2018 (9) TMI 1526 - AAR - GST

Solar inverter, controller, battery and panels form composite supply under Solar Power Generating System attracting 5% GST per Notification 01/2017

In Re: M/s. Eapro Global Limited

AAR Uttarakhand ruled that supply of solar inverter, controller, battery and panels constitutes a composite supply under Solar Power Generating System ... Supply of goods - Rate of GST - Classification of goods - Composite/mixed supply - supply of solar inverter (8504), controller (8504), battery (8507) and panels (8541) under “Solar Power Generating System” (8543) as a whole & whether the such supply be called as ‘composite supply or mix supply’ - whether supply of solar inverter & solar panels together will fall under the definition of “Solar Power Generating System” or it will be a ‘mix supply’ and the applicability of GST rate on supply of solar inverter & solar panels together - applicability of advance ruling clarification - Whether manufacturer or trader will have any significance on the clarification? Whether the supply of solar inverter, controller, battery and panels are covered under “Solar Power Generating System” as a whole and can be called as ‘composite supply or mix supply’ & what will be the rate of GST on such supply? - Held that:- “Solar Power Generating System” has not been defined in GST law - In erstwhile Central Excise regime, though exemption to said “Solar Power Generating System’ was granted vide serial ho. 332 of Notification No. 12/12-CE dated 17.03.2012 but the same has also not been defined in the said regime. Supply of solar inverter, controller, battery and panels would be covered under “Solar Power Generating System” as a whole when the said goods are supply for the said specified purpose and accordingly as per serial no. 234 of Schedule-I of the Notification No. 01/2017-CentraI Tax (Rate) dated 28.06.2017, the applicable rate of GST on such supply will be 5% as on today [2.5% CGST + 2.5% SGST] - in the present case, the supply of the said items are intended for “Solar Power Generating System”, hence the entire supply would fall under composite supply in as much as “Solar Power Generating System”, is predominant element in composite supply and it takes the character of the principal supply therefore all the goods should be taxable @ 5% as “Solar Power Generating System”. Reliance placed in the CESTAT judgment Rajasthan Electronics & Instruments Ltd. Vs CCE [2004 (7) TMI 259 - CESTAT, NEW DELHI], where it was held that Solar Photovoltaic Module is a Solar Power Generating System. Other parts are only panel housing consisting of controllers and switches. Hence the whole system is a Solar Power Generating System and is entitled for the benefit of notification. Therefore, the denial of benefit of notification by the adjudicating authority is not sustainable. The items which are used in connection with generation of power from sunlight are covered under the definition of “Solar Power Generating System”. Accordingly solar inverter & solar panel used for specified purpose i.e. generation of power from sunlight, will be covered under serial no. 234 of Schedule-I of the Notification No. 01/2017-Central Tax (Rate) dated 28.06.2017, the applicable rate of GST on such supply will be 5% [2.5% CGST + 2.5% SGST]. In this context also, the supply will be treated as “composite supply’. Ruling:- Supply of solar inverter, controller, battery and panels would covered under “Solar Power Generating System” as a whole in terms of serial no. 234 of Schedule-I of the Notification No. 01/2017 -Central Tax (Rate) dated 28.06.2017 when supplied for said purpose and the applicable rate of GST on such supply will be 5% as on today [2.5% CGST + 2.5% SGST] and such supply will be treated as “composite supply”. Supply of solar inverter & solar panels together will fall under the definition of “Solar Power Generating System” (if the same are used for said specified purpose) in terms of serial no. 234 of Schedule-I of the Notification No. 01/2017-Central Tax (Rate) dated 28.06.2017 and the applicable rate of GST on such supply will be 5% as on today [2.5% CGST + 2.5% SGST] and such supply will be treated as “composite supply”. The aforesaid findings are applicable for both manufactures and traders engaged in said supply. Issues Involved:1. Applicability of GST rate on supply of solar inverter, controller, battery, and panels under 'Solar Power Generating System' and whether such supply is a 'composite supply' or 'mixed supply'.2. Whether the supply of solar inverter and solar panels together falls under the definition of 'Solar Power Generating System' or constitutes a 'mixed supply' and the applicable GST rate.3. Significance of being a manufacturer or trader on the clarification.Issue-wise Detailed Analysis:Issue 1: Applicability of GST rate on supply of solar inverter, controller, battery, and panels under 'Solar Power Generating System' and whether such supply is a 'composite supply' or 'mixed supply'.The applicant sought an advance ruling on the classification and GST rate applicable to the supply of solar inverter, controller, battery, and panels. According to Section 97(2)(a) & (e) of the CGST/SGST Act, 2017, the application is admissible. The Joint Commissioner, SGST, Roorkee, clarified that if these items are supplied in an assembled form, they are covered under 'Solar Power Generating System' and are not treated as composite supply. The applicable GST rate for 'Solar Power Generating System' is 5% (2.5% CGST + 2.5% SGST). However, if supplied individually, they are considered a mixed supply with an 18% GST rate.The judgment examined various components of a solar power generating system, including solar panels, inverters, controllers, and batteries. It concluded that when these items are supplied for the specified purpose of generating solar power, they are covered under 'Solar Power Generating System' and treated as a composite supply. The applicable GST rate for such a supply is 5%, as per serial no. 234 of Schedule-I of Notification No. 01/2017-Central Tax (Rate) dated 28.06.2017.Issue 2: Whether the supply of solar inverter and solar panels together falls under the definition of 'Solar Power Generating System' or constitutes a 'mixed supply' and the applicable GST rate.The ruling referenced past judicial pronouncements and notifications from the erstwhile Central Excise regime, which supported the classification of solar inverters and panels as part of the 'Solar Power Generating System.' The supply of solar inverter and solar panels together, when used for generating power from sunlight, falls under the definition of 'Solar Power Generating System.' This supply is treated as a composite supply with a GST rate of 5% (2.5% CGST + 2.5% SGST), as per serial no. 234 of Schedule-I of Notification No. 01/2017-Central Tax (Rate) dated 28.06.2017.Issue 3: Significance of being a manufacturer or trader on the clarification.The ruling clarified that the GST rate does not change based on whether the supplier is a manufacturer or a trader. The same GST rate and classification apply to both manufacturers and traders engaged in the supply of solar inverters, controllers, batteries, and panels for solar power generating systems.Order:1. Supply of solar inverter, controller, battery, and panels is covered under 'Solar Power Generating System' as a whole, with a GST rate of 5% (2.5% CGST + 2.5% SGST), and such supply is treated as a composite supply.2. Supply of solar inverter and solar panels together falls under the definition of 'Solar Power Generating System' with a GST rate of 5% (2.5% CGST + 2.5% SGST), and such supply is treated as a composite supply.3. The aforesaid findings apply to both manufacturers and traders engaged in the said supply.