TaxTMI 
TaxTMI 
2022 (4) TMI 1333
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.... Suzlon submits that it receives Orders from for supply of WOEG consisting of Nacelle, Hub, Controller, Transformer, Set of 3 Rotor Blades and hybrid Lattice Tower - a component of Renewable Energy Device / Wind Operated Electricity Generator in respect of a Wind Farm Project. 5. Suzlon receives a consolidated contract for supply of Wind Turbine Generator consisting of WOEG (nacelle including hub, controller - microprocessor, accessories, set of 3 rotor blades, hybrid tower) and supply of transformer. A copy of Order: Supply/001/SMEIPL dated 30-8-21 entered with Shree Malaiamman Energy India Private Limited was submitted 6. Suzlon submits that the transformer supplied by it is specially designed for WOEG application and is installed on the ground adjoining to each Wind Operated Electricity Generator. Its transformer performs dual function of a Step-Down Transformer and a Step-Up Transformer unlike a normal Transformer. In as much as it performs dual function, it is different from other general use transformers like used by the State Electricity Board, which have a single function of either stepping down or stepping up the voltage, and does not perform both the functions simul....
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....ted key parameters of Transformers in Power, Solar and Wind Applications as follows: Type of transformer → Features ↓ Power transformer Distribution transformer Wind turbine transformer Transformer for PV Solar IEC standard IEC 60076-1 IEC 60076 IEC 60076-16 IEC 61378 IS standard IS 2026-1 IS 1180-1 IS 2026-16 IS 2026-1 Loading Continuous Continuous Cyclic Cyclic Average annual loading 60% - 100% 80% - 100% 30% - 40% 20% - 30% Category Oil insulated transformer Oil insulated / dry type transformer Oil insulated / dry type transformer Oil insulated / dry type transformer Installation Outdoor Indoor / Outdoor Indoor / Outdoor Indoor / Outdoor Mounting Ground mounted Ground / Plinth mounted Ground / Plinth / Nacelle / Tower mounted /Inside enclosure Ground / Plinth mounted / Inside enclosure Cooling type Oil natural / Oil forced / Air natural / Air forced /combination of above Oil natural / Air natural / Air forced / combination of above Oil natural / Air natural / Air forced / combination of above Oil natural / Air natural / Air forced / ....
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....for wind turbine applications' issued by the International Electro technical Commission (IEC) was adopted by the Bureau of Indian Standards on the recommendation of the Transformers Sectional Committee and approval of the Electro technical Division Council." 7.4 Suzlon submits that Transformers manufactured and supplied by them complies with the aforementioned IEC and IS. 8. Suzlon submits that Sr. No. 201A to the Schedule - II to Notification No. 1/2017-Central Tax (Rate) dated 28-6-17 (hereinafter referred to as the said Notification) read with Notification No. 1/2017-State Tax (Rate) dated 30-6-17 issued under the Gujarat GST Act, 2017 as amended vide Notification No. 8/2021-Central Tax(Rate) dated 30-921 wherein the rate of GST is 6% + 6% which earlier vide Entry No. 234 to Schedule I was 2.50% + 2.50%. The said entry for Chapter No. 84, 85 or 94 reads as follows: '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) S....
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.... voltaic cells, whether or not assembled in modules or made up into panels 11.2 The notification specifically applies only the goods falling under chapters 84, 85 and 94 of the Tariff. Therefore, this concession would be available only to such machinery, equipment etc., which fall under Chapter 84, 85 and 94 and used in the initial setting up of renewable energy plants and devices including WTEP. This entry does not cover goods falling under other chapters, say a transport vehicle falling under Chapter 87 that may be used for movement of waste to WTEP. 12. Suzlon submits that as evident from the above, what is being perceived from the above clarification is that the concessional rate is being extended for the machineries, equipment etc. falling under Chapter 84, 85 and 94 and used in the initial setting up of renewable energy plants. It is a fact that a specially designed Transformer for WOEG is always being required to set up a Wind Farm and accordingly it believes that the specially designed Transformer supplied along with WTG as a part of WOEG be liable to CGST and SGST at the rate of 2.5% up to 30th September, 2021 and 6% thereafter. 13. Suzlon submit that to det....
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....oviding necessary bolts for the same. The anchor rings and the load spreading plates are an extension of the tower, though the same is fixed to the foundation first and later attached to the tower. Thus they are parts of the tower. 5.5 In view of the above, we find that the anchor rings and load spreading plates are parts of tower specially designed for wind operated electricity generators and are eligible for exemption under Notification No. 6/2006, dated 1-3-2006.' 16. Suzlon submits that the above findings leads to the conclusion that if something is specially or specifically designed, it should be treated as part of that item for which it is specifically or specially designed. In the case of Suzlon, the Transformers are specially or specifically designed to be used along with WOEGs and hence be considered as parts liable to CGST and SGST at the rate of 2.5% each up to 30th September, 2021 and CGST and SGST at the rate of 6% each thereafter with effect from 1st October, 2021. 17. Suzlon submitted a copy of contract, as mentioned in para 5 along with the Annexure to the said contract, for supply of WTG: 'WTG" shall mean a 2.1 MW S111_140 type wind turbine ....
