GST advance ruling rejected for rooftop solar subsidies as application sought retrospective clarification not future guidance

The Rajasthan AAR rejected an application for advance ruling regarding GST treatment of government subsidies for rooftop solar installations. The applicant filed the application on 14.10.2022, significantly after commencing service supplies and paying GST. The AAR held that advance rulings are limited to transactions being undertaken or proposed to be undertaken, not retrospective clarifications. Since the applicant was already discharging GST liability and sought ruling to verify their existing payment mechanism rather than for future transactions, the application fell outside the scope of advance ruling provisions. The application was deemed non-maintainable under GST Act, 2017.

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Issues Involved:
1. Applicability of GST on government subsidy.
2. Mechanism for generating GST-included invoices with subsidized amounts.

Issue-Wise
Detailed Analysis:

1. Applicability of GST on Government Subsidy:
The applicant, M/s Vishwas Green Energy, sought clarity on whether GST is applicable to government subsidies received for installing rooftop solar systems. The applicant referenced Section 15(2)(e) of the CGST/RGST Act, 2017, which states that the value of taxable supply includes subsidies directly linked to the price, excluding those provided by the Central and State Governments.

The judgment clarified that the definition of "consideration" under the GST Act explicitly excludes subsidies given by the Central or State Government. This exclusion means that such subsidies should not be included in the taxable value of the supply. The ruling observed that the applicant's invoices showed the subsidy amount separately and did not charge GST on it, aligning with Section 15 of the Act. Therefore, it was concluded that the subsidy provided by the government for the installation of solar systems is not subject to GST.

2. Mechanism for Generating GST-Included Invoices with Subsidized Amounts:
The applicant also sought guidance on generating GST-included invoices for transactions involving government subsidies. The ruling noted that the applicant had submitted a sample GST invoice demonstrating the mechanism for raising invoices, where the subsidy amount was shown separately, and no GST was charged on it.

The judgment emphasized that the value of supply should include all components as per Section 15(2) of the GST Act, but subsidies provided by the government should be excluded. It was observed that the applicant had correctly shown the subsidy amount separately in the invoice, ensuring it was not taxed. The ruling reiterated that the applicant must continue this practice to comply with the GST Act provisions.

Conclusion:
The judgment concluded that the subsidies provided by the Central or State Government for installing rooftop solar systems are not subject to GST. The ruling also confirmed that the applicant's current practice of showing the subsidy amount separately in the invoice and not charging GST on it is correct. However, since the application for advance ruling was filed after the transactions had already occurred, the ruling declared the application non-maintainable and rejected it under the provisions of the GST Act, 2017.

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