SRINAGAR, October 30, 2026 – In a significant and far-reaching ruling, the High Court of Jammu & Kashmir and Ladakh has struck down the water usage charges levied on hydropower generation projects, bringing major relief to independent power producers.
The court declared the relevant provisions of the Jammu and Kashmir Water Resources (Regulation and Management) Act, 2010, unconstitutional, ruling that the levy was, in substance, an unauthorized “tax on the generation of electricity” rather than a legitimate charge for water usage.
The historic verdict quashed all corresponding demand notices issued by the government against the petitioning hydropower companies since 2010, permanently restraining the administration from levying such charges under the guise of water usage fees in the future.
The bench examined the core tariff mechanism, noting that linking the charges to the ‘head height’ of a hydropower project directly connected the financial levy to electricity generation rather than the mere volume of water used. The court pointed out that the hydropower companies did not receive any corresponding municipal, irrigation, or operational services in return for the exorbitant amounts demanded by the government.
Additionally, the court noted that under Section 185-A of the 2010 Act, the collected amounts were being placed in a fund earmarked specifically for capital investments in transmission networks and power purchases.
Concluding that the levy was directed squarely at electricity generation, the court held that the erstwhile state legislature lacked the constitutional and legislative competence to introduce such a tax.
The court also dismissed the government’s defense that the law’s subsequent adoption under the Jammu and Kashmir Reorganisation Act, 2019, validated the charges. The bench observed that a law unconstitutional at the time of its original enactment could not be legitimized or validated merely through its subsequent adoption.
Political Fallout: MLA Pulwama Raises Concerns
The court’s decision has immediately triggered political backlash concerning the government’s legal preparedness. Reacting to the ruling, MLA Pulwama Waheed Para flagged a potential revenue loss of Rs 1,000 crore to the Union Territory’s exchequer.
Para sharply questioned the administration’s handling of the high-stakes case. He pointed out that Jammu and Kashmir had remained without a dedicated Advocate General for nearly two years, a significant gap given that the Law Department is currently under the Chief Minister’s charge.
Expressing deep concern over the administration’s ability to defend the UT’s interests, Para stated in a post on X (formerly Twitter): “If this is how we defend our interests, what hope is there for the statehood case?”
Published by True Roots Media Network