Tripura HC rules in favour of ONGC subsidiary in a case related to levy on inter-state electricity sale

The Tripura High Court has ruled in favour of ONGC Tripura Power Company Ltd (OTPC) in a matter related to levy on inter-state sale of electricity.

The court said the state government can’t levy duty on the power producer’s inter-state sale of electricity. It also termed as “illegal and unconstitutional” a clause in Tripura’s Electricity Duty Act, 2019 that allows the state government to levy a duty on inter-state sale of electricity.

OTPC had challenged in court a section of the Tripura Electricity Duty Ordinance, 2019 which said, “electricity sold outside the state and licensees shall have to pay electricity duty on sold energy charges”. Subsequently, the Ordinance was repealed once the Electricity Duty Act, 2019 was passed by the state government.

The ONGC subsidiary generates electricity with gas and steam turbine units. The company sells the bulk of the electricity generated from the power project to seven states in northeastern India, including Tripura.

The company claimed that about 13.5% of its total energy production goes to Tripura.

The genesis of the dispute lies in Section 4 (4) (d) of the Tripura Electricity Duty Ordinance, 2019, which says the state can levy duty on electricity sold outside the state.

OTPC had challenged the clause in the high court, terming it “unconstitutional” and “beyond the legislative competence of the state legislature”.

ET Energy World
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