नई

NEW DELHI

. /Petition No.: 206/MP/2018 alongwith I.A. 4 of 2019

209/MP/2018 alongwith I.A. 7 of 2019
226/MP/2018
212/MP/2018 alongwith I.A. 8 of 2019
207/MP/2018 alongwith I.A. 1 of 2019
210/MP/2018 alongwith I.A. 3 of 2019

/Coram:

. . , /Shri P. K. Pujari, Chairperson

.ए . . , / Dr. M.K. Iyer, Member

न /Date of Order: 12th of April, 2019

IN THE MATTER OF:

Petition under Section 79 the Electricity Act, 2003 read with Article 12 of the Power
Purchase Agreements executed between Petitioners Ltd. and the Respondents, for seeking
approval of Change in Law events due to enactment of the GST Laws.

AND IN THE MATTER OF:

1) Petition No. 206/MP/2018 alongwith I.A. 4 of 2019

Parampujya Solar Energy Pvt. Ltd. (PSEPL)

5B, Sambhav House, Judges,
Bungalow Road, Bodakdev,
Ahmedabad - 380015, Gujarat
…Petitioner

VERSUS

Petition No. 206/MP/2018 &Ors. Page 1 of 51

National Thermal Power Corporation Ltd. (NTPC).
Core-7, SCOPE Complex,
1, Institutional Area,
Lodi Road. New Delhi-110003

The Ministry of New and Renewable Energy (MNRE)

Block-14, CGO Complex,
Lodhi Road, New Delhi-110 003

Mangalore Electricity Supply Company Ltd. (MESCOM)

MESCOM Bhavan,
Kavoor Cross Road, Bejai,
Mangaluru, Karnataka 575004

Bangalore Electricity Supply Company Ltd. (BESCOM)

6, 2nd Floor, 2nd B Cross Rd,
Koramangala 1A Block,
Koramangala, Bengaluru,
Karnataka 560034

Chamundeshwari Electricity Supply Corp. Ltd. (CESC)

Sri Harsha Rd, Lashkar Mohalla,
Mandi Mohalla, Mysuru,
Karnataka 570001

Gulbarga Electricity Supply Company Ltd. (GESCOM)

Station Road, Kalaburagi,
Karnataka 585102

Hubli Electricity Supply Company Ltd. (HESCOM)

PB Road, Durgad Bail,
Navanagar, Hubballi,
Karnataka 580025
…Respondents

AND IN THE MATTER OF:

2) Petition No. 209/MP/2018 alongwith I.A. 7 of 2019

Parampujya Solar Energy Pvt. Ltd. (PSEPL)

5B, Sambhav House, Judges, Bungalow Road, Bodakdev,
Ahmedabad - 380015, Gujarat
…Petitioner

VERSUS

National Thermal Power Corporation Ltd. (NTPC),

Core-7, SCOPE Complex, 7,

Petition No. 206/MP/2018 &Ors. Page 2 of 51

Institutional Area, Lodi Road,
New Delhi - 110003

The Ministry of New and Renewable Energy (MNRE)

Block-14, CGO Complex,
Lodhi Road, New Delhi-110 003

Telangana Northern Power Distribution Company Ltd

Hyderabad - Warangal - Bhopalpatnam Hwy,
Near Wadepally Lake, NGOs Colony,
Wadepally, Hanamkonda, Telangana 506001

Telangana Southern Power Distribution Company Ltd

Engine Bowli, Jangammet, Falaknuma,
Hyderabad, Telangana 500053
…Respondents

AND IN THE MATTER OF:

3) Petition No. 226/MP/2018

Parampujya Solar Energy Pvt. Ltd. (PSEPL)

5B, Sambhav House, Judges,
Bungalow Road, Bodakdev,
Ahmedabad - 380015, Gujarat
…Petitioner

VERSUS

National Thermal Power Corporation Ltd. (NTPC).

Core-7, SCOPE Complex,
1, Institutional Area,
Lodi Road. New Delhi-110003

The Ministry of New and Renewable Energy (MNRE)

Block-14, CGO Complex,
Lodhi Road, New Delhi-110 003

Mangalore Electricity Supply Company Ltd. (MESCOM)

MESCOM Bhavan,
Kavoor Cross Road, Bejai,
Mangaluru, Karnataka 575004

Bangalore Electricity Supply Company Ltd. (BESCOM)

6, 2nd Floor, 2nd B Cross Rd,
Koramangala 1A Block,

Petition No. 206/MP/2018 &Ors. Page 3 of 51

Koramangala, Bengaluru,
Karnataka 560034

Chamundeshwari Electricity Supply Corp. Ltd. (CESC)

Sri Harsha Rd, Lashkar Mohalla,
Mandi Mohalla, Mysuru,
Karnataka 570001

Gulbarga Electricity Supply Company Ltd. (GESCOM)

Station Road, Kalaburagi,
Karnataka 585102

Hubli Electricity Supply Company Ltd. (HESCOM)

PB Road, Durgad Bail,
Navanagar, Hubballi,
Karnataka 580025
…Respondents

AND IN THE MATTER OF:

4) Petition No. 212/MP/2018 alongwith I.A. 8 of 2019

Parampujya Solar Energy Pvt. Ltd. (PSEPL)

5B, Sambhav House, Judges,
Bungalow Road, Bodakdev,
Ahmedabad - 380015, Gujarat
…Petitioner

VERSUS

Solar Energy Corporation of India Ltd. (SECI)

1st Floor, A-Wing, 0-3,
District Centre, Saket,
New Delhi- 110017

The Ministry of New and Renewable Energy (MNRE)

Block-14, CGO Complex,
Lodhi Road,
New Delhi-110 003

Maharashtra State Electricity Distribution Company Ltd.

Hudco, Ekanth Nagar, N 11,
Cidco, Aurangabad,
Maharashtra 431003
…Respondents

Petition No. 206/MP/2018 &Ors. Page 4 of 51

AND IN THE MATTER OF:
5) Petition No. 207/MP/2018 alongwith I.A. 1 of 2019

Wardha Solar (Maharashtra) Private Ltd. (WSMPL)

Adani House, Nr Mithakhali Six Roads
Navrangpura, Ahmedabad 380 009
Gujarat, India

... Petitioner

VERSUS

Solar Energy Corporation of India Ltd. (SECI)

1st Floor, A-Wing, 0-3,
District Centre, Saket,
New Delhi-110017

The Ministry of New and Renewable Energy (MNRE)

Block-14, CGO Complex,
Lodhi Road,
New Delhi-110003

Bangalore Electricity Supply Company Ltd. (BESCOM)

6, 2nd Floor, 2nd B Cross Rd,
Koramangala 1A Block,
Koramangala, Bengaluru,
Karnataka 560034

Chamundeshwari Electricity Supply Corp. Ltd. (CESC)

Sri Harsha Rd, Lashkar Mohalla,
Mandi Mohalla, Mysuru,
Karnataka 570001

Hubli Electricity Supply Company Ltd. (HESCOM)

PB Road, Durgad Bail,
Navanagar, Hubballi,
Karnataka 580025

…Respondents

AND IN THE MATTER OF:

6) Petition No. 210/MP/2018 alongwith I.A. 3 of 2019

Wardha Solar (Maharashtra) Private Ltd. (WSMPL)

Adani House, Nr Mithakhali Six Roads Navrangpura,
Ahmedabad
Gujarat 380 009

Petition No. 206/MP/2018 &Ors. Page 5 of 51

 …Petitioner

VERSUS

Solar Energy Corporation of India Ltd. (SECI)

Ist Floor, A-Wing, 0-3,
District Centre, Saket,
New Delhi- 110017

The Ministry of New and Renewable Energy (MNRE)

Block-14, CGO Complex,
Lodhi Road,
New Delhi-110 003

Bangalore Electricity Supply Company Ltd. (BESCOM)

6, 2nd Floor, 2nd B Cross Rd,
Koramangala 1A Block,
Koramangala, Bengaluru,
Karnataka 560034

Chamundeshwari Electricity Supply Corp. Ltd. (CESC)

Sri Harsha Rd, Lashkar Mohalla,
Mandi Mohalla, Mysuru,
Karnataka 570001

Hubli Electricity Supply Company Ltd. (HESCOM)

PB Road, Durgad Bail.
Navanagar, Hubballi,
Karnataka 580025
…Respondents

Parties Present: Ms. Poonam Verma, Advocate, PSEPL & WSMPL

Ms. Tarul Sharma, Advocate, PSEPL & WSMPL
Shri Rakesh Shah, PSEPL
Shri M.G. Ramachandran, Advocate, NTPC, SECI & NVVNL
Ms. Poorva Saigal, Advocate, NTPC, SECI & NVVNL
Ms. Anushree Bardhan, NTPC, SECI & NVVNL

/ ORDER

1. The Petitioner, M/s Parampujya Solar Energy Pvt. Limited (PSEPL) is a generating company
and is primarily engaged in the business of setting up of solar power plants and generation of
electricity. The Petitioner is a wholly owned subsidiary of M/s Adani Green Energy Limited.

Petition No. 206/MP/2018 &Ors. Page 6 of 51

 The Petitioner has filed Petition No. 206/MP/2018; Petition No. 209/MP/2018; Petition No.
226/MP/2018 & Petition No. 212/MP/2018.

2. The Petitioner, M/s Wardha Solar (Maharashtra) Private Limited (WSPL) is a generating
company and is primarily engaged in the business of setting up of solar power plants and
generation of electricity. The Petitioner is a wholly owned subsidiary of M/s Parampujya
Solar Energy Private Limited. The Petitioner has filed Petition No. 207/MP/2018 and Petition
No. 210/MP/2018. PSEPL and WSPL are jointly referred to as “the Petitioners” hereafter.

3. The Respondent, M/s NTPC Ltd. is a Central Public Sector Undertaking and is engaged in
the business of generation of electricity and allied activities. Under the State Specific
Bundling Scheme of the National Solar Mission, NTPC is responsible for implementation of
scheme of Ministry of New and Renewable Energy for setting up Solar Power Plants, with
whom PSEPL has executed a Power Purchase Agreement.

4. The Respondent, M/s Solar Energy Corporation of India Limited, is a Central Public Sector
Undertaking and has been designated by the Government of India as the nodal agency for
implementation of Ministry of New and Renewable Energy (hereinafter referred to as
„MNRE‟) Scheme for developing grid connected solar power capacity including Phase-II,
Batch-III, Tranche-V of the Jawaharlal Nehru National Solar Mission (hereinafter referred to
as „JNNSM‟) of Government of India (hereinafter referred to as „GOI‟).

5. The Petitioners have made the following prayers in Petition No. 206/MP/2018 alongwith I.A.
4 of 2019; Petition No. 209/MP/2018 alongwith I.A. 7 of 2019; Petition No. 226/MP/2018;
Petition No. 212/MP/2018 alongwith I.A. 8 of 2019; Petition No. 207/MP/2018 alongwith
I.A. 1 of 2019 and Petition No. 210/MP/2018 alongwith I.A. 3 of 2019:

(a) Admit the Petition;

(b) Hold and declare that the imposition of the Integrated Goods and Services Tax, 2017,
Central Goods and Services Tax, 2017 and Karnataka/Telangana/Maharashtra
Goods and Services Tax, 2017 is an event under Change in Law under Article 12 of
the PPA;
(c) Restore Petitioners to the same economic condition prior to occurrence of the

Petition No. 206/MP/2018 &Ors. Page 7 of 51

 Changes in Law by way of adjustment in tariff in terms of Article 12 of the PPA by
increasing the tariff as prayed for in the present Petition.
(d) Pending proceedings, direct Respondents to pay to Petitioners the amount claimed
under Change in Law which shall be subject to adjustment based on the final order
passed by the Commission;
(e) To pass such other and further order or orders as the Commission deems appropriate
under the facts and circumstances of the present case.

Related I.A.’s
(a) Grant carrying cost to the Applicants.
(b) Restore the Applicants to the same economic position as it were prior to the
occurrence of the Change in Law event.
(c) Direct the Respondents to pay to the Applicants the amount claimed under Change in
Law in terms of Article 12 of the PPA along with carrying cost from the date the
change in law event has come into effect.
(d) Pass such further orders or directions as the Commission may deem just and proper
in the circumstances of the case.

Brief facts of the case:

6. The Petitioner PSEPL in Petition No. 206/MP/2018, Petition No. 209/MP/2018 and Petition
No. 226/MP/2018 was selected as the successful bidder under the National Solar Mission
Phase-II Batch-II Tranche-I State Specific Bidding Scheme conducted by NTPC Ltd. The
Petitioner entered into Power Purchase Agreements with NTPC for development of Solar
Photo Voltaic Power Plants in the State of Karnataka and Telangana. The Solar Power Plants
were to be developed on long term basis. As per the PPAs as well as the Bidding Scheme, the
solar power purchased by NTPC under the PPAs is to be bundled with thermal power
produced at NTPC stations and then sold to the Distribution Companies.

