GERC Reserves Order On Solar Project Customs Duty Change In Law Dispute In Gujarat

The Gujarat Electricity Regulatory Commission (GERC) has reserved its order in a dispute between Tata Power Saurya Limited and Gujarat Urja Vikas Nigam Limited (GUVNL) over whether changes in customs regulations qualify as a “Change in Law” under the parties’ Power Purchase Agreement (PPA).

The Commission passed the order on September 29, 2026, after hearing final arguments on September 22. The bench comprised Chairman Pankaj Joshi and Members Hiren Shah and Jatin N. Thakkar.

Tata Power Saurya approached GERC seeking an in-principle declaration that amendments to the Project Imports Regulations issued by the Central Board of Indirect Taxes and Customs (CBIC) in October 2022 and February 2023 constitute a Change in Law event under its PPA.

During the proceedings, Tata Power Saurya argued that the project was initially expected to benefit from concessional customs duty provisions under Chapter 98 of the Customs Tariff Act. According to the petitioner, subsequent customs notifications excluded solar power projects from the concessional import provisions, resulting in additional costs.

The company submitted that an MNRE Office Memorandum issued in March 2021 was advisory in nature and did not itself constitute a legally binding change. Tata Power Saurya argued that the relevant legal change occurred only after the issuance of formal customs notifications.

The petitioner also referred to decisions by electricity regulatory commissions in Maharashtra and by the Central Electricity Regulatory Commission (CERC), seeking similar treatment from GERC. It requested that the Commission first recognize the Change in Law event in principle, with the actual financial impact to be determined subsequently.

GUVNL opposed the petition, arguing that an in-principle declaration was inappropriate because the project had already been fully commissioned in March 2024 and the actual costs had therefore been incurred. According to GUVNL, the financial impact could now be calculated and should not be addressed through separate stages.

GUVNL further argued that bidders had been informed about the Basic Customs Duty trajectory through a corrigendum to the Request for Selection issued in March 2021. It maintained that bidders were required to factor the expected duty changes into their tariff bids and, therefore, the subsequent claim could not qualify as a Change in Law.

GUVNL also pointed to a pending Delhi High Court writ petition filed by a group company of Tata Power Saurya challenging the customs duty imposition. It argued that if the court rules in favour of the petitioner, the basis for the present claim could cease to exist.

Tata Power Saurya maintained that the Delhi High Court proceedings were separate and sought liberty to submit detailed cost calculations and supporting invoices if GERC does not grant the requested in-principle approval.

GUVNL, however, argued that rejection of the in-principle request should result in dismissal of the petition, particularly to prevent any subsequent claim for carrying costs dating back to 2023. With arguments concluded, GERC has reserved its final decision in the matter.