Supreme Court Upholds Maharashtra's Power to Modify Electricity Duty Exemptions

The Supreme Court supported Maharashtra's authority to alter electricity duty exemptions for captive power plants, while ensuring a one-year notice period before implementation. This decision overturns previous High Court rulings that deemed such policy changes arbitrary, affecting industries like Reliance Industries Ltd.

In a landmark ruling on Wednesday, the Supreme Court confirmed the Maharashtra government's right to retract or modify electricity duty exemptions granted to captive power plants.

The decision shields industries, including Reliance Industries Ltd, from sudden policy changes by mandating a one-year notice period before such decisions take effect. The bench, comprising Justices P S Narasimha and Alok Aradhe, overturned prior high court verdicts that nullified the state's move to tax captive power generation.

The case stemmed from April 2000 and April 2001 notifications under the Bombay Electricity Duty Act, 1958, which were initially met with industry resistance. The high court's original stance favored the industries, calling the state's decision arbitrary. However, the Supreme Court clarified that tax exemption is a privilege, not a perpetual right.