Ms Rays Power Infra PVT LTD vs. State Of Raj And Ors

Held

The Court held that it would entertain the writ petition, deviating from the rule of alternative remedy, because the issue involved interpretation of a statutory provision and the appellate authority might be bound by a prior departmental decision in the Suzlon Energy case, rendering appeals futile. The Court found that Entry No. 135 of Schedule-1 of the Rajasthan Value Added Tax Act, 2003, exempts plant and machinery, including all its parts, used in the generation of electricity from solar energy. The Court reasoned that individual parts forming the solar power plant cannot be isolated for taxation, as they are integral to the generation process. The Court further held that the reassessment proceedings initiated based on the M/s. Suzlon Energy Ltd. case were invalid. The Court distinguished the Suzlon case, which dealt with wind energy and transmission facilities, from the Petitioner's case involving solar energy generation. The Court concluded that the assessment order was based on surmises and conjectures and was liable to be quashed. The proceedings against the petitioner were quashed and set aside.

Facts

M/s Rayas Power Infra Pvt. Ltd. (Petitioner) filed a writ petition challenging assessment orders that imposed VAT on parts used in solar power generation. The Petitioner argued that Entry No. 135 of Schedule-1 of the Rajasthan Value Added Tax Act, 2003, exempted plant and machinery, including parts thereof, used in solar energy generation. The revenue contended that alternative remedies were available. The Petitioner had been filing returns based on this exemption since 2012-2013, and a prior income tax assessment found no tax liability. A survey conducted by the Anti-Evasion Zone found no irregularities. However, a notice was later issued under Section 9 of the CST Act read with Sections 25 & 61 of the RVAT Act, demanding VAT, penalty, and interest on electrical goods used for generation, conversion, transmission, and distribution, citing a previous decision in the case of M/s. Suzlon Energy Ltd.

Key Issues

1. Whether the High Court should entertain the writ petition despite the availability of an alternative remedy of appeal, considering the issue involves interpretation of law and the appellate authority might be bound by a prior departmental decision? (Petitioner: Yes, as the issue is interpretation and appeals would be futile. Revenue: No, due to availability of alternative remedy, citing Titaghur Paper Mills, United Bank of India, Authorized Officer State Bank of Travancore, and Comm. of Income Tax v. Chhabil Das Agarwal.) 2. Whether the parts used in the generation of electricity from solar energy are exempted from VAT under Entry No. 135 of Schedule-1 of the Rajasthan Value Added Tax Act, 2003? (Petitioner: Yes, all parts are integral to the solar power generating system. Revenue: Not explicitly recorded, but implicitly argued against by demanding tax on certain parts.) 3. Whether the reassessment proceedings initiated based on a 'change of opinion' derived from the M/s. Suzlon Energy Ltd. case are valid, particularly when the Suzlon case pertains to wind energy and not solar energy? (Petitioner: No, the reassessment is based on a wrong interpretation and change of opinion. Revenue: Not explicitly recorded, but implied by initiating reassessment.)