SC admits Gujarat govt's petition for green cess on conventional power firms

Written by Indu Bhan | Indu Bhan | New Delhi | Updated: Jul 5 2013, 09:57am hrs
The Supreme Court has admitted the Narendra Modi governments plea seeking to levy a green cess on every unit of conventional electricity generated in the state in a bid to generate funds to promote clean energy.

Levy of such cess was opposed by major industrial players of the state, including Reliance Industries, Essar Power, Nirma, Tata Chemicals, Arvind, Phillips Carbon Black, Apollo Tyres, Essar Oil, Birla Cellulosic, Torrent Power, Hindalco Industries, Jaypee Gujarat Cement Plant and United Phosphorus.

A bench headed by Justice RM Lodha, while admitting the appeal, allowed the Gujarat government to raise the demands on the major industrial units but restrained it from recovering such levies.

Challenging the state high courts decision, which struck down the Green Cess Act, 2011, as unconstitutional and declared it void, the Gujarat government said the cess is collected from the generating stations causing environmental pollution and thereby injury to public health.

The measure to improve the environment and public health could be either to require the generating stations to undertake required amount of non-conventional energy generation by themselves to reduce the fossil fuel/conventional generation or to create a fund from cess collected from such generating stations to promote renewable and non-conventional environment friendly sources.

In both the quantum of overall fossil fuel generation comes down and renewable sources increases, the appeal filed through counsel Hemantika Wahi stated.

The corporates had challenged the move in the Gujarat High Court, which in January had asked the state government to refund the cess collected from the companies with a simple interest of 8%, preferably within four months.

Under the Gujarat Green Cess Act, 2011, cess not exceeding 20 paise per unit was levied on generation of electricity other than renewable energy for creation of a fund (Green Energy Fund) for protecting the environment and promoting the generation of electricity through renewable sources like. Captive power plants of companies also faced such a levy.

The state argued that the promotion of renewable and non-conventional sources of electricity and protection of the environment for public health is a sufficient quid pro (quo) for the cess imposed.

According to Wahi, it is not that the quid pro quo should be directly utilised in identified services to the identified contributor of money towards cess fund.

The companies had argued that the state government has no competence to enact any law pertaining to such a subject as the Act provides for levy and collection of cess on generation of electricity, which is exclusively a Union subject and contained in Entry 84 to List I of Seventh Schedule.

They said that Parliament had exclusive legislative competence in this respect.

Justifying its competency in levying such cess, the state said that the Constitution and also the Electricity Act, 2003, envisage the state to take steps concerning generation, transmission, distribution and trading in electricity with environmental benign policies.