TaxTMI 
TaxTMI 
2021 (8) TMI 141
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....ter called the 'Applicant') is registered under the GST Vide GSTIN 33AADCK4657K1ZC. They have sought Advance Ruling on the following questions: 1. Whether the company is eligible to take input tax credit as inputs/capital goods or input services of the items used in Design, Engineering, Supply, Execution (EPC) of 265KW Roof top Grid Solar PV Power Plant as per MNRE 8v IEC Standards 2. Whether the company is eligible to take input tax credit for inputs and services for running the solar plant. The Applicant has submitted the copy of application in Form GST ARA - 01 and also submitted a copy of Challan evidencing payment of application fees of Rs. 5,000/- each under sub-rule (1) of Rule 104 of CGST rules 2017 and SGST Rules 2017. 2.1 The applicant has stated that their company has a plant in Erode for extracting edible oils etc. The applicant is in the process of installing/ has installed a captive roof top solar grid connected power plant in the edible oil extracting plant. They have furnished the copy of the order placed on KCP Solar Industry vide purchase order reference KLF/PO/PRI/20-21/43 dated 6.8.2020 and invoice no 135/20-21 dated 10.9.2020. The solar ....
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....t is required to be made with TNEB for any surplus. Therefore, the applicant is not required to enter into a Wheeling and Banking agreement with Tamil Nadu Generation and Distribution Corporation Ltd. 2.4 On the Interpretation of Law the applicant has stated that they are in the business of extracting/crushing/pressing edible oils of various types grades & producing coconut milk & milk powder from its plant at Nichampalayam. In their view, the above activities constitute business in terms of section 2 (17) of the CGST/TNGST Act 2017. The applicant has referred to the definitions of capital goods, inputs and input services under Section 2 (19), 2 (59) & 2 (60) of CGST Act 2017. They have also referred to the provisions of Section 16(1) & 16(2) of CGST Act 2017. They have stated that in order to avail input tax credit the following additional conditions have to be fulfilled: (1). the capital goods have been capitalised in the books of the applicant. (2). the capital goods are used or intended to be used in the course of furtherance of business. The applicant has also referred to the provisions of Section 17 of the CGST Act 2017. They have submitted that the pr....
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....ty generated is consumed captively and no part of the energy produced is sold or discharged into the grid. Hence, the applicant is of the view that they are entitled to claim input credit as detailed above. 3.1 Due to the prevailing pandemic situation and in order not to delay the proceedings, the applicant was addressed through the email address mentioned in their application to seek their willingness to participate in the digital hearing vide email dated 07.04.2021. The applicant consented and the hearing for the admission of application was held on 09.04.2021. The authorized representative appeared for the hearing virtually and reiterated their submissions. They stated that the electricity generated from solar generator for which the eligibility of input tax credit is claimed is completely used for taxable supplies. They stated that the expenses are capitalized for which they were asked to furnish a write up on the same and the relevant account details. They were also asked to furnish a write-up on outward supplies along with sample copies of invoice. 4. In furtherance to the hearing held on 09.04.2021, the applicant submitted the following documents vide their letter date....
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....f the person claiming the input tax credit and which are used or intended to be used in the course or furtherance of business. From the above, it infers that goods which have been capitalized in the books of accounts would not qualify to be considered as inputs. • As per Section 16(1) of the CGST Act, 2017, tax payer is entitled to credit of input tax charged on any supply of goods and/or services made to them and used by them in furtherance of business subject to the conditions and restrictions as specified in Section 16 (2) and Section 17 of the CGST Act, 2017. Further, as per Serial number (c) under subsection 5 of Section 17 provides input tax credit shall not be available in respect of "Works Contract Services" when supplied for construction of an immovable property (other than plant and machinery) except where it is an input service for further supply of works contract services. • In the instant case, though electric energy is fully exempted under GST, the same were fully capitively consumed by the applicant for manufacture and supply of taxable goods viz. Edible oils. Hence, it is opined that the applicant may be entitled for availment of eligible i....
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....has been supplied by M/s. KCP Solar Industry for the price quoted and paying both CGST& SGST amounting to Rs. 8,47,458/- vide invoice no 135/20-21 dated 10.9.2020. From the purchase order it is seen that the supply is a works contract comprising of designing, engineering and erection along with supply of the product which has been done as a whole process. The solar panels have been installed at the top of the roof of the factory building and oil tanks. Electricity generated from the solar plant has been fully consumed to produce taxable goods. A consolidated contract was placed for design, engineering, supply, erection of 265Kw Roof top Grid Solar PV Power Plant as per MNRE & IEC Standards. The system includes 790 panels. Each panel has 335 watt peak and a total capacity is 264.65 KW. They have stated that the Roof top Grid solar PV Power is for captive consumption within the premises. There is no third party sale and the units generated by the solar plant are consumed for operating the edible oil extraction plant. The operation is done by a reference signal received by the smart meter from the main panel which is synchronised with the solar system. In case there is a failure of th....
