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TMI Blog2025 (5) TMI 1600X X X X Extracts X X X X X X X X Extracts X X X X ..... t clear that the provisions of the Central Goods and Services Tax Act, 2017 (the CGST Act, for short) and the West Bengal Goods and Services Tax Act, 2017 (the WBGST Act, for short) have the same provisions in like matter except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean reference to the corresponding similar provisions in the WBGST Act. Further to the earlier, henceforth for the purposes of these proceedings, the expression "GST Act" would mean the CGST Act and the WBGST Act both. 1.2 The applicant is stated to be engaged in the business of erection, commissioning and installation projects in the renewable energy sector. The said scope of work would include EPC contracts for rooftop solar power plant including supply of multiple components within the said power plant. This would include monocrystalline panel, inverter with remote monitoring, fixing structure and relevant accessories. The applicant is working for multiple corporates, Government, Government entities, Indian Railways etc. 1.3 The applicant has made this application under sub section (1) of section 97 of the GST ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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." As per the above, the value of goods would be deemed to be 70% of the gross consideration charged i.e. Rs 1.08 crores and that of services would be the remaining 30% i.e. Rs. 0.46 crores. 2.5 As regards the rate of taxes, the same has been provided separately for both goods and services in Entry no. 201A of amended Notification no. 1/2017-Central tax (rate) dated 28th June 2017 and Notification no. 11/2017-Central tax (rate) dated 28th June 2017 respectively as follows: Entry no. 201A of amended Notification No. 01/2017-Central tax (rate) dated 28th June 2017 SI.No. Chapter Description Rate of tax 201A 84,85 or 94 Following renewable energy devices and parts for their manufacture: a) Bio-gas plant b) Solar Power based devices c) Solar Power generator d) Windmills, Wind Operated Electricity Generator (WOEG) e) Waste to energy plants/devices. f) Solar Lantern/Solar Lamp g) Ocean Waves/tidal energy devices /plants h) Photo voltaic cells, whether or not assembled in modules or made up into panels Explanation: If t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction, commissioning and installation projects in the renewable energy sector. The scope of work includes EPC contracts for rooftop solar power plant including supply of multiple components within the said power plant, which would include mono-crystalline panel, inverter with remote monitoring, fixing structure and relevant accessories. In response to the tender no. RT-RNY-EL-T-29-2023-24 invited by RANGIYA DIVISION-ELECTRICAL/N F RLY, the applicant entered into an agreement, accepted vide letter no. RANGIYA DIVISION-ELECTRICAL/RT-RNY-EL-T-29-2023-24/10783460105435 dated 14.06.2024 by Sr. DEE/TRD/RNY. As per the agreement/contract, the applicant was supposed to undertake works related to supply, design, installation, testing and commissioning of grid connected rooftop solar power plant consisting Mono-crystalline Panel, Inverter with remote monitoring system, fixing structure and all other accessories including LA and proper earthing as per the direction of EIC at site. PV Module (Mono-crystalline) had to be IEC certified with five year AMC/CAMC at RNY Station PF 2 & 3 PP shed, PF 4 & 5PP shed. The applicant has approached the Advance Ruling Authority with the question for the appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r based devices (c) Solar power generating system (d) Wind mills, Wind Operated Electricity Generator (WOEG) (e) Waste to energy plants/devices (f) Solar lantern/solar lamp (g) Ocean waves/tidal waves energy devices/plants (h) Photo voltaic cells, whether or not assembled in modules or made up into panels Explanation:- If the goods specified in this entry are supplied, by a supplier, along with supplies of other goods and services, one of which being a taxable service specified in the entry at S. No. 38 of the Table mentioned in the Notification No. 11/2017-Central Tax (Rate) dated 28th June, 2017 [G.S.R 690(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. Thus, it can be inferred that, all renewable energy devices are taxed at 12% GST. But, if the project includes erection, procurement, and commissioning of a solar generating system, it will fall under "Works Contract Services'. In this case, 12% GST will be applicable on 70% of the total ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... umping systems as composite supply involving supply of services and goods. The subject matter of the above appellate order is not strictly related to the facts and circumstances of the application on which ruling is sought from this authority. 4.5 Before going into the details of the discussion, we should discuss some concepts of the GST Act and the components and the process of installation of grid connected rooftop solar power plant which will act as reference in the later part of the discussion. Composite Supply: Section 2 (30) of the GST Act defines Composite Supply as supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services or both, or any combination thereof, which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply. Mixed Supply: Section2 (74) of the GST Act defines Mixed Supply as supply of two more individual supplies of goods or services or any combination thereof, made in conjunction with each other by a taxable person for a single price where such supply does not constitute a composite supply. Works Contract: Section 2 (119) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plant. Thus a Solar Power Plant can be described as a complex and integrated system which converts sunlight into direct current electricity using the photoelectric effect. Inverters change the direct current into alternating current for connection to the electrical grid. In a rooftop solar power plant, the solar panels are installed on the roof of a building with the following installation process. 4.7 The step-by-step installation process of grid connected rooftop solar power plant can be summarized as under: Preparing the roof: Before any setup, it is critical to thoroughly clean the roof surface of the roof, removing any debris, dust, or obstructions that could interfere with the mounting system. This guarantees a smooth and stable base for the solar panels. Then the mounting points are marked where the brackets might be set up. The brackets are securely fastened to the roof with the help of screws and bolts. The tilt angle of the brackets may be anything from 18 to 36 degrees for desirable results. Installing the mounting structure: Then the mounting structures are installed on the roof. This is the base where the solar panels are placed for the desired function of the en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... talline Panel, Inverter with remote monitoring system, fixing structure and all other accessories including LA and proper earthing. 