Settle CIL Case with SECI Directly, Not in Court, CERC tells Adani Solar

Notably, the Rajasthan state government had exempted the payment of land tax on all classes of lands with effect from April 2013. Thus, due to its inapplicability on the project land at the time, land tax was not factored into the quoted price put forth by ASEFPL during the bid submission process.

In November 2019, however, the state government notified the reinstatement of land tax payment at Rs.1 per sq. meter, later increased to Rs 2 per sq. meter in March 2020, on specific categories of land, which included ASEFPL’s project land. In April, the developer successfully commissioned the 50 MW solar project.

Since the two land tax notifications were issued post the bid submission deadline, ASEFPL approached the Central Electricity Regulatory Commission (CERC) to seek an ‘in-principle approval’ of the tax imposition to be considered a Change in Law (CIL) event. As in the case of other similar petitions, such an approval was sought before the land tax could be levied upon the project land.

In response to ASEFPL’s request, the commission noted that there was no provision for the grant of an ‘in-principle approval’ either in the PPA or in the CIL Rules. “As per Change in Law Rules, on occurrence of an event of Change in Law, the affected party [ASEFPL]…and other party [SECI]…is to settle the Change in Law claims between themselves and approach the Commission only in terms of Rule 3(8) [concerning the verification and adjustment of the claim amount] of the Change in Law Rules,” said CERC.

“The Commission is of the view that the cause of action arises only when the land tax is levied and the Petitioner has to pay for the tax. It is a settled law that no Order can be made in anticipation for any future claims to be raised,” CERC ruled.