CERC Rules in Favor of Solar Firms, Grants Compensation for GST Hike Impact
The ruling addresses their plea for compensation due to the financial impact resulting from the increase in the GST rate.
December 22, 2023. By Abha Rustagi
The ruling addresses their plea for compensation due to the financial impact resulting from the increase in the Goods and Services Tax (GST) rate.
The dispute centered around the government's notification on September 30, 2021, which raised the GST rate from 5 percent to 12 percent. The petitioners contended that this change constituted a 'change in law' event under Article 12 of the Power Purchase Agreements (PPAs) they had entered into with the Solar Energy Corporation of India Limited (SECI).
SECI, along with GRIDCO Odisha and other distribution companies, was named as a respondent in the case. The CERC, after admitting the petitions, directed the parties to provide details related to the Scheduled Commercial Operation Date (SCoD) and the Commercial Operation Date (CoD) of the projects.
Following a thorough examination of submissions from both sides, the CERC concluded that the increase in the GST rate indeed qualified as a 'Change in Law' event according to Article 12 of the PPAs. The Commission cited previous orders to reinforce its stance on this matter.
The ruling acknowledges the petitioners' entitlement to compensation for the change in law, specifically due to the 2021 GST Notification.
The CERC specified a discount rate of 9 percent and an annuity period of 15 years for certain projects, while another project warranted a discount rate of 9.12 percent and an annuity period of 15 years.
SECI and Discoms were directed to pay reconciled claims to the petitioners, with liability starting from the 60th day after the order's date or from the submission of claims by the petitioners, whichever was later.
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