Water (Prevention and Control of Pollution) Cess

The Water (Prevention and Control of Pollution) Cess refers to a levy imposed on industries and local authorities for the consumption of water, with the objective of augmenting the financial resources of the Central and State Pollution Control Boards. It was established under the Water (Prevention and Control of Pollution) Cess Act, 1977, which was enacted by the Government of India to support the effective implementation of the Water (Prevention and Control of Pollution) Act, 1974.
The cess aimed to promote efficient water use, reduce wastage, and control water pollution by creating economic disincentives for excessive water consumption by industries and municipalities.

Objectives of the Cess

The primary objectives of imposing the Water Pollution Cess were:

• To raise funds for the operation and maintenance of the Central and State Pollution Control Boards (CPCB and SPCBs).
• To encourage industries and local authorities to adopt measures for pollution control and water conservation.
• To reduce the misuse and wastage of water through financial accountability.
• To strengthen the enforcement of the Water (Prevention and Control of Pollution) Act, 1974.

Legal Framework

• The cess was imposed under the Water (Prevention and Control of Pollution) Cess Act, 1977, which came into force in 1978.
• The accompanying Water (Prevention and Control of Pollution) Cess Rules, 1978 laid down the procedures for assessment, collection, and rebate of the cess.
• The Act empowered the Central Government to levy and collect the cess, while the proceeds were distributed between the Central and State Pollution Control Boards.

Applicability

The cess applied to:

• Industries involved in manufacturing, processing, and operations using water for specific purposes.
• Local authorities (such as municipalities) responsible for supplying water for domestic and industrial use.

Categories of industries covered under the Act included:

• Fertilisers, paper, steel, textiles, chemicals, cement, and other water-intensive sectors.
• Thermal power plants and food processing industries.

Basis of Levy

The cess was levied based on the quantity of water consumed by industries and local authorities, measured through installed water meters.
The purposes for which water consumption was chargeable included:

1. Industrial cooling or boiler feed.
2. Domestic purposes.
3. Processing that resulted in water pollution.
4. Other purposes as specified by the Central Government.

Rates of Cess

• The cess rates were specified in the Schedule to the Act, and the Central Government had the authority to revise them periodically.
• Rates varied depending on the category of industry, use of water, and extent of pollution generated.
• The rates were expressed in paise per kilolitre of water consumed.

Rebate Provisions

To encourage compliance and pollution control, the Act provided for a rebate to industries that adopted approved measures for the treatment, reuse, and recycling of wastewater.

• Initially, industries could claim a 25% rebate on the cess amount if they installed and operated effluent treatment plants (ETPs).
• The rebate served as an incentive for industries to invest in pollution control infrastructure and adopt sustainable practices.

Collection and Utilisation of Cess

• The cess collected was credited to the Consolidated Fund of India, and a portion of it was disbursed to the Central and State Pollution Control Boards.
• The funds were utilised for:
  • Monitoring and controlling water pollution.
  • Strengthening laboratory and monitoring infrastructure.
  • Conducting water quality assessments.
  • Supporting research, training, and public awareness on pollution control.

Authorities Involved

1. Central Government: Responsible for levying and collecting the cess, and framing rules.
2. Central Pollution Control Board (CPCB): Received funds to coordinate national-level water pollution control efforts.
3. State Pollution Control Boards (SPCBs): Implemented the Act at the state level and ensured compliance by industries.
4. Local Authorities: Reported water consumption data and assisted in cess collection.

Amendments

The Act was amended several times to strengthen enforcement and improve collection efficiency:

• 1991 Amendment: Revised cess rates and extended coverage to more industries.
• 2003 Amendment: Enhanced penalties for non-payment and empowered authorities to take stringent actions against defaulters.
• 2017 Repeal: The Act was repealed through the Taxation Laws (Amendment) Act, 2017, and the cess mechanism was withdrawn.

Repeal and Replacement

The Water (Prevention and Control of Pollution) Cess Act, 1977 was repealed in 2017. Following this, the collection of cess was discontinued, and alternative mechanisms for funding the Pollution Control Boards were introduced.
The repeal aimed to simplify the tax structure and eliminate redundant levies in line with the Goods and Services Tax (GST) regime. Now, the Pollution Control Boards are financed through budgetary allocations from the Central and State Governments, consent fees from industries, and other sources.

Importance of the Cess

Despite its repeal, the Water Pollution Cess played a significant role in India’s early environmental policy framework:

• It generated financial resources for pollution control institutions.
• Created economic incentives for industries to adopt cleaner technologies.
• Encouraged the practice of measuring and metering water consumption.
• Raised awareness about the cost of water pollution and sustainable resource use.

Challenges and Limitations

1. Inefficient Collection: Many industries failed to maintain accurate water consumption records.
2. Limited Coverage: Small and medium enterprises (SMEs) often escaped the cess net.
3. Weak Enforcement: Inadequate monitoring and inspection led to under-assessment of cess liabilities.
4. Administrative Delays: Complexity in cess calculation and refund procedures caused compliance difficulties.
5. Low Awareness: Limited understanding among industries regarding rebate provisions and pollution control benefits.

Significance for Environmental Governance

The Water (Prevention and Control of Pollution) Cess mechanism represented an early effort to integrate economic instruments into environmental management in India. It established the principle of “polluter pays”, where users of natural resources bear the cost of preventing and mitigating pollution.
Although repealed, its legacy continues in India’s approach to environmental regulation, influencing the design of modern environmental taxes, fees, and incentive-based pollution control mechanisms.

Conclusion

The Water (Prevention and Control of Pollution) Cess Act, 1977 was a pioneering initiative in India’s environmental policy, aimed at conserving water resources and funding pollution control efforts. By linking water usage with financial responsibility, it encouraged industries to adopt efficient and sustainable practices.