AAR: GST ITC Not Eligible on Goods & Services Using for Solar Panel Installation

The Tamil Nadu Authority for Advance Ruling (AAR) ruled that the petitioner, VBC Associates does not qualify for a claim of Input Tax Credit (ITC), under Section 17 (2) of the CGST /TNGST Act read with Rule 43(a) of CGST /TNGST Rules 2017, on the Goods/Services utilized in the installation of Solar Power Panels, which are considered as Plant and Machinery.

Under section 17(5) (c) and (d) of CGST/TNGST Act, 2017, the petitioner asks for the advance ruling that if the ITC upon the solar power ruling would need the panels procured and installed would block credit along with the approval of GST ITC of the tax filed or treated to have been filed. The petitioner would be the partnership firm in the maintenance business of immovable property and furnish the services of maintenance of the immovable property, which counted beneath the main SAC 9972. The petitioner on monthly grounds asks for the invoice for ‘EB and DG charges’, to the tenants.

Tamil Nadu Electricity Board (‘TNEB’) to develop as a complete and made the expenses of running the DG said the petitioner and with any additional expenses which the applicant made for the business and avails for the input tax credit imposed by the supplier of the petitioner, on the inward supplies of the petitioner.

The petitioner, because of the composite type of the supply, the outward supply incurred through them would sort to be the taxable supply of the services along with that they had levied taxes on the Electricity charges and DG charges (EB and DG charges) that would get recovered via the tenant. As per that the GST would get the levy on the whole amount as a composite supply.

The petitioner would have furnished for the net units consumed post deducting the energy units which would be generated by the Solar power plant, but the petitioner would have recovered the cost via a separate invoice towards the gross energy units that the tenants consumed in developing the rate levied by the TNEB. it rendered that the power made by the Solar plant would have been sold via the petitioner to the tenants as per their own account.

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Towards the case, 92184 gross units were get consumed and billed via petitioner to the tenants. Post managing the captive units made through the Solar power plant including wheeling charges wheeled via the TNEB, the petitioner is obligated to pay TNEB for supplying 5280 units.

Electrical is treated as goods that are classified under HSN 2706 and exempted under Notification No.02/2017 CT(R) dated 28.06.2017 vide Sl. No. 104. The electrical energy made via the Solar panel installed through the petitioner would get exempted goods provided to tenants and as a result, the input tax paid for the solar panel would not be qualified as a credit of the input tax on the capital goods utilized only for the supply of the exempted supply would not be qualified under Section 17(2) read with Rule 43(a).

The Two member bench of the Authority including TG Venkatesh and K Latha has seen that goods/ Services for the installation of Solar Power panels are Plant and Machinery are not qualified for the Input tax credit.