The local body had demanded tax of Rs. 1.72 lakh for each wind mill

The Madras High Court Bench has restrained Kumarettiapuram panchayat in Kayathar Panchayat Union of Tuticorin district from demolishing, dismantling or interrupting the functioning of eight wind turbine generators installed by a private firm.

Justice K.K. Sasidharan granted the interim injunction until April 11 pursuant to a writ petition filed jointly by Gamesa Wind Turbines, a Chennai-based company that had erected the windmills on behalf of its client, Beta Wind Farm, also based in Chennai. According to the petitioner companies, they bought 17.03 acres of land in the village at a cost of Rs. 2.63 lakh and erected the eight windmills by spending Rs. 1.2 crore for laying the foundation. The works were carried out after obtaining no-objection-certificates from the Tamil Nadu Electricity Board. In January this year, the panchayat informed the petitioner companies that they were bound to pay tax from the date of commissioning of the wind turbine generators as per a Government Order issued by the Rural Development and Local Administration Department on December 13, 1999.

The local body further stated that the tax would be calculated on the basis of the price of wind turbine tower, extent of land over which the generator was erected, its market value and so on. It also insisted on obtaining approval of the building plan besides payment of professional tax.

Summons were issued to the petitioners on January 17 calling upon them to furnish the details of the number of wind turbine generators erected by them, the date on which they were commissioned and started generating electricity and the gross salary of employees working in those mills.

The summons were followed by a communication sent by the panchayat on February 17 imposing a tax liability of Rs. 1,72,670 for each windmill. Of the total amount, Rs. 40,470 was towards building approval and Rs. 75,000 towards building tax by determining the value of the building to be Rs. 5 crore.

The total amount also comprised of Rs. 45,000 towards surcharge, Rs. 12,000 towards library tax, Rs. 100 for scrutiny fee, and Rs. 100 for sewage tax.

The communication was followed by an order that failure to pay the tax amount would lead to demolition of the windmills.

Challenging it, the petitioners said that the panchayat had committed a grave error by charging Rs. 5 per square metre for 8,964 square metres of land with respect to building approval though the construction was made only to an extent of 104.04 square metres for each wind turbine generator. It was also contended that building tax had been calculated arbitrarily and illegally by taking the value of the total cost of investment for the wind turbine generators as a whole without restricting it to the cost incurred on laying the foundation alone.

After hearing preliminary arguments advanced by the petitioners' counsel, Mr. Justice Sasidharan said that the legality and correctness of the demand made by the panchayat could be determined only after it files its counter affidavit to the writ petition.