2026 Supreme(Online)(Jhk) 2

HIGH COURT OF JHARKHAND
Rajesh Shankar, J
Pali Hill Breweries Private Limited – Appellant
Versus
State of Jharkhand – Respondent
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Taxation powers cannot be delegated to the executive without clear legislative policy or guidance. Any subordinate legislation or schedule must remain consistent with the parent Act's charging section; therefore, modifying the basis of a tax from units to value without statutory authority is invalid.

Headnote:(A) Electricity Duty Act, 1948 - Sections 3 and 10 - Constitution of India - Article 14, 246(3) and 265 - Challenge to validity of amendments - Proviso to Section 3 of parent Act introduced by 1st Amendment Act delegated unbridled power to fix tax rates without legislative guidance - Delegation of power without policy or guidelines is excessive and violates constitutional principles - Method of calculating duty based on 'net charges' introduced by Schedule is inconsistent with charging section based on 'units of energy' - Rules introduced to define 'net charges' retrospectively without authority in parent Act are ultra vires - Procedure of previous publication for Rules under Section 10 is mandatory for subordinate legislation. (Paras 56, 64, 71, 88, 94, 96)

(B) Economic Policy - Judicial Review - Courts should not interfere in economic policy or price fixation unless the policy is arbitrary, perverse, or contravenes statutory or constitutional limits - Policy decisions require expertise and a rational basis, and in the absence of constitutional violations, courts should respect legislative choices. (Paras 101, 102, 103)

Facts of the case:
Petitioners challenged the constitutional validity of amendments to an electricity duty statute and corresponding rules. The amendments shifted the basis of duty computation from a 'per unit' consumption basis to a 'percentum of net charges' basis and introduced new rate schedules. Petitioners argued that the changes lacked legislative guidance, led to excessive delegation to the executive, created unworkable situations for captive power consumers, and retrospectively imposed new liabilities.

Findings of Court:
The court held that while the legislature has the power to tax, it cannot delegate taxation powers to the executive without providing clear policy guidance. The shift to a 'net charges' basis was inconsistent with the parent charging section which mandates duty on 'units of energy consumed or sold'. Furthermore, the rules lacked mandatory previous publication, rendering them invalid. However, the subsequent amendment which reverted to a 'per unit' basis for specific consumers was found to be intra vires as it remained within the scope of the original charging section and was supported by financial data rationalizing the tax increase.

Issues: The main issues addressed were the legality of delegating tax-fixation power to the executive without legislative guidelines, the consistency of the new tax computation method with the parent charging section, the validity of retrospective rule-making, and whether the tax increase was arbitrary or confiscatory.

Ratio Decidendi: Taxation is a legislative function and any delegation of such powers must include adequate policy guidance. A schedule or rule cannot redefine the fundamental basis of a levy if it contradicts the substantive charging provision of the parent Act. Retrospective fiscal legislation or subordinate legislation is impermissible unless expressly authorized by the parent statute.

Result: 1st Amendment Act and Rules quashed as ultra vires; 2nd Amendment Act upheld as intra vires. Payments made under the invalid amendments to be adjusted against future liabilities.

Table of Content
1. historical and statutory context of jharkhand electricity duty act, 1948. (Para 1 , 2 , 47 , 48 , 49 , 50 , 51 , 52 , 53 , 54 , 55)
2. charging section must define tax basis correctly. (Para 3 , 4 , 5 , 6 , 7 , 8 , 9 , 10 , 11)
3. invalidity of unguided delegation of legislative power. (Para 12 , 13 , 14 , 15 , 16 , 17 , 18 , 56 , 57 , 58 , 59 , 60 , 61 , 62 , 63 , 64 , 65 , 66 , 67)
4. procedural mandate for rules and invalidity of retrospective levy. (Para 19 , 20 , 21 , 22 , 85 , 86 , 87 , 88 , 89 , 90 , 91 , 92 , 93 , 94 , 95 , 96)
5. judicial restraint regarding economic and tax policy. (Para 23 , 24 , 25 , 26 , 97 , 98 , 99 , 100 , 101 , 102 , 103 , 104 , 105 , 106)
6. final orders, quashing of illegal levies, and adjustment mechanisms. (Para 107 , 108 , 109)

Reserved on 15.12.2025 Pronounced On 05.01.2026 Per: Rajesh Shankar, J.

1. In the present batch of writ petitions, the petitioners have challenged the vires and validity of Sections 2 and 3 of the Jharkhand Electricity Duty (Amendment) Act, 2021 (Jharkhand Act No.05 of 2021) (hereinafter to be referred as 1^st Amendment Act, 2021) notified in the Extraordinary Edition of Jharkhand Gazette published by the Government of Jharkhand on 07.07.2021. The petitioners have also challenged the vires of the Jharkhand Electricity Duty (Amendment) Rules, 2021 (hereinafter referred as the Rules, 2021) notified in the Extraordinary Edition of Jharkhand Gazette published by the Government of Jharkhand on 01.04.2022. Some of the writ petitioners, who are the captive consumers, have challenged the vires and validity of the Jharkhand Electricity Duty (Amendment) Act, 2021 (Jharkhand Act, 02 of 2022) (hereinafter to be referred as the 2^nd Amendment Act, 2021) notified in the Extraordinary Edition of Jharkhand Gazette published by the Government of Jharkhand on 17.02.2022.

2. The petitioners have also prayed for refund of the amount of electricity duty along with interest, if any, realized from them pursuant to the 1^st Amendment Act, 2021.

Argument on behalf of the petitioners:

3. Mr. M.S Mittal, learned senior counsel represents both sets of writ petitioners i.e., the electricity consumers as well as captive power plants (CPP).

4. It is submitted that in view of Section 3 of the Bihar Electricity Duty Act, 1948 (in short “the Act, 1948”) the electricity duty was being realised from the concerned petitioners on the basis of units of energy sold or consumed at the rate or rates specified in the Schedule of the said Act, however, vide 1^st Amendment Act, 2021, the said Act has been amended introducing a new method for computation of electricity duty at the rate of certain percentage of the 'net charges' calculated for the energy sold or consumed as a result of which the electricity duty payable by the petitioners has significantly increased.

5. Mr. Mittal by producing an electricity bill for the HT consumer relating to the month of July, 2021 issued to one of the petitioners i.e. M/s Pali Hill Breweries Pvt. Ltd., submits that prior to the 1^st Amendment Act, 2021, the said petitioner would have been liable to pay electricity duty at the rate of Rs.0.05 per unit (5 paise) for the electricity consumption of 1,10,136 units amounting to Rs.5,506.80/-. However, as a result of introduction of the said Amendment, the liability to pay the electricity duty by the said petitioner at the rate of 8% of 'net energy charges' (since its contract demand is less than 10 MVA) has radically enhanced to Rs.55,556.16/- (8% of the net energy charges calculated for the said month i.e. Rs.6,94,452). Therefore, its liability to pay the electricity duty has increased by almost 1000%.

6. The respondents cannot distort the language of Section 3 (1) of the Act, 1948 to include within its ambit, charging of electricity duty on ‘net charges’ calculated for energy consumed or sold when a plain reading of the charging section does not authorize them to levy electricity duty on any basis, other than the units of energ

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