The J&K High Court allowed petitions by hydropower producers challenging water usage charges. The ruling limits the Union Territory's power to tax electricity generation indirectly.Stock photo used for illustrationSrinagar,Oct 29, 2026 20:12 ISTThe High Court of Jammu and Kashmir and Ladakh has struck down provisions of the Jammu and Kashmir Water Resources (Regulation and Management) Act, 2010, that imposed water usage charges on hydropower projects, news agency Press Trust of India reported.A division bench of Justices Rajnesh Oswal and Sanjay Dhar ruled that the charges imposed on independent power producers amounted to an impermissible tax on electricity generation, which was beyond the legislative powers of the Union Territory legislature.The court allowed a batch of petitions filed by independent power producers, including Mass N Energy Pvt Ltd, Magpie Hydel Construction Operation Industries Pvt Ltd and Choudhary Power Projects Pvt Ltd.
It also quashed all related demand notices issued by the government since 2010, according to PTI.The companies were represented by senior advocate Pranav Kohli, advocate Shariq J Reyaz and others. Senior additional advocate general A R Malik and deputy solicitor general T M Shamsi argued the administration's case.
The bench said the state or Union Territory legislature had the power to regulate water under Entry 17 of List II of the Constitution but lacked the authority to impose a tax on electricity generation.The charges were calculated on the basis of the height of the water head and turbine propulsion rather than the actual quantity of water used. The court, therefore, concluded that the levy was essentially a tax on electricity generation and not a regulatory fee for water usage.
The court also rejected the administration's argument that the 2010 law had been protected and given parliamentary backing through the Jammu and Kashmir Reorganisation Act, 2019. Citing Supreme Court judgments, the bench said a law that was unconstitutional and invalid from the outset could not be legitimised through its subsequent adoption by Parliament.The court declared the provisions beyond the powers granted by the Constitution and restrained the administration from imposing future taxes on electricity generation in the form of water usage charges."The impugned enactment, to the extent it imposes water usage charges upon the petitioners, is held to be ultra vires the Constitution and is struck down to the said extent," the high court said.The court added that the administration's order "appears to be an attempt in desperation" to protect the legislation. "If we have a look at the provisions of the Jammu and Kashmir Reorganisation Act, it becomes clear that what is being provided under the said Act is saving of certain state enactments and repeal of certain others," it said in its 50-page order.The ruling removes the water usage charges imposed on the petitioning hydropower companies, cancels the related government demands issued since 2010 and bars such charges from being levied as a tax on electricity generation in the future.- Ends