Clean Solar Power (Bhainsada) Pvt. Ltd., a generating company under the Companies Act, 2013, filed a petition before the Rajasthan Electricity Regulatory Commission seeking clarification and direction regarding the applicability of increased GST rates as a “Change in Law” under the Power Purchase Agreement (PPA) with Solar Energy Corporation of India (SECI). The case revolved around the applicability of GST on renewable energy components, especially after the introduction of the 2021 GST notifications, which raised rates from 5% to 12%, 18%, and 28% for certain goods.

The petitioner had been awarded a 250 MW solar project in Rajasthan through competitive bidding by SECI and signed a PPA at a fixed tariff of ₹2.50/kWh for 25 years. The project was commissioned on May 5, 2022. However, due to the GST rate revisions from October 1, 2021, the company claimed an increased financial burden for procuring various components like solar modules, inverters, and Balance of System (BOS) equipment.

Clean Solar argued that the rate changes impacted their costs significantly and should be treated as a Change in Law under Article 12 of the PPA, warranting reimbursement. The petitioner had previously filed Petition No. 2044/2022, where the Commission had agreed that the increase in GST to 12% qualifies as a Change in Law and had allowed for compensation along with carrying costs. However, SECI and Rajasthan Urja Vikas and IT Services Limited (RUVITL) had only partially accepted the claims.

In the reconciliation meeting held on January 18, 2024, it was agreed that ₹515.5 million out of ₹558 million were valid claims. SECI rejected ₹42.4 million related to claims where GST was paid at 18% or 28%, asserting that only 12% GST is eligible under the Change in Law clause. SECI maintained that any GST rate clarification falls under the jurisdiction of the Ministry of Finance or the GST Council, not the electricity regulator.

The petitioner stressed that the 2021 Notification altered the scope of what constituted a “solar power generator” compared to the earlier term “solar power generating system,” and that some components previously covered at a 5% GST rate now faced 18% or 28% tax due to the narrower definition. Clean Solar cited legal interpretations, industry standards, and past judgments to support their claim that the broader system components should still be considered essential for generation and thus qualify for compensation.

SECI, however, argued that the petitioner had not originally claimed GST increases to 28% in their earlier petition and introducing it now was legally barred by the principle of res judicata and procedural law.

Clean Solar is requesting the Commission to direct SECI and RUVITL to acknowledge the full extent of increased GST, including the higher rates of 18% and 28%, and reconcile the carrying costs to restore them to their original financial position. The Commission’s final decision is awaited, and the case highlights the complex overlap of tax law and regulatory frameworks affecting renewable energy projects.