NEW DELHI — The Supreme Court has upheld the Maharashtra government's authority to withdraw electricity duty exemptions for companies operating captive power plants. The ruling marks a significant legal setback for major industrial players, including Reliance Industries (RIL), Lupin, and Jindal Poly Films.

The decision confirms that the state can charge a duty of 15 paise per unit on power generated and consumed by these captive units for the period between 2000 and 2005.

The Legal Dispute

The core of the case rested on whether the state, having granted an exemption in 1994, was legally barred from withdrawing it later.

• The 1994 Notification: Initially exempted captive power plants from paying electricity duty.
• The 2000-2001 Rollback: The state withdrew the exemption and eventually settled on a charge of 15 paise per unit.
• High Court vs. Supreme Court: The Bombay High Court had previously struck down the withdrawal in 2009, but the Supreme Court has now set aside those judgments.

Key Rulings by the SC Bench

The bench, comprising Justices PS Narasimha and Alok Aradhe, clarified the following:

• Authority to Withdraw: The state government holds the statutory power to modify or revoke exemptions, especially since the original 1994 notification did not guarantee a permanent status.
• Implementation Buffer: In a minor relief to the industries, the court ruled that the withdrawal notifications would only become operational one year after their respective dates (April 2000 and April 2001).
• Specific Period: The ruling specifically impacts the "gap years" between April 1, 2000, and April 30, 2005, after which exemptions were largely restored.

Impact on Industry

For the affected companies, this means a substantial retrospective payout of electricity duties. The court emphasized that unless a specific period is promised in an exemption notification, the government retains the flexibility to adjust fiscal policies based on state requirements.