7. The Petitioners in Petition No. 212/MP/2018, Petition No. 207/MP/2018 and Petition No.
210/MP/2018 were selected as the successful bidder for development of solar power projects
under the National Solar Mission Phase-II Batch-III Tranche-I and V (respectively) “State

Petition No. 206/MP/2018 &Ors. Page 8 of 51

 Specific Viability Gap Funding (VGF) Scheme” conducted by Solar Energy Corporation of
India Ltd. Pursuant thereto in terms of the bidding scheme, the Petitioners entered into PPAs
with SECI for development of Solar Photo Voltaic Power Plants under DCR category - Non
Solar Park and Supply of Solar Power in the State of Maharashtra and Karnataka on long
term basis at a tariff of Rs. 4.43/kWh.

8. The Respondent (NTPC) issued Request for Selection (hereinafter referred to as “RfS”) of
Solar Power Developers (hereinafter referred to as “SPDs”) for setting up grid-connected
solar projects of Projects of 100 MW capacity (50 MW X 2 Projects) & 500 MW capacity in
the State of Karnataka and 350 MW capacity (10 MW x 35 Projects) in the State of
Telangana through e-bidding process. Pursuant to the RfS, the Petitioner PSEPL was selected
for setting up of a solar power generation facility in the State of Karnataka and Telangana.
The Petitioner has entered into separate Power Purchase Agreements (hereinafter referred to
as “PPAs”) with NTPC for setting up of solar power projects in the State of Karnataka and
Telangana and for the consequent sale of solar power to NTPC.

9. The Respondent (SECI) issued RfS of SPDs for setting up grid-connected Solar PV Projects
for an aggregate capacity of 50 MW capacity respectively through an e-bidding process
based on guidelines issued by MNRE in the State of Maharashtra and Karnataka. Pursuant to
the RfS, WSPL was selected by SECI as SPD for the setting up of a solar power generation
facility and has entered into a PPA with SECI for setting up of solar power project in the
State of Maharashtra and Karnataka.

10. On 12.04.2017, Government of India (hereinafter referred to as “GOI”) introduced the Goods
and Services Tax, replacing multiple taxes levied by the Central and State Governments.

11. On 01.07.2017, the Central Goods and Services Tax Act, 2017; The Integrated Goods and
Services Tax Act, 2017 for levy and collection of tax on inter-State supply of goods or
services or both by the Central Government were enacted. The State
(Karnataka/Telangana/Maharashtra) Goods and Services Tax Act, 2017 was enacted for levy
and collection of tax on intra-State supply of goods or services or both by the respective
States.

Petition No. 206/MP/2018 &Ors. Page 9 of 51

12. Hence the Petitions.

Submissions of the Petitioners

13. The Petitioners have submitted that with a view to promote solar energy, MNRE issued
Guidelines for implementation of the Scheme for selection of 3000 MW Grid Connected
Solar PV Power Projects under Phase-II, Batch-II, Tranche-I for “State Specific Bundling
Scheme” (hereinafter referred to as “Bundling Guidelines”) on 10.03.2015. The Scheme was
to be implemented by NTPC through NVVN. MNRE also issued Guidelines for
implementation of the Scheme for selection of 50 MW and 2000 MW Grid Connected Solar
PV Power Projects under Phase-II, Batch-III with viability gap funding support from
National Clean Energy Fund (hereinafter referred to as “VGF Guidelines”) on 04.08.2015.
The Scheme was to be implemented by SECI.

14. The Respondents invited proposals for a RfS for setting up Grid connected Solar-PV Power
Projects in various States of India. The Petitioners participated in the bids after following the
process of Reverse Auction conducted by the Respondents and were selected as the
successful bidders. The Respondents issued the Letter of Intent (hereinafter referred to as
“LoI”). Pursuant thereto, the Petitioners entered into a Power Purchase Agreement
(hereinafter referred to as “PPA”) for setting up of solar power plant at different rates of fixed
tariff for 25 years.

15. The Petitioners have submitted that subsequent to the „Effective Date‟ as per the PPAs, the
following change in law events took place:-
(a) On 08.09.2016, the Constitution (One Hundred and First Amendment) Act 2016 was
notified in the Gazette of India, empowering both, the Central and State Governments,
to levy GST on the supply of goods and services.
(b) On 12.04.2017, the Central Goods and Services Tax Act, 2017 (“CGST Act”) was
enacted for levy and collection of tax w.e.f. 01.07.2017, on intra-State supply of goods
or services, or both, by the Central Government.
(c) On 12.04.2017, the Integrated Goods and Services Tax Act, 2017 (“IGST Act”), was

Petition No. 206/MP/2018 &Ors. Page 10 of 51

 enacted for the levy and collection of tax w.e.f. 01.07.2017 on inter-State supply of
goods or services or both by the Central Government.
d) On 14.06.2017, the State Goods and Services Tax Act, 2017 (“SGST Act”), was
enacted for levy and collection of tax w.e.f. 01.07.2017 on intra-State supply of goods
or services, or both, by various States of India.

16. The Petitioners have submitted that the Petitioners sent notice to the Respondents regarding
the „Change in Law‟ event that took place after applicability of GST w.e.f. 01.07.2017. In this
regard, no response was received from the Respondents. In fact, till date no response has been
received and the Petitioners are therefore filing the present Petition seeking approval for
„change in law‟ in terms of Article 12 of the PPA.

17. The Petitioners have submitted that prior to the Effective Date under the PPA, the erstwhile
indirect tax regime provided for a complex tax environment due to multiplicity of taxes and
elaborate compliance obligations. However, pursuant to the Effective Date, the new indirect
taxation system in the country namely GST has been introduced, representing a paradigm
shift in the mode and levy of indirect taxes. The earlier indirect tax regime was characterized
by multiple laws, different mechanisms, definitions etc. With introduction of GST, several
indirect taxes including Excise Duty, Service Tax, VAT, Central Sales Tax etc. have been
replaced by a consolidated and singular taxation scheme namely GST. In accordance to the
above referred GST laws, with effect from 01.07.2017, on Intra-State supplies of goods or
services - CGST & SGST are required to be levied by the Central and State Government
respectively and on Inter -State supplies of goods or services - IGST was to be levied by the
Central Government, at the rate prescribed from time to time. They have not contemplated
such additional taxes/GST at the time of the bid submission. Introduction of GST regime
made a huge impact on the actual cost of the project vis-a-vis budgeted cost, which was
beyond the control of the Petitioners and therefore relief on account of „change in law‟ is
being prayed for.

18. The Petitioners have submitted that in view of the GST Laws w.e.f. 01.07.2017, a tax slab of
5% to 28% has been introduced with respect to goods & services required for execution,
construction and operation of Solar Power Plants. The said goods and services were

Petition No. 206/MP/2018 &Ors. Page 11 of 51

 previously either exempted or fell under lower tax slabs. The GST Laws‟ Acts have led to the
levy of taxes impacting the Project cost of the Petitioners as under:-

A. Escalation in cost of construction on account of GST:

19. The new slabs have led to an increase in the overall project cost. The change of tax regime
has escalated the capital cost of Petitioners project, hence making the tariff quoted at the time
of bid for allocation of project unviable. The total escalation in cost of the Petitioners is
detailed hereunder:-

Component Incremental Incremental Incremental Incremental Incremental Incremental

impact on impact on impact on impact on impact on impact on
cost of cost of cost of cost of cost of cost of
Project in Project in Project in Project in Project in Project in
Petition No. Petition No. Petition No. Petition No. Petition No. Petition No.
206/MP/18 209/MP/18 226/MP/18 212/MP/18 207/MP/18 210/MP/18
(Rs.) (Rs.) (Rs.) (Rs.) (Rs.) (Rs.)
Cost of 11,10,37,769 2,45,48,956 1,82,99,192 8,18,81,887 12,17,32,652 2,11,65,375
Construction

B. Impact of GST on Operation & Maintenance (O&M) Expenses:-

20. The Petitioners have submitted that before the Effective Date, Service Tax at the rate of 15%
was being levied on O&M Expenses. In view of the GST Laws the rate of 18% is being
levied on operation and maintenance expenses. This will lead to an incremental impact on the
cost of the Project as under:

Component Incremental Incremental Incremental Incremental Incremental Incremental

impact in impact in impact in impact in impact in impact in
Petition No. Petition No. Petition No. Petition No. Petition No. Petition No.
206/MP/18 209/MP/18 226/MP/18 212/MP/18 207/MP/18 210/MP/18
(Rs.) (Rs.) (Rs.) (Rs.) (Rs.) (Rs.)
O&M 2,01,40,483 2,01,40,483 2,01,40,483 80,56,193 1,56,00,000 1,56,11,040

21. The Petitioners have submitted that for determination of the impact of GST in Operation &
Maintenance Expenses which the Petitioners are going to incur in next 25 years of PPA
tenure, O&M has been worked on the basis of relevant normative parameters as specified by
the Commission in the Central Electricity Regulatory Commission (Terms and Conditions for

Petition No. 206/MP/2018 &Ors. Page 12 of 51

 Tariff determination from Renewable Energy Sources) Regulations, 2012 as amended on
31.03.2016. The Regulations prescribe O&M expenses for the year of 2017-18 at Rs. 7.41
Lacs/MW, which includes Service Tax of 15%, with an annual escalation of 5.72%. The
Petitioners have considered the same parameter with an additional 3% GST impact, i.e. 18%
GST on the normative O&M expenses and is being claimed as the differential amount as per
the change in law provision of the PPA.

C. Change in Law Submissions:

22. The Petitioners have submitted that the PPAs entered into between the parties provide for a
specific provision qua the concept of “Change in Law”. The fundamental philosophy behind
the said provision is to ensure that additional recurring/non-recurring expenditure by the
Seller due to “Change in Law” event through monthly Tariff Payment to the extent it restores
the affected party to the same economic position as if such change in law had not occurred.
The concept of change in law has been introduced in the PPAs to ensure that the parameters/
contours based on which the Petitioners have bid for supplying power do not change in times
to come and that no detriment to either Petitioners or Respondents is caused due to such
change in law events. The definition of Law as provided under the PPAs is an inclusive and
illustrative definition, and contemplates all laws, including the Electricity Laws applicable in
India in various forms. The definition of law is quoted as under:-

“Law shall mean in relation to this Agreement, all laws including Electricity Laws in
force in India and any statute, ordinance, regulation, notification or code, rule, or any
interpretation of any of them by an Indian Government Instrumentality and having
force of law and shall further include without limitation all applicable rules,
regulations, orders, notifications by an Indian Governmental Instrumentality pursuant
to or under any of them and shall include without limitation all rules, regulations,
decisions and orders or the Appropriate Commission;”

23. The relevant clause of the PPA i.e. Article 12 is quoted as under:

ARTICLE 12: CHANGE IN LAW

12.1 Definitions
In this Article 12, the following terms shall have the following meanings:
12.1.1 "Change in Law" means the occurrence of any of the following events
after the Effective Date resulting into any additional recurring/ non-
recurring expenditure by the SPD or any income to the SPD:

Petition No. 206/MP/2018 &Ors. Page 13 of 51

  the enactment, coming into effect, adoption, promulgation, amendment,
modification or repeal (without re-enactment or consolidation) in
India, of any Law, including rules and regulations framed pursuant to
such Law;
 a change in the interpretation or application of any Law by any Indian
Governmental Instrumentality having the legal power to interpret or
apply such Law, or any Competent Court of Law;
 the imposition of a requirement for obtaining any Consents,
Clearances and Permits which was not required earlier;
 a change in the terms and conditions prescribed for obtaining any
Consents, Clearances and Permits or the inclusion of any new terms or
conditions for obtaining such Consents, Clearances and Permits;
except due to any default of the SPD;
 any change in tax or introduction of any tax made applicable for
supply of power by the SPD as per the terms of this Agreement.
but shall not include (i) any change in any withholding tax on income or dividends
distributed to the shareholders of the SPD, or (ii) any change on account of regulatory
measures by the Appropriate Commission.
12.2 Relief for Change in Law
12.2.1 The aggrieved Party shall be required to approach Central Commission for
seeking approval of Change in Law.
12.2.2 The decision of the Central Commission to acknowledge a Change in Law and
the date from which it will become effective, provide relief for the same, shall
be final and governing on both the parties.

24. The Petitioners have submitted that in terms of the aforesaid Article 12.2 of the PPAs, they
are entitled to claim the same being an event of change in law. In doing so, this Commission
has the power to:

a) Acknowledge the event of change in law.

b) Award the applicable relief to the affected party, including the date from when such
relief will come into effect.

25. The Petitioners have submitted that as per Article 12 of the PPAs, the following conditions
have to be met with while claiming a change in law:-
(a) The underlying principle of change in law provision is to determine the consequence
of change in law and to restore a party affected to the same economic position by
providing a relief under change in law, as if such change in law had not occurred.
(b) The coming into effect of:
The enactment or coming into force of any law.

Petition No. 206/MP/2018 &Ors. Page 14 of 51

 Change in interpretation of any law.
Change in any consents, Clearances or Permits available for the Project.
Inclusion of new or Change in the terms and conditions prescribed for obtaining the
Consents, Clearances, Permits.
Change in tax or introduction of any tax made applicable.
(c) Provided that such change in law results in any additional recurring/non-recurring
expenditure by the Developer or any income to the Developer.

