Sale of Solar Power Plant from unregistered state

[DS Pal]

Dear experts,

Company A (Registered with Himachal Pradesh GST) construct and sold a 'Solar Power Plant' situated in Himachal Pradesh to Company B (having a registered office in Uttar Pradesh) during 2018-19.

Company B is registered under GST in the state of Rajasthan only since year 2022 and last year PAN based turnover is totally exempt which is around 65 Lacs (Supply of Electricity).

Now, the Company B wants to sell the same to Company C (Haryana). Should Company B require to take GST registration in the state of Himachal Pradesh for this transaction?

OR Can Company B issue tax invoice from Rajasthan State?

Also Note: Such solar plant is standing in books of Company B as fixed assets. 

Please advise a possible solution.

Thank you.

[YAGAY andSUN]

In the present case, Company B, which is registered under GST only in the State of Rajasthan and proposes to sell a solar power plant situated in the State of Himachal Pradesh (entered in its books as fixed assets), is effecting a transaction which constitutes a supply of immovable property, the situs of which is in Himachal Pradesh. As per settled legal position and in terms of Section 10(1)(c) of the IGST Act, 2017, the place of supply in case of immovable property shall be the location of such property, i.e., Himachal Pradesh. Further, Section 22(1) of the CGST Act mandates that a supplier is liable to be registered in the State from where he makes a taxable supply, if his aggregate turnover exceeds the threshold limit. While Company B is not making regular taxable supplies, for the limited purpose of this transaction involving the supply of immovable property located in Himachal Pradesh, it is required to obtain GST registration in the State of Himachal Pradesh, as the said supply cannot be validly executed from its place of registration in Rajasthan. Therefore, Company B cannot issue a tax invoice from Rajasthan for this transaction, and must obtain registration in Himachal Pradesh to lawfully effect and invoice the supply of the solar plant to Company C.

[DS Pal]

Thank you for your reply.

I would like to add one more thing that such solar plant has not been considered as immovable property as per various judgements.

Further, what will be the solution in case there are solar devices/goods instead of Solar plant? In that case also, we need to take registration in HP?

[Sadanand Bulbule]

Plz refer Maharashtra AAAR No.MAH/AAAR/SS-RJ/08/2018-19 dated 05/09/2018 rendered in the case of Giriraj Renewables Pvt Ltd. - 2018 (9) TMI 1183 - APPELLATE AUTHORITY FOR ADVANCE RULING MAHARASHTRA as regards to Solar Power Generating System-immovable property or otherwise.

[Sadanand Bulbule]

2018 (9) TMI 1183 - APPELLATE AUTHORITY FOR ADVANCE RULING MAHARASHTRA - IN RE: GIRIRAJ RENEWABLES PRIVATE LIMITED

[Shilpi Jain]

You can consider this as a business sale as a going concern if it satisfies the required conditions. In that case this will also be exempt and no GST will apply

AI Summary

Place of supply: immovable property location governs GST registration, requiring registration where the property is situated. For a supply treated as immovable property, the place of supply is the location of the property and the supplier must obtain GST registration in that State to effect and invoice the supply; invoicing from the supplier's registration State is not appropriate. Classification as immovable or movable (or as a going concern) affects tax treatment and requires factual and ruling-based analysis.