Solar Power Plant Invoicing Issue

[DS Pal]

Dear Experts,

One of my client Company 'X' receives an order from Company 'Y' for EPC of Solar Power Plant. Company 'Y' also receives such order from Company 'Z'.

Now, Company 'X' is invoicing to 'Y' at the rate of 8.90% (70:30 on 5% & 18%) for Solar power generating system. Till then there is no issue in the transaction.

But contract between Company Z and Company Y says that 'Y ' will invoice to 'Z' individually Item wise / HSN wise.

Now the query is can Company 'Y' do this?

If yes, how the inventory be record in the books of Company 'Y'?

If No, what will be the possible solution to this transaction?

Should Company 'X' needs to change anything in such transaction with Company 'Y'?

Thanks

[Sadanand Bulbule]

In my considered opinion, this is not a good tax planning and unacceptable by the department.

In terms of Entry No. 201A of Notification No. 8/2021-Central Tax (Rate) dated 30/09/2021, the benefit of 70:30 is for Solar Power  Generator as one unit only. 

To avail this benefit, you must invoice for " Solar Power Generating System".

So other queries do not deserve any answer.

AI Summary

Solar power generating system invoicing as one unit required to claim 70:30 GST split; component-wise billing may be denied. Entry No. 201A of Notification No. 8/2021-Central Tax (Rate) prescribes that the 70:30 valuation split for applying 5% and 18% GST is available only where the supply is invoiced as a 'Solar Power Generating System' as a single unit. Item-wise or HSN-wise invoicing for individual components is stated to be inconsistent with this prescription and may be treated as unacceptable tax planning, risking denial of the concessional 70:30 benefit. Consequently, to claim the split-rate benefit, invoicing should be for the solar power generating system as one unit rather than component-wise.