Applicable GST rate on supply, installation, testing and commissioning of solar illumination work, Goods and Services Tax - GST

[Ranjit Samal]

Kindly guide applicability of GST rate on supply, installation, testing and commissioning of solar illumination work and also applicable respective SAC And HSN code.

Posts / Replies

[Ranjit Samal]

Can anybody share his/her views on the above posted query.

[KUNAL DESAI]

S. No. 38 of the Table mentioned in the notification No. 8/2017-Integrated Tax (Rate), dated 28th June, 2017 [G.S.R. 683(E)], the value of supply of goods for the purposes of this entry shall be deemed as seventy per cent. of the gross consideration charged for all such supplies, and the remaining thirty per cent. of the gross consideration charged shall be deemed as value of the said taxable service.

Above entry should be read with serial number 234 of Schedule I of the notification No. 1/2017-Integrated Tax (Rate), published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) dated 28th June, 2017 vide GSR number 666(E) dated 28th June, 2017.

Thus, 70% of Total Project would be considered as Goods which is taxable at 5% and other 30% of Total Project would be considered as Service which is taxable at 18%

[Ranjit Samal]

In regards to above reply kindly post the respective applicability HSN code supply and SAC code for service.

[KASTURI SETHI]

SAC 995461

(xii) other electrical installation services n.e.c. (n.e.c. stands for not elsewhere classified)

(ix) electrical installation services of illumination and signalling systems for roads, railways, airports, harbours and similar premises.

It will be a composite supply.

Regarding HSN go through the following clarifications as per your requirement, usage etc.

(i) Solar inverter, controller, battery and panels supplied for “solar power generating system” are taxable @ 5% (2.5% CGST + 2.5% SGST) under Serial No. 234 of Schedule-I to Notification No. 1/2017-C.T. (Rate). - In Re : Eapro Global Limited - 2018 (17) G.S.T.L. 677 (A.A.R. - GST) = 2018 (9) TMI 1526 - AUTHORITY FOR ADVANCE RULINGS, UTTARAKHAND.(Chapter 84 or 85)

(ii) Solar Panel Mounting Structure. - Structures of iron or steel are classifiable under Heading 7308 and structures of aluminium are classifiable under Heading 7610 and attracting 18% GST. Solar Panel Mounting Structure, depending on the metal they are made of, will be classifiable under Heading 7308 or 7610 and will attract 18% GST. - Based on C.B.E. & C. FAQs issued on 3-8-2017 - 2017 (352) E.L.T. (T11).

(iii) Solar Panel/Mould. - (1) If the solar panel/module is equipped with elements and these elements supply the power to an external load i.e, motor, an electrolyser etc., then the solar panel/module is classifiable under Heading 8501 of the Customs Tariff.

(iv) If the solar panel/module is equipped with elements but these elements do not supply the power to an external load i.e, a motor, an electrolyser etc., then the solar panel/module is classifiable under Heading 8541 of the Customs Tariff - Chief Commissioner of Customs, (NS-V), JNCH, Nhava Sheva, Public Notice No. 135/2016, dated 29-9-2016 – 2016 (340) E.L.T. (T-140).

[Ranjit Samal]

As per your above reply if tax rate is 5% for Solar, inverter controller, battery and panels supplied, please guide the HSN code for them.

[KASTURI SETHI]

Your query is too short to understand. That is why I have posted clarifications. If you want more correct details, elaborate your query. How and what you want to erect, install, test and commission ? What machinery is to be used ? Solar panel, devices, base for installation etc.

[Ranjit Samal]

Thanks for guidance.

Actually a single contract have awarded for supply, installation, testing and commissioning of solar illumination work. It includes both material and services part. In supply part it includes solar panels polycrystalline pv moudle ,solar sine inverter, solar tall tubular battery, supply etcof AC combiner box ,AC and DC cable etc and other parts. In service part it includes civil structural, installation and commissioning of above supply part.

As detail mentioned above kindly guide Tax rate e and SAC , HSN code for them also.

