Overview
Test Series
Article 288 of Indian Constitution exempts water and electricity from state taxation in specific cases. It prohibits states from taxing these resources when stored, generated, consumed, distributed, or sold by designated authorities. This exemption applies to entities established by existing laws or Parliament’s laws for inter-state river regulation. Any state law imposing such taxes requires presidential assent and must be reserved for the President’s consideration, including consent for tax rate regulations. Explore other important Constitutional Articles.
Overview |
|
Name of the Article |
Article 288 of Indian Constitution: Exemption from taxation by States in respect of water or electricity in certain cases |
Part of the Constitutional Article |
Part XII |
Exemption from taxation by States in respect of water or electricity in certain cases
Subjects | PDF Link |
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Explanation--The expression "law of a State in force" in this clause shall include a law of a Stale passed or made before the commencement of this Constitution and not previously repealed, notwithstanding that it or parts of it may not be then in operation either at all or in particular areas.
Note: "The information is referred from the official website of the Indian Code and is for reference only. Original laws and orders remain untouched.
Under Article 288 of the Indian Constitution water and electricity are capped under state taxation and require Presidential consent—for some deemed non neutral state tax laws. The important provisions are given below:
Article 288 of Indian Constitution under Part XII which plays a key role in the regulation of state taxation of water and electricity. It also includes:.
Article 288 of the Indian Constitution has been pivotal in cases addressing state taxation on electricity and water, requiring presidential assent for such laws.
The Calcutta High Court, in the case of Surya Alloy Industries Ltd. v. State of West Bengal & Others (2023) examined whether the West Bengal Electricity Duty Act, 1935 complied with Article 288 of the Indian Constitution. The petitioners argued that the Act lacked presidential assent which is required for taxation on electricity supplied by inter-state river valley authorities like Damodar Valley Corporation (DVC). The court analyzed the legislative competence of the state in imposing such taxes and whether it amounted to taxation on inter-state electricity sales.
The Supreme Court of India in the case of Damodar Valley Corporation v. State of Bihar & Others (1976) examined whether the Bihar Electricity Duty Act, 1948 could impose taxes on electricity generated by the Damodar Valley Corporation (DVC), an entity established for inter-state river regulation. The court ruled that Article 288 of the Indian Constitution exempts such entities from state taxation unless presidential assent is obtained. The judgment reinforced the constitutional protection for inter-state electricity projects, ensuring that states cannot unilaterally impose taxes on them.
The Madras High Court in the case of Suryachakra Spinning Mills (P) Ltd. v. State of Tamil Nadu (2006) examined the issue of sales tax deferral for the petitioner industry. The petitioner sought an extension of the deferral period from five years to nine years, as per government policies. The court directed the state authorities to reconsider the petitioner’s request and dispose of it in accordance with the law.
Article 288 of Indian Constitution plays a crucial role in regulating state taxation on water and electricity. It ensures that states cannot impose taxes on these resources when managed by specific authorities unless presidential assent is obtained. This provision safeguards inter-state projects, supports essential public services and maintains a balance between state autonomy and national interests. By requiring presidential oversight Article 288 prevents arbitrary taxation, ensuring smooth operations for government and railway infrastructure.
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