Rajasthan High Court - Jaipur
Ms Rays Power Infra Pvt Ltd vs State Of Raj And Ors on 18 January, 2019
Author: Inderjeet Singh
Bench: Inderjeet Singh
HIGH COURT OF JUDICATURE FOR RAJASTHAN
BENCH AT JAIPUR
S.B. Civil Writs No. 9796/2018
M/s Rayas Power Infra Pvt. Ltd., Registered Office At D 43,
Janpath, Shyam Nagar, Jaipur Through Its Chief Financial Officer
Shri Rajeev Tiwari S/o Shri Om Prakash Tiwari, Aged About 41
Years.
----Petitioner
Versus
1. The State Of Rajasthan Through Its Additional Chief
Secretary, Finance Department, Government Secretariat,
Jaipur
2. The Commissioner, Commercial Taxes Department, Kar
Bhawan, High Court Circle, Rajasthan, Jaipur.
3. Assistant Commissioner, Commercial Taxes Department,
Anti Evasion Zone Ii, Divisional Kar Bhawan, Jhalana
Institutional Area, Jaipur.
----Respondents
For Petitioner(s) : Mr. Ankit Sethi.
For Respondent(s) : Mr. Hitesh Mishra for Mr. R.B. Mathur.
HON'BLE MR. JUSTICE INDERJEET SINGH
Order
18/01/2019
Counsel for the parties in agreement that issue involved in this writ petition is squarely covered by the judgment passed by the Co-ordinate Bench of this court in the matter of M/s Rays Power Infra Pvt. Ltd Vs. The State of Rajasthan and others (S.B. Civil Writ Petition No.8088/2018) decided on 11.09.2018 wherein it has been held as under:-
(Downloaded on 05/06/2021 at 09:43:33 PM)(2 of 17) [CW-9796/2018] "1. The fulcrum of the case is on the interpretation of the Entry No.135 in Schedule-1 of the Rajasthan Value Added Tax Act, 2003 (herein referred to as 'the Act of 2003'), which was added by the Government of Rajasthan, Finance Department, vide notification dated 26.3.2012, whereby the plant and machinery including parts thereof, used in generation of electricity from solar energy; wind power; and, biomass as defined under the Policy for Promoting Generation of Electricity from Biomass, 2010, of Government of Rajasthan, was exempted from Rajasthan VAT Act.
2. Although the impugned orders of assessment are appealable in terms of the provisions contained under the Act of 2003, the question relates to the interpretation of the provision, which has been applied for imposition of tax for various years from 2012-2013 onwards, the petitioner being aggrieved has filed the present writ petitions assailing the assessment orders on the ground of interpretation taken by Commissioner, Sale Tax Department, Government of Rajasthan in case of M/s. Suzlon Energy Ltd., and thus the purpose of filing appeals would be futile.
3. The revenue prays for dismissal of the present petition on the ground of availability of alternative remedy of filing the appeal and in support of thereof relies on the judgments reported in AIR 1983SC603 "Titaghur Paper Mills Co. Ltd & Ors. Vs. State of Orissa & Ors.", 2010(8) SCC 110 "United Bank of India Vs. Satyavati Tandon", (2018) SCC 85 "Authorized Officer State Bank of Travancore & Anr. Vs. Mathew K.C. & 2014 (1) SCC 603 "Comm.of Income Tax Vs. Chhabil Das Agarwal.
