2019 (4) TMI 1822 - AAAR - GST

Maintainability of ruling by Advance Ruling authority - EPC contract for complete design, engineering, manufacture, procurement, testing, Inspection, and complete erection and commissioning of solar power generating system - Composite supply or not - supply of PV Modules/lnverters or any other supply covered under Chapter Heading 84,85 or 94 of Central Tax Notification - principal supply or not - supply of PV Modules/lnverters or any other supply - whether covered under Chapter Heading 84,85 or 94 of Central Tax Notification - concessional rate of tax or not - challenge to AAR decision. HELD THAT - The advance ruling dated 22.08.2018 obtained by the appellant is prior to the amendments made with effect from 1.01.2019 by the Govt. vide notifications ibid dated 31.12.2018 under the CGST /HGST Act, 2017 in the respective entries. There is a change in the rate of tax and the percentage of Goods and Services involved in Solar Power Generation System (SPGS), after Notification No. 24/2018- Central Tax (Rate), dated 31.12.2018 and Notification No. 27/2018-Central Tax (Rate) dated 31.12.2018. Therefore, after issuance of above notifications, the facts and circumstances have completely changed with effect from 01.01.2019. The advance ruling granted vide Advance Ruling Order dated 22.08.2018, is no more binding on the applicant or the authorities concerned in terms of Section 103(2) of the CGST and SGST Acts and the applicant may seek Advance Ruling which will be granted afresh by the Advance Ruling authority after considering the notifications mentioned after giving opportunity of hearing to the appellant - Thus, the order dated 22.08.2018 of the Advance Ruling Authority is quashed and the applicant may approach the Advance Ruling Authority for taking a decision afresh in accordance with law.

Summary

Issues:
1. Appeal against Advance Ruling No. HAR/HAAR/R/2018-19/07 dated 22.08.2018 regarding the classification of services provided by M/s. Hero Solar Energy Pvt. Ltd. as a works contract under the CGST Act and the HGST Act.

Analysis:
The appeal was filed by M/s. Hero Solar Energy Pvt. Ltd. against the Advance Ruling No. HAR/HAAR/R/2018-19/07, dated 22.08.2018, seeking clarification on the classification of their services related to setting up a Solar Power Generating System (SPGS) on a turnkey basis. The questions raised by the appellant included whether the services provided constituted a 'Composite Supply' under Section 2(30) of the CGST Act, whether certain supplies would be considered as the 'Principal Supply,' and the applicability of a concessional rate of 5% on the entire contract value. The Advance Ruling Authority had initially classified the services as falling under the definition of a 'works contract' as per section 2(119), leading to the appeal by M/s. Hero Solar Energy Pvt. Ltd.

The appellant presented various grounds in their appeal, arguing that the transaction should be considered a composite supply taxed at 5%, that the proposed contracts did not qualify as works contracts under the CGST Act, and that issues related to property movability had been resolved under previous excise laws. Additionally, they contended that the ruling was non-speaking and violated principles of natural justice. During the personal hearing, the appellant's counsel reiterated these grounds and highlighted changes in tax rates post-amendments effective from 01.01.2019, impacting the legal context of the case.

The Appellate Authority, after thorough consideration, noted the changes in tax rates and percentages post-amendments introduced by notifications dated 31.12.2018 under the CGST and HGST Acts. Given the altered circumstances, the Authority ruled that the Advance Ruling issued on 22.08.2018 was no longer binding post the amendments. Consequently, the Authority quashed the previous ruling and directed M/s. Hero Solar Energy Pvt. Ltd. to seek a fresh Advance Ruling, emphasizing that the decision was not an opinion on the case's merits. The appellant was advised to approach the Advance Ruling Authority for a fresh determination in line with the updated legal framework, thereby concluding the matter without delving into the substantive issues of the case.