TaxTMI 
TaxTMI 
2025 (7) TMI 929
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....17-CE dated 31.10.2017 1,92,81,451/- With penalty of equal amount under section 78(1) Also the Penalty of Rs. 7,000/- under Section 77(1). No penalty of Section 78A has been ordered to be imposed on Shri Yogesh Mehra. 2. The facts relevant for the disposal of these appeals are: 2.1 M/s Vish Wind Infrastructure LLP (herein referred as VWILLP) is a Limited Liability Partnership [LLP] and M/s J.N. Investments & Trading Company Private Limited [hereinafter referred as JNITCL] is a company incorporated under the Companies Act, 1956. Both these appellants are having their registered office at Wind World Towers, Veera Industrial State, Andheri, Mumbai. Both of the appellants have been floated by M/s Wind World (India) Ltd. (hereinafter known as WWIL) which was earlier known as M/s Enercon (India) Ltd. (hereinafter referred as EIL), to be engaged in carrying out various activities for facilitating the setting up of wind energy projects. VWILLP is floated for acquiring, purchasing, selling or otherwise dealing with approvals, allotments etc. for wind power projects including identification of potential wind sites after undertaking power evacuation and related feasibility studie....
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....etting up of wind mill/wind farm projects were also included in the composite work contracts entered into by EIL/WWIL with their customers. Even the price of Developmental Rights was found included in the negotiated price between the customers and EIL/WWIL. 2.4 While conducting search in the premises of both the appellants and perusing the documents as got recovered, department observed that appellants had transferred the project 'Approvals', as were obtained after conducting various activities and 'Allotments' of land, referring them to be Developmental Rights to EIL/WWIL vide on agreement dated 22.09.2010 to enable EIL/WWIL to set up wind farms in the State of Rajasthan, Karnataka and Gujarat to M/s EIL/WWIL against consideration vide Debit Note No. 1 dated 22.9.2010 for the amount of Rs. 194,14,00,000/-. The department observed from the debit note that though the appellants were obtaining DRs for setting up of wind farm but were getting the funding for the same from EIL/WWIL. Department formed the opinion that the appellants were acting on behalf of the EIL/WWIL for setting up of the mega wind farm projects. As also got supported from the Valuation Analysis Report dated ....
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....ms including obtaining governmental approvals from designated nodal agencies. It is submitted that the allegations leveled against the appellants that they were providing 'Business Support Service' to EIL/WWIL are absolutely wrong. It is submitted that the appellants were not rendering any taxable service to EIL/VWIL but were merely undertaking self-supply for acquiring DRs which falls outside the ambit of taxable transactions. Having obtained requisite 'Governmental Approvals' and acquired Exclusive Right for the development of wind farms and power evacuation infrastructure, these approvals and allotments constitute the Development Rights which were actually transferred to EIL/WWIL on principal to principal basis without any agency relationship between the appellants and EIL/WWIL. It is apparent from the facts on record that those 'Allotment and Approvals' were obtained in the name of the appellants and were sold and transferred to M/s EIL/WWIL that too after several years of acquisition vide respective agreements i.e. of dated 22.09.2010 and of 11.03.2011 against the purchase value as consideration of sale. These Development Rights were procured after following due processes by t....
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....vable property to EIL/WWIL. 4.3 Learned counsel further impressed upon the definition of 'Business Support Services' given under Section 65(104C) of Finance Act, 1994 and impressed upon that the definition seeks to cover services which are auxiliary, ancillary, and in support of the business of the client. The list of services given in the provisions clearly indicates that the activities which are of the nature of outsourced services are sought to be covered under the aforesaid taxable head. It is mentioned that the appellants are not undertaking any of those specified activities. Above all, the transaction has been undertaken on Principal to Principal Basis. Further, reliance on the definition of service given under Section 65B(44) of the Finance Act has also been laid to impress upon that any activity which constitute a transaction in money or actionable thing or an activity of transfer of title in goods or immovable property by way of sale, or in any other manner shall not be included in the said definition of service. Since the benefits arising out of land are also immovable property by virtue of Section 3 sub-section 26 General Clause Act, the impugned transaction of transfe....