4. Counsel for the petitioner submits that since in this case the question of interpretation is involved and the same is required to be determined by this Court, availability of alternative remedy would not be an impediment for this court from examining the said provision and in this regard he relies on judgments cited in 1971 (1) SCC 309: "State of WB Vs. North Adjai Coal Co., 1973 (1) SCC 633 "Raza Textiles Vs. IT Officer & 1961 (2) SCR 241 "Calcutta Discount Co. Vs. ITO"
5. I have considered the preliminary objection and while it is true that there is a remedy available of filing appeal against the assessment order. However, since the question involved in the present writ petition is with regard to interpretation of the entry no.135 in Schedule No.1 by which exemption is provided with regard to parts used in generation in electricity from solar energy. And also taking into consideration that the interpretation taken by the commissioner beyond for Suzlon case u/s 36 of the Act, which has been applied. I find that the remedy of appeal cannot be (Downloaded on 05/06/2021 at 09:43:33 PM) (3 of 17) [CW-9796/2018] said to be an efficacious remedy as a appellate authority , follow the decision of Suzlon energy case already decided by the Commissioner.Any action/order passed on wrongful interpretation can be challenged before this Court and existence of alternative remedy would not be applicable as has been held in "State of West Bengal Vs. Nortyh Adjai Coal Co. "reported in (1971) 1 SCC 309 wherein held as under:
"3. It is urged in the first instance that the High Court was incompetent to entertain the writ petition because the respondent had failed to exhaust the statutory remedies permissible under the Bengal Finance (Sales Tax) Act. It was submitted that a revision application lay to the Board of Revenue, and without moving the Board of Revenue, the respondent could not file a petition before the High Court. There is no substance in this contention. It is true that normally before a petition under Article 226 of the Constitution is entertained, the High Court would insist that the party aggrieved by the order of a quasi-judicial tribunal should have recourse to the statutory authorities, which have power to give relief. But that is a rule of practice and not of jurisdiction. In appropriate cases, the High Court may entertain a petition even if the aggrieved party has not exhausted the remedies available under a statute before the departmental authorities. In the present case, in the view of the High Court a case was made out for its interference with the order passed by the Deputy Commissioner, and we see no reason to hold that the High Court had not properly exercised jurisdiction in this case. The facts were apparently not in dispute, and the only question was whether in the facts and circumstances of the case, the respondents were entitled to the exemption claimed by them. In the circumstances the High Court cannot be said to have acted improperly in entertaining the petition."
6. Certain facts need to be noted before addressing the main issue involved in the present petition. The petitioner company states itself to be ISO 9001 & ISO 14001 certified company providing Consulting- Engineering-Contracting-Commissioning Services for solar Erection, Procurement and Commissioning Works (EPC) dealing in Solar Power Generating System/Plant EPC work. It is stated that the company is not involved in transmission and distribution and has been regularly filing its returns in terms of the provision contained in Schedule-1 Entry No.135. The company has been regularly filing its returns since 2012-2013 as the sale of solar power was within the State and is exempted in view of the Entry No. 135 (supra). There was no tax liability on the petitioner company. The assessment of the Income Tax was conducted by Assistant Commissioner, Commercial Taxes Circle-1 Jaipur in (Downloaded on 05/06/2021 at 09:43:33 PM) (4 of 17) [CW-9796/2018] terms of Section 24 of the Act of 2003 and tax assessment was finalized and no tax liability was found against the petitioner company and assessment order was accordingly passed. Whereafter on 22 nd December, 2016 the Assistant Commissioner-III, Anti Evasion, Circle-II, Jaipur, conducted survey of the business premises of the petitioner company and no illegality or irregularity was found in the books of accounts.
7. However, it is stated that notice u/s 75(1) of the Act of 2003 dated 22.12.2016 was given to the petitioner company requiring to submit the entire books of accounts relating to purchase and sale. After the company provided the details, notice dated 5.12.2017 was issued u/S 9 of CST Act, 1956 read with Sections 25 & 61 of the Act of 2003 read with Section 174 of RGST Act, 2017. It was stated that in addition to the plant and machinery used in generation of electricity, the company used electrical goods imported outside the State not only for generation of electricity but also for conversion, transmission and distribution, for which value added tax has been paid at Rs.2,00,74,792/- and also penalty and interest of evasion of tax was demanded.
8. The petitioner company demanded certain information, to which another notice was issued by the Department dated 19.12.2017 and petitioner company thereafter filed its reply on 28.12.2017. It is stated that the petitioner company was engaged in activities i.e. Designing, Procurement, Erection and Commissioning and dealing in solar power generating system/plant, EPC work, which included complete infrastructure and other related miscellaneous work. All items i.e. plant and machinery including parts thereof used in generation of electricity from solar energy is a part of solar power generating system. It was pointed out that the excise exemption on various parts of plant and machinery and any other item thereof used for transmission line have been granted by the Ministry of New and Renewable Energy (MNRE). All the items used in generation of electricity will be treated as part of solar power generating system/plant and generation of electricity is only possible when it reaches to grid. Opinions of relevant person and information received under Right to Information Act relating to the transmission line equipment to be exempted, were also submitted and relevant documents were also filed.
