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2021 (8) TMI 739 - AAR - GSTValuation - Reduction of subsidy for arriving at Ex-factory value in order to collect the GST on goods supplied to the customer under the rooftop solar project - refund for the excess amount of GST - direction to this effect should be given to all other supplier for collection of GST on subsidy amount or not - HELD THAT - To accord the benefit to deduct subsidy portion for arriving at transaction value with the customer, the applicant was not able to produce evidence that the subsidy was indeed given/borne by the Government - the subsidy portion provided by the Government shall not be included in the value of the supply to arrive at the taxable value, as per Section 15(2) (e) CGST Act. The bidder rates in the EOI are inclusive of GST. Further, the Subsidy is calculated on the total rate in Rs.per Wp(DC). This rate is inclusive of GST. The applicant has collected Subsidy from the Government in this regard and this subsidy amount is inclusive of GST, the applicant is required by law to pay to the Government the said amount in the subsidy representing GST, irrespective of the position of law that subsidy portion is to be deducted from the value of supply charged to the customer, for arriving at the taxable value - the applicant sought Ruling on the implications of Section 17(2) CGST Act, if taxable value is derived after subtracting the subsidy amount from the system price. The provisions of Section 17(2) CGST are attracted when the applicant is effecting taxable supplies and exempt supplies. The subject supply of the applicant is a taxable supply and for the reason that taxable value for charging GST is arrived after subtracting subsidy, does not alter the nature of taxable supply. It remains taxable supply. Therefore, for this matter presented before us, there is no implication of section 17(2) CGST.
Issues Involved:
1. Whether subsidy should be reduced for arriving at the ex-factory value to collect GST on goods supplied under the rooftop solar project. 2. Implications of Section 17(2) of the CGST Act if the taxable value is derived after subtracting the subsidy amount from the system price. Detailed Analysis: Issue 1: Reduction of Subsidy for GST Calculation The applicant, M/s. Greenbrilliance Renewable Energy LLP, supplies solar photovoltaic panels and Solar EPC services and is a channel partner under the Surya Gujarat Yojna. The applicant inquired whether the subsidy provided under this scheme should be reduced from the system cost to arrive at the taxable value for GST purposes. The Authority for Advance Ruling (AAR) noted that the subsidy provided by the government should not be included in the value of the supply to arrive at the taxable value as per Section 15(2)(e) of the CGST Act. The subsidy is given by the State/Central Government and disbursed through DISCOMs, which act as facilitators. Therefore, the taxable value on the tax invoice issued to the customer should be calculated after deducting the subsidy from the system cost, and the GST liability should be on this reduced taxable value. Issue 2: Implications of Section 17(2) of the CGST Act The applicant sought clarification on the implications of Section 17(2) of the CGST Act if the taxable value is derived after subtracting the subsidy amount from the system price. Section 17(2) pertains to the reversal of input tax credit (ITC) when a taxpayer is making both taxable and exempt supplies. However, in this case, the supply of solar systems is a taxable supply, and the deduction of the subsidy from the system price to arrive at the taxable value does not change the nature of the supply. Therefore, there is no implication of Section 17(2) in this context. Findings: The AAR confirmed that the subsidy portion provided by the government should not be included in the value of supply for GST purposes. The rates quoted in the EOI and the subsequent agreements are inclusive of GST, meaning the subsidy is also calculated on a rate inclusive of GST. As per Article 265 of the Constitution of India and Section 76(1) of the CGST Act, the applicant must pay the GST amount included in the subsidy to the government. Ruling: 1. The taxable value on the tax invoice issued to the customer shall be arrived at after deducting the subsidy from the system cost, and the GST liability shall be on this taxable value. 2. There shall be no implication of Section 17(2) of the CGST Act if the taxable value is derived after subtracting the subsidy amount from the system price. 3. The applicant is required to pay to the government the GST amount included in the subsidy, as detailed in the ruling. This comprehensive analysis ensures that the legal terminology and significant phrases from the original text are preserved while providing a thorough understanding of the judgment.
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