The Central Electricity Regulatory Commission (CERC) has passed a suo motu in the matter of abolition of GST compensation cess and increase in the goods and service tax (GST) rate on procurement of coal from 5 per cent to 18 per cent.
The commission has noted that the recent changes have a cost-impacting effect on the landed price of coal and require tariff adjustments or refunds, depending on the case. The regulatory directions will apply to all power purchase agreements with composite schemes covered under section 63 of the Electricity Act except in cases where generators operate captive coal mines. For all contracts where the cut-off date is on or before September 21, 2025, including those referenced in the 2018 ruling, the procurers will be entitled to claim tariff relief for both the GST increase and compensation cess abolition. The commission has also proposed initiating suo motu proceedings to develop a uniform regulatory framework for such adjustments and directed stakeholders to submit written comments within ten days of the order.