9. The Department passed the impugned assessment order dated 30.1.2018 relying upon the decision in the case of M/s Suzlon Energy Ltd. (supra) given by Commissioner of Commercial Taxes on 16.10.2014 u/s 36 of the Act of 2003. The Assessing Officer has held that certain items used in the generating system were required for electricity (Downloaded on 05/06/2021 at 09:43:33 PM) (5 of 17) [CW-9796/2018] generation, to be taxable. The assessment order, mentions about the general and scientific facts to reach to the conclusion that the Junction Box, Inverter, Transformer, Vaccum Circuit Breaker, Availability Base Tariff Meter, Switch Yard, Isolator, Lighting Arrestor, Control and Relay Panel and DO Fuse would not come within the ambit of electricity generation and were thus taxable. The Assessing Officer further mentioned of 6 stages available from generation up to use of electricity power plant generating electricity, which are (1) Power Plant Generates electricity (In this case solar PV Modules Generate the electricity), (2) Transformer steps up voltage for transmission, (3) Transmission lines carry electricity long distances, (4) Neighborhood transformer steps down voltage, (5) Distribution lines carry electricity to house and (6) Transformers on poles step down electricity before it enters houses.
10. The opinions given by the Commissioner Commercial Tax Department was, therefore, held to be not acceptable. The information given by the Rajasthan Renewel Energy Corporation Ltd., informing the assessee-company of the tax not being payable and items not coming within the ambit of transmission, was held to be not acceptable and accordingly case was treated to be of avoidance and evasion of tax and penalty has been imposed in terms of the Section 61 of the Act.
11. The petitioner also placed on record the notification dated 30.03.2016 issued by the Finance Department, whereby the item number (v) and entries thereto in column number 2 against serial number 21 in Schedule V appended to the Act of 2003, has been substituted, according to which electrical goods of all kinds used in the generation, transmission, distribution or in connection with the consumption of electricity, including all kinds of inverters, uninterrupted power supply (UPS), holders, plugs, sockets, switches, casings, capings, jacks, reapers, bends, coupling boxes, meter boxes, switch boxes, fan box, junction box, meter boards, switch boards, panel boards, wooden plugs, lightning arrestors, electrical earthenware and porcelain ware, tube light starters, chokes, jointing materials, heating elements, general lighting system (GLS) lamps, protectors, stands, fixtures, fittings, battens, have been exempted/examined from RVAT with effect from 8.3.2016.
12. Similar orders of assessment so passed for different years have been challenged in other connected writ petitions.
13. The first submission of the learned Senior Counsel for the petitioner is with regard to the provision of the Act of 2003. It is stated that Section 21 provides that (Downloaded on 05/06/2021 at 09:43:33 PM) (6 of 17) [CW-9796/2018] once assessment has been done after filing of the return, reassessment u/S 25 of the Act of 2003 could be done only when assessing authority or any officer authorized by the Commissioner on his behalf, has reason to believe that dealer has avoided or evaded tax.
14. It is submitted that issuance of notice u/S 25 to the petitioner-company was wholly illegal. There was no reason to believe that the petitioner company had avoided or evaded tax. On mere change of opinion, reassessment cannot be done. Change of opinion by the Commissioner would not result in issuance of notice under Section 25 of the Act of 2003 and entire proceedings therefore are liable to be quashed and declared to be non est.
15. Learned counsel in support of his submissions has relied on judgment reported in AIR 1961(2)SCR241:
"Calcutta Discount Co. Ltd Vs. Income Tax Officer, Companies District I Calcutta and Another, wherein held as under:
"6. To confer jurisdiction under this section to issue notice in respect of assessments beyond the period of four years, but within a period of eight years, from the end of the relevant year two conditions have therefore to be satisfied. The first is that the Income-tax Officer must have reason to believe that income, profits or gains chargeable to income- tax have been under- assessed. The second is that he must have also reason to believe that such " under assessment " has occurred by reason of either (i) omission or failure on the part of an assessee to make a return of his income under s. 22, or (ii) omission or failure on the part of an assessee to disclose fully and truly all material facts necessary for his assessment for that year. Both these conditions are conditions precedent to be satisfied before the Income-tax Officer could have jurisdiction to issue a notice for the assessment or re-assessment beyond the period of four years but within the period of eight years, from the end of the year in question."
