Naidu government gets Rs 2,500 crore bill as Andhra Pradesh HC scraps Jagan-era power duty

The cash-strapped N Chandrababu Naidu government may have to foot a bill of about ₹2,500 crore as the Andhra Pradesh High Court has struck down an electricity duty levied on industrial and commercial establishments by the previous YSRCP government.

The issue pertains to a duty levied on the sale of each unit of electricity. Under the Andhra Pradesh Electricity Duty (Amendment) Act, 1994, the state had levied 6 paise per unit of "electricity duty" on all consumers, except on power sold to the Centre and the railways. In 2022, the then Jagan Mohan Reddy-led YSRCP government increased this levy to ₹1 for industrial and commercial users through a government order. Andhra Pradesh's textile and ferro alloys industries challenged this order in the court, terming it "discriminatory" to industry as these two industries are heavy consumers of power, which accounts for 50% of their input costs.

A bench of Andhra Pradesh chief justice Dhiraj Singh Thakur and justice R Raghunandan Rao on Friday scrapped the government order through which electricity duty was enhanced. The order reads: "GOMs No 7, dated 08.04.2022 is struck down. However, the government is entitled to collect duty at the rate of 6 paise per unit, throughout the period from the date when Act of 2021 was published in the Gazette till such time as the rate of duty is modified, in accordance with law."


Since the government order has been struck down, it will need to refund 94 paise per unit collected in excess from industrial and commercial consumers.

A government source, who did not wish to be identified, told ET: "Industrial consumption of electricity is about 1,539 crore units per year. We will be calculating the dues per user. It will be about ₹2,500 crore." The government is weighing options, including appealing in the Supreme Court and adjusting future bills of consumers.

Sri Anantha Laxmi Spinning Mills executive director Paani Kumar Samineni told ET: "The government collected 94 paise excess electricity duty for 18 months till different associations got a stay order from court. This order will help consumers in recovering these dues running into hundreds of crores." The enhanced duty was collected till October 2023.