RERC Allows GST Change-in-Law Compensation for Renew Rajasthan Solar Project
The Rajasthan Electricity Regulatory Commission (RERC) has declared the increase in Goods and Services Tax (GST) rates notified in September 2021 as a Change in Law event for Renew Solar Photovoltaic Private Limited’s 375 MW solar power project in Pokhran, Jaisalmer, paving the way for compensation for the additional expenditure incurred by the developer. The project was developed under a Power Purchase Agreement (PPA) executed with Solar Energy Corporation of India (SECI) on April 13, 2022, at a tariff of Rs 2.18/kWh. The dispute relates to two Ministry of Finance notifications dated September 30, 2021, which increased the GST applicable to solar power-based devices and solar power generating systems from 5% to 12%, effective October 1, 2021. The change occurred after the July 1, 2021 bid cut-off date and, according to Renew Solar, resulted in additional project costs that could not have been factored into its bid.
Radhika Goyal is Author of Taxconcept Gurugram head office, for deeply reported tax, gst and income tax articles on issues that matter. He splits her time between New Delhi and Bengaluru, and has worked as a reporter, a podcaster and an editor for publications across India.