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TMI Blog2019 (2) TMI 1389X X X X Extracts X X X X X X X X Extracts X X X X ..... t has been stated in the writ petition that the petitioner/company is engaged in the business of execution of contracts for construction and commissioning of Solar Power Plants on Engineering, Procurement and Commissioning basis for their clients. The contracts are in the nature of works contract involving supply of material and equipments required for installation and commissioning of such solar power plants, covered by the extended definition of 'sale'. The dispute in the present petition, is in respect of classification of the product 'Substation Equipments' installed by the petitioner/company under the contract with its clients Focal Energy Group of Companies as integral and inseparable part of the works contract for erecting and installing the solar power generating system. 3. The State Government has framed a policy keeping in view the need of generation of power by capturing solar energy and the policy framed on the subject is known as "Policy for Implementation of Solar Based Power Project in Madhya Pradesh"\, 2012". The policy provides various incentives to the developer of the project including exemption from value added tax/entry tax. The policy of exemp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rate of tax in respect of substation equipments supplied/installed by the petitioner during the course of execution of the works contract. However, the respondents have rejected the contention of the petitioner. 7. The order passed by the Commissioner of Commercial Tax dated 25.03.2017 reads as under:- "The applicant has entered into EPC contracts with Focal Energy Group companies for construction and installation of solar power generation system at Sitamau in Dist. Mandsaur (MP) and has supplies various equipments and materials required for execution of the said contract under the contracts executed by and between the parties. The present application relates to determination of rate of tax on supply of certain contracts. The company is duly registered dealer under the provisions of MP VAT Act, 2002. It is well known that the Government of MP has recently announced its solar policy for encouraging establishment of solar power generation systems in MP and various projects have been approved by government. One such project relates to M/s Focal Energy Group who has entered into contracts in question with the applicant company for construction and installation of th solar power pla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elates to 'Renewable Energy Devices or Equipments, including their parts' The said entry enumerates various renewable energy devices and equipments covered by the said entry. Item No.10 of the said Entry No.71 specifies 'Solar Power Generating System' as and item covered by said entry No.71. For the sake of convenience relevant extract of the said entry 71 is reproduced herein below - Entry No.71 Schedule I MP VAT Act, 2002 "Renewable Energy Devices or Equipments, including their parts, that is to say - 1. ---------------, 2. ---------------, 3. ---------------, 4. ---------------, 5. ---------------, 6. ---------------, 7. ---------------, 8. ---------------, 9. ---------------, 10. Solar power generating system 11. ---------------, 12.---------------, Contention of the applicant - As stated above since the existence of a substation is an essential technical requirement of a solar power plant without which the solar energy generated by such plant cannot be put to consumer use and since in the present case as per the contract between the applicant and the client Focal Energy Solar India One (P) Ltd and Globus Steel and Power Pv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents have stated that tax liability has been imposed on non-exempted articles as mentioned hereunder:- "Single Support Tripod Module Rail, C Profile, Switchyard 40 MW MP Steel Structure, Lase Machine, Oil, Cable, Grounding DC & AC, Hardware, marking page, Tripod, Printer etc." 10. As the aforesaid articles do not find place in entry No.71 of Schedule-1, they are taxable articles. The respondents have further stated that exemption is available only in respect of solar power generating system and allied non-essential machinery, part supporting non-essential equipments etc. etc. are taxable. The respondents have stated that the petitioner/company has made an attempt to include non-exemption article in the exemption category, which is not permissible, in light of the statutory provision as contained under the Madhya Pradesh Value Added Tax Act, 2002 and the exemption is only available in respect of the articles mentioned in entry No.71 of Schedule-1 of VAT Notification, 2002 and Entry Tax Notification, 1976. 11. The respondents have placed reliance upon a judgment delivered by Division Bench of Bombay High Court in the case of Commissioner of Sales Tax v/s Jayanand Khira & Co. Pvt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r:- "System. "The word 'system' is defined by the Encyclopaedic Dictionary as a plan or scheme according to which things are connected or combined into a whole; an assemblage of facts or of principles and conclusions, scientifically arranged or disposed according to certain relations, so as to form a complete whole, as a system of philosophy, a system of government". etc. For the purposes of sub-heading 8471 49, the term "SYSTEM" means automatic data processing machines whose units satisfy the conditions laid in down Note 5(B) to Chapter 84 and which comprise at least a central processing unit, one input unit (for example, a keyboard or a scanner), and one output unit (for example, a visual display unit or a printer).[Customs Tariff Act (51 of 1975), I Sch, Import Tariff S. XVI, Chap. 84, Note 8, Sub-heading]" Keeping in view the aforesaid, it can safely be concluded that solar power generating system would necessarily include a substation for evacuation and upliftment of power generated by solar power plants. 16. The Hon'ble Supreme Court in the case of CCE v/s Hewlett Packard India Sales Pvt. Ltd. reported in (2007) 11 STJ 625 has explained the meaning of word ..... X X X X Extracts X X X X X X X X Extracts X X X X
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