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....evaluate whether transformer constitutes a part for manufacture of Windmill, WOEG. 21. Suzlon submits that the Customs Tariff and HSN Explanatory Notes stresses on the independent functioning of machines to determine the classification as parts of the machine. Heading 84.79 of the Customs Tariff deals with machines having individual functions. The HSN Explanatory Notes to Heading 84.79 explains that a 'machine' is something which has an individual function. The said Notes further explain that a machine which cannot perform its function unless it is mounted on another machine or appliance, or is incorporated in a more complex entity, is considered as a 'part' and not a machine. Thus, there is a twin test i.e. (a) the function performed by such machine is not distinct from that which is performed by the entity wherein it is to be incorporated, and (b) it plays an integral and inseparable part in the operation of such entity. 22. Suzlon submits that said HSN Explanatory Notes also give the example of a carburettor for an internal combustion engine and that the function performed by carburettor is distinct from that of engine, but it is not an individual function, as the operatio....
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....trical energy. The electrical energy generated has a voltage of 0.690kv. The electrical energy with voltage of 0.690kv is not consumable or marketable. The voltage of electrical energy is too low for any usage or for the purpose of evacuation or distribution. The specially designed transformers for WOEG is installed on the ground adjoining to each WOEG to make the electrical energy usable for consumption or distribution. Accordingly, it can be deduced and inferred that the transformer is a part for manufacture of WOEG and the rate of 2.5% each towards CGST and SGST be applicable to the specially designed Transformers up to 30th September, 2021 and 6% each towards CGST and SGST thereafter. 26. Suzlon submits that the Transformer also needs to be looked upon from the angle of the general principles of interpretation. The general principles of interpretation, which are meant for interpreting sections in the taxing statutes, are required to be adopted for interpreting the definitions also but at the same time when the word 'Wind Mills' and 'WOEGs' have not been defined in the Act as well the Rate Notification it is also equally well established principles of law that in the absence ....
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....7 vide Notification No. 08/2021-Central Tax (Rate) dated 30th September, 2021 read with Notification No. 08/2021-State Tax(Rate) dated 30th September, 2021? Personal Hearing 30. Personal hearing granted on 18-2-22 was attended by Shri Dhruvank Parikh, CA, (virtual hearing) and he reiterated the submissions. Additional Submissions by Suzlon: 31. Suzlon cited decision of the Honourable Apex Court in case of M/s. Enercon (India) Ltd. vs. State of Karnataka in Civil Appeal No(s). 1954/2006, pronounced on 8th March, 2016 wherein the Honourable Supreme Court considered the Transformer as Part of the Windmill considering the fact that Windmill was never defined in the erstwhile existing VAT Regime and the same is the case with erstwhile existing Central Excise Act and GST Act, 2017 as well read with Notification No. 08/2021-Central Tax (Rate) dated 30th September, 2021 read with Notification No. 08/2021-State Tax(Rate) dated 30th September, 2021. The relevant extracts of the above Ruling of the Honourable Apex Court is reproduced as follows : 'The High Court taking Note of the provisions of Section 8 and Entry 57 has observed that meaning of the words 'Windmills' is n....
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....lation is entitled to the depreciation as applicable to the windmill itself as it is to be considered as part of Windmill. Revenue's submission 33. Revenue neither submitted its comments nor appeared for hearing. Findings 34. At the outset we would like to make it clear that the provisions of CGST Act and GGST Act are in pari materia and have the same provisions in like matter and differ from each other only on a few specific provisions. Therefore, unless a mention is particularly made to such dissimilar provisions, a reference to the CGST Act would also mean reference to the corresponding similar provisions in the GGST Act. 35. We have carefully studied all the submissions. The issue before us hinges on determination of GST rate on said transformers. We record out findings, as follows, in Part A & B. (A) whether Transformers are part of WOEG to determine entry at sr no 201A of schedule II of said Notification. (B) Determination of GST rate on said Transformers. A. Transformers, whether part of WOEG. 36. We refer to sr no. 234 of schedule I of Notification 1/2017-CT (Rate) dated 28-617; and sr no 201A of schedule II of said Notification, as fo....
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....d projects, the exemption has to be given in respect of a complete project, as all the equipment used in the project are integral part of the project and even without one of the equipments, the project cannot function. Once the entry includes "Solar Power Project", all the material equipments used for the purposes of setting up power based project are certainly entitled for grant of exemption Para7(2) last para: Contention of the applicant - As stated above since the existence of a substation is an essential technical requirement of a solar power plant without which the solar energy generated by such plant cannot be put to consumer use and since in the present case as per the contract between the applicant and the client Focal Energy Solar India One (P) Ltd. and Globus Steel and Power Pvt. Ltd. construction of sub-station, its connection of solar plant and successful transmission of power from plant to sub-station is an essential condition of contract. Thus in the instant case, supply of sub-station equipment being a part of contract for construction/installation of solar power generation plant, such equipments are also covered by exemption under item No. 10 of Entry No. 71 of S....
