Mahindra Renewables eligible to be compensated for increase in Capital Cost due to Introduction of GST: CERC – EQ Mag Pro
The Central Electricity Regulatory Commission (CERC) held that Mahindra Renewables are eligible to be compensated for an increase in capital cost due to the introduction of GST.
The Petitioner, Mahindra Renewables Private Limited is a generating company and has been declared a successful bidder for the development of one unit of 250 MW capacity of the 750MW solar project in Rewa District in the State of Madhya Pradesh. M.P. Power Management Company Limited (MPPMCL) is the holding company for all the distribution licensees in the State of Madhya Pradesh with whom the Petitioner has executed a Power Purchase Agreement (PPA) for off- taking approximately 78% of the power generated by the Project Unit.
The Government of Madhya Pradesh and the Government of India decided to set up the Rewa Solar Project, supported by the Solar Park Scheme issued by MNRE on 12.12.2014 for the Development of Solar Parks and Ultra Mega Units. Madhya Pradesh Urja Vikas Nigam Limited (MPUVN) and Solar Energy Corporation of India (SECI) incorporated a joint venture company namely Rewa Ultra Mega Solar Limited (RUMSL) with equal shareholding. MNRE designated RUMSL as the solar project developer/ bid process coordinator for the Rewa Solar Project consists of three units (i.e. Unit 1, Unit 2, and Unit 3) of ground-mounted grid-connected solar photovoltaic power plants of 250 MW capacity each and the energy generated from all the three units would be supplied to MPPMCL and DMRC.
The coram of P. K. Pujari (Chairperson), I. S. Jha (Member), Arun Goyal (Member), and P. K. Singh (Member) held that the Petitioner is directed to make available to the Respondents 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 with respect to claims (subject to threshold limit).
The Respondents are further directed to reconcile the claims for Change in Law on receipt of the relevant documents and pay the amount (subject to threshold limit) so claimed to the Petitioner. The quantum of compensation on account of the introduction of GST Laws w.e.f. 01.07.2017 should be discharged by the Respondents 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 at the rates provided for in the PPAs. Alternatively, the Petitioner and the Respondents may mutually agree to a mechanism for the payment of such compensation on an annuity basis spread over a period not exceeding the duration of the PPAs as a percentage of the tariff agreed in the PPAs.
“The prayer of Petitioner to grant GST on the O&M expenses is not allowed. Since the PPAs in the instant Petition do not have a provision dealing with restitution principle of restoration to the same economic position, we hold that the claim regarding ‘carrying cost’ is not admissible,” the CERC said.
The commission held that that invoices raised up to COD pertaining to the supply of goods can be claimed under Change in Law on account of the GST Laws since the liability of Respondents for payment of the purchase of the power from the Petitioner starts from the Commercial Operation Date (COD). There is a possibility of a few services related to goods procured up to COD, to be completed on the last date of COD. Hence, in the case of ‘supply of services related to goods procured up to COD completed on the last day of COD, the invoices can be raised within 30 days after COD. Thus, in case of a supply of services related to goods procured up to COD, the invoices are to be raised within 30 days of supply of such services, which cannot be later than the 30th day of COD, and the Petitioner is entitled to be compensated accordingly.
Source : taxscan
