2026 (5) TMI 163

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.... Notification No. 1/2017-Central Tax (Rate), dated 28.06.2017, read with Services Rate Notification No. 11/2017-Central Tax (Rate), dated 28.06.2017, fixed rate of 2.5% under CGST and 2.5% under SGST, in relation to supply of goods involved in solar power generating systems and a separate rate of 18% for supply of services, in this regard, in entry 38 of Notification No. 11/2017. This entry, in Notification No. 1/2017, was further amended by Notification No. 24/2018 which added an explanation to the said entry. The said explanation reads as follows: Schedule 1-2.5% S.No. Chapter/Heading/Sub-Heading Description of Goods 234 84,85 or 94 Following renewable energy devices & parts for their manufacture ....... (b) Solar power based devices 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 deemed as seventy per cent. of the gr....

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....ed the objections raised by the petitioner, in these two representations, and passed an order of assessment, under Section 74 and 74(9) of the CGST Act on 06.03.2025, raising the tax demand of Rs. 9,19,14,507/- as well as an equivalent amount as penalty along with interest. The petitioner being aggrieved by this order, has approached this Court, by way of the present Writ Petition. 7. The petitioner in its objections, filed before the 3rd respondent had contended that the petitioner had been supplying solar power generating systems, as a composite contract and as such, the petitioner would be entitled to the benefit of the aforesaid entries which levied effective rate of 8.9%. The petitioner also took the contention that the assessment proceedings were barred by limitation as section 74 of the CGST Act, which gives extended limitation to the third respondent, could not have been invoked. The petitioner contended that none of the ingredients of section 74, had been made out in the show cause notice. 8. The 3rd respondent, while considering these objections, held that the petitioner had raised bills separately for goods supplied at different rates with different rates of taxes ....

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....y of solar power generating systems, and the tax payable on such supply has been considered by a Division Bench of this Court in Sterling and Wilson Pvt. Ltd. vs. Joint Commissioner & Ors. In that case, the issue before the Court was whether such supply of solar power generating systems would result in the installation of an immovable property or would only be a composite supply of services and goods. The Division Bench, after going into the facts of the case, had held that such supply of solar power generating systems was a composite supply of goods and services. 13. In the present case, this Court does not require to go into those facts as the petitioner is accepting tax liability set out in Entry 234 of Notification No. 1/2017 C.T (R), dated 28.06.2017 and Entry No. 38 in Service rate Notification No. 11/2017-C.T (R), dated 28.06.2017. A conjoint reading of both these notifications, and the explanations appended to the relevant entries would show that the consideration received for supply of solar power generating systems, even under erection, procurement, and commissioning contracts, would have to be taxed by applying the 70:30 mechanism, wherein 70% of the supply price woul....

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....es, one of which being a taxable service...." 17. In view of these provisions, any supply of a Solar Power Generating System, or it's parts as one supply or as separate parts would not make any difference, to the rate of tax. The view of the 3rd respondent to the contrary is incorrect and has to be rejected. 18. In the present case, even if the view of the third respondent, is to be taken into account, there has been a separate supply of goods in relation to Solar Power Generating Systems and systems, falling under Entry 234 of Notification No. 1 of 2017, and there has been a separate supply of services, falling under Entry No. 38 of Notification No. 11 of 2017, it is not clear as to how the 3rd respondent can claim that the petitioner would not be entitled to pay tax, under these entries. Except stating that separate invoices were issued, the third respondent has not explained how issuance of separate invoices would take the case of the petitioner out of these two entries. Further, the petitioner has specifically contended that these supplies were made under contracts executed with the purchaser. In such circumstances, mere issuance of separate invoices, cannot mean that the....