TaxTMI 
TaxTMI 
2022 (2) TMI 1041
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....urjar Ki Thadi, Shyam Nagar, Jaipur, Raj. -302019 (hereinafter the applicant) is fit to pronounce advance ruling as it falls under the ambit of the Section 97(2) (a) given as under:- (a) Classification of any goods or services or both: Further, the applicant being a registered person (GSTIN is 08BXFPG0701B1ZA) as per the declaration given by him in Form (ARA-01) the issue raised by the applicant is neither pending for proceedings nor proceedings were passed by any authority. Based on the above observations, the applicant is admitted to pronounce advance ruling. A. SUBMISSION AND INTERPRETATION OF THE APPLICANT; STATEMENT OF RELEVANT FACTS HAVING A BEARING ON THE QUESTIONS RAISED 1. M/s Utsav Corporation (hereinafter referred to as "applicant") is a proprietorship concern engaged in providing products and services in energy conservation, renewable energy sources, water infrastructure and water treatment project management. The applicant is engaged in supply of solar energy based products under various contracts, and on the basis of purchase orders from customers with or without installation service. 2. That the applicant is registered under GST as per the pro....
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....which the advance ruling is sought. (2) The question on which the advance ruling is sought under this Act. shall be in respect of,- (a) classification of any goods or services or both: (b) applicability of a notification issued under the provisions of this Act: (c) determination of time and value of supply of goods or services or both; (d) admissibility of input tax credit of lax paid or deemed to have been paid; (e) determination of the liability to pay lax on any goods or services or both: (f) whether applicant is required to be registered; (g) whether any particular thing done by the applicant with respect to any goods or services or both amounts to or results in a supply of goods or services or both, within the meaning of that term. 4. Thus, as per the said section, advance ruling may be sought by the applicant on the questions concerning classification of goods or services and determination of the liability to pay tax on goods or service. The applicant submits that the questions for determination in the instant advance ruling application concern (a) classification of goods or services and (b) determinat....
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....ls absorb the sun's photons and convert them into energy. Classification of Solar panels in Customs tariff is under Heading 8541 which is as below: HSN Description 8541 40 Photosensitive semi-conductor devices, including photo voltaic cells whether or not assembled in modules or made up into panels; light-emitting diodes (LED) Under the GST tariff. SI. No. 234 of GST Tariff has a specific entry for Solar PV cells which is taxable at the rate of 5%. The entry is as under: S.No. HSN Description Rate 234. 84, 85 or 94 Following renewable energy devices & pails for their manufacture (h) Photo voltaic cells, whether or not assembled in modules or made up into panels 2.5% Hence there is no ambiguity in the classification of solar panels and it is clear that the same are taxable at 5% rate of GST. 2. Solar Pump A solar water pump is used for extracting water from ponds, rivers, borewells or other sources of water which are then used to meet the water requirements for irrigation, community water supply, livestock and other purposes. Pumps are also used for water transportation from one location to another. How does it work? When ....
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....bove general standards, the voltage of solar power is lower. The solar pumps are designed to primarily run on solar energy. Hence the solar pump motors have a low voltage capacity as compared to electric pumps. Hence this is a differentiating factor of solar pumps that their voltage capacity is lower as compared to electric pumps of similar phase. For example, considering the standards, a normal 1 Hp 3 phase electric pump will have voltage capacity of 415 volts but contrary lo that a 1 Hp 3 phase solar pump will have a voltage capacity of around 100-200 volts. The normal electricity flowing in state electricity grids is in form of Alternate Current with standard voltage as explained above. The solar pumps whether AC or DC have a low voltage capacity and hence in solar water pumping systems, solar pump sets are fitted with solar charge controllers to maintain the frequency of current supplied to them. Now there can also be a question whether Solar AC pumps can work on normal grid electricity in case of lack of sunlight or solar power. The answer to the question is given in FAQs at https://www.indiawaterportal.org/. "No lack of sunlight affects the working of sol....
