Petition No. 164/MP/2018 &ors. Page 1 of 48

नई
NEW DELHI
. /Petition No.: 164/MP/2018 alongwith I.A. 5 of 2019 and

165/MP/2018 alongwith I.A. 6 of 2019
/Coram:
. . , /Shri P. K. Pujari, Chairperson

.ए . . , / Dr. M.K. Iyer, Member
न /Date of Order: 18th 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 Parampujya Solar Energy Pvt. 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. 164/MP/2018 alongwith I.A. 5 of 2019
Parampujya Solar Energy Pvt. Ltd. (PSEPL)

5B, Sambhav House, Judges,
Bungalow Road, Bodakdev,
Ahmedabad - 380015, Gujarat
…Petitioner
VERSUS
Petition No. 164/MP/2018 &Ors. Page 1 of 48

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. 165/MP/2018 alongwith I.A. 6 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
M/s Chattisgarh State Power Distribution Company Ltd.

Near Water Tank, Mowa Road,
Dubey Colony, Mowa,
Raipur, Chattisgarh 492001
…Respondents
Parties Present: Ms. Poonam Verma, PSEPL

Ms. Abiha Zaidi, PSEPL
Shri Tarul Sharma, PSEPL
Shri M.G. Ramachandran, Advocate, NTPC and SECI
Ms. Poorva Saigal, Advocate, NTPC and SECI
/ 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.
The Petitioner has filed Petition No. 164/MP/2018 and Petition No. 165/MP/2018.
2. 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.

3. The Respondent, M/s Solar Energy Corporation of India Limited (SECI), 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-VI of the Jawaharlal Nehru National Solar Mission (hereinafter referred
to as „JNNSM‟) of Government of India (hereinafter referred to as „GOI‟).
4. The Petitioner has made the following prayers:
(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/Chhattisgarh Goods and
Services Tax, 2017 is an event under Change in Law under Article 12 of the PPA;
(c) Restore PSEPL to the same economic condition prior to occurrence of the Changes in
Law event by way of adjustment in tariff in terms of Article 12 of the PPA as prayed
for in the present Petition.
(d) Pending proceedings, direct Respondents to pay to the Petitioner the amount claimed
under „Change in Law‟ which shall be subject to adjustment based on the final order
passed by the Commission;
(e) 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:
5. The Petitioner in Petition No. 164/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., on 17.05.2016. The Petitioner entered into Power Purchase
Agreements with NTPC on 27.07.2016 for development of Solar Photo Voltaic Power Plants
of 50 MW in the State of Karnataka. The Solar Power Plants were to be developed on long
term basis at a tariff of Rs. 4.79/kWh. 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 in the State of
Karnataka.
6. The Petitioner in Petition No. 165/MP/2018 was selected as the successful bidder on
02.07.2016 for development of solar power projects under the National Solar Mission Phase-
II Batch-III Tranche-VI Bidding Scheme conducted by SECI. On 02.08.2016, the Petitioner
entered into two Power Purchase Agreements with SECI for development of two Solar Photo
Voltaic Power Plants of 50 MW each i.e. total 100 MWs in the State of Chhattisgarh. The
Solar Power Plant was to be developed on long term basis at a tariff of Rs. 4.43/kWh. As per
the terms of the PPAs as well as the bidding scheme, the solar power purchased by SECI as
an intermediary, will be sold to the Distribution Companies.
7. On 12.04.2017, Government of India introduced the Goods and Services Tax, replacing
multiple taxes levied by the Central and State Governments.
8. 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 /
Chattisgarh) 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.
9. Hence the Petitions.

Submissions of Petitioner in the pleadings and during the hearings in Petition No.
164/MP/2018 & 165/MP/2018
10. The Petitioner in Petition No. 164/MP/2018 & 165/MP/2018 has submitted that the
Commission, in its Order dated 19.09.2018 in Petition No. 50/MP/2018 titled as Prayatna
Developers Private Ltd. v. National Thermal Power Corporation Limited & Ors., has
observed 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. Engineering Procurement and Construction (“EPC”) Stage i.e. during Construction
Stage which is covered under “Goods” and
b. Operation & Maintenance (“O&M”) Stage i.e. during Construction and Operation
Stage which is covered under “Services”.
Re. Claim for Change in Law on account of increase in EPC Cost
11. The Petitioner has submitted that the Commission in the Order dated 19.09.2018, has allowed
the claim for „Change in Law‟ for escalation in the construction cost (EPC cost) of the
project, on account of levy of „GST Laws‟. The Petitioner has placed reliance upon the
aforesaid findings of the Commission and is accordingly, claiming the amount for „Change in
Law‟ on account of additional tax burden qua EPC cost. The relevant extract of the Order
dated 19.09.2018 is reproduced herein under: -
“146…The Petitioner should then make available to the Respondents, the relevant documents
along with the auditor certification who may reconcile the claim and then pay the amount so
claimed to the SPD w.e.f. 01.07.2017 qua EPC cost on the basis of the auditor‟s certificate as
per the methodology discussed in para no.133 above.”
Re. Claim for Change in Law on account of increase in O&M Expenses
12. The Petitioner has submitted that the Commission in the aforesaid Order had allowed the