26. The Petitioners have submitted that the Hon‟ble Appellate Tribunal for Electricity in its order
dated 19.04.2017 in Sasan Power Limited v. Central Electricity Regulatory Commission in
Appeal No. 161 of 2015 held that:-

“44. It is true that according to the provisions of the RFP, the quoted tariff shall be
inclusive one including statutory taxes, duties and levies. But the PPA gives express
right to an affected party to claim Change in Law if the event qualifies thus in terms
of Article 13. The RFP cannot override this right if an event qualifies as a Change in
Law. The Competitive Bidding Guidelines (Article 4.7 thereof has already been
reproduced hereinabove) and the PPA have to be read together. If an event qualifies
as a Change in Law event then the compensation must follow because otherwise
Article 13 of the PPA will become redundant.”

27. The Petitioners have submitted that in view of above, the Changes in Law claimed in the
present Petitions meet the criteria laid down under Article 12 of the PPAs for which the
Petitioners ought to be compensated. In accordance with the PPAs, the Petitioners are
required to be granted relief that would be equivalent to the financial impact of the Changes
in Law on the costs and revenues so as to restore the Petitioners to the same economic
condition prior to occurrence of the Changes in Law.

28. The Petitioners have submitted that Clause 6.2(4) of the Tariff Policy dated 28.01.2016
(issued by Central Government from time to time under Section 3 of the Electricity Act,
2003) also recognizes the concept of Change of Law and provides as under:-

“6.2(4) After the award of bids, if there is any change in domestic duties, levies, cess
and taxes imposed by Central Government, State Governments/Union Territories or
by any Government instrumentality leading to corresponding changes in the cost, the
same may be treated as “Change in Law” and may unless provided otherwise in the
PPA, be allowed as pass through subject to approval of Appropriate Commission.”

Petition No. 206/MP/2018 &Ors. Page 15 of 51

29. The Petitioners have submitted that the Commission has the jurisdiction to adjudicate the
present matter. Pursuant to the Judgment of the Hon‟ble Supreme Court in Energy Watchdog
Vs. CERC & Ors. 2017 (4) SCALE 580, the Commission on 14.03.2018 vide its suo-moto
order in Petition No. 13/SM/2017, initiated hearings with the participation of the generating
companies and the distribution companies of the Procurer States, in order to facilitate the
settlement of the dues arising on account of the introduction of GST Laws being events of
Changes in Law under the respective PPAs.

30. The Petitioners have submitted that the Commission may recognize and declare the
introduction of GST Laws by the Government of India as change in law under Article 12 of
the PPAs for the purpose of claim for adjustment/ recovery in tariff on account of the
aforesaid change in law event.

Submissions of Respondents in the pleadings and during the hearings

31. The Respondents have submitted as follows:

A. Scope and Applicability of Article 12 of the PPA

32. The Respondents have submitted that the scope of Article 12.1.1 of the PPA has been
interpreted and decided by the Commission vide Order dated 19.09.2018 (Petition No.
50/MP/2018 and 52/MP/2018) and Order dated 09.10.2018 (Petition No. 188/MP/2017 and
Ors.) and by the Hon‟ble Tribunal in the decision dated 13.04.2018 in the case of Adani
Power Limited –v- Central Electricity Regulatory Commission and Others, in Appeal No.
210 of 2017 and Judgment dated 14.08.2018 in Appeal No. 119 of 2016 and Batch in M/s
Adani Power Rajasthan Private Limited –v- Rajasthan Electricity Regulatory Commission
and Ors. (and as followed in Appeal No. 111 of 2017 in M/s. GMR Warora Energy Limited -
v- Central Electricity Regulatory Commission and Ors.). The views taken in these cases have
been somewhat in variance.

Petition No. 206/MP/2018 &Ors. Page 16 of 51

33. The Respondents have submitted that there are differences in the facts of the present case in
comparison to the decision of the Hon‟ble Tribunal in the case of Adani and GMR Warora.
The provision of the present PPA is different from the PPA in the case of Adani Rajasthan
(and GMR Warora) wherein there was a specific clause, namely Article 10.3.1 dealing with
the relief applicable during the Construction Period, which inter-alia reads as under:

“10.2 Application and Principles for computing impact of Change in Law

10.2.1 While determining the consequences of Change in Law under this Article 10,
the Parties shall have due regard to the principle that the purpose of
compensating the Party affected by such Change in Law, is to restore through
monthly Tariff Payment, to the extent contemplated in this Article 10, the
affected Party to the same economic position as if such Change in Law has not
occurred.

10.3 Relief for Change in Law

10.3.1 During Construction Period
As a result of any Change in Law, the impact of increase/decrease of Capital
Cost of the Power Station in the Tariff shall be governed by the formula given
below:
For every cumulative increase/ decrease of each Rupees Sixteen crore Five
Lakh (Rs. 6.50 crore) in the Capital Cost during the Construction Period, the
increase/ decrease in Non Escalable Capacity Charges shall be an amount
equal to zero point two six seven (0.267%) of the Non Escalable Capacity
Charges. In case of Dispute, Article 14 shall apply.
It is sufficient that the above mentioned compensation shall be payable to
either Party, only with effect from the date on which the total increase/
decrease exceeds amount of Rupees Sixteen crore Fifty Lakh (Rs. 16.50
crore).”

34. The Respondents have submitted that in the present PPA, there is no such clause dealing with
specific relief under the construction period and therefore, the entire basis of the Hon‟ble
Tribunal‟s judgment, namely that the change in law provision would be rendered redundant
in respect of the „Construction Period‟ if the fifth bullet is interpreted to be confined to the
„sale of power‟, is not applicable to the facts of the present case. Accordingly, the relief (if
any) for taxes is admissible to the SPD if it squarely falls within the purview of Article 12.1.1
– fifth bullet only and not otherwise. The SPD cannot claim the change in law effect for
statutory taxes under any of the first four bullets under Article 12.1.1 of the PPA. The
intention behind the fifth bullet in Article 12.1.1 of the PPA is clear. While considering the

Petition No. 206/MP/2018 &Ors. Page 17 of 51

 taxes as change in law, the scope is restricted to the taxes which are imposed for „supply of
power‟. If the incidence of tax is on events or transactions other than the supply of power, the
conditions in the said provision are not satisfied and the relief is not admissible.

35. The Respondents have submitted that the harmonious construction of the provisions would
require some meaning to be given and a purpose to be attached to the fifth bullet of Article
12.1.1. The intention behind incorporating a specific clause on taxes is to carve out a separate
clause to restrict the nature of taxes which would be considered as change in law, unlike other
four bullets dealing with matters other than taxes. The basic aspect is that if the taxes are said
to be dealt under clauses other than the fifth bullet, the incorporation of the fifth bullet is
rendered redundant as all taxes can be covered under the First or Second bullet. It is settled
principle of interpretation that no provision can be ignored as redundant or superfluous.
Reference: JSW Infrastructure Ltd. v. Kakinada Seaports Ltd., (2017) 4 SCC 170 and Life
Insurance Corporation of India v. Dharam Vir Anand, (1998) 7 SCC 348.

36. The Respondents have submitted that the idea of carving out a separate bullet for dealing
with taxes and thereafter restricting its ambit by specific stipulation therein, unequivocally
establishes that any and every tax needs to be considered under the fifth bullet and not
otherwise. The claims which are to be considered on account of statutory taxes etc. should
squarely fall within the scope of fifth bullet. The fifth bullet is the entire repository of dealing
with taxes. When there is a specific clause relating to taxes, the general clauses dealing with
laws in general have to be interpreted as necessarily excluding taxes. Reference: South India
Corporation (P) Ltd-v- Secretary, Board of Revenue Trivandrum and Another, (1964) 4 SCR
280.Thus, the principles that emerge can be summarized as under:

a) When a specific clause deals with taxes i.e. Clause 12.1.1 – fifth bullet, the general
clauses dealing with laws in general do not cover taxes, namely the Clause 12.1.1 –
First Bullet.
b) Clauses in the Agreement cannot be interpreted in a manner to render a clause
otiose, redundant or surplusage.
c) The purpose of a specific clause on tax is to make it restrictive.
d) When there is a specific clause relating to taxes, the general clauses dealing with
laws in general have to be interpreted as necessarily excluding taxes. This is

Petition No. 206/MP/2018 &Ors. Page 18 of 51

 because there is a special entry on taxes whereas the laws other than taxes are dealt
with in a general clause.

B. Scope of Article 12.1.1 of the PPA – Fifth Bullet

37. The Respondents have submitted that the scope of Article 12.1.1 – fifth Bullet is clear and
specific. It relates to the supply of power. Thus, every change in tax or introduction of tax
was not intended to be covered by the „Change in Law‟ provisions of the PPA. It cannot,
therefore, be that the „supply of power‟ be extended to other aspects such as taxes on input
goods and services. The PPA entered into between the parties provides in the definition
clause i.e. Article 1.1 that any term used in the PPA but not defined would have the meaning
as applicable under the Electricity Act, 2003. The term „Supply‟ is defined in Section 2 (70)
of the Electricity Act, 2003 as:

“supply in relation to electricity means, the sale of electricity to a licensee or consumer”

38. In terms of the above, incidence of tax recognised under Article 12.1.1 – fifth Bullet is only
on the transaction of sale of electricity and not on any other transaction preceding it. The said
interpretation has been upheld by the Commission in its Order dated 19.09.2018 in the matter
of Prayatana Developers Private Limited v NTPC Limited and Ors. and it has been held that
the scope of the fifth Bullet is restricted to those taxes which directly impact „supply of
power‟ only (Reference: Para 311 of the Order dated 09.10.2018) in .Acme Bhiwadi Solar
Power Private Limited –v- Solar Energy Corporation of India and Ors. and Batch.

39. The Respondents have submitted that the above interpretation stands fortified by the fact that
the „Change in Law‟ provision of the present PPA stands on a different footing in comparison
to the provisions of „Change in Law‟, as incorporated in other Standard Bidding Document
issued by Government of India as well as in other PPAs. Different versions of the PPAs cover
different scopes. With regard to each PPA, the intention of parties should be gathered from
the express language used in the contract. Therefore, if the words used in the PPA are clear
and unambiguous, it would be difficult to gather their intention different from the language
used in the agreement. The deviation was consciously made and a separate provision in the

Petition No. 206/MP/2018 &Ors. Page 19 of 51

 form of last bullet was incorporated restricting the taxes to those which are made applicable
on supplying power. Even the Hon‟ble Appellate Tribunal of Electricity, in its decision dated
13.4.2018 in the case of Adani Power Limited v Central Electricity Regulatory Commission
and Ors., in Appeal No. 210 of 2017 relating to the provisions of Article 13.1.1 of the PPA
dealing with change in tax had confined the scope of the change in law in respect of tax to the
bullet/provision dealing with tax.

C. Impact of GST on Operation and Maintenance (O&M) Expenses

40. The Respondents have submitted that vide Order dated 19.09.2018 in Petition No.
50/MP/2018 and Petition No. 52/MP/2018 in the case of Prayatana Developers Private
Limited v NTPC Limited and Ors and vide Order dated 09.10.2018 in Petition No.
188/MP/2017 and Batch in the case of Acme Bhiwadi Solar Power Private Limited –v- Solar
Energy Corporation of India and Ors. and Batch, the Commission has already held that claim
of the Petitioners on account of additional tax burden on operation and maintenance expenses
(if any), is not maintainable.

D. Carrying Cost

41. The Respondents have submitted that vide Order dated 09.10.2018 passed by the
Commission in Petition No. 188/MP/2017 and Batch in the case of Acme Bhiwadi Solar
Power Private Limited–v- Solar Energy Corporation of India and Ors. and Batch, the
Commission has held that the claim regarding separate “Carrying Cost‟ in the instant
petitions is not attracted.

42. The Respondents have submitted that Judgment of the Hon‟ble Appellate Tribunal dated
13.04.2018 in Appeal No. 210 of 2017 in Adani Power Limited –v- Central Electricity
Regulatory Commission and Ors, wherein it was held that since the Gujarat Bid-01 PPA has
no provision for restoration to the same economic position, therefore, the carrying cost will
not be applicable:

Petition No. 206/MP/2018 &Ors. Page 20 of 51

 E. The Scope and Applicability of Article 12 of the respective PPAs

43. The Respondents have submitted that the issue of interpretation of Article 12 has been
decided in favour of the Petitioner vide Order dated 19.09.2018 in Petition No. 50/MP/2018
and Petition No. 52/MP/2018 in the case of Prayatana Developers Private Limited v NTPC
Limited and Ors.; Order dated 09.10.2018 in Petition No. 188/MP/2017 and Batch in the case
of Acme Bhiwadi Solar Power Private Limited –v- Solar Energy Corporation of India and
Ors. and Batch and Judgment dated 14.08.2018 in Appeal No. 119 of 2016 and Batch in M/s
Adani Power Rajasthan Private Limited v Rajasthan Electricity Regulatory Commission and
Ors (and as followed in Appeal No. 111 of 2017 in M/s. GMR Warora Energy Limited v.
Central Electricity Regulatory Commission and Ors). The instant petitions can be disposed of
with the same conclusion as reached in the decisions referred to herein above. However, in
regard to the scope and interpretation of Article 12.1.1 of the PPAs dealing with the Change
in Law, Respondents wish to reserve its rights to take appropriate appellate remedies.