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....onents to which it is connected. The controllers perform the function of regulating the frequency of current supplied into the device/system according to the voltage requirement of device/system to which it is connected. The Solar controller converts the DC power produced by the solar array to match the voltage and current operating requirements of the system's solar pump. It ensures that (i) the pump operates at its maximum performance levels and (ii) the pump will operate in less-than-perfect sun conditions, when sun rays are not available at required frequency such as on night time or cloudy days. Solar charge controllers regulate the energy flowing from the PV array and to perform such function, they consist of following components and technology:- - Variable Frequency Drive - Maximum Power Point Tracker (MPPT) - Enclosure for Controller With the variable voltage and frequency of solar power from PV array, solar drive converts the DC voltage input to AC output. In the MINISTRY OF NEW AND RENEWABLE ENERGY (MNRE) Guidelines referred above, MPPT is defined as under: Maximum Power Point Tracker (MPPT) - MPPT is an algo....
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....duct is classifiable under Chapter 85 of Customs tariff. Now. the relevant entries in GST Tariff for pumps classifiable under Chapter 85 are as under: S.No. HSN Description Rate 375. 8504 Electrical transformers, static converters (for example, rectifiers) and inductors, other than charger or charging station for Electrically operated vehicles 9% S. No. HSN Description Rate 234. 84, 85 or 94 Following renewable energy devices & parts for their manufacture 2.5% (b) Solar power based devices (c) Solar power generating system Hence, applicant is of the view that solar controllers are essentially parts for manufacture of Solar Water Pumping System which is covered under entry 243 being "Solar Power Generating System' or 'Solar Power based device'. 4. Structure Iron structures are used for mounting of PV modules in a solar water pumping system. As per MNRE Guidelines for Specification for Solar Photovoltaic Water Pumping Systems, the PV modules should be mounted on metallic structures of adequate strength and appropriate design, which can withstand load of modules and high wind velocities up to 15....
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....and 8525 to 8528 are to be classified in heading 8517; It is a fact that structures in the given case are specifically designed as per technical specification of Solar water pumping system in which they have to be used and hence they are undoubtedly intended to be part of solar pumping systems. When the structures are purchased by the applicant from their supplier, the Purchase Orders raised by the applicant for structures clearly indicate that 'Water Supply Solar Pump Mounting Structure' is required and it also indicates that structure should be suitable for specified number and weight of panels to be mounted thereon for the manufacture of solar pumping system. A sample PO for Water Supply Solar Pump Mounting Structure of Galvanized Iron for 8 panels and weight of 1280 kg is enclosed for your reference and marked as Annexure-4. Hence it is clear that the structures in the given case are suitable for use solely with a particular kind of machines, i.e. Solar Water Pumping System. Relevant to the point here, in the case of M/s Phenix Construction Technology vs. Commissioner of Central Excise & Service Tax, Ahmedabad-II [2017-TIOL-3281-CESTAT-AHM], the point of dis....
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....explained above, they are classifiable under Chapter 84 of Customs Tariff by applicability of Section Note 4(v) to Section XVI of Customs Import tariff. Hence, applicant is of the view that structures for solar water pumping system are classifiable as parts for manufacture of Solar Water Pumping system or Solar power generating system in the above Entry 234 having HSN under Chapter 84. Combinations: 1. Solar Panels + Solar Controller + Solar Pump + Structure MNRE Guidelines for Specification of Solar Water Pumping System 2019-20 clearly state as under: A SPV Water Pumping System typically consists of:- • Pump Set (having AC or DC motor) • Solar Photo Voltaic (SPV) Array (made up of Solar Panels/Modules) • Solar Controller (SPV Controller) • Module Mounting Structures. Solar Panels: Photovoltaic Cells arranged in form of panels or modules to produce required solar energy. Solar Controller: Controller with Variable Frequency Drive with Maximum Power Point Tracking technology to regulated voltage of solar energy produced by Solar Panels and maximized use of solar energy available. Solar Pumps: Direct Current (....
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....rt only of the items in a set put up for retail sale, those headings are to be regarded as equally specific in relation to those goods, even if one of them gives a more complete or precise description of the goods. (b) Mixtures, composite goods consisting of different materials or made up of different components, and goods put up in sets for retail sale, which cannot be classified by reference to (a), shall be classified as if they consisted of the material or component which gives them their essential character, in so far as this criterion is applicable. For materials contained in composite goods, i.e. Solar Water Pumping System, different heading refers to different parts of the solar pumping system like Heading 8413 for Pumps, heading 8504 for Controller etc., by application of Rule 3(a). each heading has to be regarded as equally specific in relation to Solar pumping system and one of them cannot be said to have most specific description as per Rule 3(a). Since each Heading is specific as per Rule 3(a). such composite goods cannot he classified by reference to 3(a), hence Rule 3(b) needs to be applied As per Rule 3(b). mixture or composite goods consisting of or ....