„Change in Law‟ claim on the impact of GST Laws on the EPC stage which is covered under
“Goods” but, at the same time rejected the claim on account of additional tax burden on
operation and maintenance expenses which is covered under “Services”. One of the reasons
being that the outsourcing of the O & M services is not the requirement of the Power
Purchase Agreement / bidding documents. It is a pure commercial decision of the Solar
Power Developer taken for its own advantage and any increase in cost including on account
of taxes etc. in the event the Solar Power Developer chooses to employ the services of other
agencies, cannot increase the liability for the Procurer. In this regard, the Petitioner has
submitted that:-
a. As O&M expenses are recurring in nature, therefore the same are squarely covered
under Article 12 of the PPA and the same may be allowed on the basis of the
normative parameters as specified by the Commission in the CERC (Terms and
Conditions for Tariff determination from Renewable Energy Sources) Regulations,
2012 dated 06.02.2012 as amended on 31.03.2016.
b. The issue of impact of GST on EPC (goods) being Change in Law is squarely covered
by the CERC Orders dated 19.09.2018 in Petition No. 50/MP/2018 and dated
09.10.2018 in Petition No. 188/MP/2017 and batch matters. Similarly, the impact of
GST on O&M being the services part would rationally entail Change in law given the
wide scope of GST laws; equally applicable on both goods and services.
c. The PPA in the present petition provides for prudent utility practices (@ pg. 273 of
the Paper book) which specifically provides that O&M services are prudent utility
practices and the only objection taken by the Procurers for O&M services in the
previous matters was that providing O&M services is a commercial agreement.
However, EPC is also in the form a commercial agreement and not a standard bidding
document and therefore, O&M expenses should be seen in the wholistic manner and
consequent relief should be provided.
13. The Petitioner has submitted that even if the PPA is silent on the aspect of O&M expenses,
the Hon‟ble Supreme Court in paragraphs 19 and 20 of its Judgment dated 11.04.2017 in the
case of Energy Watchdog v. CERC & Ors., has clearly provided that if the guidelines or the
contract is specifically silent on a given aspect then this Commission has been provided the
regulatory power to devise a mechanism to serve the interests of the sector. In this regard,

reliance is also placed upon Section 70 of the Indian Contract Act wherein the principle of
restitution is explicitly laid down.
Re. Claim for Carrying Cost
14. The Petitioner has submitted that the PPAs provide for extensive provisions for qualifying
any event as Change in Law and granting relief from effective date i.e. the date on which the
Change in Law event took effect. Relevant provision of the PPAs is extracted herein below:
“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:
 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 an 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.”
15. The Petitioner has 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, Petitioner

has referred to the Ministry of Power‟s letter dated 27.08.2018 to the Commission wherein
the Government has specifically recorded under clause 2 of the letter, the difficulty faced by
the Generating Companies in terms of „considerable time‟ being consumed in the approval
process resulting into severe cash flow problems to the Generating Companies, further
leading to stress in the Power Sector.
16. The Petitioner has submitted that where the purpose is of 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 not occurred, as intended in the PPA.”
17. The Petitioner has submitted that the principle of recovery of carrying cost/interest and time
value of money is well settled and reliance is placed upon the following Judgments: -
(a) Energy Watchdog v. CERC & Ors. reported as (2017) 14 SCC 80

“57…it is clear that so far as the procurement of Indian coal is concerned, to the
extent that the supply from Coal India and other Indian sources is cut down, the PPA
read with these documents provides in Clause 13.2 that while determining the
consequences of change in law, 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 payments, the affected party to the economic position as if such
change in law has not occurred…”
(b) South Eastern Coalfield Limited v. State of Madhya Pradesh reported as (2003) 8
SCC 648

