Energy Department Removes Duty Exemption in Solar Policy, Energy News, ET EnergyWorld

Jaipur: The Department of Energy has withdrawn the electricity tax exemption granted to consumers of captive solar projects. The duty was waived in the 2019 solar policy.

Last year, some generators affiliated with the Rajasthan Solar Association had appealed to the High Court of Rajasthan against the obligation imposed by the discoms. The Jodhpur bench had suspended the service request from discoms.

Recently, some buyers of the captive power had also gone to court against the duty charging saying they were exempt from the levy under the provisions of the solar policy. The Jodhpur bench had provided them with cover with a reprieve from duty.

But on May 10, the Energy Department had issued an order removing the exemption from the policy. This means that no project after the order would be eligible for the electricity exemption. An industry representative said this sends the wrong message to the investment community.

“If political decisions are not implemented and changed, investors will not trust the government. The solar policy is a decision taken by the Council of Ministers. Investors come to the state based on the provisions of the policy. By changing the policy mid-stream, you just lower the trust factor,” the representative said, preferring anonymity.

He said that before withdrawing the political decision, the ministry should have gone to the cabinet for a wider discussion. “Now it appears the Department of Energy made the decision without Cabinet approval,” he added.

In fact, after the policy was deployed, a notification should have been issued by the finance department. “Because it was a political decision, investors trusted him thinking the notification would be a natural process. But it never came,” he added.

The duty waiver was in place for a few years before expiring in March 2020. The solar policy also allowed the duty waiver for seven years.