Gujarat High Court
Renew Sun Energy Pvt. Ltd vs State Of Gujarat on 3 March, 2025
NEUTRAL CITATION
C/SCA/567/2025 JUDGMENT DATED: 03/03/2025
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 567 of 2025
With
R/SPECIAL CIVIL APPLICATION NO. 5075 of 2024
FOR APPROVAL AND SIGNATURE:
HONOURABLE MRS. JUSTICE MAUNA M. BHATT sd/-
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Approved for Reporting Yes No
YES
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RENEW SUN ENERGY PVT. LTD.
Versus
STATE OF GUJARAT & ORS.
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Appearance:
MR DHAVAL VYAS, SENIOR ADVOCATE with
MR MOHIT A GUPTA (8967) for the Petitioner(s) No. 1
MS ROSHNI PATEL, AGP for the Respondent(s) No. 1
MR HS MUNSHAW (495) for the Respondent(s) No. 2,3
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CORAM:HONOURABLE MRS. JUSTICE MAUNA M. BHATT
Date : 03/03/2025
ORAL JUDGMENT
1. Rule. Learned Assistant Government Pleader Ms. Roshni
Patel waives service of notice of rule on behalf of respondent
No. 1 and learned advocate Mr. H. S. Munshaw waives service
of notice of rule on behalf of respondent Nos. 2 and 3
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NEUTRAL CITATION
C/SCA/567/2025 JUDGMENT DATED: 03/03/2025
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2. These petitions are filed challenging the levy of property
tax by respondent No. 2- Gram Panchayat. The property tax
was levied by issuing bills under section 215 (1) of the Gram
Panchayat Act, on the Solar Power Plants set up on the land
of the petitioners.
3. Heard learned Senior advocate Mr. Dhaval Vyas assisted
by learned advocate Mr. Mohit Gupta for the petitioners and
learned Assistant Government Pleader Ms. Roshini Patel for
respondent No. 1 and learned advocate Mr. H. S. Munshaw for
respondent Nos. 2 and 3.
4. For the sake of convenience, the facts referred in Special
Civil Application No. 567 of 2025 are taken for adjudication of
these petitions. Special Civil Application No. 5075 of 2024 is
having similar facts, concerning the other assessment years.
The brief facts referred in Special Civil Application No. 567 of
2025 are as under: –
4.1 The petitioner on 22.05.2019 participated in the tender of
Gujarat Urja Vikas Nigam Limited (GUVNL) and emerged as a
successful bidder for development of Solar Power Project for
105 MW capacity. Consequently, a power purchase agreement
was signed between petitioner and GUVNL. The said Solar
Power Plant was installed and commissioned on 10.04.2021.
The certificate of commissioning is at Annexure-A1 Page No.
21. Thereafter the petitioner received letters dated 29.03.2022
and 08.04.2022 from respondent No. 2, to submit a valuation
report within 7 days to decide the levy of property tax for
Solar Power Plant. Thereafter, respondent No. 2 vide lettersPage 2 of 12
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dated 14.07.2022 and 19.07.2022 fixed the valuation at
Rs.400 crores for the purpose of levy of property tax.
4.2 The petitioner responded to the said levy, by letter dated
21.07.2022 and also questioned the provision to levy the
property tax. The petitioner also requested respondent No. 2 to
provide copy of resolution for levy of property tax. It is case
of the petitioner that correspondence was exchanged between
the parties and finally a levy was imposed of Rs. 25 lakh per
annum by communications dated 30.01.2023, 17.02.2023 and
28.03.2023. A resolution to that effect was also passed on
07.07.2023 followed by a notice dated 07.10.2023, wherein the
petitioner was directed to pay the outstanding dues within 7
days failing which levy of interest @ 18% was indicated. It is
case of the petitioner that pursuant to such levy the petitioner
once again corresponded to call for resolutions levying Rs.25
lakhs property tax per annum.
