APTEL Partly Allows Solar Firm’s Plea In Safeguard Duty Dispute

The Appellate Tribunal for Electricity (APTEL) has partially allowed an appeal filed by Adyah Solar Energy Private Limited against the Karnataka Electricity Regulatory Commission (KERC) and various electricity supply companies, including Bangalore Electricity Supply Company Limited (BESCOM). The tribunal’s judgment, delivered on May 30, 2025, settles key disputes related to safeguard duties, integrated GST (IGST), carrying costs, and court fees arising from a 50 MW solar project in Karnataka’s Pavagada Solar Park.

Change Of Law Row 

Adyah Solar, a special-purpose vehicle of Renew Solar Private Limited, signed a Power Purchase Agreement (PPA) with BESCOM in April 2018. The central issue stemmed from the subsequent imposition of safeguard duties on imported solar modules and cells by the Union government from July 30, 2018. The company sought compensation under the PPA’s “Change in Law” clause, which provides for tariff relief in case of changes in taxes or duties after the bid submission date of March 12, 2018.

In June 2021, KERC partly accepted the claim, recognizing the safeguard duty as a Change in Law event. However, it rejected the developer’s request for reimbursement of duties paid on additional modules, denied carrying costs for delayed compensation, limited tariff adjustment to a minimum guaranteed capacity utilization factor (CUF) of 15.76%, and classified the petition as a monetary dispute requiring a higher court fee.

Why Adyah Moved APTEL?

Adyah challenged these findings before APTEL, arguing that installing additional modules to achieve a declared CUF of 27.76% was an industry-standard practice known as DC overloading. The company contended that BESCOM had benefited from higher generation at lower tariffs and should bear the associated costs. It also argued that denying carrying costs contradicted the restitution principle upheld by the tribunal in prior rulings, including in the Parampujya Solar Energy case. The firm further maintained that the Change in Law petition was regulatory in nature and should attract only a fixed court fee under the KERC Fee Regulations.

In its detailed ruling, APTEL upheld the appellant’s claim for reimbursement of safeguard duty and IGST on additional modules installed before the commercial operation date. The tribunal held that the installation of additional modules to achieve higher CUF was a legitimate technical strategy and not a mere business decision. Since the distribution company benefited from increased energy generation, it could not deny compensation. APTEL referred to its earlier decision in the Nisarga Renewable Energy case to support this finding.

Issue of Carrying Cost 

On the issue of carrying cost, APTEL agreed that the principle of restitution entitles the affected party to full compensation, including interest. However, it acknowledged that the Supreme Court had stayed enforcement of carrying cost awards in a related case. Accordingly, the tribunal directed KERC to compute carrying costs as per precedent but clarified that enforcement would remain stayed until further orders from the apex court.

The tribunal, however, upheld KERC’s approach on two counts. It ruled that incremental tariff compensation must be based on the minimum guaranteed energy output, not on the actual or declared CUF, stating that the PPA did not obligate BESCOM to pay for additional generation. It also sided with the regulator on the issue of court fees, stating that a Change in Law petition seeking financial compensation is inherently a monetary dispute and must be charged accordingly.

Concluding the matter, APTEL partly allowed Adyah Solar’s appeal, directing the respondents to reimburse safeguard duty and IGST on all additional modules installed before commissioning. It also ordered computation and payment of carrying cost from the date of expense until reimbursement, subject to the Supreme Court’s directions in Civil Appeal.

The ruling is expected to have significant implications for other renewable energy developers facing similar Change in Law disputes related to safeguard duties and cost pass-through mechanisms.