The Minister of Power (MoP) has declared any tax / duty on generation of electricity, which encompasses all types of generation viz. thermal, hydro, wind, solar, nuclear, etc. as illegal and unconstitutional.
It has been stated that hydro power projects do not consume water to produce electricity. Electricity is generated by directing the flow of water through a turbine which generates electricity on the same principle as electricity from wind projects where wind is utilised to turn the turbine to produce electricity. Any imposition of tax on the non-consumptive use of water of these rivers for electricity generation is in violation of provisions of the Constitution of lndia. Therefore, the ministry finds no rationale for levy of water cess or air cess. The ministry has further directed that no taxes / duties may be levied by any state under any guise on generation of electricity and if any taxes / duties have been levied so far then it must be promptly withdrawn.
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