Minister of State for Power Kaushik Patel, who presented the Bill amending the Act, said this move would make independent power projects liable to pay sales tax on power, bringing in a revenue of Rs 10 crore to Rs 12 crore to the State exchequer. Captive power projects, which sell surplus power, have also been brought under the purview of tax.

The State power minister clarified that units receiving electricity from generating companies would not be affected by this amendment. Patel said the amendment aimed at ensuring that those units who sell power directly to users instead of routing it through the Gujarat Electricity Board did not escape the tax net.

The minister told the House that to safeguard the revenue of the State, it was considered necessary that those who generate power for themselves and sell the surplus to other units were also made liable to pay tax.

He said small units would not be affected by the amendment.

For effective tax recovery, it was also found necessary to enhance the rate of interest from 12 per cent to 24 per cent for non-payment or delayed payment of tax.

Participating in a debate on the Bill, Congress member Subhash Shelat said that since this Bill was in light of changes made in the national power policy of 1991, the government should have introduced the amendment earlier. The Congress member argued that quite a few small units had set up their captive power plants thinking that there would not be any tax.

He said that ``just for Rs 10 crore'' the government was inconveniencing such small units through a ``backdoor tax.'' Shelat also claimed that such steps would discourage private sector investment.

``It is contradictory that on the one hand the Industries Minister comes up with a Bill allowing massive private sector participation in industrial growth, and on the other, the Energy Minister brings a tax burden,'' he said.

Patel clarified that captive or independent power plants had never been promised that there would be no tax on sale of electricity, and there was no delay in bringing the bill. ``It is the right decision at the right time,'' he said.