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....gy feasibility and viability on a particular site etc. Therefore, the approvals and allotments for setting up wind farm on a particular site is not just the right to develop the specific site as wind farms but it is an outcome of several activities being rendered by the appellants. 5.1 Learned Departmental Representative led emphasis on the fact that once an entity acquires approvals and allotments for a particular site from the respective governmental authorities, only that entity, its assignee or transferee of these rights is allowed to set up WTG in that area without transferring the same to any one else. The said fact was duly acknowledged by Shri S.B. Patil, Deputy Director of M/s Gujarat Energy Development Agency in his statement dated 10.2.2015 as was recorded under Section 14 of Central Excise Act, 1944 read with Section 83 of the Finance Act 1994. Similar statement of engineer (R&C) of M/s Gujarat Energy Transmission Corporation Limited is on record. Based on those statements department had alleged that the term Development Rights as mentioned by both the appellants in the agreements with EIL/WWIL is nothing but a strategy to camouflage the transactions of providing serv....
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.... by the appellants VWILLP/JNIPL. Documentary evidence unearthed during the investigation revealed that EIL had the facility to manufacture wind turbines, and VWILLP/JNIPL had the required experience and infrastructure to set up the wind farms. Thus it was concluded that the appellants acted on behalf of EIL/WWIL to facilitate them by creating the infrastructure and providing the necessary support and assistance by completing the essential formalities and obtaining the required approvals and permissions from the various governments/state nodal authorities that are essential for setting up wind farms, EIL/WWIL helped them financially. Thus, both the appellants were actually providing Support Services to EIL/WWIL. Being the service providers and BSS being taxable, the appellants were liable to pay service tax on the amount received from EIL/WWIL. Hence the demand is rightly confirmed. 5.3 With these submissions, the learned Departmental Representative impressed upon no infirmity in the impugned order under challenge and the appeal is prayed to be dismissed. 6. Having heard rival contentions of the parties, perusing the entire record and the decisions relied upon by both the p....
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....y be divided into two parts i.e., one is the main part and the other is the inclusive part. The first part of the definition is - "infrastructural, operational, administrative, logistic, marketing or any other support of any kind comprising functions that entities carry out in ordinary course of operations themselves but may obtain as services by outsourcing from others for any reason whatsoever" and the second part is- "shall include advertisement and promotion, construction or works contract, renting of immovable property, security, testing and analysis". 6.3 The list of services mentioned in this provision clearly indicates that the activities in support of business of client are actually outsourced services. The CBEC vide Circular No. 109/3/2009-ST dated 23.02.2009 further clarified that 'Business Support Service' is a generic service of providing support to the business or commerce of the service receiver. In other words, the principal activity is to be undertaken by the recipient while the service received is to support the business or commerce of the said recipient. 6.4 Term 'Service' is defined under Section 64B(44) of the Act as follows.: "Section 65B(44) 's....
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.... (26) inmovable property' shall include land, benefits to arise out of land, and things attached to the earth, or permanently fastened to anything attached to the earth". If, therefore, any benefit arises out of the land, then it is immovable property. Considering Section 10 of the Specific Relief Act, such a benefit can be specifically enforced unless the respondents establish the compensation in money would be an adequate relief. Can FSI/TDR be said to be a benefit arising from the land Before answering that issue we may refer to some judgments for that purpose in Sikandar and Ors v Bahadur and Ors 27 ILR 462 a Division Bench of the Allahabad High Court held that right to collect market dues upon a given piece of land is a benefit arising out of land within the meaning of Section 3 of the India Registration Act, 1877. A lease, therefore, of such right for a period of more than one year must be made by registered instrument. A Division Bench of the Oudh High Court in Ram Jawan and Anr v Flanuman Prasad and Ors AIR 1940 Oud 409 also held that bazaar dues constitute a benefit arising out of the land and therefore a lease of bazaar dues is a lease of immovable Allahabad High ....
