Compensation for GST Impact: CERC Grants Solar Developers’ Petition Under Change in Law

Representational image. Credit: Canva

In these legal proceedings, two petitioners, M/s RattanIndia Solar 2 Private Limited (now known as Vector Green Prayagraj Solar Private Limited) and M/s Yarrow Infrastructure Private Limited, are generating companies involved in setting up solar power plants and generating electricity from them. M/s Vector Green has developed a 50 MW solar project in Allahabad as part of the UP Solar Park in Uttar Pradesh, while M/s Yarrow Infrastructure has developed a 50 MW solar project in Pavagada Solar Park, Karnataka.


The main issue pertains to the introduction of Goods and Services Tax (GST) Laws in India from July 1, 2017. The petitioners sought compensation for Change in Law events under Section 79 of the Electricity Act, 2003, and Article 12 of the Power Purchase Agreements (PPAs) they had executed with the respondents, Solar Energy Corporation of India Ltd (SECI) and National Thermal Power Corporation Limited (NTPC), respectively. The respondents are also power distribution companies, Uttar Pradesh Power Corporation Limited (UPPCL) and various distribution companies in Karnataka (Karnataka Discoms).

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The Central Electricity Regulatory Commission (CERC) previously disposed of the petitions, with separate orders issued in January 2021, allowing compensation for the introduction of GST but denying compensation for certain other claims. Aggrieved by the CERC’s decision, the petitioners filed an appeal before the Appellate Tribunal for Electricity (APTEL).


The APTEL, in its order dated November 29, 2022, set aside the CERC’s orders and remanded the matters back to the CERC for fresh hearing and decision in line with a previous ruling in the case of Parampujya Solar Energy Pvt. Ltd. v. Union of India and Ors.

Commission’s Analysis

Vector Green initially faced denial of compensation for GST on O&M expenses by the Commission due to the absence of specific provisions in the PPA or related agreements. However, Vector Green later submitted the land use cum implementation support agreement, which outlines the payment terms, including O&M charges and tax reimbursement.

The Commission noted that Vector Green’s projects were affected by the GST Laws implemented on July 1, 2017. Following the APTEL’s Parampujya judgment, which allows compensation for GST on O&M expenses, the Commission granted Vector Green’s request for increased charges payable to the solar park implementation agency due to GST.

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The Commission noted that Vector Green submitted their bid before the enactment of GST laws, and their project’s CoD was after July 1, 2017. Thus, Vector Green is eligible for relief under the GST laws.

In the case of Yarrow Infrastructure, the Commission referred to its previous order, which stated that Vector Green was not eligible for compensation for safeguard duty as their project was commissioned before the imposition of safeguard duty. However, the APTEL’s Parampujya judgment held that compensation for safeguard duty should be allowed for the entire impact period, including the post-CoD period.

Based on the analysis, the Commission concluded that both petitioners are entitled to compensation for the impact of GST and safeguard duty. However, they noted that the enforcement of their directions for the post-CoD period is subject to further orders from the Supreme Court in the ongoing case of Telangana Northern Power Distribution Company versus Parampujya Solar.

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