F. Absence of necessary particulars- Adverse Inference

i. Non-furnishing of details of taxes subsumed/withdrawn by reason of GST

44. The Respondents have submitted that the Petitioners have not placed before the Commission
in a transparent manner the taxes, duties and levies which stand withdrawn and no longer
payable by reason of the introduction of the GST. Admittedly, there are number of taxes,
duties, cess and levies which have been subsumed through introduction of GST which came
into force on 01.07.2017. In Order dated 09.10.2018 in Petition No. 188/MP/2017 and Batch,
in the case of Acme Bhiwadi Solar Power Private Limited –v- Solar Energy Corporation of
India and Ors. and in the Order dated 19.09.2018 in the matter of Prayatana Developers
Private Limited v NTPC Limited and Ors. the Commission has taken note of the implications
of various taxes which were in existence prior to 01.07.2017 and were subsumed/reduced/
remitted. These have to be taken into account to determine the net effect of GST Laws.
Further, the Petitioners are proceeding on the assumption that the entire quantum of taxes
under the GST are payable. This is contrary to the very scheme of the introduction of the
GST where the intention of the Government of India is rationalizing the tax structure in a
manner that various existing taxes will get subsumed in the GST. Accordingly, true and

Petition No. 206/MP/2018 &Ors. Page 21 of 51

 faithful disclosure of existing taxes which have been subsumed by the GST needs to be
furnished by the Petitioners. It is incumbent on the Petitioners to place before the
Commission in a transparent manner to submit details as regards the increase or decrease in
the taxes on net basis. For instance, if pre-GST, the Petitioners were subjected to 4% Excise
Rate and post-GST, the same became a cumulative 5%, then the Petitioners would be entitled
to claim only the difference i.e. 1% as a change in law and not the entire 5%.

ii. Non-furnishing of all the relevant details

45. The Respondents have submitted that before the amount is computed, the Petitioners should
be directed to give the particulars/documents in respect of each claim under GST Laws. The
particulars/ documents are required to be given in respect of each item of
goods/equipment/services. The Auditor Certificate in respect of the above is also to be
provided in terms of the directions of this Commission in its Order dated 09.10.2018 in the
case of Acme Bhiwadi Solar Power Private Limited –v- Solar Energy Corporation of India
and Ors. Batch, in Petition No. 188/MP/2017 and Batch.

G. Mitigating Steps: Whether undertaken by the Petitioners

46. The Respondents have submitted that in terms of Article 4.1.1 (b) of the PPA, the Solar
Power Developers are responsible at its own cost and risk for designing, constructing,
erecting, commissioning, completing and testing the Power Project in accordance with the
Prudent Utility Practices. Therefore, it is the duty of the Solar Power Developers to prudently
incur expenditure and mitigate the effect. In the order dated 19.09.2018, the Commission has
taken note of the substantial difference in the GST, namely, 5% if the components are bought
as a part of the Solar Generation System and 18% if the components are individually and
directly purchased. The view has been reiterated by the Commission in its order dated
09.10.2018 passed in the case of Acme Bhiwadi Solar Power Private Limited –v- Solar
Energy Corporation of India and Ors. Batch, in Petition No. 188/MP/2017 and Batch.

47. The Respondents have submitted that any higher cost paid, without mitigating the cost,
should not be allowed to be passed on to the consumers at large.

Petition No. 206/MP/2018 &Ors. Page 22 of 51

 H. Time Bound Payment within 60 days of the Order

48. The Respondents have submitted that regarding the amount payable to the Petitioners (if any)
on account of GST Law, the Commission has stipulated a timeline of 60 days from the date
of the passing of the Order dated 19.09.2018 in Petition No. 50/MP/2018 and 52/MP/2018,
after which a Late Payment Surcharge shall be payable. There are certain issues which are
being faced by NTPC in regard to the implementation of the above directions of this
Commission. There are many instances where the Solar Power Developers had not furnished
any letter or any detail whatsoever for more than a month from the date of the order of this
Commission. Accordingly, besides the issue of judgement on inadequacy of the particulars
and documents given, the period of 60 days should be computed only from the first day when
the Solar Power Developer furnishes the information with an undertaking that the SPDs have
duly furnished all the information and documents as per the Orders of this Commission.
Accordingly, the timeline of 60 days should begin to run only from the day the Petitioners
provide the entire documentation in the required format to the Respondents.

Submissions of the Petitioner through Rejoinder:

49. The Petitioners have reiterated the submissions already made in the main Petition as such the
same are not being reproduced here for the sake of brevity. Additionally, the Petitioners have
submitted as under:

A. Re. Scope of Article 12.1.1 of the PPA – First and Fifth Bullet

50. The Petitioner have submitted that Article 12.1.1 specifies multiple events being the
enactment, coming into effect, adoption, promulgation, amendment, modification or repeal
(without re-enactment or consolidation) in India, of any Law, including rules and
regulations framed pursuant to such Law; that would together or independently qualify as
Change in Law. The provision has, therefore, to be read and given effect holistically. Tax on
supply of power would in itself be applicable only if a particular tax applicable for supply of
power has been introduced or taken away by the legislature. In the present case, the entire
Indirect tax laws of the country have undergone a major overhaul and almost all of the

Petition No. 206/MP/2018 &Ors. Page 23 of 51

 Central and State level taxes which existed on the Effective Date have been replaced/
abolished/ subsumed by the GST Laws. The Petitioners have placed their reliance on the
Order dated 19.09.2018 passed by the Commission in Petition No. 50/MP/2018 case titled
Prayatana Developers Pvt. Ltd. vs. NTPC Ltd. & Ors.

51. The Petitioners have submitted that the Respondents have incorrectly relied upon the maxim
„expressum facit cessare tacitum’ to state that when express inclusions are specified,
anything not mentioned expressly is excluded. The said reliance by the Respondents is
misplaced and ought to be rejected in view of Judgment dated 09.08.1972 given by Hon‟ble
Supreme Court in the case of Assistant Collector of Central Excise, Calcutta Division vs.
National Tobacco Company of India Limited (1972) 2 SCC 560. It is a cardinal rule of
interpretation that all provisions of the Contract must be harmoniously interpreted, and the
interpretation so given cannot and ought not to lead to absurdity. Therefore, applying the
maxim „expressum facit cessare tacitum ‟will defeat the purpose of Article 12.1.1 as the
Petitioners despite being an affected party, which have incurred additional expenditure with
regard to increase in taxes will be deprived of the legitimate compensation and will not be
restored to the same economic position.

52. The Petitioners have submitted that the Hon‟ble Appellate Tribunal has allowed change in tax
laws as Change in Law events under similar PPA provisions by holding inter-alia that the
phrase “for supply of power” shall include inputs required for such generation and supply
of power to the Discoms.

B. Re. Impact on account of Operations and Maintenance Expenses

53. The Petitioners have submitted that Outsourcing of O&M is a prudent industrial practice to
ensure international standard of the best practices in plant inspection procedures, quality
assessment plans and checklists for maintenance. The O&M services include periodic and
preventive maintenance checks with IV curve analysis and thermographic imaging. Physical
O&M tasks, such as module cleaning, housekeeping and security are carried out through third
parties under the supervision of the generator. Outsourcing of O&M is thus a practical
requirement, if not contractual. Outsourcing of O&M of solar projects is not prohibited under

Petition No. 206/MP/2018 &Ors. Page 24 of 51

 the PPAs and is considered a part of the expenditure incurred by the generator. The Petitioner
is, therefore, entitled to compensation because of increase in costs of O&M on account of
GST Laws.

C. Re. Carrying Cost

54. The Petitioners have submitted that carrying cost is the compensation for time value of
money. Any compensation for Change in Law is incomplete if it does not come with carrying
cost that is inherent to the very provision. It is submitted that the mandate of Change in Law
provisions across all PPAs (standard documents drafted by the government) is restitution i.e.
relief be granted in a manner so as to place an affected party to the same economic position as
if a Change in Law had not occurred. Restitution is therefore inherent to compensation. The
Hon‟ble Supreme Court has in the case of R.C. Cooper vs. Union of India: AIR 1970 SC 564
noted that as per the dictionary meaning, "compensation" means anything given to make
things equal in value: anything given as an equivalent, to make amends for loss or damage”.
The aforesaid principle has also been recognized by the Hon‟ble Supreme Court in the case
of N.B. Jeejeebhoy vs. Assistant Collector, Thana Prant, Thana: AIR 1965 SC 1096.
Compensation is a comprehensive term and is aimed at restoring a party to the same position
as if no injury was caused to it, as held by the Hon‟ble Supreme Court in the case of Yadava
Kumar vs. The Divisional Manager, National Insurance Co. Ltd. and Anr., (2010) 10 SCC
341. The principle of recovery of carrying cost/ interest and time value of money has been
recognized in various cases viz. Judgment of the Hon‟ble Tribunal dated 13.04.2018 in
Appeal No. 210 of 2017, Adani Power Limited vs. Gujarat Electricity Regulatory
Commission & Ors.; Judgement of the Hon‟ble Tribunal in North Delhi Power Ltd vs. DERC
2010 ELR (APTEL) 0891; Judgment of the Hon‟ble Tribunal in Tata Power Company Ltd
vs. Maharashtra Electricity Regulatory Commission 2011 ELR (APTEL) 336.

D. Re. Necessary particulars

55. The Petitioners have submitted that they have submitted details of each component and the
tax applicable along with the Petition. They have duly annexed the sample invoices as may be
required to demonstrate its claim for compensation.

Petition No. 206/MP/2018 &Ors. Page 25 of 51

 E. Re. Efforts towards mitigation of Change in Law Event

56. The Petitioners have submitted that as per Article 12.1 of the PPA, PDPL is entitled to
Change in Law claim for events occurring after the Effective Date and the immaterial
conditions such as intent or motive cannot be artificially built into the PPA. They have been
prudent in considering the impact of GST implication. As a prudent utility, their obligations
include ensuring that prudent business decisions are taken based on commercial principles.
Following this, the assets were purchased individually and hence their purchase cannot be
termed as imprudent.

Analysis and decision:

57. We have heard the learned counsels for the Petitioners and the Respondents and have
carefully perused the records. Since Petition No. 206/MP/2018 alongwith I.A. 4 of 2019;
Petition No. 209/MP/2018 alongwith I.A. 7 of 2019; Petition No. 226/MP/2018; Petition No.
212/MP/2018 alongwith I.A. 8 of 2019; Petition No. 207/MP/2018 alongwith I.A. 1 of 2019
and Petition No. 210/MP/2018 alongwith I.A. 3 of 2019 are likely worded and contain the
similar issues to be adjudicated, the same are clubbed together.

58. The Central Goods and Services Tax Act, 2017, The Integrated Goods and Services Tax Act,
2017 on 12.04.2017, The State(s) Goods and Services Tax Act, 2017 are hereinafter
collectively referred as „GST Laws‟.

59. The brief facts of the case are tabulated as under:

206/MP/2018 209/MP/2018 226/MP/2018 212/MP/2018 207/MP/2018 210/MP/2018

Scheme 3000 MW Grid Connected Solar PV Power 50 MW Grid (Maharashtra) & 1000 MW Grid
Projects under Phase-II, Batch-II, Trench-I for (Karnataka) Connected Solar PV Power
State Specific Bundling Scheme Projects under Phase-II, Batch-III with VGF
support from National Clean Energy Fund.
Capacity 50MW 50 (5 X 10) 100 (50 X 2) 20MW 50MW 50MW
MW MW
Location Karnataka Telangana Karnataka Maharashtra Karnataka Karnataka
RfS Dated NTPC/2015- NTPC/2015- SECI/JNNS SECI/JNNSM/P-2/B-
16.06.2016 16/NSM/TI/N 16/NSM/TI/K M/P-2/B- /RfS/KA/ 022016
SP-TEL/11 ARl09 3/RfS/MH/ dated 15.02.2016
022016 dated

Petition No. 206/MP/2018 &Ors. Page 26 of 51

 Dated dated 24.02.2016
09.10.2015 17.05.2016
LOI NTPCINSM/K NTPCINSM/ NTPCINSMIK SECI/JNSSM SECI/JNNSM/ SECI/JNNSM/
AR- TIINSP- AR- /LOI/P2B3T1 LOI/KA/PSEP LOI/KA/PSEP
08(R)/Parampuj OPEN/TEL- 09IParampujya -AGEL-A- L/P6/8465 L/P1/8460
ya/ II/50MW/ / 2MH-
50MW 0022 100MW 1V/8206
dated dated dated dated
dated 20.06.2016 dated 16.06.2016 02.07.2016 02.07.2016
04.11.2016 17.05.2016
PPA 26.12.2016 23.08.2016 27.07.2016 19.07.2016 22.09.2016 22.09.2016
Date of 19.07.2016 23.08.2016 27.02.2016 19.07.2016 22.09.2016 -
PPA
Effective 16.07.2016 19.07.2016 21.06.2016 16.07.2016 02.08.2016 02.08.2016
date
SCoD 16.08.2017 18.08.2017 20.07.2017 16.08.2017 02.09.2017 02.09.2017

60. The Petitioners have submitted that the Respondents invited proposals for setting up Grid
connected Solar-PV Power Projects in various States of India through „State Specific
Bundling Scheme‟ and „viability gap funding scheme‟. The Petitioners participated in the
bids after following the process of „Reverse Auction‟ and were selected as the successful
bidders. Pursuant thereto, the Petitioners entered into a PPA for setting up of solar power
plant at different rates of fixed tariff for 25 years. Subsequent to the „Effective Date‟ as per
the PPAs, the „GST Laws‟ were enacted. Introduction of „GST Laws‟ made a huge impact
on the actual cost of the project vis-a-vis budgeted cost, which was beyond their control and
therefore, notice regarding the „Change in Law‟ was sent to the Respondents. The Petitioners
have submitted that the PPAs entered into between the parties provide for a specific
provision qua the concept of “Change in Law”. The fundamental philosophy behind the said
provision is to restore the affected party to the same economic position as if such change in
law had not occurred. The concept of change in law has been introduced in the PPAs to
ensure that the parameters/ contours based on which the Petitioners have bid for supplying
power do not change in times to come and that no detriment to either Petitioners or
Respondents is caused due to such change in law events. The Petitioners have submitted that
in terms of the Article 12 of the PPAs, they are entitled to claim the same being an event of
„change in law‟.

