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Supreme Court stays Gujarat HC judgment quashing Green Cess Act

According to reports, the legal debate over the NarendraModi government imposing green cess on industries was revived on Wednesday with Supreme Court staying a Gujarat high court judgment quashing the state legislation as unconstitutional.

A bench of Justices R M Lodha and S J Mukhopadhaya stayed the HC judgment and allowed the Gujarat government to compute green cess on 20-odd big industries, including Reliance Industries Ltd, Apollo Tyres, Arvind Mills, Essar Oil Ltd, Ultratech Cement, Nirma Ltd, Hindalco, Tata Chemicals and Jaypee Gujarat Cement.

Though the bench admitted Gujarat’s appeal filed through standing counsel Hemantika Wahi and expedited the hearing, it asked the state government to only compute the cess liability of industries, which use self-generated power to run their units, but not recover the dues till pendency of the appeal. Two years back, the state enacted the Gujarat Green Cess Act to create ‘Green Energy Fund’ to be utilized for promoting generation of electricity through renewable sources, purchase of non-conventional energy and taking initiatives for protecting the environment.

Senior advocate L Nageshwar Rao said the aim of the Act was to protect environment by levying cess on generation of electricity other than renewable sources and utilization of the amount collected by promoting renewable sources of energy in the state in substitution of conventional/fossil fuel generated electricity. However, senior advocates A M Singhvi and C A Sundaram said these industries were generating electricity from conventional sources to meet in-house demand and not for selling it to consumers for a profit. They requested the court to distinguish between commercial producers of electricity and those generating it to run their units while adjudicating the legislative competence of the state to enact such a law.

The Modi government referred to ‘public health’ and said this empowered the state to legislate on the subject. “The cess (is) collected from generating stations in Gujarat which are causing pollution to the atmosphere and environment and thereby injury to public health,” it said.

“Promotion of generation of electricity through renewable and non-conventional sources and protection of environment in the state for public health in the circumstances mentioned above is a sufficient quid pro quo for the cess to be imposed,” it added.

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