16. He further relied on the judgment passed by the Apex Court in Civil Appeal No.6714/2009"State of UP Vs. Aryaverth Chawl Udyog" SC judgment dated 27.11.2014.
"16. This appeal requires our consideration and decision on the limited question of whether the High Court-was justified in quashing the reassessment proceedings initiated Under Section 21(2) of the Act on (Downloaded on 05/06/2021 at 09:43:33 PM) (7 of 17) [CW-9796/2018] grounds that it was merely based on change of opinion and therefore, bad in law.
28. This court has consistently held that such material on which the assessing authority bases its opinion must not be arbitrary, irrational, vague, distant or irrelevant. It must bring home the appropriate rationale of action taken by the assessing authority in pursuance of such belief. In case of absence of such material, this Court in clear terms has held the action taken by assessing authority on such "reason to believe" as arbitrary and bad in law. In case of the same material being present before the assessing authority during both, the assessment proceedings and the issuance of notice for reassessment proceedings, it cannot be said by the assessing authority that "reason to believe" for initiating reassessment is an error discovered in the earlier view taken by it during original assessment proceedings. (See DCM v. State of Rajasthan [1980] 4 SCC 71)."
17. He also relied on judgment reported in 2010(2)SCC723 "CIT Vs. Kelvinator of India Ltd. Learned counsel also relied on judgment passed by Coordinate Bench of this court reported in 2014(45)Raxmann.com468"Mukesh Modi Vs. DCIT"
and further relies on 2007(15)SCC435:" Binani Industries Vs. ACCT".
18. Learned counsel secondly submits that subsequent decision cannot be used for reopening of assessment and in support thereof relied on judgment reported in 2013(358)ITR129(SC) DCIT Vs. Simplex Concrete Piles (India)Ltd. And 2015(57)Taxmann.com 240 (Punjab & Haryana): Mitsubishi Electrix Automatic India(P) Ltd. Vs. Union of India and judgment passed by this court dated 15th April, 2009 in S.B.Sales Tax Revision Petition No. 58/2009 "C.T.O. Vs. Karyapalak Engineer",, mere because of change of opinion on account of change of law or on account of new interpretation taken by Apex Court, in any case does not render the assessment already done as evasion and reassessment on the said basis would not be available.
19. The respondents have filed their reply and submitted that the advantage while making assessment was taken by the petitioner company by misleading the authorities which could be only noticed when the survey was conducted and the notification (Downloaded on 05/06/2021 at 09:43:33 PM) (8 of 17) [CW-9796/2018] dated 26.3.2012 was very much clear that it pertains to plant and machinery including parts thereof, used in generation of electricity from solar energy and wind power, which were exempted and any other goods which are used beyond generation cannot be permitted to take advantage of the notification. The petitioner had taken total benefit even on the goods which were not part of generation of electricity and were not eligible for the said benefit. Once the Commissioner has determined RVAT vide its order dated 16.10.2014 holding that goods and parts used in plant and machinery for installation of wind mill for generation of electricity are exempted under the notification dated 26.03.2012 but other goods used beyond it i.e. DP Yard and supply and installation of transformer and other equipments therein, cannot be treated as plant and machinery under notification dated 26.3.2012. The order dated 16.10.2014 being very well known to everybody, it would be treated as evasion of tax and therefore this order is in accordance with law.
20. Learned Senior Counsel for the petitioner has also submitted that the respondents had wrongfully relied on the case of M/s. Suzlon Energy Ltd., which is the case relating to wind power and is not in relation to solar energy. The attempt made by assessing officer is based on surmises and conjunctures. Any exemption in terms of Section 135 is on plant and machinery including parts thereof used in generation of electricity. Since all the parts, which have been mentioned in the assessment order, are the parts of the plant and machinery used in the generation of electricity from solar energy. So far as the company is concerned, it does not set up the lines for transmission, which is work of the concerned corporations/companies of the State Government. The EPC agreement is related to generation of electricity from solar power and for setting up power plant and maintenance thereof and there could be no further interpretation than the contents of the entry no.135.