61. Per Contra, the Respondents have submitted that the scope of Article 12 of the PPA has been
interpreted and decided by the Commission vide order dated 19.09.2018 and Order dated
09.10.2018 and by the Hon‟ble Tribunal in the decision dated 13.04.2018 in the case of

Petition No. 206/MP/2018 &Ors. Page 27 of 51

 Adani Power Limited –v- Central Electricity Regulatory Commission and Others, in Appeal
No. 210 of 2017 and Judgment dated 14.08.2018 in Appeal No. 119 of 2016 and Batch in
M/s Adani Power Rajasthan Private Limited –v- Rajasthan Electricity Regulatory
Commission and Ors (and as followed in Appeal No. 111 of 2017 in M/s. GMR Warora
Energy Limited -v- Central Electricity Regulatory Commission and Ors.). The views taken in
these cases have been somewhat in variance. There are differences in the facts of the present
case in comparison to the decision of the Hon‟ble Tribunal in the case of Adani and GMR
Warora. The provision of the present PPA is different from the PPA in the case of Adani
Rajasthan (and GMR Warora). The Commission has already held that claim of the Petitioners
on account of additional tax burden on O&M expenses (if any), is not maintainable. Further,
vide Order dated 09.10.2018 passed by the Commission in Petition No. 188/MP/2017 and
Batch in the case of Acme Bhiwadi Solar Power Private Limited–v- Solar Energy
Corporation of India and Ors. & Batch, the Commission has held that the claim regarding
separate “Carrying Cost‟ in the instant petitions is not attracted. Further, vide judgment of
the Hon‟ble Appellate Tribunal dated 13.04.2018 in Appeal No. 210 of 2017 in Adani Power
Limited –v- Central Electricity Regulatory Commission and Ors., wherein it was held that
since the Gujarat Bid-01 PPA has no provision for restoration to the same economic position,
therefore, the carrying cost will not be applicable. The relevant portion of the judgment is as
under:

“ISSUE NO.3: DENIAL OF CARRYING COST

…………………………
x. Further, the provisions of Article 13.2 i.e. restoring the Appellant to the same
economic position as if Change in Law has not occurred is in consonance with the
principle of „restitution‟ i.e. restoration of some specific thing to its rightful status.
Hence, in view of the provisions of the PPA, the principle of restitution and judgment of
the Hon‟ble Supreme Court in case of Indian Council for Enviro-Legal Action vs. Union
of India & Ors., we are of the considered opinion that the Appellant is eligible for
Carrying Cost arising out of approval of the Change in Law events from the effective
date of Change in Law till the approval of the said event by appropriate authority. It is
also observed that the Gujarat Bid-01 PPA have no provision for restoration to the
same economic position as if Change in Law has not occurred. Accordingly, this
decision of allowing Carrying Cost will not be applicable to the Gujarat Bid-01 PPA.”

62. The Respondents have submitted that the Petitioners have not placed before the Commission
in a transparent manner the taxes, duties and levies which stand withdrawn and no longer

Petition No. 206/MP/2018 &Ors. Page 28 of 51

 payable by reason of the introduction of the GST. In terms of Article 4.1.1 (b) of the PPA, the
Solar Power Developers are responsible at their own cost and risk for designing, constructing,
erecting, commissioning, completing and testing the Power Project in accordance with the
Prudent Utility Practices. Therefore, it is the duty of the SPDs to prudently incur expenditure
and mitigate the effect. In the order dated 19.09.2018, the Commission has taken note of the
substantial difference in the GST, namely, 5% if the components are bought as a part of the
Solar Generation System and 18% if the components are individually and directly purchased.
The view has been reiterated by the Commission in its order dated 09.10.2018 passed in the
case of Acme Bhiwadi Solar Power Private Limited –v- Solar Energy Corporation of India
and Ors. Batch, in Petition No. 188/MP/2017 and Batch. The Respondents have submitted
that any higher cost paid, without mitigating the cost, should not be allowed to be passed on
to the consumers at large. Further, regarding the amount payable to the Petitioners (if any) on
account of „GST Laws‟ the timeline of 60 days should begin to run only from the day the
Petitioners provide the entire documentation in the required format to the Respondents.

63. From the submissions of the parties, the following issues arise before this Commission:

64. Issue No.1:Whether the promulgation of the IGST Act, 2017, the CGST Act, 2017 and the
Karnataka/Telangana/Maharashtra State(s) GST Act, 2017 with effect from 01.07.2017
are covered under the scope of ‘Change in Law’ under Article 12 of the Power Purchase
Agreements?

65. Issue No. 2: Whether there will be incremental impact in the cost of construction and
O&M expenses on account of promulgation of the GST Laws? And, Whether there is a
need to evolve a suitable mechanism to compensate the Petitioners for the increase in
recurring and non-recurring expenditure incurred by the Petitioners on account of
Change in Law?

66. Issue No. 3: Whether the claim of ‘Carrying Cost’ for delay in reimbursement by the
Respondents is sustainable?

67. No other issue was pressed or claimed.

Petition No. 206/MP/2018 &Ors. Page 29 of 51

68. We now discuss the issues one by one:

69. Issue No. 1: Whether the promulgation of the IGST Act, 2017, the CGST Act, 2017 and
the Karnataka/Telangana/Maharashtra State(s) GST Act, 2017 with effect from
01.07.2017 are covered under the scope of ‘Change in Law’ under Article 12 of the Power
Purchase Agreements?

70. The Petitioners have submitted that Article 12 of the PPAs provides for a list of five (5)
events which would be considered as „Change in Law‟. They include inter alia the
enactment, promulgation, adoption in India of any Law, as well as, any change in tax or
introduction of any tax made applicable for supply of power.

71. The Petitioners have submitted that the event of enactment of „GST Law‟ has occurred after
the Effective Date and has resulted in additional recurring and non-recurring expenditure for
the Petitioners. In terms of Article 12.2.1 of the PPA, an aggrieved party who has incurred
additional recurring/ non-recurring expenditure is required to approach the Central
Commission for seeking approval of such change in law event and thereby, claim relief for
the same upon approval by the Central Commission. They have approached this Commission
for seeking relief on account of introduction of GST as a change in law event, as per the first
and fifth bullet of Article 12.1.1 of the PPAs, in as much as (i) it is in the nature of an
enactment, coming into effect after the Effective Date and (ii) also qualifies as an
introduction of a tax on the supply of power leading to additional recurring/ non-recurring
expenditure for the Petitioners. Hence, it is claimed by the Petitioners that they are eligible
for the benefit of GST as a change in law event in terms of the first and fifth bullet of Article
12.1.1 of the PPA.

72. Per Contra, the Respondents have submitted that as per Orders of Commission in Petition
No. 50/MP/2018 & Another and in Petition No. 188/MP/2017 & Batch the „GST Laws‟
implication cannot be claimed in the following circumstances:
(a) where the Scheduled Date of Commissioning is prior to 01.07.2017; or
(b) where the Actual Date of Commissioning is prior to 01.07.2017; or
(c) where the point of taxation of Goods/Services is before 01.07.2017; or

Petition No. 206/MP/2018 &Ors. Page 30 of 51

 (d) when there is no clear/one-to-one co-relation between the projects, supply of
goods or services and the invoices raised by the supplier of goods and services.

73. The Respondents have submitted that combined effect of the above conditions are that the
GST implications will be applicable only if the point of taxation occurs on or after
01.07.2017 and not when the point of taxation has occurred prior to 01.07.2017, in which
case the taxes shall be payable only under the pre-GST laws . Therefore, there is no change in
law.

74. The Respondents have submitted that the intention behind the fifth bullet in Article 12.1.1 is
to carve out a separate clause to restrict the nature of taxes which would be considered as
change in law, unlike other four bullets dealing with matters other than taxes. If the taxes are
said to be dealt under clauses other than the fifth bullet, the incorporation of the fifth bullet is
rendered redundant as all taxes can be covered under the First or Second bullet. It is settled
principle of interpretation that no provision can be ignored as redundant or superfluous. The
Respondents have placed their reliance on judgment in case titled JSW Infrastructure Ltd. v.
Kakinada Seaports Ltd., (2017) 4 SCC 170 and Life Insurance Corporation of India v.
Dharam Vir Anand, (1998) 7 SCC 348.

75. The Respondents have submitted that the relief (if any) for taxes is admissible to the SPD if it
squarely falls within the purview of Article 12.1.1 – fifth Bullet only and not otherwise. The
SPD cannot claim the change in law effect for statutory taxes under any of the first four
bullets under Article 12.1.1 of the PPA.

76. The Commission observes that Article 12 of the Power Purchase Agreements stipulates as
under:-

“12. ARTICLE 12: CHANGE IN LAW

12.1 Definitions
In this Article 12, the following terms shall have the following meanings:

12.1.1 “Change in Law” means the occurrence of any of the following events after
the Effective Date resulting into any additional recurring/ non-recurring
expenditure by the SPD or any income to the SPD:

Petition No. 206/MP/2018 &Ors. Page 31 of 51

 • the enactment, coming into effect, adoption, promulgation, amendment,
modification or repeal (without re-enactment or consolidation) in India,
of any Law, including rules and regulations framed pursuant to such
Law;
• a change in the interpretation or application of any Law by any Indian
Governmental Instrumentality having the legal power to interpret or
apply such Law, or any Competent Court of Law;
• the imposition of a requirement for obtaining any Consents, Clearances
and Permits which was not required earlier;
• a change in the terms and conditions prescribed for obtaining any
Consents, Clearances and Permits or the inclusion of any new terms or
conditions for obtaining such Consents, Clearances and Permits; except
due to any default of the SPD;
• any change in tax or introduction of any tax made applicable for supply of
power by the SPD as per the terms of this Agreement.

but shall not include (i) any change in any withholding tax on income or dividends
distributed to the shareholders of the SPD, or (ii) any change on account of
regulatory measures by the Appropriate Commission.

12.2 Relief for Change in Law

12.2.1 The aggrieved Party shall be required to approach the Central Commission
for seeking approval of Change in Law.

12.2.2 The decision of the Central Commission to acknowledge a Change in Law and
the date from which it will become effective, provide relief for the same, shall
be final and governing on both the parties.”

77. The brief facts of the petitions with respect to RfS dates, effective date of PPAs etc. are as
under:

Petition No. Date of RFS Signing date of Effective date Scheduled Date of
PPAs of PPAs Commissioning
206/MP/2018 16.06.2016 19.07.2016 16.07.2016 16.08.2017
209/MP/2018 09.10.2015 23.08.2016 19.07.2016 18.08.2017
226/MP/2018 17.05.2016 27.07.2016 21.06.2016 20.07.2017
212/MP/2018 24.02.2016 19.07.2016 16.07.2016 16.08.2017
207/MP/2018 15.02.2016 22.09.2016 02.08.2016 02.09.2017
210/MP/2018 15.02.2016 02.08.2016 02.09.2017

78. The Commission observes that the „Effective date of PPAs‟ is before the date of coming into
effect of the „GST Laws‟ i.e. 01.07.2017. Further, the SCoD of all the Projects related to the
Petitions are after the promulgation of the „GST Laws‟. The event of enactment of „GST

Petition No. 206/MP/2018 &Ors. Page 32 of 51

 Law‟ has occurred after the execution of „PPAs‟ and it has been contended by the Petitioners
that the enactment of the „GST Laws‟ has resulted in additional recurring and non-recurring
expenditure for the Petitioners and they have approached the Commission for seeking relief
on account of introduction of GST as a change in law event, as per the first and fifth bullet of
Article 12.1.1 of the PPA.