“21. Interest is also payable in equity in certain circumstances. The rule in equity is
that interest is payable even in the absence of any agreement or custom to that effect
though subject, of course, to a contrary agreement (see Chitty on Contracts, 1999
Edn., Vol. II, Para 38-248 at p. 712). Interest in equity has been held to be payable on
the market rate even though the deed contains no mention of interest. Applicability of
the rule to award interest in equity is attracted on the existence of a state of
circumstances being established which justify the exercise of such equitable
jurisdiction and such circumstances can be many.
……..
24. We are, therefore, of the opinion that in the absence of there being a prohibition
either in law or in the contract entered into between the two parties, there is no
reason why the Coalfields should not be compensated by payment of interest for the
period for which the consumers/purchasers did not pay the amount of enhanced
royalty which is a constituent part of the price of the mineral for the period for which
it remained unpaid…”
(c) Judgment of the Hon‟ble Tribunal dated 20.12.2012 in Appeal No. 150 of 2011, SLS
Power Ltd v. Andhra Pradesh Electricity Regulatory Commission& Ors.
“35…
35.5. The principle of carrying cost has been well established in the various
judgments of the Tribunal. The carrying cost is the compensation for time value of
money or the monies denied at the appropriate time and paid after a lapse of time.
Therefore, the developers are entitled to interest on the differential amount due to
them as a consequence of re-determination of tariff by the State Commission on the
principles laid down in this judgment….”
(d) 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.
“12…d)
…
ix…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…. 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.”
18. The Petitioner has also placed its reliance upon Section 70 of the Indian Contract Act, 1872.
It does not require express provision in the contract/PPA especially when the term „relief for
Change in Law‟ is appropriately used and inserted to cover the restitution part. In the instant
case, NTPC/procurer of power at a price/tariff and as the matter is finally disposed of, the
Petitioner is entitled to be compensated for time value of money as the supply of power is not

a non-gratuitous act. The Petitioner has placed reliance on Piloo Dhunjishaw Sidhwa v.
Municipal Corporation of the City of Poona reported as (1970) 1 SCC 213, the relevant
extracts of which are reproduced herein below:
“10. In our view the High Court was in error in holding that the plaintiff is entitled
not to the invoice value of the goods, but only to “the fair price” of the goods. Under
Section 70 of the Contract Act, a person lawfully delivering goods to another, and not
intending to do so gratuitously, is entitled to demand that the goods delivered shall be
returned, or that compensation for the goods shall be made. Compensation would
normally be the market price of the goods. By refusing to return the goods, the person
to whom the goods have been delivered cannot improve his position and seek to pay
less than the market-value of the goods. The High Court of Lahore in Secretary of
State v. G.T. Sarin and Company [ILR 11 Lah 375] held that a person without an
enforceable contract in his favour supplying goods to a Government Department is
entitled to a money equivalent of the goods delivered assessed at the market rate
prevailing on the date on which the supplies were made.”
19. The Petitioner has submitted that what is to be allowed as “Relief for Change in Law” is
nothing but the impact of any Change in Law on the Petitioner's revenues and costs. In case
of delay, the impact will also include carrying cost as an integral part of the cost on account
of change in law since the Petitioner has to incur the financing cost to borrow the additional
fund to be paid to the statutory authorities pending timely reimbursement from the NTPC. In
terms of Article 12 of the PPAs, the affected party is to be restored to the same economic
position as if the Change in Law event had not occurred. Therefore, any relief granted under
Article 12.2 must conform to the primary principle of restoring the Petitioner to the same
economic position. Failure to do so would defeat the underlying principle of restitution and
render Article 12 of the PPAs otiose. Further, Article 12 of the PPAs is a restitutive provision
and thus ought to be given a wide and purposive interpretation. Article 12.2 of the PPAs
accords plenary powers to the Commission to determine the compensation to be awarded.
Article 12.2 of the PPAs neither limits nor restricts the power of the Commission to grant
carrying cost.
20. The Petitioner has submitted that the „Relief for change in Law‟ does not limit itself to a
simple correlation of increased expenditure and a corresponding compensation amount but
ought to include payment towards carrying costs in respect to the Change in Law events.
Hon‟ble Supreme Court has in the case of R.C. Cooper v. Union of India reported as 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 v. Assistant Collector, Thana Prant, Thana reported as AIR 1965
SC 1096 in relation to Article 31 of the Constitution of India wherein it was held that:
“the expression "compensation" in Art. 31(2) of the Constitution means "just

equivalent" of what the owner has been deprived of.”
21. The Petitioner has submitted that compensation is a comprehensive term and is aimed at
restoring a party to the same position as if no injury was caused to him, as held by the
Hon‟ble Supreme Court in the case of Yadava Kumar v. The Divisional Manager, National
Insurance Co. Ltd. and Anr., reported as (2010) 10 SCC 341, the relevant extract of which is
reproduced herein below:-
“20. The High Court and the Tribunal must realize that there is a distinction between
compensation and damage. The expression compensation may include a claim for
damage but compensation is more comprehensive. Normally damages are given for
an injury which is suffered, whereas compensation stands on a slightly higher footing.
It is given for the atonement of injury caused and the intention behind grant of
compensation is to put back the injured party as far as possible in the same position,
as if the injury has not taken place, by way of grant of pecuniary relief. Thus, in the
matter of computation of compensation, the approach will be slightly more broad
based than what is done in the matter of assessment of damages. At the same time, it
is true that there cannot be any rigid or mathematical precision in the matter of
determination of compensation.”
22. The Petitioner has submitted that from the above it is evident that: -
a. Compensation implies equivalence and not simpliciter making equal a loss sustained.
Thus, time value of money will also have to be considered while awarding
compensation.
b. It is a term of broader implication.
c. Where the purpose is restoration to the same economic position, the courts ought to
consider the aggregate economic impact including carrying cost which is in the nature
of compensation.
d. The term 'restitution' is used in three senses, firstly, return or restoration of some
specific thing to its rightful owner or status, secondly, the compensation for benefits

