Uttarakhand High Court Strikes Down Water Tax on Hydropower Generation as Unconstitutional

The Uttarakhand High Court recently struck down the Uttarakhand Water Tax on Electricity Generation Act, 2012, holding that the State government lacked constitutional authority to impose tax on hydropower generation.

Justice Alok Kumar Verma delivered the judgment while resolving a split verdict earlier delivered by a Division Bench in petitions filed by several hydropower companies, including THDC and NHPC.

The Court observed that although the State described the levy as a “water tax,” the taxable event was intrinsically linked to electricity generation, a field falling outside the State’s legislative competence.

The judgment provides major relief to hydropower companies operating in Uttarakhand.