79. The Commission observes that as per Article 12, „Change in Law‟ means the enactment/
coming into effect/ adoption/ promulgation/ amendment/ modification or repeal of any Law
in India; Change in the interpretation of any Law in India; Imposition of a requirement for
obtaining any consents or Change in tax or introduction of any tax made applicable for
supply of power by the SPD as per the terms of this Agreement, resulting into any additional
recurring/ non-recurring expenditure or any income to the SPD. The Commission is of the
view that harmonious construction of the bullet points under Article 12 makes it clear that
bullet point one is wider in scope and refers to the enactment, coming into effect, adoption,
promulgation, amendment, modification or repeal of any Law in India, including rules and
regulations framed pursuant to such Law whereas bullet point fifth in seriatim refers
specifically to any change in tax or introduction of any tax made applicable for „supply of
power‟ by the SPD as per the terms of Agreement. It implies that bullet point fifth in seriatim
would be applicable as „Change in Law‟ to the cases where the change in tax or introduction
of any tax directly impacts „supply of power‟ only. Thus, the ambit of the fifth bullet point is
limited in that if any change in Tax is made or any tax is introduced having its impact
specifically on the „supply of power‟, in that case the remedy of „Change in Law‟ is available
to the Petitioners under bullet point number five only. Clearly, the „GST laws‟ enacted are
not in the nature of a mere change in the tax having limited applicability on supply of power.
Rather, it is in the nature of an enactment having wide ranging implication on the entire
indirect taxation regime in India. Various laws were subsumed and repealed. The
Commission observes that the Appellate Tribunal for Electricity by the Judgment dated
14.08.2018 in Appeal No. 111 of 2017 in M/s. GMR Warora Energy Limited v. Central
Electricity Regulatory Commission and Ors. has decided on interpretation of „Change in
Law‟ provision similar to the present PPAs. It was held as under:

“This Tribunal has decided that any tax or application of new tax on supply of power also

Petition No. 206/MP/2018 &Ors. Page 33 of 51

 covers the taxes on inputs required for such generation and supply of power to the
Distribution Licensees.”

80. It has further been decided by APTEL in Appeal No. 111 of 2017 in M/s. GMR Warora
Energy Limited v. Central Electricity Regulatory Commission and Ors. that:-

“vi. Now, we will consider the issues raised by the MSEDCL. Let us first consider the
issues related to Construction Period. These issues are change in rates of Customs
Duty/ Excise Duty/ Service Tax/ Other Taxes (WCT, VAT, CST). Let us first examine
the findings of the Central Commission on these issues. The relevant extracts from the
Impugned Order are reproduced below:

"44. We have considered the submissions of the Petitioner, MSEDCL and Prayas.
The increase in Service Tax was affected through Finance Act, 2012. Since the
enhanced rate of Service Tax is through an Act of Parliament after the cut-off
date and has resulted in additional expenditure by the Petitioner, the same is
covered as change in law under Article 10.1.1 of the MSEDCL PPA.
Accordingly, the Petitioner is entitled to be compensated by MSEDCL for the
impact of difference in the rate of service tax on the project cost.
.
.
i. From the above it is crystal clear that the Central Commission has considered
the tax on supply of power as tax on inputs for supply of power and allowed the
same under Change in Law. Further, the State Commission has considered that
change in duties/ tax imposed by IGI under Act of the Parliament resulting in
change in cost of the project is to be considered under Change in Law. We agree
to this conclusion arrived at by the Central Commission as we have also
concluded the same while allowing the Busy Season Surcharge and Development
Surcharge imposed by MoR, IGI under the Act of the Parliament for
transportation of coal which has resulted in change in cost to GWEL as such
change in cost could not be factored in by GWEL at the time of bid submission.”

81. From the above, it is clear that the Hon‟ble Appellate Tribunal for Electricity has already
held that any tax levied through an Act of Parliament after the cut-off date which results in
additional expenditure by the Petitioner, the same is covered as „Change in Law‟. In the same
judgment it is also held that any tax or application of new tax on „supply of power‟ covers the
taxes on inputs required for such generation and supply of power to the Distribution
Licensees. In the instant case, the „GST Laws‟ have been enacted by the Act of Parliament
and the State Legislative Assemblies. The change in duties/ tax imposed consequent upon
these Acts has resulted in the change in cost of the inputs required for generation and hence
the same is to be considered as „Change in Law‟. Hence, the Commission holds that the

Petition No. 206/MP/2018 &Ors. Page 34 of 51

 enactment of „GST laws‟ is squarely covered as „Change in Law‟ under the first, and fifth
bullet in seriatim of Article 12.1.1 of the PPA. This view is in consonance with the view
taken by the Commission in Order dated 09.10.2018 in Petition No. 188/MP/2018 & Ors.
titled Acme Bhiwadi Solar Power Private Limited –v- Solar Energy Corporation of India and
Ors.

82. Issue No. 2: Whether there will be incremental impact in the cost of construction and
O&M expenses on account of promulgation of the GST Laws? and, Whether there is a
need to evolve a suitable mechanism to compensate the Petitioners for the increase in
recurring and non-recurring expenditure incurred by the Petitioners on account of
Change in Law?

83. The Petitioners have submitted that prior to the Effective Date under the PPA, the erstwhile
indirect tax regime provided for a complex tax environment due to multiplicity of taxes and
elaborate compliance obligations. However, after to the Effective Date, the new indirect
taxation system viz. „GST Laws‟ has been introduced, representing a paradigm shift in the
mode and levy of indirect taxes. With introduction of „GST Laws‟ a tax slab of 5% to 28%
has been introduced with respect to goods & services required for execution, construction and
operation of Solar Power Plants. The said goods and services were previously either
exempted or fell under lower tax slabs. The new slabs have also led to an increase in the
overall project cost of the Petitioners hence making the tariff quoted at the time of bid for
allocation of project unviable. The Petitioners have claimed the increase in total Cost and
O&M expenses due to increase in tax incidence as given below:

Petition No. Increase in Incremental Increase in Incremental Total Escalation

TAX due to impact on Cost TAX due to impact on O&M
GST Laws due to increase in GST Laws due to increase in
TAX indices TAX indices

206/MP/2018 11,10,37,769 2,01,40,483 13,11,78,252

209/MP/2018 2,45,48,956 2,01,40,483 4,46,89,439
226/MP/2018 1,82,99,192 2,01,40,483 3,84,39,675
5% to 28% 15% , 18%
212/MP/2018 8,18,81,887 80,56,193 8,99,38,080
207/MP/2018 12,17,32,652 1,56,00,000 13,73,32,652
210/MP/2018 2,11,65,375 1,56,11,040 3,67,76,415

84. Per Contra, the Respondents have submitted that in terms of Article 4.1.1 (b) of the PPAs, the

Petition No. 206/MP/2018 &Ors. Page 35 of 51

 Petitioners are responsible at their own cost and risk for designing, constructing, erecting,
commissioning, completing and testing the Power Project in accordance with the Prudent
Utility Practices. Therefore, it is the duty of the Petitioners to prudently incur expenditure and
mitigate the effect.

85. The Commission observes that „GST Laws‟ became effective from 01.07.2017. „GST Laws‟
provide for a tax slab (previously exempted) of 5% to 28% with respect to Goods & Services
required for execution, construction and operation of Solar Projects w.e.f. 01.07.2017. The
„Goods and Services‟ in the context of the present petitions can be broadly categorized under
the following two heads:

a) EPC Stage i.e. Construction Stage which is covered under „Goods‟ and
b) O & M Stage i.e. Post Construction Stage which is covered under „Services‟.

86. The impact of „GST laws‟ on the Engineering, Procurement and Construction (hereinafter
referred to as „EPC‟) Stage can be also construed broadly to be „Construction Stage‟ which is
covered under Goods under „GST Laws‟. It is pertinent to note that under „GST Laws‟ it has
been provided that “If point of taxation of Goods/Services before the GST implementation
then it will be taxed under earlier law. GST will not be applicable. Any portion of any supply
whose point of taxation is after GST implementation will be taxed under GST. The time of
goods/supply of services shall be the earlier of the:- (a) The date of issuing invoice (or the
last day by which invoice should have been issued) OR (b) The date of receipt of payment-
whichever is earlier.” A plain reading of the above implies that according to „GST Laws‟, in
cases where the invoice is raised or consideration for the goods/ supply of services have been
received before 01.07.2017 and the tax has already been paid under the earlier law, the GST
will not be applicable in such cases. It is immaterial whether the consideration for supply has
been paid fully or partly. The Petitioners have claimed that on account of levy of „GST
Laws‟, the construction cost of project has escalated to the tune of few Crores. The
Commission is of the view that there has to be a clear and one to one correlation between the
projects, the supply of goods or services and the invoices raised by the supplier of goods and
services. Accordingly, the Commission directs the parties to reconcile the accounts as per
discussion above.

Petition No. 206/MP/2018 &Ors. Page 36 of 51

87. The Commission observes that in the instant petitions, the tariff has been discovered under
transparent e-bidding process in accordance with the NSM guidelines issued by the Central
Government. In the Competitive Bidding Scenario, the SPDs bid levellised tariff without
disclosing the details of the calculations of the project cost including capital expenditure. The
component wise details of the capital employed are not required to be declared by the
bidders. The design of the bid levellised tariff is solely a decision of the SPDs.

88. The Commission observes that prior to the introduction of Goods & Service Tax Act (GST),
the components were taxed at the time of production (Excise) and at the time of Sale (VAT).
For sale of components between two States, CST was applicable. Moreover, for projects
executed within certain Municipal Corporation limits, additional Octroi was applicable to the
components. As per Goods And Service Tax (GST), Concept & Status, published by Central
Board Of Indirect Taxes And Customs, Department Of Revenue, Ministry Of Finance,
Government Of India, as on 1st August, 2018, the list of the taxes subsumed in the GST,
2017 is as under:

“10.21 Subsuming of taxes, duties etc.: Among the taxes and duties levied and
collected by the Union, Central Excise duty, Duties of Excise (Medicinal and Toilet
Preparations), Additional Duties of Excise (Goods of Special Importance), Additional
Duties of Excise (Textiles and Textile Products), Additional Duties of Customs
(commonly known as CVD), Special Additional Duty of Customs (SAD), Service Tax
and cesses and surcharges insofar as they related to supply of goods or services were
subsumed. As far as taxes levied and collected by States are concerned, State VAT,
Central Sales Tax, Purchase Tax, Luxury Tax, Entry Tax, Entertainment Tax (except
those levied by the local bodies), Taxes on advertisements, Taxes on lotteries, betting
and gambling, cesses and surcharges insofar as they related to supply of goods or
services were subsumed.”

89. The Commission observes that with the enactment of Central Goods and Services Tax Act,
2017, the following Acts were repealed by the Parliament:

i) the Central Excise Act, 1944 (except as respects goods included in entry 84 of the
Union List of the Seventh Schedule to the Constitution),

ii) the Medicinal and Toilet Preparations (Excise Duties) Act, 1955,

iii) the Additional Duties of Excise (Goods of Special Importance) Act, 1957,

Petition No. 206/MP/2018 &Ors. Page 37 of 51

 iv) the Additional Duties of Excise (Textiles and Textile Articles) Act, 1978, and

v) the Central Excise Tariff Act, 1985

90. The Central Excise Tariff Act, 1985 (5 of 1986) and Exemption Notifications (other than
general) the „General Exemption No. 64‟ stipulates as under:

“GENERAL EXEMPTION NO. 64

Exemption on all items of machinery, including prime movers, instruments, apparatus

and appliances, control gear and transmission equipment and auxiliary equipment and
components, required for initial setting up of a solar power generation project or facility.
[Notifn. no. 15/2010-CE., dt. 27.2.2010 as amended by 26/12, 15/14]

In exercise of the powers conferred by sub-section (1) of section 5A of the Central Excise
Act, 1944(1 of 1944), the Central Government, on being satisfied that it is necessary in
the public interest so to do, hereby exempts all items of machinery, including prime
movers, instruments, apparatus and appliances, control gear and transmission equipment
and auxiliary equipment (including those required for testing and quality control) and
components, required for initial setting up of a solar power generation or solar energy
production project or facility, from the whole of the duty of excise leviable thereon which
is specified in the First schedule to the Central Excise Tariff Act, 1985 (5 of 1986),
subject to the following conditions, namely:-

(1) that an officer not below the rank of a Deputy Secretary to the Government of India,
in the Ministry of New and Renewable Energy recommends the grant of this exemption,
indicating the quantity, description and specification of the goods and certifies that they
are required for initial setting up of a solar power generation or solar energy production
project or facility, as the case may be; and

(2) the Chief Executive Officer of the project furnishes an undertaking to the Deputy
Commissioner of Central Excise or the Assistant Commissioner of Central Excise, as the
case may be, having jurisdiction over the factory of the manufacturer, to the effect that-

(i) the said goods will be used only in the said project and not for any other use; and

(ii) in the event of non-compliance of sub-clause (i), the Project Developer of such
project shall pay the duty which would have been leviable at the time of clearance of
goods, but for this exemption.”

91. Similarly, the Commission observes that with the enactment of the Goods and Services Tax,
2017, by of Karnataka, Telangana and Maharashtra Acts related to State VAT, Central Sales
Tax, Purchase Tax, Luxury Tax, Entry Tax, Entertainment Tax (except those levied by the

Petition No. 206/MP/2018 &Ors. Page 38 of 51

 local bodies), Taxes on advertisements, Taxes on lotteries, betting and gambling, cesses and
surcharges insofar as they related to supply of goods or services were subsumed.

