Case Law Details
ONGC Tripura Power Company Ltd. Vs State of Tripura (Tripura High Court)
In a significant legal victory for electricity-generating companies, the Tripura High Court has held State Governments cannot levy electricity duty on inter-State sale of electricity. ONGC Tripura Corporation Ltd had challenged the provisions of the Tripura Electricity Duty Act, 2019 (TEDA) by a petition in the High Court through their advocate Parinay Deep Shah of Urja Law Chambers.
The Division Bench comprising the Chief Justice, Akil Kureshi and Justice S.G. Chattopadhyay quashed Section 4 (4) (d) of the Tripura Electricity Duty Act, 2019 (TEDA), reasoning that the State legislature is not competent to levy electricity duty on the inter-State sale of electricity and allowed OTPC’s prayer for a refund to the extent the tax has not been passed on to the consumers.
The High Court held that Articles 286, 269 and 269A restrict the State legislature’s power to levy tax on the inter-State sale of goods.
The Bench dealt with the changes to taxation laws by GST regime through constitutional amendments and enactment of the Integrated Goods and Services Tax Act, the Central Goods and Services Tax Act and the State Goods and Services Tax Act. The Bench accepted Mr Shah’s argument that the Schedule 7 entries are not the source of the power of legislation but are mere legislation fields on which the State or Union Legislature can frame a law and that the power to legislate and its limitations can be traced in the Constitution.
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