4.3 It is case of the petitioner that the demand notices dated
1312.2023 and 14.12.2023 were issued calling upon the
petitioner to pay the outstanding dues. The notices dated
13.12.2023 and 14.12.2023 were followed by other similar
notices of demand dated 23.01.2024 and 08.02.2024. The
petitioner requested to provide requisite documents to file their
effective reply however respondent No. 2 issued notice dated
28.02.2024 under Section 152 of Gujarat Land Revenue Code,
1879 for recovery of dues as arrears of land. The petitioner
responded to the said notices. In the reply dated 19.03.2024
the petitioner responded that the levy of demand of property
tax is illegal since the Solar Power Plant will not fall withinPage 3 of 12
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the definition of building as prescribed under Section 2(1) of
Gujarat Panchayats Act, 1993. The petitioner also questioned
the procedure for determining the levy of tax as prescribed
under the Gujarat Gram and Nagar Panchayat Taxes and Fees
Rules, 1964 (for short ‘the Rules, 1964’).
4.4 It was case of the petitioner that under the Gujarat Gram
Panchayat Act, petitioner is exempted from levy of tax.
Further, the procedure for determining the levy of tax has not
been followed as per the Rules, 1964 and therefore the notices
deserve to be quashed and set aside. The respondent, ignoring
the reply, issued notices dated 20.03.2024 and 21.03.2024
indicating that if the dues are not paid appropriate coercive
action will be taken.
4.5 Aggrieved by the coercive action indicated under notices
dated 20.03.2024 and 21.03.2024 the petitioner preferred
Special Civil Application No. 5075 of 2024 and the same is
subject matter of one of the captioned writ petitions. In Special
Civil Application No. 5075 of 2024 this Court under order
dated 26.03.2024 directed the respondent to release the seal.
The said order was subject matter of Letters Patent Appeal No.
789 of 2024 wherein this Court directed to decide the Special
Civil Application and therefore this matter is taken up for
hearing.
5. Learned Senior advocate Mr. Dhaval Vyas for the
petitioner submitted that the levy of tax by bill dated
24.12.2024 (Annexure-A25, Page No. 75) is without
jurisdiction. The levy of property tax is to be made under the
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C/SCA/567/2025 JUDGMENT DATED: 03/03/2025
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Rules, 1964. Rule 7(3) of the Rules, 1964 exempts the new
industries for a period of 5 years from the date of its
establishment. In the present case the petitioner installed Solar
Power Plant on 10.04.2021 which is evident from certificate
at Annexure-A1-Page No. 21. Therefore, the petitioner is
entitled for exemption from property tax upto 09.04.2026.
Thus, the demands raised for financial year 2023-24 and 2024-
25 are without jurisdiction since the same falls within the
period of exemption.
5.1 Learned Senior advocate in support relied upon the
decision in the case of Gabriel India Limited v.s State of
Gujarat decided by this Court on 22.09.2022 in Special Civil
Application No. 7250 of 2021. Learned Senior advocate also
submitted that there are other grounds raised in this petition,
however, since the issue has already been considered in the
case of Gabriel India Limited [supra] in relation to the
exemption, the petitioner at this stage is not raising other
grounds and is seeking exemption for initial period of 5 years.
Therefore, the levy of taxes by issuance of bill dated
24.12.2024 for the year 2024-2025, deserves to be quashed and
set aside.
6. Learned advocate Mr. H. S. Munshaw for respondent Nos.
2 and 3 on the other hand relied upon the affidavit to submit
that the petitioner – Company purchased the land admeasuring
342 acres covering in all 49 Survey numbers of Village Eval
through different registered sale deeds and thereafter applied to
competent authority for non-agricultural usage permission. The
permission was granted by District Collector, Patan. Further,
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the petitioner – Company is having plant for generation of
electricity through Solar Panels entered into by an agreement
on 22.05.2019 with GUVNL. However, construction of the
office premises was put up without any development
permission from the Gram Panchayat and generation of
electricity was also started in the year 2021.
