TaxTMI 
TaxTMI 
2025 (12) TMI 1888
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....ng and installing Wind Turbine Generators. The petitioner, in the course of its business, during the periods 2017-2018 and 2018-2019, had entered into various contracts for manufacture and erection of Wind Turbine Generators, for its customers. The petitioner treated these contracts as composite supplies of goods and services and paid tax @ 5%. However, the 1st respondent initiated assessment proceedings on the ground that the contracts executed by the petitioner should be treated as works contracts involving immovable property, taxable @ 18%. The 1st respondent, had passed two separate Orders of Assessment, for the periods July 2017 to March 2018 and April 2018 to September 2019 (the disputed turn-over is only up to March 2019), dated 30.12.2020. Aggrieved by these orders, the petitioner has approached the 2nd respondent, by way of an appeal. The 2nd respondent affirmed the orders of the 1st respondent, by way of two separate orders, dated 29.10.2021. 3. Aggrieved by these orders, the petitioner has approached this Court, by way of W.P.Nos.4799 of 2022 and 4801 of 2022. 4. The 1st respondent also initiated penalty proceedings, culminating in two separate orders, dated 29.11.....
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....rator and electronic control unit comes into play. The gear box increases the speed of the shaft between the rotor hub and generator. The generator uses rotational energy of the shaft to generate electricity using electromagnetism principle. Parts and components of Wind Turbine Generator 16. As per the Ministry of New and Renewable Energy clarification to CBEC, the parts of Wind Operated Electricity Generators are (i) Tower: which supports the nacelle and rotor assembly of a wind operated electricity generator; (ii) Nacelle: which consists of gear-box, generator, yaw components, flexible couplings, brake hydraulics, brake calipers, sensors, nacelle plate, nacelle cover and other smaller components; (iii) Rotor: consists of blades, hub, nosecone, main shaft and special bearings, and (iv) Wind turbine controller, nacelle controller and control cables. 17. As per IEC 61400-1 design standards, a wind turbine generator system (WTG) comprises of the following major units:- • One unit of nacelle comprising an assembly of relevant electrical and mechanical components (including high voltage step-up transformer if a....
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....or a design life of 20 years as part of the Type Certificate. 20. The foundation is a key requirement for installing a WTG. Erection and De-erection of a Wind Turbine Generator 21. As per the technical note dt. 01.06.2020 provided with their reply dt.,09.09.2020. The many components that make up a WTG need to be brought to the selected site, fitted with each other and then get erected on the foundation. WTG Erection 22. As per them, the steps/ processes involved in erection and commissioning of WTG at customer site are: (i) Manufacture and Supply of Nacelle assembly, hub assembly, blades, towers, internal cables, internal platforms and internal ladders, power and ground control panel, transformer, WTG earthing system and other associated fittings and accessories of WTG; (ii) Transportation of WTG components from factory to customer site; (iii) Insurance of stores and parts and components; (iv) Site preparation; (v) Construction of civil foundation for installation of WTG; (vi) All civil works including all equipment support structure foundation, cable trench; (vii) Excavation....
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....em in their reply are that - wherever a wind farm is to be built, the roads are cut to make way for transporting parts. At each wind turbine location, the land is graded and the pad area is leveled. A concrete foundation is then laid into the ground, followed by the installation of the pooling substation and the transmission lines. These lines connect the wind turbines to each other in series, and also connect all of them to the pooling substation; that -The tower's sections are received in the site and the tower is kept horizontal until placement. A crane lifts the tower into position, all bolts are tightened, and stability is tested upon completion. The height of the towers range between 90 Meters to 130 Meters; that -The fiberglass nacelle having main drive shaft, gearbox, and blade pitch and yaw control are mounted onto a base frame. The nacelle is then bolted around the equipment. At the site, the nacelle is lifted onto the completed tower and bolted into place and that-The blades are usually bolted onto the Rotor hub before it is lifted, and it is bolted to the Nacelle. 26. The WTGs come into existence at the site upon being erected. These WTGs cannot function wh....
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..... WTG De-erection 28. Following the erection, several activities related to commissioning are undertaken and once commissioned; the wind warm is typically operated at least until the end of its design life. Based on the design margins built into the turbine components, the wind farm can sustain operations beyond the design life also. When WTG is de-commissioned wherein the WTG is de-erected, and the foundation is demolished or left as it is. 29. As per their note dt.01.06.2020, the de-erection of wind turbine can also happen in the following cases. The activities that occur in de-erection are similar to that of erection, the cost is expected to be in the range as the erection cost. * If there are deficiencies in any of the components that endanger the structural integrity and efficiency of the WTG, the turbine would have to be de-erected and sent to a specialized workshop for repair. Once the proper repair of the safety shortcomings is attested by the workshop in writing, the WTG can be re-erected at the site. * If there is a structural integrity issue in the foundation, the WTG would have to be de-erected and stored at an appropriate lo....
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....neral Clauses Act, 1897. 11. In the present cases, both the respondents 1 & 2, after setting out the manner in which the Wind Turbine Generators would be assembled and erected at the site, had held that the Wind Turbine Generators would have to be treated as immovable property, inasmuch as the Turbine Generator Plant cannot be erected without embedding it into the earth and attaching it permanently to the platform created for such purpose. The respondents 1 & 2 also took the view that the installation of such Wind Turbine Generator was with an intention to install the same on a permanent basis and consequently, these units cannot be treated to be movable properties. 12. The learned Government Pleader for Commercial Tax, while reiterating the said stand of respondents 1 & 2, would also contend that the entire unit would have to be treated as one unit and the same cannot be supplied as movable part and immovable part. He would submit that the generation of power, which is the purpose for which the Turbine Generators had been installed, would not be possible unless they are attached permanently to the platform created for such purpose. He would submit that the said platform is u....
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....was bought and brought in a completely knocked-down or semi-knocked-down condition and was erected and installed at the site. The relevant observation of the Hon'ble Supreme Court is extracted hereunder: It may be noted that while this Court invoked permanency test in T.T.G. Industries Ltd. (supra), what was also observed was that if the machinery cannot be shifted and re-erected without dismantling, it would show that it is an immovable property. 11.7.11 In the present case, while mobile tower cannot be shifted to another location without dismantling it, it is to be noted that mobile tower itself was bought and brought in a completely knocked-down (CKD) or semi-knocked-down (SKD) condition and it was erected and installed at the site after assembling the parts. If the said mobile tower is to be shifted to another location, it obviously has to be dismantled and restored to its SKD or CKD condition and thereafter re-erected, which however, would not entail any damage to it. Thus, the present case of the mobile towers differs from the factual matrix of T.T.G. Industries Ltd. (supra). 17. In the present cases also, even according to the facts recorded by the 2nd r....
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...., can be determinative of the nature of the property. If the parties intend that the property in issue is for permanent addition to the immovable property, it will be treated as immovable. If the attachment is not meant to be permanent, it indicates that it is movable. 4. Functionality Test: If the article is fixed to the ground to enhance the operational efficacy of the article and for making it stable and wobble free, it is an indication that such fixation is for the benefit of the article, such the property is movable. 5. Permanency Test: If the property can be dismantled and relocated without any damage, the attachment cannot be said to be permanent but temporary and it can be considered to be movable. 6. Marketability Test: If the property, even if attached to the earth or to an immovable property, can be removed and sold in the market, it can be said to be movable. 18. The aforesaid tests would apply to the facts and circumstances of these cases to show that the Turbine Generator would amount to movable property. The facts recorded by the 2nd respondent states that - 1) The Turbine Generators can be removed and re-located; 2) Th....