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....sions relevant to Input Tax Credit are analysed as under. Section 16 (1) to (3) of CGST Act 2017 & TNGST Act 2017 provides the "Eligibility and conditions for taking Input tax credit" is as follows: 16. (1) Every registered person shall, subject to such conditions and restrictions as may be prescribed and in the manner specified in section 49, be entitled to take credit of input tax charged on any supply of goods or services or both to him which are used or intended to be used in the course or furtherance of his business and the said amount shall be credited to the electronic credit ledger of such person. (2) Notwithstanding anything contained in this section, no registered person shall be entitled to the credit of any input tax in respect of any supply of goods or services or both to him unless,- (a) he is in possession of a tax invoice or debit note issued by a supplier registered under this Act, or such other tax paying documents as may be prescribed; (b) he has received the goods or services or both. Explanation-For the purposes of this clause, it shall be deemed that the registered person has received the goods where the goods are d....
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.... 1975 and hence, Electric Energy is considered as goods. Accordingly, Electric power is one of the inputs required for carrying out the process of manufacturing. Further, in terms of SI.No.104 of Notification No. 02/2017(Rate) dated 28.06.2017, electrical energy is exempted from tax under CGST Act, 2017. However, in the case of the Applicant, though electric energy is fully exempted under GST, the same is going to be fully capitively consumed by the applicant for manufacture and supply of taxable goods viz. Edible oils as certified by the order issued by the Tamil Nadu Generation and Distribution Corporation Ltd vide Copy of Memo no. U23/003097/M/s KL F Nirmal-220 KW/2020 dated 24.12.2020 which has been enclosed as Appendix B. The commercial terms for the approval is given in point 13 of the approval and the relevant extract is given below: "(13) At present as per the Hon'ble TNERC's Grid Connectivity and Intra State Open Access Regulations 2014, parallel operation charges (Rs. 15000/- per month per MW or part thereof as per TNERC order no 5 of 2019 dated 29.3.2019) as fixed by the Hon'ble TNERC has to be paid by the generator. This charge is applicable as the generator is....
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.... than plant and machinery) except where it is an input service for further supply of works contract service; (d) goods or services or both received by a taxable person for construction of an immovable property (other than plant or machinery) on his own account including when such goods or services or both are used in the course or furtherance of business. Explanation.-For the purposes of this Chapter and Chapter VI, the expression "plant and machinery" means apparatus, equipment, and machinery fixed to earth by foundation or structural support that are used for making outward supply of goods or services or both and includes such foundation and structural supports but excludes- (i) land, building or any other civil structures; (ii) telecommunication towers; and (iii) pipelines laid outside the factory premises. As seen above, Section 17 (5) further stipulates certain conditions for availing Input tax credit wherein, clauses (c) and (d) provide for blocking of credits on works Contract service / construction, but it excludes 'Plant and Machinery' which is defined under the Explanation to the Section. 8.4 In the case at hand, the whol....
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....ices for M.S. Channels and Loading charges etc., and claimed credit of GST paid on such goods/services, grouped under "Gross Block Plant & Machinery-TN (Tamil Nadu)" while in the Appendix-A annexed to the application, they have submitted invocies of M/s.KCP Solar Industries from whom they have ordered to purchase the solar power plant along with connected services of desinging, engineering etc and required their eligibility to credit on this alone. The works contract services received from M/s. KCP Solar Industry, being Plant& Machinery, the credit of Rs. 8,47,458/- raised under Invoice no.135/20-21 dt. 10.09.2020 listed as Appendix-A to the application is eligible as credit. However the GST component on other invoices grouped under "Gross Block Plant & Machinery-TN (Tamil Nadu)" is not available as credit for the reasons mentioned above. Thus the applicant is eligible for availing input tax credit as inputs/capital goods or input services of the items used in Design, Engineering, Supply, Execution (EPC) of 265KW Roof top Grid Solar PV Power Plant as per MNRE & IEC Standards procured from M.s KCP Solar Industries as they have been found to comply with the provisions of Sections 16 ....