CERC allows GST as 'Change in Law' for solar projects, recovery of tax paid

Putting an end to the confusion over the cost of new solar power projects under the goods and services tax (GST) regime, the Central Electricity Regulatory Commission (CERC) has allowed it to be covered under the 'Change in Law' clause of power contracts. The GST paid by the project developers can be recovered as a separate element on "one-time basis in a time-bound manner".

The order comes in response to the applications filed by Azure Power and Prayatna Developers, a subsidiary of Adani Power. Adani had petitioned CERC to declare GST as a change in law so that future bids could consider this in their cost structure. Till now, the companies were not sure as there was no legal approval from the sector regulator.

Adani had also asked CERC to restore the petitioners to the same economic condition before the occurrence of the change in law by way of adjustment in tariff. The case was filed against NTPC and the three power distribution companies of Rajasthan -- where Adani has its solar power project.