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....evant which covers following: 'Following renewable energy devices and parts for their manufacture' (c) Solar Power generating system (d) Solar power based devices As explained at length above, a solar photovoltaic (SPV) water pumping system is a system powered by solar energy which consists of SPV panels and when sunlight falls on the solar panels it produces current which then feeds the motor to pump out the water. So the system is a solar power generating system. Although the term 'Solar power generating system is not defined in GST law. Exemption were provided to Solar power generating systems in excise regime as well and term has been interpreted by Authorities as under: In Rajasthan Electronics 2005 (180) ELT 481 (Tri - Delhi), the case of the appellant was that a Dusk Dawn System which is an electronic system for street lights comprising of electronic controller and Solar Photovoltaic Module should be entitled for benefit of notification being a Solar Power Generating system or not. The above judgment has been enclosed as Annexure-6. The contention of the appellant was that whole system works on the solar energy and it is ....
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.... whole in terms of SI. No. 234 of Notification No. 01/2017-CT(Rate) dated 28.06.2017 when supplied for said purpose and the applicable rate of GST will be 5% and such supply will be treated as composite supply. ii) Supply of solar inverter & solar panels together will fall under the definition of "Solar Power Generating System" (if the same are used for said specified purpose) in terms of SI. No. 234 of Notification No. 01/2017-CT(Rate) dated 28.06.2017 and the applicable rate of GST will be 5% and such supply will be treated as composite supply. The above ruling has been enclosed as Annexure-7 Hence on the basis of above analysis, the applicant's interpretation has been affirmed that sale of all these components together is a composite supply in which sale of Solar Water Pumping System itself is the composite supply since the intention of the recipient is very clear that he has to procure a Solar Water Pumping System as a whole. Further, in ease of Aura Solar recently a judgment has been delivered by Mumbai Tribunal in the context of Excise where it has said then when goods are sold as a package and can be proved through a technical opinion that it is a solar....
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...., Hyderabad 2008 taxmann.com 125 (Bangalore - CESTAT), Hon'ble Bangalore Tribunal has even held that an inverter charger card is entitled for benefit as a Solar power generating system: In present case, the appellants have claimed exemption in respect of "inverter charger card" as solar power generating system The appellants actually manufactured STK lantern. The above lantern required electricity for its working. It is possible to convert solar energy to electricity with the help of inverter charger manufactured by the appellants. The Dy. General Manager has certified that the inverter charger constitutes solar power generating system as it performs the function of generating the required high frequency AC power from Sun-light with the help of SPV module and supplying it to the compact fluorescent lamp of a solar lantern In view of the above, expert opinion, we hold that the impugned item can be considered as solar power generating system and is entitled for the benefit of the exemption Notification. Therefore, we allow the appeal with consequential relief The above judgment has been enclosed as Annexure-9. The parts intended to be sold by applicant are designed to be....
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....1/2017-Central Tax (Rate) dated 28.06.2017 which has been amended by various notifications and the extract of the said notification amended till date relevant for the present issue is reproduced as under: S.No. HSN Description 234. 84, 85 or 94 Following renewable energy devices & parts for their manufacture A) Bio-gas plant B) Solar power based devices C) Solar power generating system D) Wind mills. Wind Operated Electricity Generator (WOEG) E) Waste to energy plants/devices F) Solar lantern/solar lamp G) Ocean waves/tidal waves energy devices/plants H) Photo voltaic cells, whether or not assembled in modules or made up into panels "Explanation: If the goods specified in this entry are supplied, by a supplier, along with supplies of other goods and services, one of which being a taxable service specified in the entry at S. No. 38 of the Table mentioned in the notification No. 11/2017- Central Tax (Rate), dated 28th June, 2017 [G.S.R 690(E)], the value of supply of goods for the purposes of this entry shall be as seventy per cent, of the gross consideration charged for all such supplies, and the remaining thirty per cent, of the gross Co....
