2021 (4) TMI 658 - AAR - GST

AAR declines ruling on GST liability for solar cables due to insufficient contract documentation to determine transaction scope

AAR Gujarat declined to rule on GST liability for solar cables supplied by the applicant. The authority held that without submission of ... Applicability or determination of liability to pay Tax - Solar HT XLPE & LT XLPE Cables - availability of benefit of concessional rate of GST @ 5% - Entry Sr.No.234 of the Schedule-I to Notification No.1/2017-Integrated Tax (Rate) - non-submission of various details - HELD THAT:- In the event of non-submission of the documents by the applicant, it would not be possible to take a decision in the matter since the issue in hand covers supply of goods such as cables for the Solar Power Generating System and after going through the details, there appears to be a distinct possibility of supply of services being involved in the instant case, along with the supply of goods and in such an eventuality, the nature of the transaction as well as the aspect of GST liability thereon are likely to be completely different. There is also every likelihood of such supply of goods i.e. DC cables for Solar Power Generating System being accompanied by services such as assembly, installation of the cables with all fittings and accessories etc. Even otherwise, as can be seen from the wordings, the supply of DC cables by the applicant is to be accompanied by services such as packing and forwarding transportation alongwith transit Insurance. In the instant case, any decision on the issue cannot be taken, since the applicant has failed to provide the documents such as contract/agreement/tender. It is thus concluded that in view of non-submission of the documents such as contract/agreement/tender by the applicant and without going through the conditions/provisions envisaged in the documents, it will not be possible to take a decision in the matter. Issues Involved:1. Applicability of concessional GST rate on Solar DC Cables.2. Classification of Solar DC Cables under appropriate tariff heading.3. Determination of whether Solar DC Cables are integral parts of Solar Power Generating Systems.4. Requirement of documentation to substantiate the claim for concessional GST rate.Issue-wise Detailed Analysis:1. Applicability of Concessional GST Rate on Solar DC Cables:The applicant sought an advance ruling on whether the supply of Solar DC Cables to Solar Power Generating Projects would attract a concessional GST rate of 5% as per Sr.No.234 of Schedule-I of Notification No.01/2017-Integrated Tax (Rate) dated 28.06.2017. The applicant argued that these cables are essential parts of Solar Power Generating Systems, and thus should be taxed at the concessional rate.2. Classification of Solar DC Cables under Appropriate Tariff Heading:The applicant contended that Solar DC Cables fall under Chapter Heading No.8544 of the Customs Tariff Act, which includes insulated wires and cables. The judgment confirmed that the cables are indeed covered under Sub-heading 8544 of Chapter-85, thereby satisfying the first condition for concessional GST rate eligibility.3. Determination of Whether Solar DC Cables are Integral Parts of Solar Power Generating Systems:The judgment examined whether Solar DC Cables are integral to Solar Power Generating Systems. It was noted that these cables connect solar panels to a combiner box and then to an inverter, converting DC to AC. The technical specifications provided by the applicant indicated that these cables are designed for solar applications and are essential for the system's operation. However, the judgment emphasized the necessity of verifying whether these cables are indeed used as parts of the Solar Power Generating System in the applicant's specific case.4. Requirement of Documentation to Substantiate the Claim for Concessional GST Rate:The judgment highlighted the importance of documentation, such as supply contracts, technical specifications, and agreements, to substantiate the claim for the concessional GST rate. Despite requests, the applicant failed to provide the necessary documents, including contracts, tenders, and detailed technical specifications. The judgment referenced Circular No.80/54/2018-GST, which clarifies that suppliers must ensure goods are used in renewable energy projects by obtaining relevant documents from buyers.Conclusion:Due to the non-submission of critical documents by the applicant, the judgment could not conclusively determine the applicability of the concessional GST rate on Solar DC Cables. The ruling emphasized that without detailed contracts, technical specifications, and other relevant documents, it is impossible to make a definitive decision on the matter. Therefore, the application for an advance ruling was dismissed, and no decision was provided on the GST rate applicability for the Solar DC Cables supplied by the applicant.