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Shimla, Aug 8
The Himachal Pradesh High Court has quashed the provision under which electricity duty was imposed on power generated by consumers through diesel generating sets or any other mode for their own captive or standby consumption.
A Division Bench comprising Justice Vivek Singh Thakur and Justice Ranjan Sharma passed the judgment on August 7, 2026, while allowing a petition filed by M/s Ruchira Papers Ltd. against the Himachal Pradesh State Electricity Board Limited (HPSEBL) and the State government.
The company had challenged Section 3(1)(xi) of the Himachal Pradesh Electricity (Duty) Act, 2009, as well as the September 1, 2023 notification increasing the electricity duty on electricity generated through diesel generating sets for own consumption from 30 paise to 45 paise per unit.
The petitioner argued that electricity generated by a consumer through its own diesel generator for captive use did not fall within the charging provision of Section 3 of the 2009 Act. It also submitted that industries were often compelled to operate generators during power cuts despite the cost of such generation being substantially higher than normal electricity.
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The State and HPSEBL defended the levy, arguing that the government had legislative competence to impose electricity duty and that the levy was also intended to discourage the use of polluting diesel generators and promote cleaner energy sources.
The High Court, however, held that Section 3 did not empower the State to levy electricity duty on a consumer who was neither the Board, a licensee, electricity trader nor a generating company. The court held that the manner of imposing such duty on consumers under clause (xi) was illegal.
The Bench accordingly quashed clause (xi) of Section 3(1) insofar as it imposed duty on electricity generated by diesel generating sets or any other mode for own consumption, while directing that the remaining provisions would continue to remain in force. The petition was allowed along with pending applications, if any.
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