Page 21 - Banking Finance May 2018
P. 21
LEGAL UPDATE
Solar project of Renew Service tax rule set aside
Clean Energy Ltd
Large number of service providing corporates had moved the High Court stating
that while rendering their services they were also get-
ting reimbursement in respect of certain activities under-
taken by them. These reimbursements should not be
Included to arrive at the 'gross value' charged from their
clients, they argued. According to Rule 5 of the Service
Tax Rules, the value of the reimbursable activities is also to be included as part
of the services provided by the firms. The High Court held that the rule was ul-
tra vires. This was upheld by the Supreme Court in the case of Union of India vs
Intercontinental Consultants &Technocrats Ltd.
The appeal of Madhya Pradesh Compensation payable by the Builder
Power Management Company was
dismissed by the Supreme Court as it The Supreme Court had stated that 3 years deadline is reasonable for delivery
had terminated its power purchase of flats, if there is no timeline specified by the builder.
agreement with Renew Clean En- Further added, that the compensation for breach of the
ergy Ltd alleging delay in completing contractual term should be counted from the date of
a solar project. The High Court and breach, though the court may fix an appropriate date
the Supreme Court held that the ter- as the rule is flexible. In the case of Fortune Infrastruc-
mination of the contract was wrong ture vs Trevor D' Lima, the builder in Mumbai failed to
in the facts of the case. keep the promise leading to a complaint before the National Consumer Com-
mission. It ordered the builder to refund the payment of Rs. 8,700,000 for the
The solar company, chosen from fiat and pay Rs. 36,546,000 as compensation. The court reduced it to Rs.
among 100 bidders, was given a 22,720,000 but added Rs. 2,000,000 for the promised parking lot.
large area to start the project. How-
ever, the place was occupied by Auction purchaser's rights were upheld
squatters and the project team was
physically attacked whenever it vis- The Patna High Court's judgment was recently set aside by the Supreme Court
ited the site. by allowing the appeal of the auction purchaser. The
High Court had quashed the sale on the ground that
Therefore, the solar energy firm the borrower company had not been given time till the
sought a different site which was last date to pay the dues under a one-time settlement
given. This process took time and plan. The High Court also felt that the amount fetched
there was a dispute over the alleged in the auction was low. However, the Supreme Court,
delay in starting the project. The
Power Management Company termi- in its judgment, TSR Financial Services Ltd vs Central Bank of India, stated the
nated the contract and imposed a borrower had in fact not been able to match the price offered by the auction
penalty of Rs. 119,554,200 on Renew purchaser.
Clean Energy.
Industrial plots selling fetters
The solar energy firm moved the
High Court against the termination Recently ruled out by the Supreme Court that the conditions for allotment of indus-
and other adverse actions. The High trial plots do not stay once they are sold to entrepre-
Court set aside the termination, call- neurs who paid full consideration. The state-owned
ing it "arbitrary". As a result of the Andhra Pradesh Industrial Infrastructure Corporation
Supreme Court appeal, the firm was allotted plots to a larger number of transporters and
asked to pay penalty. executed sale deeds in their favour. The units were
suppose to start within 2 years. But there was a delay
in starting the industries, allegedly because the state
corporation did not provide infrastructures like road, electricity and water. The cor-
poration threatened to cancel the transfer because of the delay.
BANKING FINANCE | MAY | 2018 | 21
