J&K High Court strikes down water usage charge on hydropower projects

The High Court of Jammu & Kashmir and Ladakh struck down water usage charges on hydropower projects on 29 October, ruling they amount to an unconstitutional tax on electricity generation. A division bench of Justice Sanjay Dhar and Justice Rajnesh Oswal declared the relevant provisions of the Jammu and Kashmir Water Resources (Regulation and Management) Act, 2010 ultra vires the Constitution, quashed demand notices issued to 13 independent power producers and restrained the Union Territory government from imposing any such levy.

The Court held that water use by hydropower projects is non-consumptive and inextricably linked to electricity generation, making any charge on it a tax on generation, which the erstwhile state legislature lacked competence to impose. The Union of India supported the petitioners' position. The J&K government had defended the levy as a regulatory measure under its power to regulate water resources, but the Court rejected the argument, noting the charge was calculated on turbine head height, not water volume consumed, and was not linked to any specific service. The government's contention that the law's adoption under the Jammu & Kashmir Reorganisation Act, 2019 had legitimised it was also dismissed on the ground that a law unconstitutional at enactment cannot be validated by subsequent parliamentary adoption.