QUESTION
We are registered with GST in
Maharashtra having 3 business verticals; we have taken SINGLE registration for
the same. We had made CAPEX investment in solar rooftop at 3 different locations
in Maharashtra, one plant installed in pre GST regime and rest in post GST
regime. We have not availed any ITC i.e. VAT, Service Tax, and GST on plant as
well as on periodic maintenance charges etc., For selling of Electricity
(HSN-2716) to said companies we are making bill of supply on monthly bases no
GST is charged in the light of exemption notification No.02/2017 Central. Now we
wish to sell / transfer said solar plants to third party in this connection our
queries are as follows :
1) Classification of goods: HSN for the Solar power / Rooftop Solar plant and
applicable rate of tax.
2) We have not availed any ITC on said plant hence we required to pay GST for
such sell / transfer? If yes, how to arrive on taxable value mechanism? weather
margin mechanism like Motor vehicle will apply here or tax will be paid on
transaction value?
3) we have taken Plant Insurance for said asst can we avail ITC for the same
specially for after sale remaining period ?
4) Said Plants are installed at third Party’s premises so the same is not
registered as an additional place of business of our GST RC, now at the time of
making TAX invoice at the time of transfer/sale required to be included as
additional place of business in GST RC.?
ANSWER
FACTS OF THE CASE :
You have a single registration in the state of Maharashtra and 3 branches are
operating under this GSTIN. Solar Panels were installed on rooftops and ITC was
not claimed on the same since they are used for providing exempt supply of
electricity. To decide whether GST is applicable when these panels are sold.
LAW APPLICABLE :
1. Clause (a) of Section 7(1) of CGST act states that
"(1) For the purposes of this Act, the expression 'supply' includes
(a) all forms of supply of goods or services or both such as sale,
transfer, barter, exchange, licence, rental, lease or disposal made or agreed to
be made for a consideration by a person in the course or furtherance of
business"
2. Subsection (2) of Section (17) of CGST dictates that
"Where the goods or services or both are used by the registered person partly
for effecting taxable supplies including zero-rated supplies under this Act or
under the Integrated Goods and Services Tax Act and partly for effecting exempt
supplies under the said Acts, the amount of credit shall be restricted to
so much of the input tax as is attributable to the said taxable supplies
including zero-rated supplies."
INTERPRETATION:
Section (7) of CGST any sale,
transfer, barter, exchange, licence, rental, lease or disposal made in the
course of business is covered under the ambit of "Supply".
Sale of solar panels by you in the course of business is considered a supply.
It's important to note here that section (7) does not necessitate availment of
ITC as a pre condition to determine whether a transaction is a supply or not.
Therefore your transaction is a "Supply" regardless of whether ITC was claimed
or not.
GST is attracted on this supply u/s 9(1) CGST
CONCLUSION:
To answer your questions,
Question1) Classification of goods: HSN for the Solar power / Rooftop Solar
plant and applicable rate of tax.
HSN : 85414012
Rate of tax as per notification 1/2017 CGST Rate : 2.5% CGST + 2.5% SGST = 5%
Question2) We have not availed any ITC on said plant hence we required to pay
GST for such sell / transfer? If yes, how to arrive on taxable value mechanism?
whether margin mechanism like Motor vehicle will apply here or tax will be paid
on transaction value?
GST is applicable on outward supply regardless of whether ITC was claimed on
input or not (Section 7(1)(a) read with Section 9(1)).
Unlike Notification 08/2018 Central Tax (Rate) issued in case of motor vehicles,
no margin mechanism is issued in case of solar panels. Therefore tax would be
applicable on transaction value under section 15 CGST.
Question 3) we have taken Plant Insurance for said asset can we avail ITC for
the same specially for after sale remaining period ?
As per section 17(2) the ITC can not be availed on inputs used in making exempt
supply. Since solar panels are used to make exempt supply of electricity
therefore ITC on it or its insurance can not be availed.
Question 4) Said Plants are installed at third Party’s premises so the same
is not registered as an additional place of business of our GST RC, now at the
time of making TAX invoice at the time of transfer/sale required to be included
as additional place of business in GST RC.?
As per the definition given u/s 2(85) of CGST Act, Place of Business is defined
as
"place from where the business is ordinarily carried on, and includes a
warehouse, a godown or any other place where a taxable person stores his
goods, supplies or receives goods or services or both"
Therefore location where panels are stored becomes your place of business and
should be disclosed as additional POB. (Reply dt.09/08/2021)
QUESTION
Considering the reply please clarify the below. With reference to your answer on applicable Rate @ 2.5 % CGST + 2.5 % SGST in the light of notification 1/2017. We are reproducing relevant para of said Notification /schedule as follows Schedule – I (@2.5 %) S No Chapter / Heading / Sub-heading / Tariff item Description of Goods 234 84 or 85 Following renewable energy devices & parts for their manufacture (a) Bio-gas plant (b) Solar power 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 Considering heading kindly clarify that entire Roof top Slar palnt consist Solar Penal, Electrical wires, Inverters etc., Will cover under this or it will fall under @ 9 + 9 A.G.NaganeAsst.Comm. Customs&Central Excise (Retd) Membership No: 10673
ANSWER
Facts of the case:
To check the classification and rate of tax of Rooftop Solar Panel.
Law applicable:
Entry no. 234 under schedule I of notification no. 01/2017 is laid as under
"234.
[84, 85 or 94]
Following renewable energy devices & parts for their manufacture
(a) Bio-gas plant
(b) Solar power 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 "
Interpretation:
The entire Rooftop Solar plant consisting of Solar Panel, Electrical wires,
Inverters etc. can rightly be classified under the above head because this falls
under the definition of "Solar Power Generating System".
"System" covers an entire setup to generate solar power.
Conclusion:
Rate of tax applicable will be 2.5% + 2.5%.(Reply dt.31/08/2021)