TaxTMI 
TaxTMI 
2022 (10) TMI 303
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....IN 33AAFFV9173N1Z1. The applicant has sought Advance Ruling on the following question:- Whether the input tax credit on solar power panels procured and installed is blocked credit under Section 17(5) (c) and (d) of CGST/TNGST Act, 2017 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 they are a Partnership Firm in the business of maintenance of an immovable property located in T Nagar, Chennai. The said property is also the principal place of business of the applicant, as the said maintenance services for the immovable property is being provided from that premises. They have stated that they provide the services of maintenance of immovable property, covered under the main SAC 9972. The applicant, on a monthly basis, raises an invoice for 'EB and DG charges', to the tenants, with applicable GST, and the same is being duly deposited to the government by the applicant on a monthly basis under the SAC 997221 at 18%. They have furnished sample ....
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....on of the unit ((A) above), and taxes would be discharged on the said collection from the tenant. For the purpose of computing the total consumption by the unit (from Electricity Board + Diesel Generator), sub-meters have been installed for each of the tenants, and on that basis, the electricity charges are collected and remitted to the TNEB. 2.3 The applicant has further stated that there would not be any sale of the power units generated from the Solar Power Panels, and the units so generated would be utilized against the consumption of electricity for the leased premises, on which the taxes are being charged to the tenants, on the entire value of services. For the purpose of availing such credit with respect to the Solar Power Panel, the applicant, as mentioned above, has incurred the expenses with respect to procurement of solar panels and erection and commissioning of solar power panel. 2.4 On interpretation of law, the applicant has referred to the definition of 'inputs', 'capital goods' and ' input services' under section 2(59), 2(19) and 2(60) respectively, of the CGST Act 2017. The applicant has submitted that as per Section 17(5) (c) and (d) ....
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....earing in Digital media. The applicant consented and the hearing was held on 19.04.2022. The Authorized Representative (AR) CA Rishabh Singhvi appeared for the hearing and reiterated the email submissions made. The CGST Member questioned on where the solar power panels are installed, the AR submitted that they are installed at their additional premises. They further submitted that the electricity generated is used by them captively and not sold to anyone; that the GST component has not been capitalized. The SGST member required the applicant to submit the audited financial statements. In reply the AR submitted that their financials are not yet audited and that the fixed assets scheduled which has been submitted by them is audited. The applicant furnished the following submissions during the hearing ,- • Synopsis - various judicial precedents to substantiate their contentions in the instant case. • wheeling agreement with TANGEDCO, statutory provisions, extract from unaudited financial statements, copies of case laws relied by them viz. Advance Ruling issued by TNAAR in the case of Kumaran Oil Mill, KLF Nirmal Industries Private Limited. The applicant....
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....id. 4. The Centre Jurisdictional Authority, Chennai South Commissionerate, who has administrative control over the applicant was addressed vide this office letter dated 16.02.2022 requiring to furnish comments on the issue raised by the applicant and report whether any proceedings are pending in respect of the applicant. The said authority has stated that no proceedings have been initiated or pending in respect of the ruling sought by the taxpayer and offered no comments on the issue. 5. The State Jurisdictional Authority has submitted that there are no pending proceedings in the applicant's case in their jurisdiction. 6. We have carefully examined the statement of facts, supporting documents filed by the Applicant, all the additional submissions made during the hearings and the submissions of the Jurisdictional authorities. The applicant engaged in the business of maintenance of an immovable property at Chennai has procured, erected and commissioned Solar Power Panels for generation of electricity at their additional place of business at R.Kombai Village, Kujilyambarai Taluka, Dindigul District, Tamil Nadu. The applicant had executed an "Energy Wheeling Agreement for ....
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....d M/s Nissan Renault Financial Services India Private Limited as Lessee states that the Lessors are the absolute owners of entire 5th floor of the building at No.47&49, Bazullah Road, T.Nagar, Chennai - 600017, consisting of basement and first floor for two wheeler parking and ground floor for car parking and other services plus ten upper floors, more fully described in Schedule A and that they have absolute right, title and interest in Schedule A property. 8.1.2 The Lessors have provided adequate power supply to the building on the Schedule A property. Lessors have provided the demised premises with 100% power back up of 500 KVA x 2 nos for the Schedule A property. However, the running, repair and maintenance thereof shall be borne by the Lessee and the other lessees of the Schedule a property for which purpose the Lessee and other lessees shall enter into separate maintenance contact with the Lessors/Maintenance Company. 8.1.3 A separate Facility Management Services contract has been concluded this day between the Lessors and Lessee. 8.2.1 Maintenance Agreement dated 27.09.2020 between M/s VBC Associates, a Partnership Firm, represented by its partner Mr V.S. Balaji as f....
