Safeguarding Green Investments: Rajasthan High Court Upholds 7-Year Duty Exemption for Existing Proj

Safeguarding Green Investments: Rajasthan High Court Upholds 7-Year Duty Exemption for Existing Proj

April 10, 2026

In a landmark decision for the renewable energy sector, the Rajasthan High Court has ruled that the state government cannot retrospectively withdraw electricity duty exemptions promised to solar developers. The court held that projects commissioned under the Solar Policy 2019 are entitled to the full seven-year duty exemption they were originally assured, shielding them from a 2022 policy amendment that attempted to roll back these benefits.

The case was brought forward by UltraTech Cement, which had invested approximately ₹890 million to set up captive solar projects for its manufacturing units in Rajasthan. These investments were made based on the clear promise of the 2019 policy. However, in May 2022, the state government amended the policy to make duty exemptions dependent on separate statutory notifications—effectively allowing distribution companies to start billing for duties that were previously exempt. The court declared this move “arbitrary” and a violation of the principle of “accrued rights,” stating that while governments can change future policies, they cannot snatch away benefits that induced past investments.

This ruling reinforces policy certainty, a critical factor for long-term infrastructure projects. The High Court directed that all captive solar projects commissioned before May 10, 2022, must receive their seven-year exemption as promised. Any withdrawal of incentives will only apply prospectively to new projects. By emphasizing that the “invocation of public interest must be real and demonstrable,” the court has sent a strong signal to state regulators: policy objectives, like reaching solar capacity targets, are best met through consistency rather than post-facto justifications for revenue collection.