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....re' which includes the right to get their property, including the ability to construct buildings, alter existing structures, or change the use of the land. These rights are often regulated by local zoning laws and building codes, which dictate what can be built and how. Thus the development rights can be understood to mean in context of following: 1. Ownership and Regulation: * Development rights are inherent to land ownership, meaning the owner has the primary authority to decide how the property is developed. * However, these rights are not absolute and are subject to regulations set by local governments. * Zoning laws, building codes, and environmental regulations all play a role in shaping how land can be developed. 2. Transferable Development Rights (TDR): * TDR allows landowners to separate their development rights from their land and sell them to other land owners. * This can be a way to protect environmentally sensitive areas or historic landmarks while still allowing for growth in other areas. * For example, a landowner in a historic district might sell their development rights to a developer in a different area, allowing the developer to build ....
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....services to their customers. The unrelated third parties for setting up of the Wind Mill/wind farm projects for them on turnkey basis i.e. they were entering into composite contracts for setting up of the wind farm project as a complete package with other parties. (v) The transaction under dispute is between the VWILLP and JNITPL with EIL/WWIL pursuant to the agreements dated 22.9.2010 and 11.03.2011 respectively which are Agreements for Transfer of Project Approvals and Allotments. (vi) The amount of consideration for the said agreements is mentioned as 'Purchase Consideration' in those agreements and is recorded as 'Sale of Allotment/Approvals' in the financial statements of the appellants; (vii) The agreement coins the approvals as "developer permission". From the above admissions on record it becomes clear that the appellants are incorporated by EIL/WWIL to do some of such activities as were undertaken by EIL/WWIL to be done for their customers. Precisely the preparatory work for enabling EIL/WWIL to erect and commission the Wind Farms has been done by appellants. This observations gets support from the fact that EIL/WWIL while entering into the agreements with....
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....structure for evacuation of the energy and many other factors. Therefore, a development right for a wind farm site is the right to develop a wind farm at a particular site. Once an entity acquires a development right for a particular site, only that entity or its assignee or the transferee of these rights has the right to setup a WTG in that area. A development right for wind farm for a particular site is achieved on successfully discovering a potential wind power project at a particular site, by assessing wind speeds and estimated energy generation, known as Wind Monitoring, followed by obtaining the required approvals from the Government / Regulatory Authority." Further the process cycle for obtaining such development rights for wind farm sites has been elaborated by those consultants in the said Valuation report as below: Concept Stage Identification Identification of site based on wind pattern studies sourced from various agencies Approval If studies are favorable, obtain approvals for further wind energy potential studies Wind Monitoring Wind Mast Installation Once approval is received, Wind Masts are installed to study the wind patterns over a period of ti....
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....he said report are also observed: "From the above, it can be seen that EIL were having the facilities for manufacture of wind turbines and VWIL were having the required experience and infrastructure for setting up the wind farms. It appears that VWIL were acting on behalf of EIL to facilitate them by creating the infrastructure and providing the necessary support and assistance by completing the necessary formalities and obtaining the required approvals and permission from the various Government/State Nodal authorities for setting up of wind farm." 13. It becomes evidence that though the application for setting up of wind farm of capacity 159.2 MW was made by VWIL to RREC but the funding for the same was provided by EIL/WWIL. This goes to show that VWIL were acting on behalf of EIL/WWIL while making the application for setting up of the 159.2. MW wind farm project. 14. From the project summary information and other documents in respect of the wind farm project in Gujarat it can be seen that EIL was the Developer of the project and some of the approvals for the project including approval for forest land were obtained by EIL. However, the approval for diversion of reserve forest ....