“Waste to Energy plant”-Triveni Turbines (AAAR Karnataka)

This is with reference to the decision of AAAR (Karnataka) in case of M/s Triveni Turbines Ltd dated 03rd April 2019 whereby the appellate authority for Advance ruling had set aside the order of AAR and held that the ‘Waste to energy plants’ are to be taxed @ 5% under Sr.No 234 of Notification No. 01/2017-IGST rate dated 28th June 2017.

Brief Facts of the case

• The Appellant is engaged in the manufacture and supply of steam turbine solutions for Industrial Captive
  and Renewable Power;
• It had entered into an agreement with their customers for design, manufacture and supply of Steam Turbine Generator Sets and also for commissioning & installation of Steam Turbine Generator sets at the site of the customers;
• In order to promote this sector, the Andhra Pradesh Government awarded the project for development of MSW Waste-to-energy plants in three clusters in Guntur, Visakhapatnam and Tirupati districts of Andhra Pradesh to JITF Urban Infrastructure Ltd;
• The Appellant filed an application seeking clarification on rate of tax on such projects i.e. Whether the turbine generator set to be supplied by the applicant to the buyer for use in waste-to-energy project is covered under SI.No.234 of Schedule I of Notification No.1/2017-IGST(Rate) dated 28.06.2017 as “Renewable energy devices and parts for the manufacture of waste to energy plants/devices”attracting 5% levy?”
• The AAR vide an order dated 17th Nov 2018 gave the negative order i.e. not classified under Sr. no 234 of the relevant notification;
• Aggrieved by the above order, this appeal has been preferred for clarity on the scope of Sr. no 234 of Schedule I;

Ruling pronounced

• In this case, the use of the terms ‘plant’ and ‘device’ in the item (e) of entry SI.No 234, is of a wide connotation used to cover the entire process of converting waste to energy. It cannot be interpreted to limit its meaning to only those goods which convert waste into steam and leave outside its scope those goods which convert steam to electricity;
• Further, explanation (iv) provides that the rules for the interpretation of the First Schedule to the Customs Tariff Act, 1975, including the Section and Chapter Notes and the General Explanatory Notes of the First Schedule so far as may be, apply to the interpretation of thi notification;
• CBIC had issued Circular No.80/54/2018-GST dated 31.12.2018 and clarified that the concession of 5% rate as per entry SI.No 234 of Notification No. 01/2017 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 Waste to Energy Plants
• Therefore, basis of above findings it has been held that the “Turbine generator set” would be leviable to tax @ 5% in this entry to Schedule I of the above quoted notification.

Note: This advance ruling is binding only on the applicant and its jurisdictional officers, it is possible that this ruling may be referred by the revenue authorities while dealing with similar situations.

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