Are renewable energy certificates, bought by power companies, goods or services? Neither. And so, must be out of the indirect tax ambit, according to power companies which have suffered higher costs because of the Goods and Services Tax (GST). The power companies that buy these certificates to comply with the environmental norms challenged the levy through a writ petition filed in the Delhi High Court on Tuesday.
Power companies buy these certificates from renewable energy exchanges to abide by government norms that mandate that a certain percentage of power generated should be through renewable sources. The certificates are derivatives based on the power generated in green route. Most power generators buy renewable energy from their green peers, sometimes based abroad. These certificates also work as a source to buy the balance quantity of renewable energy that cannot be bought or generated directly by the power firms.