21. Learned counsel has also taken this Court through Rajasthan Solar Energy Policy 2014 to submit that the definition of solar power plant is provided as under :
"3.1(39) Solar Plant/Solar Power Plant : means a power plant or system utilizing solar energy through solar photo-voltaic or concentrated solar thermal (Downloaded on 05/06/2021 at 09:43:33 PM) (9 of 17) [CW-9796/2018] devices including its integration into conventional fossil fuel for generating of electricity."
22. The goods purchased from out side the State were electronic goods used for manufacturing purposes of the solar energy and the same are not notified goods. It is argued that the solar plant cannot be set up without the goods as mentioned in the assessment order and in absence of any one of the goods mentioned therein, the solar power plant cannot be made to function in generating electricity. In the circumstances, therefore, the assessment order was not required to be interfered with and there was no case for initiating proceedings again u/S 25.
23. Having noted the submissions, this court finds that the provision of the RVAT Act, 2003 need to be quoted:
"21. Filing of return.- "(1) Every registered dealer shall assess his liability under this Act, and shall furnish return, for such period, in such form and manner, and within such time and with such late fee not exceeding fifty thousand rupees, for delayed furnishing of returns, as may be prescribed, to the assessing authority or to the officer authorized by the Commissioner."
(2) Any person or a dealer as may be required by a notice to do so by the Assessing authority or by an officer authorized by the Commissioner in this behalf, shall furnish return for such period in such form and manner and within such time as may be specified. (3) Notwithstanding anything contained in sub-section (1), where "the Commissioner" is of the opinion that it is expedient in the public interest so to do may by a notification in the Official Gazette extend the date of submission of the returns or may dispense with the requirement of filing any or all the returns by a dealer or class of dealers
22. Assessment on failure to deposit tax or submit return or audit report.- (1) Where a dealer has failed to deposit tax in accordance with the provisions of section 20 within the notified period or has failed to submit a return in accordance with the provisions of section 21, or an audit report in accordance with the provisions of section 73, within the prescribed period, the assessing authority or the officer authorized by the Commissioner shall, without (Downloaded on 05/06/2021 at 09:43:33 PM) (10 of 17) [CW-9796/2018] prejudice to the penal provisions in this Act, after making such enquiry as it may consider necessary and after giving the dealer a reasonable opportunity of being heard, assess tax for that period to the best of his judgment.
(2) The tax assessed in sub-section (1), after adjustment of input tax credit and the amount deposited in advance in this behalf, if any, shall be payable by the dealer within thirty days from the date of service of the notice of demand. However, the assessing authority or the officer authorized by the Commissioner, after recording reasons in writing, may reduce such period.
(3) The tax deposited under sub-section (2) shall be adjusted in the assessment for the relevant period. (4) No order under this section shall be passed after the last date of submission of annual return for that year.
23. Self Assessment.- Every registered dealer who has furnished, all the returns under the provisions of section 21 or audit report as contemplated in section 73 along with all the returns under section 21, for the year, before issuance of any notice under sub-section (2) of section 24, shall, subject to the provisions of section 24, be deemed to have been assessed on the basis of such returns and such audit report, as the case may be.
24. Assessment.- (1) Assessment of a dealer shall be for a year and it shall be made after the last date of furnishing of annual return for the year. However, the assessment of a closed business may be made immediately after its closure.
(2) Every return furnished by a registered dealer shall be subject to such scrutiny as may be determined by the Commissioner, to verify its correctness, and if any error is detected in any return or returns, the assessing authority or the officer authorised by the Commissioner shall serve a notice in the prescribed form to the dealer for rectification of the errors and the dealer may file a revised return within such period as specified therein.
