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SUPREME COURT OF INDIA
PAMIDIGHANTAM SRI NARASIMHA, ALOK ARADHE, JJ.
The State of Maharashtra & Others – Appellants
Versus
Reliance industries ltd. & others – Respondents
Civil Appeal Nos. 3012-3026 of 2010 With Civil Appeal Nos. 3027-3029 of 2010
Decided On : 25-03-2026
Key Points: - The appeals challenge High Court judgments quashing notifications dated 01.04.2000 and 04.04.2001 that withdrew exemptions from electricity duty for captive power generators under Section 5A of the Bombay Electricity Duty Act, 1958. (!) (!) - Section 5A empowers the State Government to grant, modify, or withdraw exemptions from electricity duty prospectively or retrospectively if necessary in public interest. (!) - Exemptions were granted from 1994 to encourage captive power generation but were modified in 2000-2001 to augment state revenue amid budgetary constraints. (!) (!) (!) (!) - High Court quashed the notifications as arbitrary, discriminatory, and without justifiable grounds, but Supreme Court overturned this. (!) - State has statutory authority to withdraw exemptions granted under Section 5A, as exemptions are concessions without perpetual enforceable rights. (!) (!) (!) - Doctrines of legitimate expectation and promissory estoppel do not apply when withdrawal is justified by public interest, such as fiscal stability. (!) (!) (!) - Courts defer to government on economic policy unless arbitrary; withdrawal here was reasonable for revenue augmentation. (!) (!) (!) - Withdrawal must include reasonable notice for fairness; Supreme Court mandated one-year transition period from notification dates. (!) (!) (!) (!) - Appeals allowed, High Court orders set aside, notifications upheld effective after one year; no costs ordered. (!) (!)
| Table of Content |
|---|
| 1. overview of exemption granted under the act. (Para 1 , 2 , 3 , 4 , 5 , 6 , 7) |
| 2. legal challenges and high court's rulings. (Para 8 , 9 , 10) |
| 3. arguments by the appellant and respondent. (Para 11 , 12) |
| 4. exemption as a statutory power and public interest. (Para 13 , 14 , 15 , 16 , 17) |
| 5. assessing arbitrary exercise of power. (Para 18 , 19 , 20) |
| 6. requirements of reasonableness and fairness in withdrawal. (Para 21 , 22) |
| 7. final ruling on notification amendments. (Para 23 , 24) |
| 8. conclusion of the appeals. (Para 25) |
JUDGMENT :
ALOK ARADHE, J.
1. These appeals by State of Maharashtra question the correctness of judgment and orders dated 05.10.2009 and 07.11.2009 whereby notifications dated 01.04.2000 and 04.04.2001 issued under Section 5A of the Bombay Electricity Duty Act, 1958 (Act), were struck down. The core issue which arises for consideration in these appeals is whether the State, having once granted exemption from payment of electricity duty to captive power generators was legally precluded from withdrawing or modifying such exemption in the exercise of same statutory power. In order to appreciate the grievance of the appellant, relevant facts need mention.
2. The Act is an act to provide for levy and collection of duty on consumption of electrical energy in the State of Bombay. The Act extends to the whole of the State of Maharashtra. Section 5A empowers the State Government, if it considers it necessary in the public interest so to exempt, by notification in the Official Gazette prospectively or retrospectively, the consumption of energy in the whole or any part of the State in respect of any class of premises or purposes in respect of energy consumed up to a specified limit from payment of the whole or any part of the electricity duty payable under the Act.
3. In exercise of powers under Section 5A of the Act, the State Government has issued notifications from time to time, granting exemption from payment of electricity duty in respect of electricity consumed by industries through captive power plants. Such exemption was granted by notification dated 01.09.1994.
4. In supersession of aforesaid notification, the State Government issued another notification on 30.10.1996, granting exemption on consumption of energy generated in a generating station by person carrying on an industry and consumed by himself for such industry, in the whole of the State of Maharashtra from payment of electricity duty payable under Clause (b) of the Part-G of the Schedule appended to the Act.
5. The State Government thereafter on 01.04.2000 issued a notification under Section 5A of the Act, to enable the State to bill electricity duty in whole State of Maharashtra in respect of premises used for consumption of energy for any purpose under Part A, B, C and G of the Schedule to the Act. The State Government by another notification of even date issued under Section 5A of the Act, exempted the payment of electricity duty under Clause (b) of Part-G of the Schedule to the Act, on consumption of energy generated through non-conventional sources by a person carrying on industry in the cooperative sector and consumed by himself for such industry.
6. The State Government thereafter issued another notification dated 04.04.2001 under Section 5A of the Act, exempting the consumption of energy generated by a person carrying on an industry and consumed by himself for such industry, in whole of Maharashtra, from payment of such part of electricity duty payable under Clause (b) of Part ‘G’ of the Schedule of the Act, as in excess of fifteen paise per unit of energy so consumed subject to the condition that generating set is installed in pursuance of Government of Maharashtra policy prior to revised policy regarding captive generation declared vide Government Resolution dated 25.04.2000.
7. The validity of the notifications dated 01.04.2000 and 04.04.2001, issued under Section 5A of the Act, was challenged in a batch of the Writ Petitions before the H
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