SC upholds states’ right to change industrial policy

Rules in Maharashtra’s favour in 25-year-old dispute on electricity duty exemption rollback

- Yash Tiwari

In 2009, the Bombay High Court ruled in favour of companies, striking down the state's decision.

(ISTOCKPHOTO)

The Supreme Court on Wednesday upheld the government's powers to withdraw electricity duty exemptions for captive power plants, ruling in favour of Maharashtra in a 25-year-old dispute with companies such as Reliance Industries Ltd.

A bench of Justices P.S. Narasimha and Alok Aradhe upheld the validity of the state’s notifications of 1 April 2000 and 4 April 2001 to withdraw the exemption and impose electricity duty on power generated and consumed by industries.

However, the court ruled that the withdrawal should not take effect immediately. It directed that the notifications would come into effect only after a one-year period from their respective dates, giving companies time to adjust their finances and operations.