In a landmark judgment with significant financial implications, the Jharkhand High Court has struck down the controversial Jharkhand Electricity Duty (First Amendment) Act, 2021. The court declared the amendment ultra vires and invalidated the practice of charging duty based on a percentage of "net charges," providing major relief to industrial consumers across the state.
Court's Verdict on Charging Methodology
A division bench comprising Chief Justice Tarlok Singh Chauhan and Justice Rajesh Shankar delivered the decisive order on January 5. The bench firmly held that the electricity department's method of calculating duty was fundamentally flawed. The court clarified that electricity duty must be levied solely on the actual units of power consumed by a customer, not on the basis of the net charges appearing on the bill.
The judges explicitly stated that the practice of charging consumption of power by a percentage of "net charges" is incorrect. This ruling corrects a billing anomaly that had led to inflated charges for numerous industrial units.
Financial Relief and Refund Directive
Beyond striking down the amendment, the High Court's order carries a direct financial mandate. The court has directed that the excess amount collected by the electricity department under the now-invalidated amendment must be refunded to the affected consumers.
This refund directive is expected to channel significant funds back to the industrial sector, potentially improving liquidity and operational viability for many businesses that had been burdened by the extra duty.
Legal Challenge by Industrial Units
The court's ruling came while hearing a batch of writ petitions. The lead petitioner was M/s Pali Hill Brewery Private Limited, which was joined by several other companies. These entities collectively challenged the constitutional and legal validity of the 2021 amendment, arguing that it imposed an unjust and illegal financial burden.
The successful challenge highlights the role of judicial review in checking executive and legislative overreach, especially concerning fiscal measures that impact key economic sectors like industry.
This judgment sets a critical precedent for utility pricing and taxation in Jharkhand, reinforcing the principle that charges must be transparent, directly linked to consumption, and legally sound. It marks a substantial victory for industrial advocacy and corporate governance in the state.