4.9 At the very outset we should keep in mind that the issue raised in the instant application for advance ruling has already been placed before different Authorities for Advance Ruling in different parts of the country. Even the matter has been referred to the Hon'ble High Court of Andhra Pradesh as well. The rulings given by authorities differ so far as the nature of supply in the present case is concerned. The Karnataka Authority for Advance Ruling in the case of Solaris Non-conventional Energy Private Limited and the Maharashtra Authority for Advance Ruling in the case of Fermi Solar Farms Private Limited has ruled that the activity under question is works contract. In the first case the authority observed that there is transfer of property in goods in case of installation of solar power generating system. The authority has also observed that the contract is for the engineering, procurement and commissioning of the solar power generating system and what is transferred is the entire power generating system including the civil works involved in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ules and the Solar Power Generating System have not been attached to the civil structure for the purpose of better enjoyment or beneficial enjoyment of the civil foundation. On the contrary, the civil foundation has been embedded on earth for better permanent and beneficial enjoyment of the Solar Power Generating Station. Applying the aforesaid test, it must be held that the property in question, viz., the Solar Power Generating System would not answer the description of immoveable property. The transaction in question would not fall within the meaning of "works contract as defined under Section 2 (119) of the GST Act. The Hon'ble High Court has finally observed that applying the principles set out in Commissioner of Central Excise, Ahmedabad v. Solid and Correct Engineering Works, it must be held that the property in question is not embedded in the earth to bring it within the meaning of immoveable property. Once it is held not to be embedded, the question of whether it is a permanent embedment or not, would not arise. In this view of the matter, it must be held that the supply of the Solar generating Power Station, is a composite supply, it would not amount to a works contract. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... han works contract where the nature of supply (whether supply of goods or services) is to be determined in terms of principal supply. Now we must bear in mind that the activities which come under the ambit of works contract as defined under Sec. 2 (119) must be in relation to any immovable property. Since the term immovable property is not defined in the GST Act, we have to refer to the General Clauses Act, 1897 as well as the Transfer of Property Act, 1882 and different judicial pronouncements defining immovable property. Under Section 3(26) of the General Clauses Act, 1897, "immovable property" includes land, benefits arising out of land, and things attached to the earth or permanently fastened to anything attached to the earth. There is no ambiguity in respect of the first two elements. The third element i.e. things attached to the earth or permanently fastened to anything attached to the earth has not been defined in the General Clauses Act, 1897. Here the Transfer of Property Act, 1882 comes to our help. The Transfer of Property Act, 1882 has defined 'attached to the earth' as rooted in the earth, as in the case of trees and shrubs. imbedded in the earth, as in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sand and coarse aggregate respectively. The preceding discussion clearly points out that the element of being permanently fastened to anything attached to the earth is very much present in case of rooftop solar power plant. Civil structures are created for installation of different equipments of the plant and those structures become inseparable part of the whole power plant. At the completion of the work it is the entire rooftop solar power plant with all the civil works done is transferred to the recipient. Some individual equipments/ components may be detached from the installation itself but in its entirety the grid connected rooftop solar power plant is immovable in nature. If we consider it in terms of degree of annexation, grid connected rooftop solar power plant is not a kind of installation that is capable of shifting from time to time. Rather the project in its entirety can be viewed as permanent both in terms of its use and location. It is not the case that the solar power plant has been installed somewhere today and will be shifted elsewhere the next day. 4.17 In view of the above discussion, it can be said that supply, design, installation, testing and commissioning ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... system (d) Wind mills, Wind Operated Electricity Generator (WOEG) (e) Waste to energy plants / devices (f) Ocean waves/tidal waves energy devices/plants Explanation:- This entry shall be read in conjunction with serial number 16234 of Schedule I 16201A of Schedule II 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. 18 4.18 We should not miss the Explanation parts of Entry no. 201A and Entry no. 38 of Notification No. 01/2017-Central Tax (Rate) Dt. 28.06.2017 as amended and Notification No. 11/2017-Central Tax (Rate) Dt. 28.06.2017 as amended respectively. We have to discuss both the entries at length for the purpose of this application for advance ruling. There are eight renewable energy devices and parts for their manufacture viz. (a) bio gas plant, (b) solar power based devices, (c) solar power generator, (d) wind mills, wind operated electricity generator, (e) waste to energy plants and devices, (f) solar lantern/ solar lamp, (g) ocean waves/ tidal energy devices/ plants, (h) photo vo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 70 per cent. portion of the supply will attract tax rate of the goods supplied i.e. solar power generator (in the present case) and the rest 30 per cent will attract the tax rate of the service under serial no. 38. In view of the foregoing discussion, we rule as under: RULING Q1. Whether the supply of components of the solar power plant along with the erection of the same would be treated as a composite supply under GST? Answer: The supply of components of the solar power plant along with the erection of the same would be treated as a composite supply of the nature of works contract. Q2. If yes, what should be the classification and rate of GST on the said contract? Answer: As per Entry no. 201 of Notification No. 01/ 2017 supra, tax rate should be 12% IGST on seventy per cent. of the gross value charged by the supplier and 18% IGST on thirty per cent. of the gross value charged by the supplier. Q3. what would be the value on which the relevant rate of GST Would be applicable? Answer: The value referred to here is the gross consideration charged by the supplier for the entire supply. Q4. Whether Notification no. 24/2018-Central tax (rate) dated 31 December 2018 containin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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