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....0% respectively. 10. The above understanding has been confirmed by Advance Ruling Authorities/ Appellate Advance Ruling Authorities for Solar water pumping systems which has substantiated the view of applicant. 11. That Rajasthan Appellate Advance Ruling Authority pronounced a ruling for Appeal against Advance Ruling in case of Shri Kailash Chandra (Prop. Mali Construction) Order No. RAJ/AAAR/2019-20 dated 15.05.2019, wherein it was held as under: 23. On careful consideration of the abovementioned entries of the said notifications, we find that the Solar Energy' based bore well water pumping system (hereinafter also referred to as "the System") deserve classification under entry' No. 234 of the Notification No. 01/2017-Central Tax (Sate) as 'Solar Power based devices'. The Appellant has contended that benefit of Notification Nos. 24/2018-Central Tax(Rate) and 27/2018- Central Tax(Rate) inserting 'Explanation' in the entry No. 234 ibid and inserting entry No. 38 ibid respectively should be available to them . After going through the amended entries 234 and 34 ibid, we find that the benefit is available only when the Solar Power based devices....
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....d valuation has to be done in line with SL No. 234 of Notification No. 01/2017 - CT(Rate) dated 28.06.2017 read with SI. No. 38 of Notification No. 01/2017 -CT(Rate) dated 28.06.2017 along with their Explanations. B. PERSONAL HEARING In the matter personal bearing was granted to the applicant on 26 08.2021 at Room no. 2.11 NCRB, Statue Circle, Jaipur. On behalf of the applicant Shri Sanjiv Agarwal, (CA) appeared for PH. During the PH. he reiterated the submissions already made in the application. C. FINDINGS, ANALYSIS & CONCLUSION: M/s Utsav Corporation (hereinafter referred to as "applicant") is a proprietorship concern engaged in providing products and services in energy conservation, renewable energy sources, water infrastructure and water treatment project management. The applicant is engaged in supply of solar energy based products under various contracts and on the basis of purchase orders from customers with or without installation service. 1. That the applicant is registered under GST as per the provisions of the GST laws bearing GSTIN 08BXFPG0701B1ZA in the state of Rajasthan. 2. That in relation to the contracts/orders of pure sale of solar energy device....
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....water supply, livestock and other purposes. Pumps are also used for water transportation from one location to another. When sunlight falls on the solar panels, it produces direct current (DC) which then feeds the DC motor to pump out the water In the case where the motor requires an alternating current (AC), the DC produced by solar panels is converted to AC using an inverter/Variable Frequency Drive, and the motor uses that AC to pump out the water. The important characteristic of solar pumps (whether DC or AC) is that it is designed with low voltage capacity to be run on solar energy. As compared to the above general standards, the voltage of solar power is lower. The solar pumps are designed to primarily run on solar energy, Hence the solar pump motors have a low voltage capacity as compared to electric pumps. Hence this is a differentiating factor of solar pumps that their voltage capacity is lower as compared to electric pumps of similar phase. The solar pumps whether AC or DC have a low voltage capacity and hence in solar water pumping systems, solar pump sets are fitted with solar charge controllers to maintain the frequency of current supplied to them. The relev....
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....umps are of different types which includes DC Pumps and AC Pumps: DC pump: This pump runs on a motor which operates on direct current. AC pump; The motor of this primp operates on alternating current, which means the direct current produced by the solar panels gets converted to AC using the inverter. A solar panel produces direct current. The sun on the panels stimulates the flow' of electrons, creating current and since these electrons flow in the same direction, the current is direct Since, Solar Water Pumping System is not the whole device it is made of Solar panel. Controller, Solar Pump, Structure etc, includes procurement, development, testing, commissioning etc hence, it is a mixed supply for goods and services. Mixed Supply has been defined in Section 2(74) of GST Act, 2017 as below- (74) "mixed supply" means two or more individual supplies of goods or services, or any combination thereof, made in conjunction with each other by a taxable person for a single price where such supply does not constitute a composite supply Illustration:- A supply of a package consisting of canned foods, sweets, chocolates, cakes, dry fruits, aerated drinks a....
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....ing manner, namely:- (a) a composite supply comprising two or more supplies, one of which is a principal supply, shall be treated as a supply of such principal supply; and (b) ................................ As per Section 2(30) composite supply is defined as,- "composite supply" means a supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services or both, or any combination thereof, which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply; Further principal supply is defined under Section 2(90) as,- "principal supply" means the supply of goods or services which constitutes the predominant element of a composite supply and lo which any other supply forming pan of that composite supply is ancillary; Further. Composite supply; - The following composite supplies shall be treated as a supply of services, namely:- (a) works contract as defined in clause (119) of section 2; However, since composite supply of works contract has been explicitly classified as supply of service under Schedule....