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2023 (3) TMI 1321 - AAR - GSTScope of Advance Ruling - Levy of GST - Government Subsidy - Applicant is involved in installation of Solar system on roof top and subsidy is provided by Central Govt. for this work through Renewable Energy Corporation - How to Generate GST including Subsidized Invoice? HELD THAT - Applicant filed their application before the Rajasthan Authority for Advance Ruling (RAAR) on 14.10.2022 i.e. much later from the supply of services. Applicant is discharging his GST liability since starting on the service supplied by him and asked advance ruling when subsidy has not been given to him from concern department. It is observed that applicant motto is to find out whether the mechanism opted by him for payment of GST on said service is right or wrong, which is against the spirit of advance ruling. From the definition of Advance Ruling, it is very much clear that the scope of the ruling for Authority for Advance Ruling (AAR) is limited to the transactions being undertaken or proposed to be undertaken - In the instant case, the application seeking advance ruling was filed on 14.10.2022 before the RAAR with respect to supplies already being undertaken and GST being paid. Hence, the case is out of the purview of the Advance Ruling. The subject application for advance ruling made by the applicant is not maintainable and hereby rejected under the provisions of the GST Act, 2017.
Issues Involved:
1. Applicability of GST on government subsidy. 2. Mechanism for generating GST-included invoices with subsidized amounts. Issue-Wise Detailed Analysis: 1. Applicability of GST on Government Subsidy: The applicant, M/s Vishwas Green Energy, sought clarity on whether GST is applicable to government subsidies received for installing rooftop solar systems. The applicant referenced Section 15(2)(e) of the CGST/RGST Act, 2017, which states that the value of taxable supply includes subsidies directly linked to the price, excluding those provided by the Central and State Governments. The judgment clarified that the definition of "consideration" under the GST Act explicitly excludes subsidies given by the Central or State Government. This exclusion means that such subsidies should not be included in the taxable value of the supply. The ruling observed that the applicant's invoices showed the subsidy amount separately and did not charge GST on it, aligning with Section 15 of the Act. Therefore, it was concluded that the subsidy provided by the government for the installation of solar systems is not subject to GST. 2. Mechanism for Generating GST-Included Invoices with Subsidized Amounts: The applicant also sought guidance on generating GST-included invoices for transactions involving government subsidies. The ruling noted that the applicant had submitted a sample GST invoice demonstrating the mechanism for raising invoices, where the subsidy amount was shown separately, and no GST was charged on it. The judgment emphasized that the value of supply should include all components as per Section 15(2) of the GST Act, but subsidies provided by the government should be excluded. It was observed that the applicant had correctly shown the subsidy amount separately in the invoice, ensuring it was not taxed. The ruling reiterated that the applicant must continue this practice to comply with the GST Act provisions. Conclusion: The judgment concluded that the subsidies provided by the Central or State Government for installing rooftop solar systems are not subject to GST. The ruling also confirmed that the applicant's current practice of showing the subsidy amount separately in the invoice and not charging GST on it is correct. However, since the application for advance ruling was filed after the transactions had already occurred, the ruling declared the application non-maintainable and rejected it under the provisions of the GST Act, 2017.
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