APTEL Upholds Forest Tax as Change in Law for Maruti Clean Coal, Rejects Rajasthan Discoms' Plea on Pre-Existing 2002 Notification

APTEL dismisses Rajasthan distribution companies' appeal, holding that Chhattisgarh forest transit levy became a compensable change-in-law event only from 1 November 2012, after the bid cut-off date.

The Appellate Tribunal for Electricity dismissed Appeal No. 248 of 2020 filed by Rajasthan Urja Vikas Nigam Ltd. and three Rajasthan distribution licensees against a Central Electricity Regulatory Commission order dated 25 September 2019. That CERC order had granted change-in-law compensation to Maruti Clean Coal and Power Limited (MCCPL) — the generator operating a 300 MW coal-based thermal plant at Korba, Chhattisgarh — on account of a forest transit levy on coal transported from South Eastern Coalfields Limited (SECL) mines. The sole surviving issue before APTEL was whether the Chhattisgarh forest tax of Rs. 7 per tonne was already operative as on the bid cut-off date of 11 September 2012, or whether it became enforceable only after that date. APTEL, in a judgment authored by Officiating Chairperson Ms. Seema Gupta, found that the levy was mandatorily operationalised only from 1 November 2012 and upheld the CERC order in full.

The Power Purchase Arrangement and the Dispute Before CERC

Appellant No. 1, Rajasthan Urja Vikas Nigam Ltd. (erstwhile Rajasthan Rajya Vidyut Prasaran Nigam Ltd.), represents three Rajasthan distribution licensees: Ajmer Vidyut Vitran Nigam Ltd., Jodhpur Vidyut Vitran Nigam Ltd., and Jaipur Vidyut Vitran Nigam Ltd. On 28 May 2012, Appellant No. 1 issued a Request for Procurement for long-term power supply through tariff-based competitive bidding, with bids due by 18 September 2012. The cut-off date under the PPA framework was 11 September 2012.

Back-to-back Power Purchase Agreements were executed on 1 November 2013 between the distribution licensees and MCCPL through PTC India Limited, the inter-state trading licensee. MCCPL began supplying 45 MW from 30 November 2016 and 250 MW from 1 April 2017.

On 11 April 2018, MCCPL filed Petition No. 116/MP/2018 before CERC seeking tariff increases on account of several change-in-law events, including levies on royalty, sizing charges, surface transportation charges, forest transit fee, and others. CERC admitted certain claims by its order of 25 September 2019. The Rajasthan appellants challenged that order before APTEL raising eight categories of issues. By the time of final hearing, all issues except the “Change in Forest Tax” had been given up, having been settled by earlier decisions of APTEL and the Supreme Court.

The Appellants' Case: A Pre-Existing Levy Cannot Be a Change in Law

The appellants argued that the Chhattisgarh Government's Forest Department had issued Notification No. F 7-61/V.S./2001 dated 14 June 2002 under the Chhattisgarh Transit (Forest Produce) Rules, 2001, prescribing a transit fee of Rs. 7 per tonne on coal and several other minerals. Since this notification pre-dated the cut-off date of 11 September 2012, the levy was a known, pre-existing legal obligation. A prudent bidder was expected to factor it into its bid. Accordingly, MCCPL could at best claim only the incremental increase from Rs. 7 per tonne to Rs. 15 per tonne — an increase of Rs. 8 per tonne — following the revision notified on 30 June 2015 with effect from 1 July 2015.

The appellants also pointed to a CERC order dated 19 December 2017 in Petition No. 101/MP/2017, arising from a bidding process with an identical cut-off date, where only Rs. 8 per tonne had been allowed. They contended that the SECL letter of 9 November 2012 directing compulsory implementation was merely an internal administrative direction and could not itself constitute a change in law under Article 10.1.1 of the PPA.

There was, however, a procedural complication. The 2002 Notification had never been pleaded in the appeal before APTEL and had not been placed before CERC. It was raised for the first time during final arguments on 16 February 2026 and placed on record only on 27 February 2026.

MCCPL's Defence: Operational Enforcement, Not Textual Existence, Is the Test

MCCPL contended that the appellants' reliance on the 2002 Notification was an afterthought and impermissible, since parties are bound by their pleadings and cannot introduce new factual foundations at the stage of final arguments to the prejudice of the other side.

On merits, MCCPL argued that Article 10.1.1 of the PPA is not satisfied by the mere textual existence of a notification on the statute book. The clause separately uses the expressions “enactment” and “coming into effect,” and refers to a tax being “made applicable.” A levy that was dormant and not actually recovered cannot constitute an operative financial burden that a bidder could have factored into its bid. MCCPL relied on the Office of the Forest Conservator, Bilaspur Circle, Chhattisgarh, which vide its communication dated 31 October 2012 had expressly directed that the arrangements for issuance of licence fee for transit passes for minerals from forest land “shall be effected from 01 November, 2012” mandatorily, with necessary directions to all coal exploration fields under SECL.