derived from wrong done to another and, thirdly, compensation or reparation for the
loss caused to another.
23. The Petitioner has further submitted that a Change in Law clause being a restitutive clause in
the PPA, equity demands that the Petitioner should be compensated for all the necessary and
reasonable extra costs including carrying cost and/or interest on the additional cost incurred
on account of Change in Law event. In this regard, the Petitioner has placed reliance on the
Hon‟ble Supreme Court‟s Judgment in Sumitomo Heavy Industries Limited v. ONGC Limited
reported as (2010) 11 SCC 296. The relevant extract is reproduced as hereunder: -
“It is an obligation of the parties to a contract that they must perform their respective
promises, and if a party does not so perform, the arbitrator or the umpire has to give the
necessary direction if sought. In that process, they have to give a meaningful interpretation to
all the relevant clauses of the contract to make them effective and not redundant. The
intention of the parties in providing a clause like Clause 17.3 could not be ignored…This is
what the umpire has done and has given the direction to the respondent to compensate the
appellant for the amount of the necessary and reasonable extra cost caused by change in law.
We have no hesitation in holding that the award of the umpire is a well-reasoned award and
one within his jurisdiction, and which gives a meaningful interpretation to all the clauses of
the contract including Clause 17.3.
The Petitioner has submitted that unless there is an express provision prohibiting the grant of
restitution, the affected party would be legally entitled to be restored to the same economic
position that it would have been but for the Change in Law event.
24. The Petitioner has submitted that the Hon‟ble Supreme Court in the case of Energy Watchdog
v. CERC & Ors. reported as (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. It is submitted
that this is a fit case where the Commission ought to exercise its power and devise a suitable
mechanism to ensure that the Petitioner is restored to the same economic position. The
Commission ought to recognise time-value of money and that the Petitioner is restored to the
same economic position by allowing carrying cost for the period when the Petitioner pays the
change in law amount and when the Respondent-Procurers compensate the Petitioner.
25. The Petitioner has submitted that it is entitled to compensation not only arising directly on
account of the Change in Law events as claimed in Petitions but also compensation on

account of additional deployment of funds (carrying costs) in relation to the Change in Law
events, so as to effectively restore the Petitioner to the same economic position as if the
Change in Law event had not taken place. The carrying cost is payable even in terms of the
principles of Equity, Business Efficacy and Unjust Enrichment as detailed hereunder:-
a) Principle of Equity - Hon‟ble Supreme Court in the SLS case has held that “a party
finally found to be entitled to a relief in terms of money, would be entitled to be
compensated by award of interest which would also be payable in equity on the basis
of principle of restitution which is recognized in Section 144 of Code of Civil
Procedure”.
b) Principle of Business Efficacy - In order to address a specific situation where the
PPA is silent on the aspect of „Change in Law‟, the power producing companies may
resort to reading the PPA under the principle of “business efficacy” wherein the
explicit terms of the contract are final with regard to the intention of the parties to the
contract. In this regard, the Petitioner has placed the reliance upon the judgment of the
Hon'ble Supreme Court in the case of Nabha Power Limitedv. Punjab State Power
Corporation Limited and Anr. reported as (2018) 11 SCC 508, the relevant extract is
reproduced herein below: -
“48…
The principle of business efficacy is normally invoked to read a term in an
agreement or contract so as to achieve the result or the consequence intended
by the parties acting as prudent businessmen. Business efficacy means the
power to produce intended results. The classic test of business efficacy was
proposed by Bowen, L.J. in Moorcock [(1889) LR 14 PD 64 (CA)]. This test
requires that a term can only be implied if it is necessary to give business
efficacy to the contract to avoid such a failure of consideration that the parties
cannot as reasonable businessmen have intended. But only the most limited
term should then be implied--the bare minimum to achieve this goal. If the
contract makes business sense without the term, the courts will not imply the
same.
…
61…
The principle of 'business efficacy' would also require us to read the 'Monthly
Energy Charges' formula in a manner as would be normally understood.”
c) Doctrine of Unjust Enrichment– Alternatively, if carrying cost is not payable, then

there will be an adverse incentive for the Procurer to delay the adjudication of Change
in Law as he stands to gain in terms of time value of Money as he has to make

