Subsidy cannot be enforced as a matter of right

Supreme Court while dismissing the appeals of heavy industries in Uttar Pradesh in Paschimanchal Vidyut Vitaran Nigam v. Adarsh Textiles said that, “granting subsidies in power tariff to certain sectors is the prerogative of the State Government and that “subsidy being a concession could not be enforced as a matter of right.” Court further observed that, granting subsidies in power tariff to certain sectors is the prerogative of the state government and the electricity regulatory commission has no authority to burden the state by extending the benefit to heavy industries.

The government had granted flat rate to farmers, weavers and light power consumers according to a policy decision. However, the state regulatory commission took the view that the policy had the effect of altering the rate schedule approved by it. Hence, it issued an order restraining all electricity supply undertakings in the state from implementing the government order.

However, Allahabad High Court dismissed the petition of the state power corporation opposing it. On subsequent appeal, the Supreme Court ruled that the High Court was wrong in extending the subsidy to heavy industries.

Supreme Court further observed that, “it is the prerogative of the state governments to extend the benefit of subsidy to a class of consumers; subsidy being a concession could not be enforced as a matter of right“. Judgment further added that, the commission was bound to act according to the directives of the government under the provisions of the Electricity Act 2003 and the Reforms Act 1999.

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