[KASTURI SETHI]

In my view, it is classified under the category, "Works Contract Service" and SAC remains the same. It attracts GST @ 18%. Also go through the definition of 'Composite Supply'. When it is a composite supply, tax of Principal Supply is applicable.

Views of other experts are also solicited.

[KUNAL DESAI]

Against Reply No.3, For HSN & SAC, I have already replied in my earlier reply No.2. You may read the notification and from that, you can have HSN & SAC.

Against Last Reply of Kasturiji,

Considering Work Contract Services, shall we not pass the 2 tests of whether it is "Immovable Property" & what is "Principal Supply" ?

(119) “works contract” means a contract for building, construction, fabrication, completion, erection, installation, fitting out, improvement, modification, repair, maintenance, renovation, alteration or commissioning of any immovable property wherein transfer of property in goods (whether as goods or in some other form) is involved in the execution of such contract;

Further, My following questions are for querist:

For Immovable Property- Shall we transfer this Solar Illumination work to other place? This question is required to pass the "Works Contract Service" test.

For Principal Supply- What is Principal Supply according to you? As this will be surely considered as composite supply and it is very importatnt to have this answer before going further.

[Ranjit Samal]

Thanks for your response Sh. Kunal Jee.

In response to your reply at point no. 2 regarding HSN and SAC code, i did not find any code in the said notification. So, please help to provide the HSN and SAC code. (Out of value 70% towards supply @5% and 30% towards service @ 18% as mentioned by you)

Coming immovable property, the said work shall not transfer and in awarded contract the maximum part is supply. Please guide.

[KASTURI SETHI]

You cannot go out of the scope of 'Installation services'. Your activities are erection, testing & commissioning. All these are integrated and included in 'Installation Services" These services fall under SAC 995461 other electrical installation services n.e.c. N.E.C. is a sea.

Other option is to go for advance ruling.

[KASTURI SETHI]

You are concerned with service and not with supply of goods. Major portion is service.

Definition of 'Service'

Section 2 (102) “services” means anything other than goods, ---------------------------------------------for which a separate consideration is charged;

Definition of 'service' is very very wide and wider than earlier one in Service Tax era.Nothing has been left except some specific exclusion in the definition of service. If you do not find any proper SAC for your services, you will have to opt for "Not Elsewhere Classified".

See SAC 998739 Installation services of other goods nowhere else classified. Notification No.11/17-CT(R) dated 28.6.17 as amended (serial no.497).

[YAGAY andSUN]

The Authority for Advance Ruling ( AAR ) Maharashtra ruled that in the case of separate contracts for supply of goods and services for solar power plant, there would be a cumulative consideration as ‘works contract’ and hence the rate of tax would be 18% under IGST and an aggregate of 18% of CGST and SGST. The applicant M/s Fermi Solar Farms Ltd. = 2018 (5) TMI 963 - AUTHORITY FOR ADVANCE RULING - MAHARASHTRA is engaged in the operation of renewable energy power plant projects. These typically include operation of soar power plants set up across India for generation and distribution of electricity generated through solar plants.

The Applicant approached the authority seeking clarification on the following questions:

Whether in case of separate contracts for supply of goods and services for a solar power plant, there would be separate taxability of goods as ‘solar power generating system’ at 5% and the services at 18% ?

Whether parts supplied on standalone basis (when supplied without PV modules) would also be eligible to concessional rate of 5% as parts of solar power generating system?

Whether benefit of concessional rate of 5% of solar power generation system and parts thereof would also be available to sub-contractors?

Though the authority couldn’t provide clarity to the other two questions owing to absence of any documents, the first question was clarified in the aforementioned manner. The authority further stressed that depending upon the nature of supply, intra-state or inter-state, the rate of tax would be governed by the governed by the entry under Integrated Goods and Service Act, 2017.

[YAGAY andSUN]

https://economictimes.indiatimes.com/industry/energy/power/no-gst-concession-for-solar-contractors/printarticle/64094994.cms