In re AES Engineering Solar Private Limited (GST AAR Maharashtra)
In the case of AES Engineering Solar Private Limited, the GST Authority for Advance Rulings (AAR) Maharashtra examined the applicability of GST on the intra-state and inter-state supply of electrical energy. The applicant inquired whether GST was payable on the delivery of electrical energy based on their existing agreement. The AAR determined that since the applicant only invoiced for the supply of electricity without including delivery (transmission) charges, the supply of electrical energy is exempt from GST under Entry No. 104 of both Notification No. 2/2017-Central Tax (Rate) and Notification No. 2/2017-Integrated Tax (Rate), both dated 28th June 2017. Additionally, the applicant asked if they could claim and utilize input tax credit (ITC) for the CGST and SGST paid on the procurement of the solar power plant used for generating electricity. The AAR ruled that since the supply of electricity is exempt from GST, the applicant is not entitled to claim ITC on their inward supplies of goods, services, or capital goods used in generating electricity. This is in accordance with Section 17 of the GST Act and Rules 42 and 43, which govern the calculation of ITC. Thus, the output supply being tax-exempt precludes the applicant from availing ITC on related procurements.
