waaree december

CERC Granted Relief To SBG Cleantech By Approval Of ‘Change In Law’ Event Due To Introduction Of GST And SGD On Solar Module


Reading Time: 5 minutes

In a recent order CERC granted relief to SBG Cleantech One Ltd in line with additional capital cost incurred due to introduction of GST and Safe Guard Duty (SGD) on Solar Module imported from China.


Background :

On 08.11.2016, SECI issued RfS in which it invited proposals for setting up grid connected Solar PV Projects under the NSM scheme at Bhadla Ph-III Solar Park,Rajasthan on ‘BOO’ basis for an aggregate capacity of 500MW in line with the Bhadla Ph-III solar park which is being developed by Saurya Urja Company of Rajasthan Limited. On 12.05.2017, after reverse auction SECI declared SBG Cleantech One Ltd as successful bidder for three projects of 100MW each. (Project 1, Project 2 & Project 3)

On 01.07.2017, the Central Goods and Services Tax Act, 2017; the IGST Act, 2017 and collection of Tax on inter-state supply of goods or services or both by the central gov were enacted.

On 16.08.2017, SECI issued three LOI in favour of SBG Cleantech One Ltd for development of 300MW (100MW each) projects in terms of the RfS.

On 30.07.2018, vide notification No.1.1.2018 (G) (Safeguard Duty Notification), the Central Gov imposed SGD on the import of ” Solar Cells whether or not assembled in modules or panels”.

With due reference of the above notifications SBG Cleantech One Ltd petitioned the following prayers to CERC. The respondents are SECI and RUVNL (Rajasthan Urja Vikas Nigam Limited).

Also Read  Masdar Acquires Arlington Energy To Advance Renewable Energy Storage Market

a.Declare and hold that the introduction of the GST laws qualifies as ‘Change in Law’ in terms of Article 12 of the PPA.

b.Declare and hold that the imposition of SGD is a ‘Change in Law’ event in terms of Article 12 of PPAs executed between petitioner and the SECI.

c. Direct the Respondent No.1 : SECI to restitute the petitioner by paying the additional non-recurring or recurring capital cost incurred by it, to the tune of INR 68,18,25,850 on account of introduction of GST law and INR 98,39,78,082 due to imposition of SGD by any of upfront lumpsum payment.


SECI to restitute petitioner by paying the additional non-recurring or recurring capital cost incurred by it, to the tune of by way of adjustment in quoted tariff.

d.Direct SECI to restitute the petitioner for the O&M costs as claimed by the petitioner on account of the ‘Change in Law’ events.

e.Direct SECI to pay to the petitioner, the associated carrying cost incurred on account of introduction of GST law and SGD notification till the approval of Change in Law.

Commission’s Analysis and Decision :

After taking into account prayers of petitioners and subsequent submissions by respondents, rejoinder by petitioner; commission enlisted the following three main issues for adjudication.

Also Read  Ministry of New and Renewable Energy Launches its Waste To Energy Programme

Issue No 1:

Whether the enactment of the GST laws and imposition of SGD are change in law events under article 12 of the PPA and whether the petitioner is entitiled to relief thereunder?

Decision :

i.The enactment of the ‘GST Laws’ is squarely covered as ‘Change in Law’ according to article 12 of the PPA and entities. The petitioner to get relief under article 12 of the PPAs.

ii.The imposition of SGD qualifies as ‘Change in Law’ under the PPAs and entities the petitioner to get relief under Article 12 of the PPAs.

iii. The liability of payment on account of GST Laws and imposition of safeguard duty on procurement of Solar PV panels and associated equipment by the petitioners shall be with the respondents till the commercial operation date (COD) for the contracted capacity and energy as per article 4.4. of the PPAs.

iv. SECI is directed to pay to the Petitioner as per mutually agreed mechanism for payment of such compensation on annuity basis spread over the period not exceeding the duration of the PPAs, subject to the outcome of Petition No. 536/MP/2020 filed by SECI for approval of annuity methodology including annuity rate.

v. The compensation to be paid to the Petitioners is not conditional upon the payment to be made by the Respondent RUVNL to Respondent SECI. However, the Respondent SECI is eligible to claim the same from the Respondent RUVNL on „back to back‟ basis. The Commission also directs the Respondent RUVNL to expeditiously settle such claims in term of the PSA.

Also Read  GAIL Tenders 600 MW Solar PV Power Project In Kutch, Gujarat

vi. The first instalment of the claim shall be paid within sixty days of the date of this Order or from the date of submission of claims by the Petitioner whichever is later failing which it will attract late payment surcharge as provided under PPA/PSA.

Issue No.2 :

Decision: The claim on account of additional tax burden on O&M is not maintainable.

Issue No.3 :

Decision: The claims on account of „Carrying cost‟, „Interest on Working Capital‟ and „Return of Equity‟ are not admissible.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.