92. The Commission observes that GST rates are ranging from 5% to 18%. In case of PV
Modules, the applicable GST is 5%, as against 0% VAT applicable in various States pre-GST
roll out. Excise duty on components required for initial setting up of a solar power generation
or solar energy production project or facility was at „Zero‟ rate and also enjoyed concessional
Basic Customs Duty and Additional Customs Duty on imports. The imposition of VAT on
solar power generating equipment has been diverse with some States offering complete
exemption while on the other hand, few States have levied a concessional rate of tax at 4%
(four per cent) and 5% ( five per cent) respectively, on the equipment and components used
for setting up of solar power generating equipment. The GST rate on solar power generating
systems and raw material used (including modules), has been notified at 5% (five per cent) of
value of such goods. However, other goods such as inverter, cement and cables have been
kept under the 18% (eighteen per cent) bracket. Further, the GST on various services such as
works contract service, technology etc. which are typically used in setting up of a solar
power plant has been kept at 18% (eighteen per cent). It is pertinent to mention here that
Services, Commercial, Contractual, Erection and Commissioning, all attracted Service Tax
@15%, Swachh Bharat Cess of 0.5% and Krishi Kalyan Cess of 0.5% before GST regime.

93. The Commission observes that as per Notification No. 1/2017-Central Tax (Rate) as
contained at Sr. No. 234 Chapter heading 84, 85 or 94 of the “renewable energy devices &
parts for the manufacture …… (C) Solar Power Generation System” the concessional rate of
5% would also be available i.e. say inverters, cables, connectors etc. are under 28 per cent
duty but whenever these products are used in the solar generation system, these will attract an
effective levy of 5 per cent instead of 28 per cent. Further, in case of direct purchase of the
mounting structures, power conditioning units etc. are under 18 per cent duty but in case
these components are sold as part of Solar Power Generating system then the same will
attract an effective levy of 5 per cent instead of 18 per cent.

94. With the above facts in mind, the Commission now proceeds to determine the impact of GST
on the projects under consideration in the present petitions. As regards the component wise

Petition No. 206/MP/2018 &Ors. Page 39 of 51

 details of the project and respective percentage share of each such component in the overall
capital cost, the Commission observes that in the absence of any related references in the
projects selected through bidding, reliance could be placed on the Commission‟s Order dated
23.03.2016 passed in Petition No. 17/SM/2015 for the purpose of determining „weightage of
the Components of Capital cost‟ and the percentage impact of the taxation due to enactment
of „GST Laws‟ on the various components may be calculated accordingly. It is pertinent to
mention here that in respect of PV Modules VAT (pre-GST regime) of 0-5% was charged on
intra-State procurement. Further, in case of input by SPV or high sea sale by EPC, the
effective rate also was 0%, whereas, post enactment of „GST Laws, 5% will be applicable on
intra state procurement as well as import by EPC or SPV. The calculations for the escalation
as based on Petition no. 17/SM/2015 are tabulated as below:-

GST Comments
Particulars Weightage of As claimed As per „GST
Component of by the Laws‟ post
Capital Cost As Petitioners 01.07.17
taken in Petition
No.
17/SM/2015

PV Modules 61.96 % 5% 5%

Land Cost 4.72 % 0% 0%

Civil and General Works 6.60 % 9% 9% The GST rate at 18%;

However, in few Petitions the
(Balance of Plant-Civil; Petitioners have claimed 9%.
EPC-Civil; Roads &
Drainage Fencing Work)
Mounting Structures 6.60 % 18 % 5% The GST rate at 18% (SGST-
9% + CGST-9%) in case of
(Mounting Structure & direct purchase. In case the
Nut-Bolts; Clamp & structures are sold as part of
Fasteners; Mounting Solar power generating
Structure Foundation) system then 5% GST is
applicable.
Power Conditioning Unit 6.60 % 28 % 5% The GST rate at 18% (SGST-
9% + CGST-9%) in case of
(Inverter Transformer; DC direct purchase. In case the
Battery & Battery structures are sold as part of
Charger) Solar power generating
system then 5% GST is
applicable.
Evacuation Cost up to 8.30 % 18 % 5% Post GST sold as part of Solar
Interconnection Point power generating system
hence 5% GST rate.
(AC/DC Cables;
Switchgears; PLC,

Petition No. 206/MP/2018 &Ors. Page 40 of 51

 SCADA; Connectors;
Transmission line;
AC/DC- Electrical
Materials; Combiner Box;;
Misc. Electricals)
Preliminary and Pre- 5.21 % 18 % 5% The GST rate at 18%;
Operative Expenses However, in few Petitions the
including IDC and Petitioners have claimed 5%.
Contingency

(Transmission & Logistic

Services; Erection of
MMS and Module;
Electrical Erection; Pre-
Op & other indirect;
Safety; Security and IT
services; EPC-Services)
Weighted Avg. of 9.16 % 5.55 %
Tax/GST

95. The Petitioners are directed to make available to the Respondents (NTPC & SECI) all
relevant documents exhibiting clear and one to one correlation between the projects and the
supply of goods or services, duly supported by relevant invoices and Auditor‟s Certificate.
The Respondents (NTPC & SECI) are further directed to reconcile the claims for Change in
Law on receipt of the relevant documents and pay the amount so claimed to the SPDs as per
the methodology discussed in Para 86 and 94 above. It has been brought to our notice that in
some cases, the Respondent Procurers are questioning the rationale of the commercial
decisions taken by the SPDs in cases where the rates of GST are on the higher side. Since,
the decision for project implementation including the mode of procurement of goods and
services were taken by SPDs prior to the implementation of GST, it would not be appropriate
to question such commercial decisions on the basis of the differential rates of GST on certain
goods and services, and payments should be made based on the invoices raised and supported
by Auditor‟s Certificate. The Commission is of the view that since the quantum of
compensation on account of introduction of GST w.e.f. 01.07.2017 is not large, it should be
discharged by the Respondent-Procurers as one-time payment in a time bound manner.
Accordingly, it is directed that the GST bills shall be paid within 60 days from the date of
issue of this Order or from the date of submission of claims by the Petitioners, whichever is
later, failing which it shall attract late payment surcharge in terms of the PPA. Alternatively,
the Petitioners and the Respondents (NTPC & SECI) may mutually agree to mechanism for
the payment of such compensation on annuity basis spread over such period not exceeding

Petition No. 206/MP/2018 &Ors. Page 41 of 51

 the duration of the PPAs as a percentage of the tariff agreed in the PPAs. This will obviate
the hardship of the Respondents (NTPC & SECI) for one-time payment.

96. The next issue is that of the impact of „GST laws‟ on the „Operations and Maintenance‟
stage. The Commission is of the view that „O & M‟ stage can be construed broadly to be
„Post-Construction Stage‟ which is covered under Services under „GST Laws‟. The following
activities constitute O&M and there is no other significant activity covered by O&M for a
solar plant: Site Security; Consumables and breakdown spares; Annual Maintenance
Contract; and Module cleaning - labour and water supply.

97. The Petitioners have submitted that for determination of the impact of GST in Operation &
Maintenance Expenses which they are going to incur in next 25 years of PPA tenure, has
been worked on the basis of relevant normative parameters as specified by the Commission
in the Central Electricity Regulatory Commission (Terms and Conditions for Tariff
determination from Renewable Energy Sources) Regulations, 2012 dated 06.02.2012 as
amended on 31.03.2016. The Regulations prescribe O&M expenses for the year of 2017-18
at Rs. 7.41 Lacs/MW, which includes Service Tax of 15%, with an annual escalation of
5.72%. In the present petitions, the Petitioners have considered the same parameter with an
additional 3% GST impact, i.e. 18% GST on the normative O&M expenses. Accordingly, net
present value of Pre-GST O&M Expenses and post GST impact has been claimed as the
differential amount as per the change in law provision of the PPA.

98. The Commission observes that as per the GST Act, 2017, the supply of services include:

“5. Supply of services

The following shall be treated as supply of services, namely:-

(a) renting of immovable property;

(b) construction of a complex, building, civil structure or a part thereof, including a
complex or building intended for sale to a buyer, wholly or partly, except where the
entire consideration has been received after issuance of completion certificate, where
required, by the competent authority or after its first occupation, whichever is earlier.

Explanation.-
For the purposes of this clause-

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 (1) the expression “competent authority” means the Government or any
authority authorized to issue completion certificate under any law for the time
being in force and in case of non-requirement of such certificate from such
authority, from any of the following, namely:-
(i) an architect registered with the Council of Architecture constituted
under the Architects Act, 1972 (Central Act No. 20 of 1972); or
(ii) a chartered engineer registered with the Institution of Engineers
(India); or
(iii) a licensed surveyor of the respective local body of the city or town
or village or development or planning authority;
(2) the expression “construction” includes additions, alterations,
replacements or remodeling of any existing civil structure;
(c) temporary transfer or permitting the use or enjoyment of any intellectual property
right;
(d) development, design, programming, customization, adaptation, up gradation,
enhancement, implementation of information technology software;
(e) agreeing to the obligation to refrain from an act, or to tolerate an act or a
situation, or to do an act; and
(f) transfer of the right to use any goods for any purpose (whether or not for a
specified period) for cash, deferred payment or other valuable consideration.”

99. The Commission is of the view that the recurring expenses referred to in Article 12 of the
PPAs includes activities like salary, tax expenses, estimated maintenance costs, and monthly
income from leases etc. It is apparent that GST will apply in case of outsourcing of the
„Operation and Maintenance‟ services to a third party (if any). The Commission is of the
view that outsourcing of the „Operation and Maintenance‟ services is not the requirement of
the PPAs/ bidding documents. The concept of the outsourcing is neither included expressly in
the PPAs nor it is included implicitly in the Article 12 of the PPAs. It is pertinent to mention
here that the Petitioner in their petitions have categorically submitted that: “Further, Article
12 also makes it abundantly clear that a statutory change in tax structure made applicable
for setting up of Solar Power Projects resulting in an additional non-recurring and recurring
expenditure for the Petitioner in the form of escalation of capital cost and operational cost of
the Project also qualifies as „Change of law‟. The aforesaid additional non-recurring and
recurring expenditure has not been factored into the tariff bid by the SPDs at the time of
submission, taken into consideration the extant tax regime prevailing at the time.” The
Commission is of the view that in the Competitive Bidding Scenario, the SPDs bid levellised
tariff without disclosing the details of the calculations of the project cost. It has already been
held by the Commission in the earlier Orders and also appreciated above that it is a pure
commercial decision of the Petitioners taken for its own advantage and any increase in cost

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 including on account of taxes etc. in the event the Petitioners choose to employ the services
of other agencies, cannot increase the liability for the Respondents. Therefore, the
Commission holds that claim of the Petitioners on account of additional tax burden on
operation and maintenance expenses (if any), is not maintainable. This view is in consonance
with the view taken by the Commission Order dated 09.10.2018 in Petition No. 188/MP/2017
& Ors. case titled Acme Bhiwadi Solar Power Private Limited –v- Solar Energy Corporation
of India and Ors.

100. Issue No. 3: Whether the claim of ‘Carrying Cost’ for delay in reimbursement by the
Respondents is sustainable?

101. The Petitioners have submitted that the mandate of Change in Law provisions across all
PPAs (standard documents drafted by the government) is restitution i.e. relief be granted in a
manner so as to place an affected party in the same economic position as if a Change in Law
had not occurred. Restitution is, therefore, inherent to compensation. In this regard, it is
submitted that where the stated purpose is restoration to the same economic position, the
Commission ought to consider the aggregate economic impact including carrying cost which
is in the nature of compensation for time value of funds deployed on account of Change in
Law events. The Hon‟ble Appellate Tribunal for Electricity in its judgment dated 12.09.2014
in Appeal No. 288 of 2013 titled Wardha Power Company Ltd. v. Reliance Infrastructure
Ltd. & Ors., has recognized the principle that in order to „restore the affected party to the
same economic position‟, compensation for Change in Law claims has to be such, as to
reimburse the affected party for the expense actually incurred. Thus, the same will include
expenditure attributable towards carrying cost. The relevant portion of the judgment is given
below:-

“27. For example, if the price of coal calculated on the same base as used in the bid is
more than the prevalent price of coal, then using the base price of coal for computing the
compensation for Change in Law will result in over compensation to the Seller. Similarly,
if the coal price calculated on the same base as used in bid is less than the actual price of
coal, it will result in under compensation to the Seller. In both these cases, the affected
party will not be restored to the same economic position as if such Change in Law has

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 not occurred, as intended in the PPA.”

