NHPC Ltd. Vs Principal Commissioner (Himachal Pradesh High Court)
Himachal Pradesh High Court held that GST not leviable on supply of free electricity by treating same as ‘consideration’ towards licensing services rendered by the State Government.
Facts- The petitioner is engaged in the activity of power generation and is registered with various States GST Authorities including the State of Himachal Pradesh, vide different GSTINs. It had entered into agreements with various State Governments including the State of Himachal Pradesh, for establishing and running power generation projects in the State. Under such agreements, as compensation towards causing distress to the environment and people involved due to the setting up of the power projects, the petitioner provides 12% of the power generated, free of cost to the State Governments and 1% free power to the Local Area Development Fund.
This is in accordance with the power sharing letter issued on 01.11.1990 by the then Department of Power, Ministry of Energy, Government of India, and also as per the Hydropower Policy, 1998.
Para 9.2 of the Hydropower Policy, 2008, while dealing with the Resettlement and Rehabilitation ( R and R) issues, states that the National Policy of Rehabilitation and Resettlement, 2007 would be applicable to all kinds of projects and lays down the minimum R and R package, but there is a need to go beyond this in case of hydro projects. It is further observed that just as host State Governments have been turned into stake-holders by stipulating that 12% of the power is given to them free of cost as a royalty, there is a need to turn the project affected areas and persons also into stake holders with a continuing stake not only in the completion but also in the continued operation of the projects.
