Adani Green Energy (UP) Limited (petitioner) has approached the Karnataka High Court challenging the State government's amended rules imposing property tax at the rate of 1 percent of the property's value on solar power plants.
The company has challenged the Karnataka Grama Swaraj and Panchayat Raj (Grama Panchayat Taxes, Rates and Fees) Rules, 2025, notified on October 17, 2025 to the extent they classify solar power plants as regular industrial buildings for taxation purposes.
It has also sought the quashing of demand notices and assessment proceedings initiated by the concerned gram panchayat authorities for the assessment year 2026-27.
The petitioner has contended that solar power plants constitute a distinct category of infrastructure and cannot be equated with conventional industrial buildings for the purpose of levying property tax.
According to the petition, the government had earlier prescribed a tax of ₹5,000 per megawatt per annum for renewable energy units, including solar power plants, following recommendations made by an expert committee constituted to examine taxation issues affecting small-scale industries.
The company has relied on government circulars dated February 27, 2018 and March 20, 2020, which, according to it, prescribed and continued the levy of ₹5,000 per megawatt per annum for renewable energy units.
The petitioner has submitted that it installed a solar power plant within the Bengaluru South districts Channapattana and Magadi Taluku, MB Halli, H Byadarahalli and Mattikere Gram Panchayats and had been paying taxes in accordance with the earlier regime.
However, the State government subsequently proposed increasing the tax on renewable energy units from ₹5,000 to ₹10,000 per megawatt.
The company has alleged that the final notification issued on October 17, 2025, departed from the earlier proposal and instead brought solar power plants under the category of regular industries, subjecting them to property tax at the rate of 1 percent of the property's value under Schedule I.
The same was done without giving any explanation and without calling for objection from all the stakeholders much less from the renewable energy stakeholders, it has been contended.
As per the plea, solar power plants are non-polluting renewable energy infrastructure and do not involve the same operational requirements, machinery or regulatory approvals as conventional industrial establishments.
It has contended that calculating the tax on the basis of the property's value, instead of the electricity-generating capacity of the installation, would impose an excessive financial burden on renewable energy projects.
The petition further states that the government had previously adopted a separate taxation framework for solar power plants to encourage investment in renewable energy and address the State's power requirements.
The petitioner has also alleged that the impugned rules are discriminatory, as they impose a levy of 1 percent of the property's value on solar parks, while prescribing lower rates for certain other categories of industrial buildings.
The company has further challenged the demand notices on the ground that they were issued in violation of the procedure prescribed under the Karnataka Grama Swaraj and Panchayat Raj Act, 1993.