notice on a writ petition filed by PSPCL challenging the constitutional validity of the Himachal Pradesh Land Revenue (Amendment) Ordinance, 2025, and related rules.
Petition Challenges New Land Revenue Framework
PSPCL filed the petition assailing the constitutional validity of the Himachal Pradesh Land Revenue (Amendment) Ordinance, 2025, the Himachal Pradesh Land Revenue (Special Assessment) Amendment Rules, 2025, the implementation notification dated December 10, 2025, the Final Land Revenue Special Assessment Report dated February 2, 2026, and the consequential demand notice dated March 6, 2026. The demand raised a total of Rs 16.324 crore in respect of the Shanan hydroelectric power project.
According to the petitioner, the impugned legislative framework, though styled as a land revenue levy, is in substance a tax on electricity generation. The assessment is based on the "Average Market Value of the Project" rather than any recognised principle governing the assessment of land revenue. It has been contended that the levy lacks a rational nexus with land and therefore travels beyond the legislative competence of the state.
Allegations of Colourable Legislation
PSPCL alleged that the impugned enactments were a colourable exercise of legislative power and effectively seek to reintroduce, in another form, the levy imposed under the Himachal Pradesh Water Cess on Hydropower Generation Act, 2023, which the High Court had earlier declared unconstitutional. The court had struck down that Act, finding it to be beyond the state's legislative competence.
The Division Bench directed that no coercive steps would be taken against the petitioner pursuant to the impugned proceedings until the next date of hearing. The matter has been listed for further hearing on July 23, 2026.
Implications for Hydropower Projects
The case has significant implications for hydropower projects in Himachal Pradesh, as it tests the boundaries of the state's power to levy land revenue. If the court ultimately strikes down the ordinance, it could impact the state's revenue collection from such projects. The Shanan project, which supplies power to Punjab, has been a longstanding point of contention between the two states.
The High Court's interim order provides temporary relief to PSPCL, allowing it to continue operations without the threat of coercive recovery while the constitutional challenge is adjudicated.