payment of effect of Change in Law event (principle) only subsequent to adjudication
of Change in Law as per the directions of the Commission. This in turn will lead to
unjust enrichment of the Procurer at the cost of the Seller. This doctrine is embodied
in Sections 69 of the Indian Contract Act. Mr. Rajah Ayyar referred to the following
passage in Leake on Contracts (8th edition) which may be taken as an accurate
statement of the English Law, 'A debt for money paid arises where a person has paid
money for another under circumstances and upon occasions which make it just and
equitable that it should be repaid; a debt or promise to pay is then implied in law,
without any actual agreement to that effect‟.
26. In view of aforesaid submissions, the Petitioner has submitted to direct the NTPC to make the
legitimate payments towards the additional tax burden on impact of GST and carrying cost
due to the Petitioner.
Submissions of Respondents in the pleadings and during the hearings in Petition No.
164/MP/2018 & 165/MP/2018
27. The Respondents have submitted that as per Orders of Commission in Petition No.
50/MP/2018 & Another and in Petition No. 188/MP/2017, 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
(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.
28. The Respondents have submitted that combined effect of the above conditions is 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.
29. The Respondents have further submitted as follows:

A. Scope and Applicability of Article 12 of the PPA
30. 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.
31. 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 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).”
32. The Respondents have submitted that in the present PPAs, 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 sixth 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 – sixth 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 sixth bullet in Article 12.1.1 of the PPA is clear. While considering
the 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.
33. 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 sixth 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 sixth bullet, the incorporation of the sixth 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.
34. 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 sixth bullet and not

otherwise. The claims which are to be considered on account of statutory taxes etc. should
squarely fall within the scope of sixth bullet. The sixth 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 – sixth 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
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 – Sixth Bullet
35. The Respondents have submitted that the scope of Article 12.1.1 - sixth 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”
36. The Respondents have submitted that, in terms of the above, incidence of tax recognised
under Article 12.1.1 – sixth 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 this Hon‟ble
Commission in its Order dated 19.09.2018 and it has been held that the scope of the sixth
Bullet is restricted to those taxes which directly impact „supply of power‟ only (Reference:
Para 311 of the Order dated 09.10.2018).
37. 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
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
38. 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 Petitioner on account of additional tax burden on operation and maintenance expenses
(if any), is not maintainable.
D. Carrying Cost

39. 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.
40. 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.
E. The Scope and Applicability of Article 12 of the respective PPAs
41. 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 wishes to reserve its rights to take appropriate appellate remedies as
may be advised.
F. Absence of necessary particulars- Adverse Inference

i. Non-furnishing of details of taxes subsumed/withdrawn by reason of GST
42. The Respondents have submitted that the Petitioner has not placed before the Commission in
a transparent manner the taxes, duties and levies which stands 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 in the above Taxes 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 the Commission has taken note of the
implications of the various taxes which were in existence prior to 1.07.2017 and were
subsumed/reduced/ remitted. These have to be taken into account to determine the net effect
of GST Laws. Further, the Petitioner 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 and 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 faithful disclosure of existing taxes which have been subsumed by the GST needs to
be furnished by the Petitioner . It is incumbent on the Petitioner to place before the
Commission in a transparent manner in regard to the increase or decrease in the taxes on net
basis. For instance, if pre-GST, the Petitioner were subjected to 4% Excise Rate and post-
GST, the same became a cumulative 5%, then the Petitioner 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
43. The Respondents have submitted that before the amount is computed, the Petitioner 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 Petitioner
44. 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.
45. The Respondents have submitted that any higher cost paid, without mitigating the cost,
should not be allowed to be passed on to and thereby to the consumers at large.
H. Time Bound Payment within 60 days of the Order
46. The Respondents have submitted that regarding 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 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 Developers 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 Petitioner
provides the entire documentation in the required format to the Respondents.
Analysis and decision:

