Article 287 of the Costitution of India with Case law
📜 Article 287 of the Constitution of India – Exemption from Taxes by States in Respect of Electricity
✅ Text of Article 287:
"Exemption from taxes by States in respect of electricity."
No law of a State shall impose, or authorize the imposition of, a tax on the consumption or sale of electricity (whether produced by a Government or other persons) which is—
(a) consumed by the Government of India, or
(b) consumed in the construction, maintenance or operation of any railway by the Government of India or by any company operating that railway,
if the consumption or sale takes place in the course of inter-State trade or commerce.
🧠 Explanation:
Article 287 prohibits States from imposing electricity tax on consumption or sale of electricity used:
By the Government of India, or
In railway operations by the Union or authorized companies,
when such electricity is used in inter-State trade or commerce.
This ensures fiscal autonomy for the Union Government and national railways in their inter-State operations.
⚖️ Important Case Laws on Article 287:
1. State of Andhra Pradesh v. National Thermal Power Corporation (NTPC)
Citation: AIR 2002 SC 1895
Facts: NTPC, a Central Government PSU, was generating and transmitting power inter-State. Andhra Pradesh tried to impose duties.
Held:
Article 287 bars States from taxing electricity consumed by the Union in inter-State trade.
NTPC, acting under Union control, was exempt from such State taxes if conditions of inter-State trade are satisfied.
2. State of U.P. v. Renusagar Power Co.
Citation: AIR 1988 SC 1737
Facts: U.P. government tried to levy electricity duty on Renusagar’s power consumption.
Held:
Article 287 applies only to consumption by Union or for railway operations, and only when involved in inter-State commerce.
The burden of proof lies on the entity claiming exemption to prove inter-State nature of consumption.
3. Indian Aluminium Co. v. State of Kerala
Citation: AIR 1996 SC 1431
Held:
Article 287 does not grant blanket exemption from all electricity taxes.
It only applies in limited circumstances involving inter-State commerce and Union use.
Private companies cannot claim exemption unless clearly falling within Article 287’s scope.
🛑 Limitations of Article 287:
| Condition | Explanation |
|---|---|
| Government Use | Only applies to Government of India, not private companies. |
| Railways | Includes only Government-operated or authorized railway operations. |
| Inter-State Trade | Consumption/sale must occur in the course of inter-State trade. |
| No blanket exemption | Must satisfy all conditions; otherwise, state tax is valid. |
🔁 Related Articles:
| Article | Relevance |
|---|---|
| Article 286 | Restrictions on taxing inter-State trade or commerce. |
| Article 288 | Exemption from taxation by Union in respect of water or electricity in certain cases. |
| Seventh Schedule (List II - State List) | Allows states to tax electricity (subject to Article 287). |
📚 Summary Table:
| Feature | Description |
|---|---|
| Article | 287 |
| Purpose | Exempt Union Government & Railways from electricity tax in inter-State trade |
| Applies To | Government of India, Railways |
| Condition | Consumption/sale in inter-State commerce |
| State Tax Barred | Yes, if above conditions are met |
| Key Case Laws | NTPC v. A.P., Renusagar, Indian Aluminium Co. |
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