UPERC Grants Compensation To SAEL For Increased GST Rates

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The Uttar Pradesh Electricity Regulatory Commission (UPERC) in its latest judgement allowed compensation to SAEL Limited, a solar power generator. The company had earlier moved the state power regulator seeking compensation on account of increase in its project cost due to the rise of Goods and Services Tax (GST). 

The company had installed a 32 MW solar power plant in Uttar Pradesh. The clean power produced by SAEL was supposed to be supplied to UPPCL. However, the company in its petition before the UPERC said that the rise of GST rates in September 2021 after submitting its bid escalated its project cost. It appealed to the state commission to consider this move as a ‘change of law’ event and award compensations accordingly. 

As per the case details, the company submitted its bid for the project on June 25, 2019. It signed the PPA for the project on February 27, 2020. On the other hand the Union Finance Ministry came out with a notification on September 30, 2021 which increased the GST on solar modules from 5% to 12%. The company claimed that the single decision accounted for an increase of its project cost by upto 5.37 crore. 

The respondent in the case-UPPCL on the other hand countered the claims of the petitioner and accused the petitioner of arranging for the solar modules at the last minute after the GST notification. The UPERC however termed the move as a change of law against the signed PPA and awarded compensations accordingly. 

“It is clear that on account of the notification dated September 30, 2021 issued by the Government of India, the petitioner incurred an additional cost of Rs 5.37 crore towards solar modules and Rs 36.55 lakh towards solar inverters. Therefore on account of the aforesaid sudden increase in the rate of GST on solar modules and solar inverters, the cost of the solar power project on the petitioner was directly affected and the petitioner incurred an additional expense of Rs 5,37,90,626,” the UPERC order said. 

It also said that the main purpose of the Change of Law in the clause under the PPA had been to relive the affected party of any additional burden. “Therefore the relief intended to be afforded under contracts cannot be complete unless the said burden is allowed from the date of commissioning of the project till date of this order,” the UPERC order read.