47. We have heard the learned counsels for the Petitioner and the Respondents and have
carefully perused the records. Since Petition No. 164/MP/2018 alongwith I.A. 5 of 2019; and
Petition No. 165/MP/2018 alongwith I.A. 6 of 2019 are likely worded and contain the similar
issues to be adjudicated the same are clubbed together.
48. 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‟.
49. The brief facts of the case are that the Petitioner in Petition No. 164/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., on 17.05.2016. The Petitioner entered
into PPA with NTPC on 27.07.2016 for development of Solar Photo Voltaic Power Plants of
50 MW in the State of Karnataka. The Solar Power Plants were to be developed on long term
basis at a tariff of Rs. 4.79/kWh. 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 in the State of Karnataka.
Further, in Petition No. 165/MP/2018, the Petitioner was selected as the successful bidder on
02.07.2016 for development of solar power projects under the National Solar Mission Phase-
II Batch-III Tranche-VI Bidding Scheme conducted by SECI Ltd. On 02.08.2016, the
Petitioner entered into two PPAs with SECI for development of two Solar Photo Voltaic
Power Plants of 50 MW each i.e. total 100MWs in the State of Chhattisgarh. The Solar
Power Plant was to be developed on long term basis at a tariff of Rs. 4.43/kWh. As per the
terms of the PPAs as well as the bidding scheme, the solar power purchased by SECI Ltd. as
an intermediary, will be sold to the Distribution Companies.
50. 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 for levy and collection of tax on
supply of goods or services or both. The State (Karnataka / Chhattisgarh) 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.
51. The Petitioner has submitted that it participated in the bids after following the process of
„Reverse Auction‟ and was selected as the successful bidder. Pursuant thereto, the Petitioner
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 Petitioner has 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 Petitioner has bid for
supplying power do not change in times to come and that no detriment to either Petitioner or
Respondents is caused due to such change in law events. The Petitioner has 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‟.
52. Per Contra, the Respondents have submitted 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. 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. There are differences in the facts of the present case in
comparison to the decision of the Hon‟ble Tribunal in the case 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 Respondents have submitted that the Commission has already held that
claim of the Petitioner 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.
53. The Respondents have submitted that the Petitioner has not placed before the Commission in
a transparent manner the taxes, duties and levies which stands withdrawn and no longer
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 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 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 Respondents have submitted that any higher cost
paid, without mitigating the cost, should not be allowed to be passed on to and thereby to the
consumers at large. Further, regarding the amount payable to the Petitioner (if any) on
account of „GST Laws‟ the timeline of 60 days should begin to run only from the day the
Petitioner provides the entire documentation in the required format to the Respondents.
54. From the submissions of the parties, the following issues arise before this Commission:

55. Issue No.1: Whether the promulgation of the IGST Act, 2017, the CGST Act, 2017, the
and the Karnataka/ Chhattisgarh 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?
56. 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 Petitioner for the increase in
recurring and non-recurring expenditure incurred by the Petitioner on account of Change
in Law?
57. Issue No. 3: Whether the claim of ‘Carrying Cost’ for delay in reimbursement by the
Respondents is sustainable?
58. No other issue was pressed or claimed.
59. We now discuss the issues one by one:
60. Issue No. 1: Whether the promulgation of the IGST Act, 2017, the CGST Act, 2017, the
and the Karnataka/ Chhattisgarh 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?
61. The Petitioner has submitted that Article 12 of the PPAs provides for a list of six (6) 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.
62. The Petitioner has 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
Petitioner. 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 sixth 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 Petitioner. Hence, it is claimed by the Petitioner that they are eligible for
the benefit of GST as a change in law event in terms of the first and sixth bullet of Article
12.1.1 of the PPA.
63. 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, the „GST Laws‟ implication
cannot be claimed in the following circumstances:
(e) where the Scheduled Date of Commissioning is prior to 01.07.2017; or
(f) where the Actual Date of Commissioning is prior to 01.07.2017; or
(g) where the point of taxation of Goods/Services is before 01.07.2017; or
(h) 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.
64. The Respondents have submitted that combined effect of the above conditions is 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. Furthermore,
the Respondents have submitted that there are differences in the facts of the present petitions
in comparison to the decision of the Hon‟ble Tribunal in the case Adani and GMR Warora.
The provision of the present PPA is different from the PPA in the case of Adani Rajasthan
(and GMR Warora).
65. The Respondents have submitted that the intention behind the sixth 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 five bullets dealing with matters other than taxes. If the taxes are
said to be dealt under clauses other than the sixth bullet, the incorporation of the sixth 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.
66. 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 – sixth 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.
67. 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:
 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 an 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.”
68. The brief facts of the petitions with respect to RfS dates, effective date of PPAs are as under:
Petition No. Date of Signing date Effective Scheduled Date of

RFS of PPAs date of PPAs Commissioning
164/MP/2018 01.09.2015 27.07.2016 21.06.2016 20.07.2017
165/MP/2018 08.03.2016 02.08.2016 19.07.2016 02.09.2017
69. 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
Law‟ has occurred after the execution of „PPAs‟ and it has been contended by the Petitioner
that the enactment of the „GST Laws‟ has resulted in additional recurring and non-recurring
expenditure for the Petitioner 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 sixth bullet of
Article 12.1.1 of the PPA.
70. 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 sixth 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 sixth 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 sixth 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 Petitioner under bullet point number six 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. However, the
Commission feels that the same are immaterial. The Commission has further observed 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
covers the taxes on inputs required for such generation and supply of power to the
Distribution Licensees.”
71. 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.”
72. From the above, it is apparent that the 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, is covered under „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 by the Central Government and
State Government(s) 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 enactment of „GST laws‟ is squarely covered as „Change in Law‟ under the first, and
sixth bullet in seriatim of Article 12.1.1 of the PPA. As regards the argument of the
Respondent that the PPAs in the case of Adani Rajasthan and GMR Warora were at variance
with (being more explicit) than the PPAs in the present Petitions, the Commission is of the
view that such difference is not material as it does not alter the basic premise of GST Laws
being a „Change in Law‟. Rather the „Relief for Change in Law‟ as contained in the Article
12.2 empowers the Commission to provide the relief which shall be final and governing for
both the parties. This view is in consonance with the view taken by the Commission in Order
dated 09.10.2018 in Petition No. 188/MP/2017 & Ors. titled Acme Bhiwadi Solar Power
Private Limited –v- Solar Energy Corporation of India and Ors.
73. 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 Petitioner for the increase in
recurring and non-recurring expenditure incurred by the Petitioner on account of Change
in Law?
74. The Petitioner has 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 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 Petitioner hence making the tariff quoted at the time of bid for
allocation of project unviable. The Petitioner has claimed the increase in total Cost & O&M
expenses due to increase in tax incidence as given below:
Petition No. Increase in Incremental Increase in Incremental Total