6.1 Learned advocate for respondent Nos. 2 and 3 further
submitted that the commercial/industrial usage was commenced
in the year 2021 and therefore the petitioner was liable to pay
property tax to the Gram Panchayat as per provisions of
Section 200 of the Gujarat Gram Panchayat Act, 1993 and the
Rules framed thereunder. Therefore, communications were
exchanged between the respondent and the petitioner for
assessment of property tax which is evident from the letters
dated 29.03.2022 and 08.04.2022. The letters of respondents
were responded by the petitioner on 19.04.2022, wherein the
issue of exemption was not raised by the petitioner. Further, in
absence of any reply from the petitioner, respondent No. 2
addressed letters 14.07.2022 and 19.07.2022 assessing the
property of the Company at the value of Rs.400 crores. Hence,
this shows non-cooperation on the part of the petitioner –
Company and therefore the petition being misconceived
deserves to be rejected.
6.2 Learned advocate further submitted that the claim for
exemption for initial period of 5 years is belatedly contended
vide communication dated 07.01.2025 and therefore at this
stage this contention may not be entertained. Learned advocate
for respondent Nos. 2 and 3 however, could not dispute the
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applicability of decision of this Court in the case of Gabriel
India Limited [supra] wherein the aspect of Solar Power Plant
having exemption of initial period of 5 years is decided.
7. Considered the submissions and the decision relied upon.
Since, upon instructions Learned Senior Advocate for the
petitioner has restricted his ground of challenge to exemption
being available for initial period of five years from the date of
commissioning, and other grounds being not pressed, these
petitions are considered only on this aspect. Therefore, the
issue which needs to be considered in the captioned writ
petitions is ”Whether the petitioner is entitled for exemption
from property tax until 09.04.2026 because of the exemption
available under Rule 7(3) of the Gujarat Gram Panchayat and
Nagar Panchayat Taxes and Fees Rules 1964.”
8. Upon revisitation of facts it is noticed that it is not in
dispute that the petitioner has installed and commissioned the
Solar Power Plant at Village Eval Taluka Santhalpur District
Patan on 10.04.2021. The certificate of commissioning dated
25.06.2021, is at Annexure -A1 page 21. The challenge in
Special Civil Application No. 567 of 2025, is in relation to levy
of property tax for the year 2024-2025 and in Special Civil
Application No. 5075 of 2024 for the year 2023-2024. Thus, in
both the petitions challenge is in relation to levy of property
tax for two different years.
8.1. It is contended on behalf of the petitioner that in view of
express provision of sub-rule (3) of rule 7 of the Gujarat Gram
Panchayat and Nagar Panchayat Taxes and Fees Rules 1964,
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levy of property tax for both the years i.e 2023-2024 and
2024-2025, is illegal and without jurisdiction. To consider the
submission on behalf of the petitioner, it would be apposite to
refer to the Rule.
9. Rule 7 of the Rules, 1964 prescribes for rate of tax on
building and lands, wherein sub rule 3 reads as under:-
“7. Rate of tax on buildings and lands :-
(1) xxxx
(2) xxxx
(3) The buildings and lands belonging to [new
industries shall be exempted from the levy of
tax under sub-rule (1) for a period of five years
from the date of its establishment from the date
of the commencement of these rules, whichever
event occurs later.
Explanation. -For the purpose of this sub-rule
expression “new industry” shall have the
meaning assigned 3 to it in rule 36:
Provided that nothing in this rule shall be
deemed to exempts from tax any buildings or
lands in respect of which a railway
administration is liable to pay tax or a sum in
lieu thereof by virtue of a notification under
section 135 of the Indian Railways Act, 1890 (IX
of 1891), or section 3 of the Railways (Local
Authorities Taxation) Act, 1941 (XXV of 1941).”
Sub-rule (3) of Rule 36 of the Rules 1964 reads
as under:
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(3) For the purpose of sub-rule (2), “new
industry” means:-
(i) any industry established within the limits
of the gram or as the case may be nagar on or
after 1st May, 1960.
(ii) any industry established within such limits
before the 1st May, 1960 but the production of
goods in which has commenced after the 1 st
May, 1960, and
(iii) in the case of an industry which has been
established before the 1st May, 1960 but which
has undergone or which undergoes expansion
after that date of the expanded part of the
industry;
Provided that an industry shall not be deemed
to undergo expansion merely on account of
replacement or overhauling of any existing
machinery.
