HC scraps notice served to alcohol company demanding water tax of Rs 400 crore

Lokmat News Network

Chhatrapati Sambhajinagar:

The Aurangabad Bench of the Bombay High Court on Friday quashed the demand notices issued by the Water Resources Department (WRD) to United Spirits Ltd., Dharmabad (Nanded district), for outstanding dues exceeding ₹400 crore related to water drawn from the Godavari River for alcohol production.

The court directed the state government to conduct a fresh assessment of the water usage by the company from November 2018 onwards. The reassessment should be completed within three months based on the prevailing water tariff rates of 2018 and 2022. The WRD’s (Nanded) executive engineer has been instructed to conduct a proper inquiry, follow principles of natural justice, and consider the company's representations before issuing any fresh demand.

Meanwhile, United Spirits has been ordered to deposit ₹66.50 crore within six weeks with the executive engineer. This amount will be adjusted against the newly calculated water charges. If the company has paid in excess, the surplus will be adjusted against future bills.

What is the petition?

It may be noted that the company had challenged the demand notices issued by the WRD for the period 2018-2022, arguing that only 2 per cent of the water drawn was used as raw material for alcohol production, while the rest was used for cleaning, cooling, and other processes. The company contended that it was unfairly charged at the rate of ₹240 per cubic meter for the entire volume of water drawn.

The senior lawyer Andhyarujina argued the department issued the demand notices without conducting a proper inquiry into the nature and extent of water usage.

Special government pleaders Adv Uday Warunjikar and V P Tapkir defended the government’s position and sought dismissal of the petition, but the court ruled in favour of the company and ordered a fresh, fair reassessment.

This decision is expected to bring clarity and fairness in the billing of water usage by industrial units in the region.

High Court observations

The High Court observed that the WRD had issued demand notices to the petitioner-company without conducting a proper inquiry into the actual usage of water drawn from the river. The court noted that no assessment was carried out to distinguish between the quantity of water used as raw material for alcohol production and the portion used for other purposes such as cleaning, cooling, and processing. As a result, the court termed the department’s action as unjustified.