JSW Energy Challenges Goa’s Green Cess Act in Supreme Court: Here's Why

JSW Energy moved the Supreme Court challenging the legislative competence of the Goa state legislature on April 28 to enact the Green Cess Act and the Green Cess Rules, reported ET.

JSW Energy has raised the issue whether ‘environment’ can fall within the legislative competence of the state. Besides, the company alleged that section 4 of the Green Cess is “manifestly arbitrary”.

According to ET, a Bench led by Justice BV Nagarathna refused to entertain the appeal in the present form, but asked the company to move a writ petition within a week under Article 32 challenging the validity of the Goa cess laws and the assessment notices issued to it under the Act.

The apex court also directed that no coercive action shall be taken against JSW Energy on assessment notice issued by the state for three weeks.

JSW Energy is challenging the constitutional validity of the Goa Cess on Products and Substances Causing Pollution (Green Cess) Act, 2013, and the Goa Cess on Products and Substances Causing Pollution (Green Cess) (Functions and Duties of the Competent Authority, Assessment, Levy and Collection of Cess) Rules, 2014. The company cited the SC judgement in Reliance Industries vs Gujarat, JSW Energy to argue that the environmental law does not fall within the state’s legislative competence.

The company also argued that similar notices were issued to its other group companies - JSW Steel and South West Port (SWPL) – and that the green cess cannot be levied twice on the same consignment.

What is Green Cess Act?

The Green Cess Act was enacted in 2013 to provide for levy and collection of cess on the products and substances including hazardous substances, which upon their handling or consumption or utilisation or combustion or movement or transportation cause pollution.

Based on the concept of the “polluter pays principle”, the law provides for the measures to reduce the carbon footprint. The law provides for the imposition of fees not exceeding 2% of the sale value of the products causing pollution.

The cess is primarily imposed on companies handling coal and chemicals such as naphtha, which is used in the production of fertilisers.