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....ng with other tenants of the building and basis of calculation remains the same as that of common electricity charges of the building. 8.2.4 The first party will facilitate the process of effective 100% power back up facility provided in the building by keeping the Generator in operative readiness condition so as to provide uninterrupted power supply to 800KVA. However, the diesel consumption charges shall have to be borne by the second party proportionately based on the area of occupation of the area on monthly basis. 8.2.5 This Agreement shall be read as part and parcel of Lease Deed dated 27.09.2020 entered into between the parties and this Agreement shall co-exist and co-terminate with the Lease Deed dated 27.09.2020. 8.3 The maintenance agreement refers to Lease Deed dated 27.09.2020, but the copy of Lease Deed submitted by applicant is dated 05.08.2021 with effective date from 10.12.2020. However, the Tenant / service recipient in the Lease Deed and Maintenance Agreement respectively are same. 8.4 Invoice No. VBV/21-22/112 dated 01.03.2022 issued by the applicant to NRFSI, towards Maintenance charges for the month of March 2022 along with amount collected as GST. ....
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....eu of various charges including Transmission charges and Wheeling Charges. 8.7 The applicant submitted copy of Letter of Intent dated 05.02.2020 issued to M/s SJ Engineers Renewable Energy Private Limited for end to end services for design, engineering, testing, supply, installation and commissioning of 1 MW turnkey of Solar Photo Voltaic Power Plant at Kovilur, Dindigul District in Tamil Nadu. The applicant also submitted copy of Invoice No.50-A dated 30.09.2021 issued to applicant by M/s SJ Engineers Renewable Energy Private Limited towards supply of material and erection, installation and commissioning 1MW Solar Power Plant at Kovilur and collected GST of Rs.34,28,652/-. 8.8 The AR submitted written submissions dated 19.04.2022, wherein various AAR decisions are relied. The AR also submitted photograph of the installed solar panels and put forth their view that Solar Panels are Plant and Machinery by quoting definitions, notification, depreciation schedule under Income Tax Act and extract of applicant's Fixed Assets schedule from unaudited Financial Statements for the year ending 31.03.2022. 9.1 The question before us to decide is whether the input tax credit on Sol....
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.... 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. 9.2.3 Rule 43. Manner of determination of input tax credit in respect of capital goods and reversal thereof in certain cases. - (1) Subject to the provisions of sub-section (3) of section 16, the input tax credit in respect of capital goods, which attract the provisions of sub-sections (1) and (2) of section 17, being partly used for the purposes of business and partly for other purposes, or partly used for effecting taxable supplies including zero rated supplies and partly for effecting exempt supplies, shall be attributed to the purposes of business or for effecting taxable supplies in the following manner, namely, - (a) the amount of input tax in respect of capital goods used or intended to be used exclusively for non-business purposes or used or intended to be used exclusively ....
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....cant to pay upfront, common electricity charges and metered water charges or tanker lorry water charges and reimburse such payments from the tenants, as discussed in para 8.2.3 and 8.2.4 supra. 10.4 Various documents perused and discussed in para 8.5.2 to 8.6 reveal that the applicant procured electricity from TNEB, which includes electricity generated by Solar Power Panels installed at additional place of business and wheeled by TNEB for captive use at the principal place of business of the applicant. The applicant has paid for the net units consumed after deducting energy units generated by Solar Power Plant. However, the applicant has recovered amount through separate invoice, for the gross energy units consumed by the tenants in the building at the rate charged by TNEB, which implies that the energy generated by Solar Power Plant are sold by the applicant to the tenants on their own account. In the instant case as discussed in para 8.5.3 supra, 92184 gross units were consumed and billed by applicant to the tenants. After adjusting 86904 captive generated units by Solar Power Plant and wheeled by TNEB against wheeling charges, the applicant has paid to TNEB for 5280 units sup....