Change in Components of Central Excise Duty

Relevant Paras in the Petition No.126/MP/2016 @Page 23-25

Relevant documents annexed with the Petition

It is submitted that the facts pursuant to the said component has already
been discussed in the main petition and the written submission at length
and therefore the same are not repeated herein for sake of brevity. It is
further submitted that MERC in case no. 163 of 2014 vide its order
dated 20.04.2015 has allowed the captioned component as a Change in
Law event. In terms of the PPA, the relevant paragraph of the said order
is being reproduced here kind perusal of this Hon’ble Commission:

15.4 Inclusion of Stowing Excise Duty, Royalty

and other State levies for computation of Central
Excise Duty

The inclusion of Stowing Excise Duty,

Royalty and State levies for computation of
Central Excise Duty falls within the category of
“Change in Law” as per Article 13.1.1 (i) of the
PPA.

Therefore in the light of abovementioned principle laid down by Hon’ble

MERC the petitioner is entitled to be compensated for change in
components of Central Excise Duty on account of Change in Law.

Service Tax on Royalty of Coal

It is submitted that the facts pursuant to the said component has already
been discussed in the main petition and the written submission at length
and therefore the same are not repeated herein for sake of brevity. It is
further submitted that CERC in Petition No. 8/MP/2014 vide its order
dated 01.02.2017 has allowed the captioned component as a Change in
Law event. In terms of the PPA, the relevant paragraph of the said order
is being reproduced here kind perusal of this Hon’ble Commission:

44. We have considered the submissions of the Petitioner,

MSEDCL and Prayas. The increase in Service Tax was
affected through Finance Act, 2012. Since the enhanced rate
of Service Tax is through an Act of Parliament after the cut-
off date and has resulted in additional expenditure by the
Petitioner, the same is covered as change in law under
Article 10.1.1 of the MSEDCL PPA. Accordingly, the Petitioner
is entitled to be compensated by MSEDCL for the impact of
difference in the rate of service tax on the project cost.

Therefore in the light of abovementioned ruling laid down by this Hon’ble

commission the increase in Service Tax falls within the ambit of Change in
law. Thus any change with regard to this shall be considered as a Change
in Law event. Hence the petitioner herein is entitled to be compensated
for levy of Service Tax on the Royalty of Coal.

Increase in change in Components of Value Added Tax(VAT)

It is submitted that the facts pursuant to the said component has already
been discussed in the main petition and the written submission at length
and therefore the same are not repeated herein for sake of brevity. It is
further submitted that Hon’ble Appellate Tribunal in Appeal No. 161 of
2015 vide its order dated 19.04.2017 has allowed the said component as
a Change in Law event. In terms of the PPA, the relevant paragraph of
the said judgment is being reiterated herein for the ready reference of
this Hon’ble Commission:

43. We are informed that the Central Commission has

subsequently allowed change in Merit Rate of Excise Duty and
change in rate of Central Sales Tax as Change in Law events
in the following matters:

a) GMR Kamalanga Energy Limited v. DHBVNL & Ors.

b) GMR Warora Energy Limited v. MSEDCL & Ors.

c) Adani Power Limited v. UHBVNL & Ors.

It is not understood why the CERC has taken a different stand

in this case. So far as VAT is concerned, it is levied on
procurement of materials by the seller. Therefore, it affects
the cost of business of generation and sale of electricity.
Hence, the CERC has erred in disallowing increase in VAT by
the Madhya Pradesh Government.