(3) Where the dealer, in pursuance of the notice issued under subsection (2),-
(Downloaded on 05/06/2021 at 09:43:33 PM)(11 of 17) [CW-9796/2018]
(a) furnishes the revised return or returns, as the case may be, in terms of the notice and deposits the tax, interest, late fee, if any, he shall be deemed to have been assessed under section 23;
(b) does not furnish revised return or returns, as the case may be, or the revised return or returns, as the case may be, furnished by the dealer is not in terms of the notice, the assessing authority or the officer authorised by the Commissioner, after giving an opportunity of being heard to the dealer and after conducting such enquiry as he may consider necessary, shall assess the dealer to the best of his judgment on the basis of the material available on record.
(4) Where a dealer, fails to furnish return in accordance with the provisions of section 21, the assessing authority or the officer authorised by the Commissioner, after giving an opportunity of being heard to the dealer and after conducting such enquiry as he may consider necessary, shall assess the dealer to the best of his judgment on the basis of the material available on record and shall impose a penalty, for non-filing of returns, of an amount equal to twenty percent of the net tax payable subject to a minimum of five thousand rupees.
(5) No assessment order under this section shall be passed after the expiry of two years from the end of the relevant year. However, the Commissioner may for reasons to be recorded in writing, extend such time limit in any particular case by a period not exceeding six months.
(6) Notwithstanding anything contained in sub- section (5), where any proceeding relating to an assessment is subject to adjudication before the Tax Board or a competent court or any other authority under this Act, assessment in such matters may be passed within two years from the final adjudication of such proceedings. The limitation of two years shall be counted from the date of communication of the order of such final adjudication to the assessing authority.".
25. Assessment in case of avoidance or evasion of tax. - (1) Where the assessing authority or any officer authorized by the commissioner in this behalf has reasons to believe that a dealer has avoided or evaded tax or has not paid tax in accordance with law or has availed input tax credit wrongly, he may after (Downloaded on 05/06/2021 at 09:43:33 PM) (12 of 17) [CW-9796/2018] giving the dealer a reasonable opportunity of being heard, determine at any time and for any period, that taxable turnover of such dealer on which tax has been avoided or evaded or has not been paid in accordance with law or wrong input tax credit has been availed and assess the tax to the best of his judgment. (2) The tax assessed under sub-section (1), after adjustment of input tax credit and the amount deposited in advance in this behalf, if any, shall be payable by the dealer within thirty days from the date of service of the notice of demand. However, the assessing authority or any officer authorized by the Commissioner, after recording reasons in writing, may reduce such period.
(3) The assessment under sub-section (1) shall not be made after the expiry of a period of six months from the date of making out the case. However, the Commissioner may, for reasons to be recorded in writing, in any particular case, extend this time limit for a further period not exceeding six months. (4) Notwithstanding anything contained in this Act, where notice has been issued under sub- section (1), the authority issuing such notice shall be competent to make the assessment for the relevant year. (5) No notice under sub-section (1) shall be issued after the expiry of five years from the end of the relevant year.
(6) Notwithstanding anything contained in sub- sections (3) and (5), where any proceeding relating to an assessment is subject to adjudication before the Tax Board or a competent court or any other authority under this Act, assessment in such matters may be passed within two years from the final adjudication of such proceedings. The limitation of two years shall be counted from the date of communication of the order of such final adjudication to the assessing authority."
24. The aforesaid provision thus provide that the dealer has to submit his return in terms of the Act on the date which may be extended as per Section 21(3). If the person does not file the return within prescribed period, the Commissioner may conduct an enquiry and grant reasonable opportunity by issuing notice of assessment of tax and thereafter assess the tax and direct to deposit the amount within 30 days from the date of service of notice in terms of Section 22. The (Downloaded on 05/06/2021 at 09:43:33 PM) (13 of 17) [CW-9796/2018] assessment made and return filed in terms of Section 21 would be treated as self-assessment and will be deemed to have been assessed subject to any scrutiny which may be made u/S 24(2) of the Act. On the basis of the scrutiny conducted u/S 24(2) if any revised return is required to be filed, the same would be furnished in terms of the notice. On such furnishing, the Commissioner shall, after giving opportunity of hearing, pass order of assessment. After such assessment in terms of Section 23 or Section 24, the assessment is final, however, in terms of Section 25, where the Assessing Authority has reason to believe that the dealer has avoided or evaded tax or has not paid tax in accordance with law or assessed the tax wrongly, he may give notice to the concerned dealer and determine taxable turn over, the said assessment has to be made within a period of six months from the date of making out the case.
