Concessional GST on solar power systems applies with mandatory 70:30 apportionment for goods and services.

The concessional GST rate for solar power generating systems under Notification No. 1/2017-Central Tax (Rate), as amended, applies to supplies involving erection and commissioning of such systems. Where the transaction includes both goods and taxable services, the notified 70:30 apportionment must be applied to determine the taxable value, and the assessment cannot be sustained if it ignores that statutory split. The characterisation of the arrangement as a works contract or composite supply does not displace the notified rate. The tax and interest already paid were left for verification by the assessing authority on fresh assessment.

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Issues: Whether the concessional rate under Notification No. 1/2017-Central Tax (Rate) as amended by Notification No. 24/2018-Central Tax (Rate) applied to the supply and erection of solar power generating systems, and whether the assessment could stand without applying the 70:30 apportionment.

Analysis: Entry No. 234 of Schedule I prescribed a concessional rate for solar power based devices and solar power generating systems, including their parts. The later explanation provided that where such goods were supplied along with taxable services, the gross consideration had to be split into 70% attributable to goods and 30% attributable to services. The assessment itself related to erection and commissioning of a solar power generating system, so the applicability of the notified rate did not depend on whether the transaction was described as a works contract relating to immovable property or as a composite supply. The question whether the tax and interest already paid were correct was left to be verified by the assessing authority.

Conclusion: The concessional notification applied, and the assessment could not be sustained in its existing form. The matter was remanded for fresh assessment on the basis of the 8.9% effective rate derived from the notified 70:30 split.

Ratio Decidendi: Where a notified concessional rate expressly covers solar power generating systems and prescribes a statutory apportionment for supplies made along with services, the assessment must be made on that notified basis irrespective of the label placed on the transaction.

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