Synopsis

The Uttarakhand Water Tax on Electricity Generation Act, 2012 imposed a tax on the drawal of water for electricity generation. After a Division Bench delivered a split verdict (Chief Justice Vipin Sanghi upholding the Act, Justice Ravindra Maithani striking it down as ultra vires), the matter was referred to a third judge. The third judge (Alok Kumar Verma, J.) agreed with Justice Maithani that the Act is unconstitutional. He held that: (i) in pith and substance, the tax is on generation of electricity – a field exclusively under Union List (Entry 92A? Actually electricity generation is not specifically listed but the court reasoned state lacks competence); (ii) the Act cannot be traced to any State List Entry (17, 45, 49, 50) or Article 288; (iii) Section 17 delegates unfettered power to fix tax rates without guidelines, amounting to excessive delegation; (iv) however, the plea of promissory estoppel (based on agreements exempting taxes) fails because there is no estoppel against the legislature. The Act was declared ultra vires.

Court: High Court of Uttarakhand at Nainital

Coram: Hon’ble Mr. Justice Alok Kumar Verma (Single Judge on Reference after split verdict)

Date of Judgment: 27th April 2026 (pronounced; reserved on 17.06.2025, delivered 27.06.2026 as per page 4 – though order date shows 27.04.2026, the judgment text says 27th April, 2026)

Citation: Special Appeal No. 149 of 2021 & connected matters (2026:UHC:12252)

Core Law: Constitutional Law – Legislative competence (Article 246, Seventh Schedule – List II Entries 17, 45, 49, 50; List I Entry 92A); Article 288; Doctrine of Pith and Substance; Doctrine of Excessive Delegation; Promissory Estoppel

1.  Heading of the judgment

High court of uttarakhand at nainital

Special appeal no. 149 of 2021 & connected matters with writ petition (m/s) no. 1739 of 2021

Uttar pradesh power corporation limited & ors. (appellants) vs. State of uttarakhand & ors. (respondents)

Coram: hon’ble mr. justice alok kumar verma (on reference after split verdict)

Date: 27th april, 2026

2. Legal framework

Major laws and provisions involved:

• Constitution of india, 1950 – article 245, 246 (distribution of legislative powers), article 265 (tax only by authority of law), article 288 (exemption from state taxation on water/electricity in certain cases), seventh schedule – list i (union list) – entry 92a (tax on sale/purchase of electricity – not directly cited but state lacks power to tax generation), list ii (state list) – entries 17 (water), 18 (land), 45 (land revenue), 49 (taxes on lands and buildings), 50 (taxes on mineral rights)

• Uttarakhand water tax on electricity generation act, 2012 – sections 2(c), 2(f), 2(i), 17 (charging section with power to fix rates), 18, 19

Subject matter of the judgment:

Whether the Uttarakhand Water Tax on Electricity Generation Act, 2012 is constitutionally valid, specifically examining: (i) whether the tax is on “drawal of water” (state subject) or on “generation of electricity” (outside state competence); (ii) whether the Act can be sustained under Entries 17, 45, 49, 50 of List II or Article 288; (iii) whether Section 17 suffers from excessive delegation; (iv) w

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