25. In the facts of this case, in terms of Section 24, the assessment has already been done by the company at the said stage. There is already a provision of scrutiny by the Commissioner to verify the correctness of the return. However, in the present case, notice has been issued u/S 25 i.e. there is reason to believe that the petitioners have avoided or evaded tax. The phrase 'reason to believe' has been examined in detail in case of 2010 (2) SCC 723 "CIT Vs. Kelvinator of India Ltd" Almost identical question came up before the Apex Court in relation to Section 147 of the Income Tax Act. After taking note of the amendments made in section 147 from time to time; the Apex Court noted that only one condition has remained where the Assessing Officer has reason to believe that income has escaped assessment, confers jurisdiction to reopen the assessment. The Apex Court has noted as under:
"6. We must also keep in mind the conceptual difference between power to review and power to re- assess. The Assessing Officer has no power to review; he has the power to re-assess. But re-assessment has to be based on fulfillment of certain pre-condition and if the concept of "change of opinion" is removed, as contended on behalf of the Department, then, in the garb of re-opening the assessment, review would take place.
7. One must treat the concept of "change of opinion" as an in-built test to check abuse of power by the Assessing Officer. Hence, after 1 st April, 1989, (Downloaded on 05/06/2021 at 09:43:33 PM) (14 of 17) [CW-9796/2018] Assessing Officer has power to re-open, provided there is "tangible material" to come to the conclusion that there is escapement of income from assessment. Reasons must have a live link with the formation of the belief. Our view gets support from the changes made to Section 147 of the Act, as quoted hereinabove. Under the Direct Tax Laws (Amendment) Act, 1987, Parliament not only deleted the words "reason to believe" but also inserted the word "opinion" in Section 147 of the Act. However, on receipt of representations from the Companies against omission of the words "reason to believe", Parliament re-introduced the said expression and deleted the word "opinion" on the ground that it would vest arbitrary powers in the Assessing Officer."
26. Thus, the change of opinion or an opinion relating to the assessment by the Commissioner u/s 36 of RVAT Act, 2003 in relation to another case would not effect the assessment already made. Similarly view has been taken in "State of UP Vs. Aryaverth Chawl Udyog & Ors. "reported in [2016] 91 VST 1 (SC) while examining the provision "reason to believe" Apex court has held as under:
"28. This court has consistently held that such material on which the assessing authority bases its opinion must not be arbitrary, irrational, vague, distant or irrelevant. It must bring home the appropriate rationale of action taken by the assessing authority in pursuance of such belief. In case of absence of such material, this Court in clear terms has held the action taken by assessing authority on such "reason to believe" as arbitrary and bad in law. In case of the same material being present before the assessing authority during both, the assessment proceedings and the issuance of notice for reassessment proceedings, it cannot be said by the assessing authority that "reason to believe" for initiating reassessment is an error discovered in the earlier view taken by it during original assessment proceedings. (See DCM v. State of Rajasthan [1980] 4 SCC 71).
36. In the instant case, reliance placed on the change in law as specified under the Circular and action taken on the basis of directions issued by the Commissioner of Trade Tax, the assessing authority has reached the purported "reason to believe" that (Downloaded on 05/06/2021 at 09:43:33 PM) (15 of 17) [CW-9796/2018] reassessment proceedings are required to be initiated. The material in existence remains the same during both, the assessment and the reassessment proceedings and no additional material or facts have been referred to explaining such "reason to believe"
as per the mandate of Section 21(1) of the Act before initiating reassessment proceedings. In fact, the assessing authority has not indicated any material at all that has given rise to such reason and thus, on the basis of mere "change of opinion" concluded that exemption on purchase tax has wrongly been allowed."
27.In the case of "Mukesh Modi Vs. Deputy Commissioner of Income-tax" reported in 267 CTR 409 para 38,which reads as under:
"38. Upon a close scrutiny of the legal position, which has emerged out for construing the term "reason to believe", the decks are clear for its interpretation. The expression "reason to believe" means the existence of rational and intelligible nexus between the reasons and the belief, so that on such reasons no one properly instructed on facts and the law could reasonably entertain the belief."
