Maharashtra Commission Rejects Solar Power Developer’s Petition for GST Compensation


Maharashtra Commission Rejects Solar Power Developer’s Petition for GST Compensation

Independent solar power producer Azure Power’s petition to Maharashtra Electricity Regulatory Commission (MERC), requesting to order Maharashtra State Power Generation Company (MSGPCL or MAHAGENCO) to compensate the company for the excess cost incurred due to Goods and Service Tax (GST) was dismissed by the commission as premature.

Azure Power had won contracts to develop and sell power from four 50 MW capacity solar projects. The solar power developer instantly filed a petition for declaratory and compensatory reliefs on account of the occurrence of ‘Change in Law’ event. The change in GST rates resulted in an increase in the effective tax rates under the GST laws from 5% to 8.9% (on gross consideration) on the composite EPC contracts with effect from January 1, 2019.

Due to the increase in GST, Azure Power was liable to pay ₹276.9 million ($39.8 million), which it expected to be compensated for by MAHAGENCO. Read More

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