TAX due impact on Cost TAX due to impact on Escalation
to GST due to increase GST Laws O&M due to
Laws in TAX indices increase in
TAX indices
164/MP/2018 2,43,53,723 2,01,40,482 4,44,94,205

5% to 28% 15% , 18%
165/MP/2018 2,186,55,848 4,02,80,966 25,89,36,814
75. Per Contra, the Respondents have submitted that in terms of Article 4.1.1 (b) of the PPAs, the
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 Petitioner to prudently incur expenditure and
mitigate the effect.
76. 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‟.

77. 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 Petitioner has 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.
78. 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.
79. 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.”
80. 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,
iv) the Additional Duties of Excise (Textiles and Textile Articles) Act, 1978, and
v) the Central Excise Tariff Act, 1985
81. 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.”
82. Similarly, the Commission observes that with the enactment of the Goods and Services Tax,
2017, by State Legislative Assemblies of Karnataka and Chhattisgarh, Acts related to 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.
83. 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.
84. 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.
85. 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
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 Petitioner 01.07.17
As taken in
Petition No.
17/SM/2015
PV Modules 61.96 % 5% 5%
Land Cost 4.72 % 0% 0%
Civil and General 6.60 % 9% 9% The GST rate at 18%;

Works However, in few Petitions
the Petitioner has claimed
9%.
(Balance of Plant-Civil;
EPC-Civil; Roads &
Drainage Fencing
Work)
Mounting Structures 6.60 % 18 % 5% The GST rate at 18%

(SGST-9% + CGST-9%)
in case of direct purchase.
In case the structures are
(Mounting Structure & sold as part of Solar power
Nut-Bolts; Clamp & generating system then 5%
Fasteners; Mounting GST is applicable.
Structure Foundation)
Power Conditioning 6.60 % 28 % 5% The GST rate at 18%

Unit (SGST-9% + CGST-9%)
in case of direct purchase.
In case the structures are
sold as part of Solar power
(Inverter Transformer; generating system then 5%
DC Battery & Battery GST is applicable.
Charger)
Evacuation Cost up to 8.30 % 18 % 5% Post GST sold as part of

Interconnection Point Solar power generating
system hence 5% GST
rate.
(AC/DC Cables;
Switchgears; PLC,
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
including IDC and the Petitioner has claimed
Contingency 5%.
(Transmission &
Logistic Services;
Erection of MMS and
Module; Electrical
Erection; Pre-Op &
other indirects; Safety;
Security and IT
services; EPC-Services)
Weighted Avg. 9.16 % 5.55 %

of Tax/GST
86. The Petitioner is 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 76 and 84 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 Petitioner, whichever is
later, failing which it shall attract late payment surcharge in terms of the PPA. Alternatively,
the Petitioner and the Respondents may mutually agree to a mechanism for the payment of

such compensation on annuity basis spread over such period not exceeding the duration of
the PPAs as a percentage of the tariff agreed in the PPAs. This will obviate the hardship of
the Respondents for one-time payment.
87. 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.
88. The Petitioner has 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 Petitioner has 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.
89. 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-
(1) the expression “competent authority” means the Government or any
authority authorised 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.”
90. 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 its petitions has 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 Petitioner taken for its own advantage and any increase in cost
including on account of taxes etc. in the event the Petitioner chooses to employ the services
of other agencies, cannot increase the liability for the Respondents. Therefore, the
Commission holds that claim of the Petitioner 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.
91. Issue No. 3: Whether the claim of ‘Carrying Cost’ for delay in reimbursement by the
Respondents is sustainable?
92. The Petitioner has 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 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
not occurred, as intended in the PPA.”
93. The Petitioner has 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 Petitioner
has argued that this is a fit case for exercise of such power to devise a suitable mechanism to
ensure that the Petitioner is restored to the same economic position and time-value of money
is restored by allowing carrying cost for the period between when the Petitioner pays the
Change in Law amount and when the Respondents compensates them.
94. 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 Petitioner is yet to be adjudicated and the amount if any, due to the
Petitioner has to be determined/computed first. Thereafter, only after the amount is
determined, is the Petitioner 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 arise 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, 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.
95. 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
Petitioner 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.
96. 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.
97. 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.
98. 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

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/ judgement. 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/2017 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.
99. 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.
100. 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.
101. The Respondents have submitted that in view of the above, the Petitioner is 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.
102. The Respondents have submitted that 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. 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.
103. The Commission observes that in the judgment of the 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.”
104. 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
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.”