102. The Petitioners have submitted that principle of recovery of carrying cost/interest and time
value of money has been recognized in numerous cases including Judgment of the Hon‟ble
Tribunal dated 13.04.2018 in Appeal No. 210 of 2017, Adani Power Limited vs. Gujarat
Electricity Regulatory Commission & Ors.; Judgment of the Hon‟ble Tribunal dated
15.02.2011 in Appeal No. 173 of 2009, Tata Power Company Ltd vs. Maharashtra
Electricity Regulatory Commission; Judgment of the Hon‟ble Tribunal dated 20.12.2012 in
Appeal No. 150 and batch matters, SLS Power Ltd v. Andhra Pradesh Electricity Regulatory
Commission; Judgement of the Hon‟ble Supreme Court in South Eastern Coalfield Ltd vs.
State of Madhya Pradesh (2003) 8 SCC 648.In addition to the aforesaid, the Hon‟ble
Supreme Court in the case of Energy Watchdog vs. Central Electricity Regulatory
Commission and Ors. (2017) 14 SCC 80, has held that where a situation arises which is not
covered by the Guidelines or the Guidelines do not deal with a given situation, the
Commission‟s general regulatory powers under Section 79(1)(b) can be used. The Petitioners
have submitted that this is a fit case for exercise of such power to devise a suitable
mechanism to ensure that the Petitioners are restored to the same economic position and
time-value of money is restored by allowing carrying cost for the period between when the
Petitioners pays the Change in Law amount and when the Respondents compensates them.

103. Per Contra, the Respondents have submitted that there is no provision in the PPA regarding
carrying cost or interest for the period till the decision of the Commission acknowledging the
„change in law‟ and deciding on the amount to be paid for such change in law namely
„provide for relief for the same‟, as specified in Article 12.2.2 of the PPAs. The „Change in
Law‟ claim of the Petitioners is yet to be adjudicated and the amount if any, due to the
Petitioner has to be determined/computed first. Only after the amount is determined, are the
Petitioners required to raise a Supplementary invoice for the amount so computed as per
Article 10.7 of the PPA. It is only in case of default on the part of the Respondents in not
making the payment by the due date as per supplementary invoices does the issue of Late
Payment Surcharge arises i.e. for the period after the due date. The reference in Article 12.2.2
of the Commission deciding on the date from which the „change in law‟ will be effective,

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 refers to the principal amount to be computed from the date on which change in law comes
into force and not to the payment of interest and carrying cost.

104. The Respondents have submitted that the provision of Article 10.3.3 of the PPAs dealing with
late Payment Surcharge and definition of the „Due Date‟ in Article 1 read with Article 10.3.1
of the PPA are relevant. The due date is fifth (5th) day of the immediately succeeding month
in which Monthly Bill or a Supplementary bill is received and duly accepted by Respondents.
In case the Monthly Bill or any other bill, including a Supplementary Bill is issued after the
(fifteenth) 15th day of the next month, the Due Date for payment would be fifth (5th) day of
the next month to the succeeding Month. The supplementary bill needs to be raised by the
Petitioners for the adjustment of the „Change in Law‟ after the Change in Law claim is
approved by the Commission. There cannot be any claim for late payment surcharge for the
period prior to the due date. The Respondents have relied upon the decision of the Hon‟ble
Appellate Tribunal in SLS Power Limited -v- Andhra Pradesh Electricity Regulatory
Commission and Others (Appeal No. 150 of 2011) and Batch that recognizes that the interest
will be due from the date the payment is due. In the present case, the payment is due only
after issuance of the Supplementary Bill after the decision of the Commission.

105. The Respondents have submitted that the PPA does not have a provision dealing with
restitution principles of restoration to same economic position. Therefore, the Petitioner is not
entitled to claim relief which is not provided for in the PPA.

106. The Respondents have submitted that in the Judgment of the Hon‟ble Appellate Tribunal
dated 13.04.2018 in Appeal No. 210 of 2017 in Adani Power Limited –v- Central Electricity
Regulatory Commission and Ors, it was held that since the Gujarat Bid-01 PPA has no
provision for restoration to the same economic position, therefore, the carrying cost will not
be applicable.

107. The Respondents have submitted that the issue regarding Carrying Cost has been decided by
the Judgment of the Hon‟ble Tribunal dated 14.08.2018 in Appeal No. 111 of 2017 in M/s.
GMR Warora Energy Limited –v- Central Electricity Regulatory Commission and Ors. The
Hon‟ble Tribunal vide the above judgment has decided that if there is a provision in the PPAs

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 for restoration of the Seller to the same economic position as if no Change in Law event has
occurred, the Seller is eligible for carrying cost for such allowed Change in Law event(s)
from the effective date of Change in Law event until the same is allowed by the appropriate
authority by an order/ judgment. In the present case also, there is no provision in the PPAs for
carrying cost or restitution and therefore the same, will not be applicable in the case of the
Petitioner. In its Order dated 09.10.2018 in Petition No. 188/MP/2018 and Batch in Acme
Bhiwadi Solar Power Private Limited –v- Solar Energy Corporation of India and Ors. Batch,
the Commission has also reiterated the aforementioned findings of the Hon‟ble Tribunal.

108. The Respondents have submitted that in the absence of the express provision in the PPA, it is
not open for the Petitioner to claim relief under principles of equity. Reference in this regard
may be made to the judgment –Alopi Parshad and Sons Ltd. v. Union of India, (1960) 2 SCR
793 : AIR 1960 SC 588.

109. The Respondents have further submitted that there cannot be any consideration for individual
tariff elements such as interest on working capital or return on equity or any other in a
competitive bid process under Section 63 of the Electricity Act, 2003 and there cannot be any
computation of the same. There is no concept of interest on working capital or individual
tariff elements in competitively bid process and bidders are required to give the bid based on
all-inclusive tariff. Further, there cannot be any issue of return on equity on incremental
working capital and margin. Reference in this regard may be made to the issue decided by the
Hon‟ble Tribunal in its Order dated 19.04.2017 in Appeal No. 161 of 2015- Sasan Power
Limited –v- Central Electricity Regulatory Commission and Order dated 14.08.2018 in
Appeal No. 111 of 2017 in the case of GMR Warora v Central Electricity Regulatory
Commission and Ors.

110. The Respondents have submitted that in view of the above, the Petitioners are not entitled to
interest on incremental working capital at normative interest rate or otherwise to put the
Petitioner to the same economic position as if the change in law has not occurred.

111. The Respondents have submitted that for the amount payable to the Petitioner (if any) on
account of GST Law, the Commission has stipulated a timeline of 60 days from the date of
the passing of the Order, after which a Late Payment Surcharge shall be payable.

Petition No. 206/MP/2018 &Ors. Page 47 of 51

 Respondents have submitted that the timeline of 60 days should begin to run from the day the
Petitioner provides the entire documentation in the required format to the Respondents. It is
further submitted that the final decision by the Commission may be given after the Petitioner
has submitted complete information and not before. Thus, any delay in the determination of
the impact of change in law is on account of the petitioner. The adverse consequences for not
furnishing the full documentation/information at the first instance ought to be borne by the
defaulting party i.e. the Petitioner itself.

112. The Commission observes that in the judgment of the Hon‟ble Appellate Tribunal for
Electricity dated 13.04.2018 in Appeal No. 210 of 2017 in Adani Power Limited v. Central
Electricity Regulatory Commission and Ors., it was held that since Gujarat Bid-01 PPA has
no provision for restoration to the same economic position, the decision of allowing carrying
cost will not be applicable. The relevant extract of the Judgment dated 13.04.2018 reads as
under:

“ISSUE NO.3: DENIAL OF CARRYING COST

x. Further, the provisions of Article 13.2 i.e. restoring the Appellant to the same
economic position as if Change in Law has not occurred is in consonance with the
principle of „restitution‟ i.e. restoration of some specific thing to its rightful status.
Hence, in view of the provisions of the PPA, the principle of restitution and
judgement of the Hon'ble Supreme Court in case of Indian Council for Enviro-Legal
Action vs. Union of India &Ors., we are of the considered opinion that the Appellant
is eligible for Carrying Cost arising out of approval of the Change in Law events
from the effective date of Change in Law till the approval of the said event by
appropriate authority. It is also observed that the Gujarat Bid-01 PPA have no
provision for restoration to the same economic position as if Change in Law has not
occurred. Accordingly, this decision of allowing Carrying Cost will not be applicable
to the Gujarat Bid-01 PPA.”

113. Relevant extracts of the Judgment of the Hon‟ble Tribunal dated 14.08.2018 in Appeal No.
111 of 2017 in M/s. GMR Warora Energy Limited v. Central Electricity Regulatory
Commission and Ors. on the aspect of carrying cost reads as under:

“ix. In the present case we observe that from the effective date of Change in Law the
Appellant is subjected to incur additional expenses in the form of arranging for
working capital to cater the requirement of impact of Change in Law event in
addition to the expenses made due to Change in Law. As per the provisions of the

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 PPA the Appellant is required to make application before the Central Commission
for approval of the Change in Law and its consequences. There is always time lag
between the happening of Change in Law event till its approval by the Central
Commission and this time lag may be substantial. As pointed out by the Central
Commission that the Appellant is only eligible for surcharge if the payment is not
made in time by the Respondents Nos. 2 to 4 after raising of the supplementary bill
arising out of approved Change in Law event and in PPA there is no compensation
mechanism for payment of interest or carrying cost for the period from when
Change in Law becomes operational till the date of its approval by the Central
Commission. We also observe that this Tribunal in SLS case after considering time
value of the money has held that in case of redetermination of tariff the interest by a
way of compensation is payable for the period for which tariff is re-determined till
the date of such re-determination of the tariff. In the present case after perusal of
the PPAs we find that the impact of Change in Law event is to be passed on to the
Respondents Nos. 2 to 4 by way of tariff adjustment payment as per Article 13.4 of
the PPA. The relevant extract is reproduced below:

13.4 Tariff Adjustment Payment on account of Change in Law 13.4.1 Subject

to Article 13.2 the adjustment in Monthly Tariff Payment shall be effective
from:

the date of adoption, promulgation, amendment, re-enactment or repeal of the

Law or Change in Law; or

the date of order/ judgment of the Competent Court or tribunal or Indian

Government instrumentality, it the Change in Law is on account of a change
in interpretation of Law. (c) the date of impact resulting from the occurrence
of Article 13.1.1.

From the above it can be seen that the impact of Change in Law is to be done in the
form of adjustment to the tariff. To our mind such adjustment in the tariff is nothing
less then re-determination of the existing tariff.

x. Further, the provisions of Article 13.2 i.e. restoring the Appellant to the same
economic position as if Change in Law has not occurred is in consonance with the
principle of 'restitution' i.e. restoration of some specific thing to its rightful status.
Hence, in view of the provisions of the PPA, the principle of restitution and
judgment of the Hon'ble Supreme Court in case of Indian Council for Enviro Legal
Action vs. Union of India &Ors., we are of the considered opinion that the Appellant
is eligible for Carrying Cost arising out of approval of the Change in Law events
from the effective date of Change in Law till the approval of the said event by
appropriate authority.

This Tribunal vide above judgement has decided that if there is a provision in the
PPA for restoration of the Seller to the same economic position as if no Change in
Law event has occurred, the Seller is eligible for carrying cost for such allowed
Change in Law event (s) from the effective date of Change in Law event until the
same is allowed by the appropriate authority by an order/ judgment.”

Petition No. 206/MP/2018 &Ors. Page 49 of 51

 From the above judgment the Commission observes that if there is a provision in the PPA for
restoration of the Petitioners to the same economic position as if no Change in Law event has
occurred, the Petitioners are eligible for „Carrying Cost‟ for such allowed „Change in Law‟
event(s) from the effective date of Change in Law event until the same is allowed by the
Commission. The Commission observes that the PPAs do not have a provision dealing with
restitution principles of restoration to same economic position. Therefore, the Commission is
of the view that the claim regarding separate carrying cost is not admissible.

Summary of decisions:

114. Our decisions in this Order are summed up as under:

a. Issue No. 1: The introduction of „GST laws‟ w.e.f. 01.07.2017 is covered under „Change
in Law‟ in terms of Article 12 of the respective PPAs.

b. Issue No. 2: As regards the claims during construction period, the Petitioners have to
exhibit clear and one to one correlation between the projects and the supply of goods and
services duly supported by the Invoices raised by the supplier of goods and services and
auditors certificate. The amount determined by Petitioner shall be on „back to back‟ basis
shall be paid by DISCOMS to the Petitioners under respective „Power Sale Agreements‟.
The Claim based on discussions in paragraph 86 and 94 above of this Order shall be paid
within sixty days of the date of this Order or from the date of submission of claims by
the Petitioners whichever is later failing which it will attract late payment surcharge as
provided under PPAs/PSAs. Alternatively, the Petitioners and the Respondents may
mutually agree to mechanism for the payment of such compensation on annuity basis
spread over the period not exceeding the duration of the PPAs as a percentage of the
tariff agreed in the PPAs. The claim of the Petitioners on account of additional tax
burden on "O&M" expenses (if any), is not maintainable.

c. Issue No. 3: The claim regarding separate „Carrying Cost‟ and „interest on working
capital‟ in the instant petitions is not allowed.

Petition No. 206/MP/2018 &Ors. Page 50 of 51

115. Accordingly, the Petition No. 206/MP/2018 alongwith I.A. 4 of 2019; Petition No.
209/MP/2018 alongwith I.A. 7 of 2019; Petition No. 226/MP/2018; Petition No.
212/MP/2018 alongwith I.A. 8 of 2019; Petition No. 207/MP/2018 alongwith I.A. 1 of 2019
and Petition No. 210/MP/2018 alongwith I.A. 3 of 2019 are disposed of.

Sd/- Sd/-

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