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Uttarakhand HC rules state lacks authority to tax hydropower generation
The Uttarakhand High Court on April 27, 2026 struck down the Uttarakhand Water Tax on Electricity Generation Act, 2012, ruling that the state legislature cannot levy a tax on electricity generation via hydropower projects. The court held that the tax is effectively a water-use tax, outside the state's legislative competence and falling under Centre's domain. The decision follows a 2023 split verdict by the same court on the same Act.
Why It Matters
The ruling clarifies the division of taxation powers between the Centre and states regarding electricity generation and water use for hydropower, impacting operators and state fiscal policy in Uttarakhand.
Timeline
4 Events
April 28, 2026: Reporting of the ruling by media
April 28, 2026
HT published coverage reporting the order and noting that a copy of the court’s order exists, as described in the article publish date.
April 27, 2026: High Court strikes down the Act, ruling lack of state authority
April 27, 2026
The court held that the tax is effectively a tax on drawal/use/ consumption of water for electricity generation, not a tax on electricity generation itself. It stated there is no Entry under List II of Schedule VII for a water tax, and taxation is a distinct matter outside the state's powers.
October 2023: High Court delivers split verdict on the Act
October 2023
The Uttarakhand High Court delivered a split verdict: Justice Vipin Sanghi upheld the Act's validity, while Justice Ravindra Maithani struck it down.
Enactment of Uttarakhand Water Tax on Electricity Generation Act, 2012
2012
The Uttarakhand government imposed a water tax on electricity generation through hydropower projects, ranging from 2 to 10 paise per unit based on project capacity.