State Cannot Withdraw Electricity Duty Exemptions Retrospectively Without Overriding Public Interest, Rules Court
In a significant judgment, the Rajasthan High Court has ruled in favor of M/s Ultra Tech Cement Ltd. and others, reinforcing the doctrine of promissory estoppel in the context of renewable energy incentives. The court decided that the State of Rajasthan cannot retrospectively withdraw electricity duty exemptions promised under the Rajasthan Solar Policy, 2019, which were initially guaranteed for seven years from the date of commissioning of solar power plants.
The court observed that Ultra Tech Cement Ltd. and other petitioners had made substantial investments in solar power projects based on the State's clear and explicit policy assurances. The withdrawal of these exemptions by an amendment dated May 10, 2022, was deemed to violate the principles of promissory estoppel and legitimate expectation, which protect investors' reliance on governmental promises unless an overriding public interest is demonstrated.
The judgment emphasized that while the State retains the power to modify policies, such changes must operate prospectively and respect vested rights. The court noted that the withdrawal lacked cogent justification and failed to meet the objectives of the Solar Policy, thereby undermining investor confidence and the constitutional ethos of fairness.
The court further stated that the argument of financial constraints put forth by the State does not constitute a sufficient public interest to justify such withdrawal, especially when the policy's targets remain unmet. The decision mandates that exemptions remain enforceable for projects commissioned before the policy amendment, ensuring the petitioners' entitlement to the promised benefits for the specified period.
The court's ruling reaffirms the commitment to renewable energy promotion and the protection of investor confidence through adherence to policy assurances, aligning with India's broader climate commitments and sustainable development goals.
Bottom Line:
Renewable Energy - Withdrawal of electricity duty exemption under Solar Policy, 2019 - Doctrine of promissory estoppel applicable - State cannot retrospectively withdraw exemptions that induced substantial investments based on explicit policy assurances - Change in policy can only have prospective application.
Statutory provision(s): Article 14 of the Constitution of India, Doctrine of Promissory Estoppel, Doctrine of Legitimate Expectation, Rajasthan Electricity (Duty) Act, 1962, Rajasthan Solar Policy, 2019.
