Apportionment of consideration for solar power systems mandates a goods-services split, yielding a single reduced uniform tax on gross consideration.

Supply of solar power generating systems supplied with taxable services falls under Entry No.234 as amended by Notification No.24/2018; the explanation requires apportioning the gross consideration between goods and services (majority to goods, remainder to services) so that a single uniform tax incidence applies to the gross consideration irrespective of whether the contract is treated as a works contract relating to immovable property or a composite supply; outcome: writ allowed, assessment set aside and remanded for reassessment applying the uniform rate on gross consideration with verification of factual tax and interest details.

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Issues: (i) Whether the supply of solar power generating systems and related contracts are to be taxed as works contracts relating to immovable property at 18% or can be taxed under the concessional entry for solar power devices at an effective uniform rate of 8.9% by applying the explanation to Entry No.234 of Schedule-I in Notification No.1/2017 as amended by Notification No.24/2018.

Analysis: The Court examined the applicability of Entry No.234 of Schedule-I of Notification No.1/2017 dated 28.06.2017 and the explanation inserted by Notification No.24/2018 dated 31.12.2018 which prescribes that where goods covered by Entry No.234 (including solar power generating systems) are supplied along with taxable services, 70% of the gross consideration is to be attributed to goods (taxable at 5%) and 30% to services (taxable at 18%), yielding an aggregate uniform tax incidence of 8.9% on the gross consideration. The Court found that the explanation to Entry No.234 is applicable to supplies of the solar power generating systems in question irrespective of whether the contract is characterized as a works contract relating to immovable property or as a composite supply of goods and services. The Court noted that factual questions such as exact quantum of tax and interest paid and documentary break-up can be verified by the assessing authority on remand.

Conclusion: The writ petition is allowed; the assessment dated 27.11.2024 is set aside and the matter is remanded to the assessing authority to complete assessment applying a uniform rate of 8.9% on the gross consideration for the relevant period, with verification of factual details including tax and interest payments.

Ratio Decidendi: Where Notification No.1/2017 (Entry No.234) as amended by Notification No.24/2018 applies to supply of solar power generating systems supplied with taxable services, the explanation mandates apportionment of gross consideration as 70% for goods and 30% for services, and that apportionment governs tax incidence regardless of characterization of the contract as relating to movable or immovable property.

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