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2023 (3) TMI 1247 - AAR - GSTClassification of goods - solar inverter manufactured by the applicant fall under entry no. 234 of Schedule -I of the Notification 1/2017 - Central tax (rate) dated 28.06.2017 or not - Solar Batteries manufacture by the MNS and sold to the manufactures/trades who further use the same in Solar power plants shall qualify as parts of solar power plants and fall under entry no. 234 of Schedule-I of the Notification 1/2017 -Central tax (rate) dated 28.06.2017 or not - solar inverter along with solar battery and solar panel together in package, will fall under entry no. 234 of Schedule -I of the Notification 1/2017 - Central tax (rate) dated 28.06.2017 or not. HELD THAT - The term Solar Power Generating System has not been defined under GST Act. Generally, the solar power generating systems are the systems which absorb sunlight and convert it into electricity which can be put to further use - Further it has also been mentioned that Solar Power Generating System has been defined under solar power-Grid connected ground mounted and solar rooftop metering regulation-2014 issued by State of Goa. As per this regulation Solar Power Generating System means a grid connected solar generating station including the evacuation system upto the grid inter connection point . A solar power plant produces electricity directly from sun by the interaction of sunlight with a solar panel made of semiconductor material. The power provided is direct current (DC) electricity. A solar power plant consists of an array of modules generating DC electricity, an inverter and sometimes battery storage back up. The applicable GST Rate for supply of equipment for a solar power generating system (composite supply) will be 12% (The value can be equivalent to 70 % of the plant cost). However, for installation and engineering services, EPC companies and installers will need to raise a separate works contract equivalent to 30 % of the overall bill with a GST rate of 18%.
Issues Involved:
1. Applicant's eligibility for seeking an advance ruling. 2. Classification of solar inverter under GST. 3. Classification of solar batteries under GST. 4. Classification of the composite supply of solar inverter, solar battery, and solar panel under GST. Issue-wise Detailed Analysis: 1. Applicant's Eligibility for Seeking an Advance Ruling: The applicant must meet the conditions under the Central Goods and Services Tax Act, 2017 (CGST Act, 2017) and Haryana Goods and Services Tax Act, 2017 (HGST Act, 2017). Sections 97(2) (a)(b) & (c) read with Section 95 of the CGST Act, 2017 allow seeking an Advance Ruling on classification of goods/services, applicability of a notification, determination of tax liability, and whether a particular activity amounts to a supply. The applicant's issue is neither pending nor decided in any proceeding under the CGST/HGST Act, 2017, making them eligible for an Advance Ruling. 2. Classification of Solar Inverter under GST: The applicant manufactures solar inverters, which convert the DC output of solar panels into AC. The applicant argues that solar inverters fall under entry no. 234 of Schedule I of Notification 1/2017 - Central tax (rate) dated 28.06.2017, which covers renewable energy devices. The Authority agreed, referencing cases like COMMISSIONER OF CUSTOMS, COCHIN VS. SOLGEN ENERGY PVT. LTD. and Bhel v. CCE, where solar inverters were classified as solar power generating systems. Thus, solar inverters qualify under entry no. 234, attracting a GST rate of 12%. 3. Classification of Solar Batteries under GST: The applicant manufactures batteries used in solar power generating units. The batteries store solar electricity and maintain a uniform power supply. The applicant contends that solar batteries are integral parts of solar power generating systems and should fall under entry no. 234 of Schedule I of Notification 1/2017 - Central tax (rate). The Authority agreed, recognizing solar batteries as parts of renewable energy devices, thus qualifying under entry no. 234 with a GST rate of 12%. 4. Classification of Composite Supply of Solar Inverter, Solar Battery, and Solar Panel under GST: The applicant supplies solar inverters, batteries, and panels as a composite unit. The term 'Composite Supply' under Section 2(30) of CGST Act means a combination of two or more supplies naturally bundled and supplied together, with one being the principal supply. The Authority determined that the combination of solar inverter, battery, and panel constitutes a composite supply as they work together as a "Solar Power Generating System." This composite supply falls under entry no. 234 of Schedule I of Notification 1/2017 - Central tax (rate), attracting a GST rate of 12%. Ruling: 1. The combination of solar panel, inverter, solar battery, and charge controller qualifies as a "Solar Power Generating System" when supplied in assembled form, treated as composite supply with a GST rate of 12%. 2. If solar inverter and battery are supplied individually and invoiced separately, it constitutes a mixed supply with a GST rate of 18%.
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