From the above judgment the Commission observes that if there is a provision in the PPA for
restoration of the Petitioner to the same economic position as if no Change in Law event has
occurred, the Petitioner 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
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:
105. 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 Petitioner has 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 the Petitioner shall be on „back to back‟
basis and shall be paid by DISCOMS to the Petitioner under respective „Power Sale
Agreements‟. The Claim based on discussions in paragraph 77 and 85 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 Petitioner whichever is later failing which it will attract late
payment surcharge as provided under PPAs/PSAs. Alternatively, the Petitioner 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 Petitioner 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.

106. Accordingly, the Petition No. 164/MP/2018 alongwith I.A. 5 of 2019 and Petition No.
165/MP/2018 alongwith I.A. 6 of 2019 are disposed of.
Sd/- Sd/-
ए

Petition No. 164/MP/2018 &ors. Page 1 of 48

Uploaded by

Copyright:

Available Formats

Petition No. 164/MP/2018 &ors. Page 1 of 48

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Petition No. 164/MP/2018 &ors. Page 1 of 48

Uploaded by

Copyright:

Available Formats

नई

. /Petition No.: 164/MP/2018 alongwith I.A. 5 of 2019 and

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

न /Date of Order: 18th of April, 2019

IN THE MATTER OF:

AND IN THE MATTER OF:

1) Petition No. 164/MP/2018 alongwith I.A. 5 of 2019

Parampujya Solar Energy Pvt. Ltd. (PSEPL)

Petition No. 164/MP/2018 &Ors. Page 1 of 48

The Ministry of New and Renewable Energy (MNRE)

Mangalore Electricity Supply Company Ltd. (MESCOM)

Bangalore Electricity Supply Company Ltd. (BESCOM)

Chamundeshwari Electricity Supply Corp. Ltd. (CESC)

Gulbarga Electricity Supply Company Ltd. (GESCOM)

Hubli Electricity Supply Company Ltd. (HESCOM)

AND IN THE MATTER OF:

2) Petition No. 165/MP/2018 alongwith I.A. 6 of 2019

Parampujya Solar Energy Pvt. Ltd. (PSEPL)

Petition No. 164/MP/2018 &Ors. Page 2 of 48

Solar Energy Corporation of India Ltd. (SECI)

The Ministry of New and Renewable Energy (MNRE)

M/s Chattisgarh State Power Distribution Company Ltd.

Parties Present: Ms. Poonam Verma, PSEPL

Petition No. 164/MP/2018 &Ors. Page 3 of 48

4. The Petitioner has made the following prayers:

(a) Admit the Petition;

Petition No. 164/MP/2018 &Ors. Page 4 of 48

9. Hence the Petitions.

Petition No. 164/MP/2018 &Ors. Page 5 of 48

Re. Claim for Change in Law on account of increase in EPC Cost

Re. Claim for Change in Law on account of increase in O&M Expenses

Petition No. 164/MP/2018 &Ors. Page 6 of 48

Petition No. 164/MP/2018 &Ors. Page 7 of 48

Re. Claim for Carrying Cost

12.2 Relief for Change in law

Petition No. 164/MP/2018 &Ors. Page 8 of 48

(a) Energy Watchdog v. CERC & Ors. reported as (2017) 14 SCC 80

Petition No. 164/MP/2018 &Ors. Page 9 of 48

Petition No. 164/MP/2018 &Ors. Page 10 of 48

Petition No. 164/MP/2018 &Ors. Page 11 of 48

“the expression "compensation" in Art. 31(2) of the Constitution means "just

Petition No. 164/MP/2018 &Ors. Page 12 of 48

Petition No. 164/MP/2018 &Ors. Page 13 of 48

c) Doctrine of Unjust Enrichment– Alternatively, if carrying cost is not payable, then

Petition No. 164/MP/2018 &Ors. Page 14 of 48

29. The Respondents have further submitted as follows:

Petition No. 164/MP/2018 &Ors. Page 15 of 48

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

10.3 Relief for Change in Law

Petition No. 164/MP/2018 &Ors. Page 16 of 48

Petition No. 164/MP/2018 &Ors. Page 17 of 48

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

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

Petition No. 164/MP/2018 &Ors. Page 18 of 48

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

Petition No. 164/MP/2018 &Ors. Page 19 of 48

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

F. Absence of necessary particulars- Adverse Inference

Petition No. 164/MP/2018 &Ors. Page 20 of 48