9.1 Thus, plain reading of Sub Rule 3 of Rule 7 of the Rules,
1964 provides that the building and land belonging to new
industries shall be exempted from levy tax under Sub Rule 3
for a period of 5 years from the date of its establishment or
from the date of commencement of these Rules, whichever is
later. In both these cases, the certificate of commissioning
refers to the date 10.04.2021. The certificate of commissioning
dated 25.06.2021, reads ‘This is to certify that M/s. Renew
Sun Energy Pvt. Ltd., 138 Ansal Chambers-ii, Bhikaji Cama
Place, Delhi – 110066 has isntalled and commissioned 105 MW
(AC) / 152.27 MW (DC) capacity Solar Power Plant at Village
– Eval, Ta – Santalpur, Dist. Patan on 10-04-2021 along with
associated equipment’ and therefore, admittedly the period of
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5 years would end on 10.04.2026. The bills which were raised
and impugned in the present petitions are for the year 2023-24
and 2024-25 and would fall under the period of 5 years which
are exempted years under Sub Rule 3 of Rule 7 of the Rules,
1964. Further, it is not the case of respondent no.-2- gram
panchayat, that petitioner is not entitled for exemption as
prescribed under subrule 3 of Rule 7 of the Rules 1964.
9.2 Moreover, this aspect has been considered by this Court
in the case of Gabriel India Limited [supra] as under:-
“15. Considering the fact that the petitioner has
entered into lease agreement in the year 2013
and as per the provisions of Rule 3 of the
Gujarat Gram and Nagar Panchayat Taxes and
Fees Rules, 1964 he is entitle for five years and
therefore till 2018, he should get benefits and
therefore, the impugned notice as well as bill
dated 17.02.2021 issued by the respondent No.2
Chharodi Gram Panchayat is found per say
illegal and erroneous and it is also found that
the respondent No.2 Gram Panchayat has acted
in arbitrary manner and as Panchayat purported
to usurp jurisdiction therefore after considering
the judgments reported in 1998(8) SCC 1 in case
of Whirlpool Corporation vs Registrar Of Trade
Marks, Mumbai & Others and also 2016(2) GLR
1021 in the case of Bharat Naranbhai Vegda
versus State of Gujarat, therefore, I find that
this is a fit case where the powers under Article
226 of the Constitution of India is required to
be exercised by quashing and setting aside the
impugned notice as well as bill dated
17.02.2021 issued by the respondent No.2 by
raising the demand of Rs.1,17,18,632/- for the
period of 2013 to 2021 towards property tax isPage 10 of 12
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required to be quashed and set aside. However,
the respondent No.2 Authority can reassess the
property tax by following proper procedure and
by considering the policy and provisions of law.
16. With the above direction, the present
petition is allowed. Rule is made absolute to the
aforesaid extent. No order as to costs.”
10. Thus, in view of provision of subrule 3 of Rule 7 of the
Rules 1964, applicable to the petitioner and decision of this
court in case of Gabriel India Limited [supra] , in the opinion
of this Court, the levy of property tax by issuing bills for the
years 2023-2024 and 2024-2025, is without jurisdiction and
deserves to be quashed and set-aside and hereby quashed and
set aside.
11. For forgoing reasons, the petitions are allowed to the
above extent. Rule is made absolute. Since the petitioner has
not pressed other grounds raised in these petitions other than
that of exemption, this Court has not considered the same at
this stage and kept open.
(MAUNA M. BHATT,J)
SHRIJIT PILLAI
FURTHER ORDER
13. At this stage, Learned Senior advocate Mr. Vyas for the
petitioner submitted that pursuant to order dated 26.03.2024 in
Special Civil Application No. 5075 of 2024, the petitioner had
deposited an amount of Rs.30,00,140/- before the Panchayat
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and the same may be refunded.
Considering the order of even date in both these
petitions, the amount of Rs. 30,00,140/-deposited by the
petitioner before the Panchayat is ordered to be released in its
favour within a period of 2 weeks from the date of receipt of
the order.
sd/-
MAUNA M. BHATT,J)
SHRIJIT PILLAI
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