JUDGMENT :

Alok Kumar Verma, J.

The aforesaid appeals were filed against the common judgment dated 12.02.2021, passed by the Coordinate Bench of this Court in a batch of writ petitions. The writ petitions were filed by the appellants challenging the constitutional validity and vires of “The Uttarakhand Water Tax on Electricity Generation Act, 2012” (in short, “Act”). The Coordinate Bench, by the common judgment, passed on 12.02.2021, dismissed all the writ petitions. The Writ Petition (M/S) No.1739 of 2021 was filed during the pendency of the said appeals. This writ petition has also been filed challenging the constitutional validity of the Act.

2. The Hon’ble Division Bench delivered a split verdict on 25.10.2023. Mr. Vipin Sanghi, the then Hon’ble Chief Justice and a member of the Division Bench, has dismissed the appeals and the writ petition, whereas the other member of the Bench, Hon’ble Mr. Ravindra Maithani, J., has struck down the Act as ultra vires the Constitution. Therefore, the present matter has been referred to this Court by the then Hon’ble Acting Chief Justice, in terms of Chapter VIII Rule 3 of the High Court Rules, vide Order dated 23.11.2023.

3. The Act has been challenged on various grounds. The main grounds for challenge are that the tax imposed by the Act is on electricity generation. The State Legislature is not competent to legislate the Act, which imposes a tax on generation/production of electricity.

4. The stand of the State of Uttarakhand is that the incident of tax in the Act is the drawal of water for use in electricity generation only. Initially, State of Uttarakhand indicated Entry 17 List II as the source of legislation, but subsequently, it stated Entry 45, 49, 50 of List II of the Seventh Schedule and Article 288 of the Constitution of India as the basis for enacting the Act.

5. Before discussing the issues involved, it would be appropriate to examine the relevant provisions (Chapter-1 to Chapter-5) of the impugned legislation.

THE UTTARAKHAND WATER TAX ON ELECTRICITY GENERATION ACT, 2012
[UTTARAKHAND ACT NO. 09 OF 2013]

to levy water tax on electricity generation in the State of Uttarakhand

An

Act

be it enacted in the sixty-third Year of the Republic of India by the Uttarakhand State Legislative Assembly as follows:-

CHAPTER-I
PRELIMINARY

1. Short Title, Extent and Commencement.- (1) This Act may be called the Uttarakhand Water Tax on Electricity Generation Act, 20l2.

(2) It extends to the whole State of Uttarakhand.

(3) It shall come into force from such date as the State Government may by notification in the Gazette appoint.

(4) The provisions of this Act shall have effect notwithstanding anything inconsistent contained in any other law for the time being in force.

2. Definitions.- In these rules, unless there is anything repugnant in the subject or context:-

(a) "Act" means the Uttarakhand Water Tax on Electricity Generation Act, 20l2;

(b) "Commission" means Uttarakhand State Commission for Water Tax on Electricity Generation established under Section21 of the Act;

(c) "Electricity" means electrical energy generated by way of water drawn from any water source flowing within the territory of the State;

(d) "Government" means Government of Uttarakhand:

(e) "Notification" means a notification published in the Gazette of the State, and the term "notify" shall be construed accordingly;

(f) "User" means any person, group of persons, local body, Government Department, company, corporation, society etc. drawing water or any other authority authorized under chapter -II of the Act to avail the facility to draw water from any source for generation of electricity;

(g) "Water" means natural resource flowing in any river, stream, tributary, canal, nallah or any other natural course of water or stipulated upon the surface of any land like, pond, lagoon, swamp, spring;

(h) "Water Source" means a river and its tributaries, stream, nallah, canal, spring, pond, lake, water course or any other source from which water is drawn to gener