GST Ruling: Solar Power Systems as Composite Supply

The case involved determining whether the supply of solar rooftop power plants and solar irrigation water pumping systems, inclusive of design, erection, commissioning, and installation, constituted a 'composite supply' under GST regulations. The Assistant Commissioner, SGST, confirmed that both supplies qualified as 'composite supplies' with the service portion comprising less than 10% of the total cost. Consequently, a GST rate of 5% was applicable as per relevant notifications. The ruling categorized the supplies as 'Solar Power Generating Systems' and specified the GST rates for goods and services within the composite supply.

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Issues Involved:
1. Whether the supply of solar rooftop power plant along with design, erection, commissioning, and installation is a 'composite supply' and the applicability of GST rate.
2. Whether the supply of solar irrigation water pumping systems along with design, erection, commissioning, and installation is a 'composite supply' and the applicability of GST rate.

Issue-Wise Detailed Analysis:

Issue 1: Composite Supply of Solar Rooftop Power Plant
The applicant sought an advance ruling on whether the supply of solar rooftop power plant along with design, erection, commissioning, and installation constitutes a 'composite supply' and the applicable GST rate. As per Section 2(30) of the CGST/SGST Act, 2017, a 'composite supply' involves two or more taxable supplies of goods or services which are naturally bundled and supplied in conjunction with each other, one of which is a principal supply. The principal supply here is the solar rooftop power plant, with the service portion (erection, commissioning, and installation) being ancillary. The Assistant Commissioner, SGST, confirmed that the service portion is less than 10% of the overall cost, making the supply a 'composite supply' with a GST rate of 5% as per Notification No. 01/2017-Central Tax (Rate) dated 28.06.2017.

Issue 2: Composite Supply of Solar Irrigation Water Pumping Systems
Similarly, the applicant sought clarity on whether the supply of solar irrigation water pumping systems along with design, erection, commissioning, and installation is a 'composite supply' and the applicable GST rate. The components of the solar irrigation water pumping system were detailed, and it was concluded that the principal supply is the solar irrigation water pumping system, with the service portion being ancillary. The Assistant Commissioner, SGST, also confirmed that the service portion is less than 10% of the overall cost, making this supply a 'composite supply' with a GST rate of 5% as per Notification No. 01/2017-Central Tax (Rate) dated 28.06.2017.

Legal Provisions and Judicial Precedents:
The judgment referred to several legal definitions and judicial precedents to support the conclusions. Section 2(30) defines 'composite supply,' and Section 2(74) defines 'mixed supply.' Section 8 outlines the tax liability for composite and mixed supplies. The judgment also referenced past notifications and judicial decisions, such as the Rajasthan Electronics & Instruments Ltd. vs CCE and BHEL Vs CCE cases, which provided clarity on the classification of solar power generating systems.

GST Council Clarification:
The GST Council, in its 31st meeting, clarified that for renewable energy devices and parts, 70% of the gross value is deemed as the value of supply of goods attracting 5% GST, and the remaining 30% as the value of supply of taxable service attracting the standard GST rate. This clarification was incorporated into Notification No. 27/2018-Central Tax (Rate) dated 31.12.2018.

Ruling:
1. The supply of solar rooftop power plant and solar irrigation water pumping systems is covered under 'Solar Power Generating System' as per serial no. 234 of Schedule-I of Notification No. 01/2017-Central Tax (Rate) dated 28.06.2017.
2. The supply in question is treated as a 'composite supply.'
3. 70% of the gross value of the supply is the value of goods attracting 5% GST, and the remaining 30% is the value of taxable service attracting 18% GST as per Notification No. 27/2018-Central Tax (Rate) dated 31.12.2018.

This comprehensive analysis ensures that the supply of solar rooftop power plants and solar irrigation water pumping systems, including design, erection, commissioning, and installation, is classified as a 'composite supply' with the specified GST rates applied accordingly.

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