Centre asks States to scrap taxes on power generation units
The Centre on Wednesday warned states to not levy any cess like water cess on power generation as it is unconstitutional. Centre issued this warning as some states are imposing tax on power generation units. It is because Seventh Schedule of the constitution did not enabled states to impose such taxes.
Centre’s contention is that tax imposed on power generation plants including thermal, hydro, wind, solar, nuclear, etc. will be finally born by consumers. But consumers for power plant of one state could be located in other states. Imposing tax on power plants is same as imposing tax by state on residents of other states which is unconstitutional.
Constitution empowered States to levy taxes only on consumption or sale of electricity in their jurisdiction but this does not include the power to impose any tax or duty on the generation of electricity.
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