28. Thus, I find that the respondents could not issue notice u/s 25 on the basis of opinion taken in the case of Suzlon Energy as reason to believe of avoiding or evasion of tax. An ancillary question which arises for consideration is whether there was a change of opinion regarding the question of exemption in relation to the solar plant. A look at the order dated 16.10.2014,passed in Suzlon Energy which has been placed by the respondents along with reply, shows that it has been determined under Section 36 of the Act of 2003 in the case of M/s. Suzlon Energy Ltd., by the Commissioner Commercial Tax and categorically held that the goods/parts, which are used for plant and machinery for installation of wind mill for generation of electricity, is exempted under the notification dated 26.03.2012 but other goods, which are used beyond it, namely, DP Yard and supply and installation of transformer and other equipment therein, laying of electric lines, installation of power evacuation facilities like sub-station, laying of EHV Line to carry electricity to Grid Sub Station of Utility and installation of EHV Bays at Utility Sub Station etc., cannot be treated as plant and machinery including (Downloaded on 05/06/2021 at 09:43:33 PM) (16 of 17) [CW-9796/2018] parts as mentioned in the Notification dated 26.03.2012 and they are not exempted.
29. So far as the present case of the petitioner is concerned, it is related to solar energy and not wind mill. It is the submission of the petitioner that the various parts mentioned in the assessment order are complete parts of the solar energy plant, which comprehensively are utilized for generating electricity from solar energy and that without those parts mentioned in the assessment order, the solar energy plant cannot be set up.
30. Thus, it cannot be said that there was a change of opinion in relation to Entry No.135 so far as solar plant is concerned. This court finds that the individual parts form as part of the whole plant and machinery for generation, have to be exempted in terms of the entry No.135 which reads as under:
"Plant & Machinery including parts thereof, used in generation of electricity, from-
"(a) Solar Energy
(b) Wind Power
(c) Biomass as defined under policy for promoting generation of electricity from Biomass, 2010, of Government of Rajasthan"
31.The word used in entry no.135, namely, plant and machinery including parts thereof would mean all the parts which are included for setting up plant and machinery. One cannot individually isolate one part of the plant to reach to conclusion that there has been evasion of tax. Parts forming the plant cannot be individually picked up for imposition of tax. Thus exemption is for plant including parts thereof.
32. It is not of the case of the revenue that the company was also engaged in distribution or transmission of electricity or setting up of solar power plant. This has to be treated as exempted from RVAT in terms of the notification dated 26.3.2012. Thus viewed, the order of assessment on the various parts has to be set aside as it is based on surmises and conjectures and is liable to be quashed.
33. Even otherwise, taken into consideration Commissioner has said that reassessment notice is based only on the decision taken by the Commissioner in M/s. Suzlon case, entire proceedings are liable to be quashed and set aside as this Court has already held that the decision taken by the Commissioner in M/s.
(Downloaded on 05/06/2021 at 09:43:33 PM)(17 of 17) [CW-9796/2018] Suzlon's case would not be applicable to cases relating to solar energy. The submission of learned counsel for the revenue that the decision of the Commissioner u/s 36 of the RVAT Act, 2003 would be therefore applicable on the case of the petitioner, is misconceived. Section 36 of the Act of 2003 provides for determination of disputed questions. The determination done in M/s. Suzlon Energy Ltd.(supra) is only with relation to question whether tax is payable in respect of any particular thing in any goods to or result in manufacturing of goods that is Section (34)
(e), such determination would only apply to matters relating to wind mill and not to solar plant. While wind mill processes wind energy for electrical energy and transmits it for far off electricity station, the solar plant only generates electricity. Thus, the proceedings undertaken against the petitioner are quashed and set aside.
34. The writ petition is accordingly allowed.
35. No costs."
In that view of the matter, the writ petition is allowed in view of the judgment passed by the Co-ordinate Bench of this court in the matter of M/s Rays Power Infra (supra).
(INDERJEET SINGH),J MG/60 (Downloaded on 05/06/2021 at 09:43:33 PM) Powered by TCPDF (www.tcpdf.org)