TaxTMI 
TaxTMI 
2019 (2) TMI 1473
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....975, Central Excise Act, 1944, etc. The Government of India approved the respondent as a Co-Developer (which is included within the term "Developer"). The Ministry of Commerce and Industry ["MoC&I"], by a letter dated 19.12.2006, granted approval to the appellant for setting up a power plant in the aforesaid SEZ. Thus, the appellant has established the aforesaid power plant in four phases consisting of four units of 330 MW in Phase I and II, two units of 660 MW in Phase III, and three units of 660 MW in Phase IV. The respondent has entered into various Power Purchase Agreements ["PPAs"] with the appellant. We are concerned in the present case with the PPAs dated 07.08.2008 and 02.02.2007. The MoC&I, vide notification dated 06.04.2015 has withdrawn the exemption of all duties under the Customs Act, Customs Tariff Act, Central Excise Act, etc. on goods imported/procured by the respondent for authorized operations w.e.f. 01.04.2015. Equally, vide notification dated 16.02.2016, fiscal benefits including exemption of service tax on power plants approved prior to 27.02.2009 was promulgated, as a result of which, exemption from service tax, to which the respondent was entitled, has been w....
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....served : "x. Further, the provisions of Article 13.2 i.e. restoring the Appellant to the same economic position as if Change in Law has not occurred is in consonance with the principle of 'restitution' i.e. restoration of some specific thing to its rightful status. Hence, in view of the provisions of the PPA, the principle of restitution and judgment of the Hon'ble Supreme Court in case of Indian Council for Enviro-Legal Action vs. Union of India & Ors., we are of the considered opinion that the Appellant is eligible for Carrying Cost arising out of approval of the Change in Law events from the effective date of Change in Law till the approval of the said event by appropriate authority. It is also observed that the Gujarat Bid-01 PPA have no provision for restoration to the same economic position as if Change in Law has not occurred. Accordingly, this decision of allowing Carrying Cost will not be applicable to the Gujarat Bid-01 PPA." Accordingly, carrying cost was allowed and the judgment of the Commission was set aside. 2. Shri G. Umapathy, learned Advocate, and Shri V. Giri, learned Senior Advocate, appearing for the appellants in these appeals have argued before us that t....
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....entary Bill by either Party beyond one month from the date of billing, a Late Payment Surcharge shall be payable at same terms applicable to the Monthly Bill in Article 11.3.4." Article 18.17 states as follows: "18.17 No Consequential or Indirect Losses The liability of the Seller and the Procurer shall be limited to that explicitly provided in this Agreement. Provided that notwithstanding anything contained in this Agreement, under no event shall the Procurer or the Seller claim from one another any indirect or consequential losses or damages." 5. Ultimately, the result of this appeal depends upon the interpretation of Article 13 of the PPAs which is set out in full hereinbelow: "13. ARTICLE 13 - CHANGE IN LAW 13.1 Definitions In this Article 13, the following terms shall have the following meanings: 13.1.1 "Change in Law" means the occurrence of any of the following events after the date, which is seven (7) days prior to the Bid Deadline: (i) the enactment, bringing into effect, adoption, promulgation, amendment, modification or repeal, of any Law or (ii) a change in interpretation of any Law by a Competent Court of law, tribunal or Indian Governmental Inst....
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....t for establishing the impact of such Change in Law. In case of Dispute, Article 17 shall apply. It is clarified that the above mentioned compensation shall be payable to either Party, only with effect from the date on which the total increase/decrease exceeds amount of Rs. 8,90,00,000 [sic] (Rupees eight crore ninety lakh only) b) Operation Period As a result of Change in Law, the compensation for any increase/decrease in revenues or cost to the Seller shall be determined and effective from such date, as decided by the Appropriate Commission whose decision shall be final and binding on both the Parties, subject to rights of appeal provided under applicable Law. Provided that the above mentioned compensation shall be payable only if and for increase/decrease in revenues or cost to the Seller is in excess of an amount equivalent to 1% of Letter of Credit in aggregate for a Contract Year. 13.3 Notification of Change in Law 13.3.1 If the Seller is affected by a Change in Law in accordance with Article 13.2 and wishes to claim a Change in Law under this Article it shall give notice to the Procurer of such Change in Law as soon as reasonably practicable after becoming ....
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.... 13.2 of the PPAs. 7. Article 13.2 is an in-built restitutionary principle which compensates the party affected by such change in law and which must restore, through monthly tariff payments, the affected party to the same economic position as if such change in law has not occurred. This would mean that by this clause a fiction is created, and the party has to be put in the same economic position is if such change in law has not occurred, i.e., the party must be given the benefit of restitution as understood in civil law. Article 13.2, however, goes on to divide such restitution into two separate periods. The first period is the "construction period" in which increase/decrease of capital cost of the project in the tariff is to be governed by a certain formula. However, the seller has to provide to the procurer documentary proof of such increase/decrease in capital cost for establishing the impact of such change in law and in the case of dispute as to the same, a dispute resolution mechanism as per Article 17 of the PPA is to be resorted to. It is also made clear that compensation is only payable to either party only with effect from the date on which the total increase/decrease exc....
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.... 06.04.2015 and 16.02.2016. The present case, therefore, falls within Article 13.4.1(i). This being the case, it is clear that the adjustment in monthly tariff payment has to be effected from the date on which the exemptions given were withdrawn. This being the case, monthly invoices to be raised by the seller after such change in tariff are to appropriately reflect the changed tariff. On the facts of the present case, it is clear that the respondents were entitled to adjustment in their monthly tariff payment from the date on which the exemption notifications became effective. This being the case, the restitutionary principle contained in Article 13.2 would kick in for the simple reason that it is only after the order dated 04.05.2017 that the CERC held that the respondents were entitled to claim added costs on account of change in law w.e.f. 01.04.2015. This being the case, it would be fallacious to say that the respondents would be claiming this restitutionary amount on some general principle of equity outside the PPA. Since it is clear that this amount of carrying cost is only relatable to Article 13 of the PPA, we find no reason to interfere with the judgment of the Appellate ....
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....of interest. In the present matter, we have the second proviso to Regulation 79(2) of the 1999 Regulations which permitted the generating company to continue to charge the existing tariff for such period as may be specified in the notification by the Commission, and the notifications permitted continuation of the existing tariff as on 31-3-2001, until the final tariff was determined. There was no provision for payment of interest therein. The very fact that interest came to be provided subsequently by a notification under the Regulations of 2004 is also indicative of a contrary situation in the present matter viz. that interest was not payable earlier." 13. Article 13 of the PPAs provides for payment of carrying costs, as held by us above. This judgment also turned on the interpretation of Regulation 79(2) of the Central Electricity Regulatory Commission (Conduct of Business) Regulations, 1999, and therefore, also has no manner of application to the facts of the present case. 14. In Indian Council for Enviro-Legal Action v. Union of India and Ors., (2011) 8 SCC 161, this Court was concerned with whether a successful party in a litigation should not be compensated by way of....