SC stays Chhattisgarh HC order on captive power cess

The Supreme Court has stayed a Chhattisgarh High Court order that had struck down the state government's decision to impose a cess on sale of electricity by captive power producers (CPPs).

A Bench comprising Justice SH Kapadia and Justice PK Balasubramanyam also stayed the refund of the cess amounting to more than Rs 100 crore as sought by the CPPs.

The Chhattisgarh government had earlier approached the Supreme Court seeking quashing of the high court order that struck down its notification imposing 10 paise per unit cess on sale of electricity by the CPPs.

Various big companies with captive power plants like Associated Cement, Grasim Industries, Lafarge India, Ambuja Cement Eastern Ltd, Bharat Aluminium, Monnet Ispat & Energy had challenged the decision on the ground that they were being discriminated against.

The CPPs had argued that independent power producers (IPPs) were not required to pay the cess.

The state government said captive and independent power producers could not be equated as the IPPs were subject to different tax regimes.

CPPs were exempt from electricity duty for 5 years and dod not pay any surcharge, while IPPs had to incur additional cost in the form of wheeling charges, transmission losses and surcharge, the state government said.