MCCPL placed reliance on Energy Watchdog v. CERC, (2017) 14 SCC 80; Uttar Haryana Bijli Vitran Nigam Ltd. v. Adani Power Ltd., (2019) 5 SCC 325; Jaipur Vidyut Vitran Nigam Ltd. v. Adani Power Rajasthan Ltd., (2020) 4 SCC 650; Jaipur Vidyut Vitran Nigam Ltd. v. MB Power (Madhya Pradesh) Ltd., (2024) 8 SCC 513; and this Tribunal's judgment dated 15 September 2022 in Appeal No. 427 of 2019 and batch, for the proposition that change-in-law relief is restitutionary and linked to the point at which the change becomes effective and results in actual cost impact.

How APTEL Reasoned Through the Forest Tax Question

APTEL first addressed the procedural objection. It accepted that the 2002 Notification was never pleaded in the appeal and was introduced belatedly at the final hearing stage. The Tribunal held that, in general, appellants should not be permitted to rely upon the 2002 Notification as an independent ground of challenge. However, since the document had been placed on record and both parties had addressed it on merits, APTEL proceeded to examine the merits as well, without prejudice to that preliminary finding.

On the substantive question, APTEL examined the definition of “Law” in the PPA, which covers all laws in force in India including any statute, ordinance, regulation, notification or code, or any interpretation thereof by an Indian Governmental Instrumentality having force of law. It then turned to Article 10.1.1, which defines “Change in Law” as the occurrence, after the date seven days prior to the bid deadline, of events including the enactment, coming into effect, adoption, promulgation, amendment or repeal of any law; a change in the interpretation or application of any law; or any change in tax or introduction of any tax made applicable for supply of power by the seller.

APTEL noted that the clause separately uses “enactment” and “coming into effect,” expressly distinguishing legislative promulgation from actual operational effectiveness. If the mere existence of a notification were sufficient, the references to “coming into effect,” “application,” and “made applicable” would be rendered otiose. The clause, read harmoniously, is concerned with operational effect and actual financial impact.

APTEL then examined the Forest Conservator's letter of 31 October 2012. That communication, addressed to the Chairman of SECL, referred to the 2002 Notification and expressly directed that the arrangements for issuance of licence fee for transit passes for minerals from forest land shall be effected from 1 November 2012 in all areas mandatorily. APTEL held that this communication established beyond cavil that the levy acquired the character of a compulsory and enforceable impost only from 1 November 2012. The attempt to characterise it as a mere internal directive was rejected: the communication unequivocally affirmed that transit passes were indispensable for SECL mines on forest land and that the fee under the 2002 Notification was to be mandatorily applicable from that date.

APTEL also recorded that the appellants had failed to place any cogent material on record to demonstrate that the forest transit levy at Rs. 7 per tonne was actually being recovered at the field level from MCCPL or any other generator prior to 1 November 2012. In the absence of such evidence, the plea that the levy was a pre-existing operative burden factored into the bid was devoid of substance.

The Tribunal drew support from the Supreme Court's judgment in GMR Warora Energy Limited v. CERC, (2023) 10 SCC 401, which affirmed APTEL's earlier judgment in Adani Power Limited v. RERC & Ors. dated 14 August 2018 in Appeal No. 119 of 2016 and batch. The Supreme Court had held in GMR Warora that as on the cut-off date there was no forest tax applicable on coal mined and transported from SECL mines located in forest areas, and that all additional charges payable on account of orders, directions, notifications and regulations issued by instrumentalities of the State after the cut-off date constitute change-in-law events entitling generators to compensation on the restitutionary principle.

As for the appellants' reliance on the CERC order of 19 December 2017 in Petition No. 101/MP/2017 where only Rs. 8 per tonne was allowed, APTEL held that each matter must be adjudicated on its own facts, pleadings, and documentary record. Orders of Regulatory Commissions are persuasive but do not bind APTEL, which exercises appellate jurisdiction under the statute. The appellants had adduced no evidence of actual recovery of the levy prior to 1 November 2012 from other generators, so that order could not advance their case.

Outcome

APTEL held that the forest transit levy at Rs. 7 per tonne was operationally recovered only from 1 November 2012, which is after the cut-off date of 11 September 2012. The levy therefore constitutes a change-in-law event. MCCPL is entitled to change-in-law compensation at Rs. 7 per tonne with effect from 1 November 2012 to 30 June 2015, and at Rs. 15 per tonne with effect from 1 July 2015 following the revision by SECL vide Notification No. SECL/BSP/S&M/1788 dated 12 October 2015. The appellants' contention that only the incremental Rs. 8 per tonne is compensable was rejected.

APTEL found no error in the impugned CERC order dated 25 September 2019 warranting interference. Appeal No. 248 of 2020 and all pending interlocutory applications were dismissed. The judgment was pronounced in open court on 11 May 2026.