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..... 84, Note 8, Sub-heading]" Keeping in view the aforesaid, it can safely be concluded that solar power generating system would necessarily include a sub-station for evacuation and upliftment of power generated by solar power plants. 16. The Hon'ble Supreme Court in the case of CCE v. Hewlett Packard India Sales Pvt. Ltd. reported in (2007) 11 STJ 625 = 2007 (215) E.L.T. 484 (S.C.) has explained the meaning of word 'System' with reference to operating system of the computer and it has been held that the pre-loaded operating system recorded in the hard drive of the computer is an integral part of the computer, without which, the computer cannot open and work and has been classified as operating system under entry relating to computer itself. Para 18 ... this Court is of the opinion that power generating system includes all components even the grid/goods related to sub-station, without which, the system cannot work.' 38.1 This case law drives home the point that solar power generating system includes solar power generator and other devices of transmission, and distribution. Thus solar power generator and solar power generating system are not one and the same. The said Noti....
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.... does not make transformer a part of wind mill, unless the transformer is requisite for the wind mill to function and operate. This issue is further detailed in forthcoming paras 39 to 42. In the same way, WOEG is a device in itself, with its identity in the market, being capable of marketed on its own strength. WOEG is generator for generation of electricity from the kinetic energy of wind. We, repeat ourselves, to bring the matter to clarity that the wording in Notification is WOEG and not wind turbine system/ wind power system/ wind turbine project. 38.5 Further, we find our views are in line with Ministry of New and Renewable Energy clarification, reported in Government Circular No1008/15/2015-CX dated 20-10-2015 wherein we note that Transformer is not mentioned as a part of WOEG. Relevant para 3 of the said Government Circular reads as follows: 3. Ministry of New and Renewable Energy had earlier clarified to CBEC on the subject that the following are parts of Wind Operated Electricity Generators. (i) Tower : which supports the nacelle and rotor assembly of a wind operated electricity generator. (ii) Nacelle : which consists of gear-box, generator,....
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....uzlon, in para 7.3, submits that IEC 60076 part 16:2018 is a dedicated international standard defining the technical requirements for step up voltage Transformer for use in wind turbine application where the transformer is used to connect the wind turbine generator to the wind farm power collection system or adjacent distribution network and not the transformer used to connect several wind turbines to a distribution or transmission network. What is forthcoming is that Transformers connect/link the WOEG to distribution network. Nothing on record substantiates that Transformers are inalienable part of WOEG. Transformer could have been considered a part of WOEG if WOEG cannot function without it. But the fact is WOEG is able to generate electricity with the kinetic energy of the wind by itself. The very acronym WOEG stands for Wind operated electricity generator. Whereas, transformers for WOEG is installed on the ground adjoining to WOEG to make the electrical energy generated by WOEG usable for consumption or distribution purpose. We note that the transformers are neither placed in nacelle nor tower but on the ground beside the WOEG. Suzlon's submission in this regard that transforme....
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....o the application filed seeking ruling in the matter of classification of Specially Designed Dual Function Transformers supplied by us to be used with Wind Operated Electricity Generators only before the Honourable Authority for Advance Ruling, Gujarat. In connection thereto, we have received the impugned Letter requiring few clarifications from our end which are provided as under to the best of our understanding and our belief: 1. With reference to the clarification sought for in connection to an agreement entered into between M/s. Suzlon Energy Limited Daman and M/s. Shree Malaiamman Energy India Pvt Ltd. as to who is the actual supplier of the goods, it is most humbly and respectfully clarified that we based on the provisions of Section 22(1) of CGST Act, 2017 read with the provisions of 25(1) and 25(2) of CGST Act, 2017 respectively requiring a Person to take registration in every State or Union Territory from where the Taxable supplies of Goods and / or Services are made, on our PAN : AADCS0472N are currently registered in the States / Union Territory of Karnataka, Maharashtra, Tamil Nadu, Telangana, Madhya Pradesh, Delhi, Puducherry, Andhra Pradesh, West Bengal, Dadr....
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....red Advance Ruling. 5. The invoicing has not been done for the Purchase Agreement referred to by your good self and hence the copy of one another Purchase Agreement already executed with the same recipient of supply along with the copies of the invoices are enclosed herewith for the kind consideration of your good self. 6. Hope the above would be sufficient to clarify the clarifications required by your good self and we shall be pleased to provide any other clarification that may be required from our end to decide the question raised before the Honourable Authority for Advance Ruling, Gujarat State. 7. Based on the above, Your Honour would most graciously be pleased to pronounce the Advance Ruling to classify the supply of Specially Designed Transformers as components / parts / devices under Sr. No. 234 to Schedule I to Notification No. 01/2017-CT (Rate) dated 28th June, 2017 read with Notification No. 01/2017 dated 30th June, 2017 issued under Gujarat GST Act, 2017 and that the benefit of concessional rate of 5% GST up to 30th September, 2021 is applicable on the specially designed Transformers and 6% each towards CGST and SGST with effect from 01st Octo....