In re Utsav Corporation (GST AAAR Rajasthan)
It was held that controller will attract GST at appropriate rate applicable to items of Chapter Heading 8504. 2. Iron structure designed for use of solar panel is classifiable under Chapter Heading 7308 and neither be classified as solar power based devices nor called as solar power generators and the rate of tax as applicable to such devices or system cannot apply to the iron and steel structures. 3. Supply of different types of goods in bundle on a single invoice is falls under mixed supply and higher rate of tax is applicable. 4. supply of Solar water pumping system alongwith installation, benefit of entry No. 38 of Notification No. 11/2017-CT and entry No. 234 of Notification No. 1/2017-CT is available to appellant.
Read AAR Order:- Classification and GST rate on Supply of Solar water pumping system
FULL TEXT OF THE ORDER OF APPELLATE AUTHORITY FOR ADVANCE RULING, RAJASTHAN
At the outset, we would like to make it clear that the provisions of both the Central GST Act, 2017 and the Rajasthan GST Act, 2017 are same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the Central GST Act, 2017 would also mean a reference to the same provisions under Rajasthan GST Act, 2017.
2. The present appeal has been filed under Section 100 of the Central GST Act, 2017 (hereinafter also referred to as ‘the CGST Act’) read with Section 100 of the Rajasthan GST Act, 2017(hereinafter also referred to as ‘the RGST Act’) by M/s Utsav Corporation (Legal Name Sapna Gupta) Gurjar Ki Thadi, Jaipur (hereinafter also referred to as ‘the appellant’) against the Advance Ruling No.RAPAAR/2021-22/10 dated 03.09.2021.
BRIEF FACTS OF THE CASE
3. M/s Utsav Corporation (legal name Sapna Gupta) Gurjar Ki Thadi, Jaipur (herein after referred as appellant) have filed appeal against Ruling issued by Authority for Advance Ruling Rajasthan vide order No. RAJ/AAR/2001-22/10 dated 03.09.2021. The Appellant has submitted appeal on online portal on 06.10.2021 and in hard copy on 18.10.2021. Fee of CGST Rs. 10000/- and SGST Rs. 10000/- have been paid vide Challan dated 23.09.2021. Brief facts of the case are as under: –
3.1 M/s Utsav Corporation, Gurjar Ki Thadi, Jaipur (hereinafter referred to as “appellant”) is a proprietorship concern engaged in providing products and services in energy conservation, renewable energy sources, water infrastructure and water treatment project management. The appellant is engaged in supply of solar energy-based products under various contracts and on the basis of purchase orders from customers with or without installation service. Appellant is registered under GST as per the provisions of the GST laws bearing GSTIN 08BXFPG0701B1ZA in the state of Rajasthan.
3.2 Due to different nature of contracts/orders in the sector of solar energy devices, the
appellant has sought advance ruling on following question for classification and GST’ rate on sale of solar energy products as Solar Water pumping system as a whole, sale of one of the products on standalone basis, and sale of the products under various combinations to be undertaken by them and supply of parts of the system along with installation.
1) What should be the classification and GST rate on sale of following goods or combination of goods:
a) Solar Pump
b) Controller
c) Structure
d) Solar Water Pumping System (comprising of Solar panel + Controller + Solar Pump + Structure)
e) Solar panel + Solar Controller + Solar Pump
f) Solar Pump + Solar Panel
g) Solar Pump + Controller
h) Solar Panel + Controller
2) What should be the classification and GST rate on Supply of Solar water pumping system as a whole comprising of goods (Solar Panel + Solar Controller + Solar Pump + Structure) along with the installation of Solar water pumping system for drinking water application?
3.2.1 Authority for Advance Authority has passed the ruling vides Order No. Raj/AAR/2021-22/10 dated 03.09.2021 which is as under.
3.2.2 Solar Panels: – Under the GST Tariff, S. No. 234 of Schedule-I of GST Tariff have a specific entry for Solar PV cells which is taxable at the rate of 5%.
3.2.3 Solar pump: – Solar pump is solar power-based devise and is classifiable under S. No. 234 of Notification No. 01/2017-CT (Rate) dated 28.06.2017 taxable at the rate of 5% GST.
3.2.4 Solar Controller: – Controller is neither solar power-based devise nor part of solar power-based devices and fall under chapter heading 85 of GST Tariff which has a specific entry for Electrical transformers, static converters and inductor. Thus controller attracts 18% rate of GST.
3.2.5 Structure: -The structures are neither solar power-based devices nor part of solar power-based devices and fall under chapter heading 7308 and attracts 18% rate of GST.
3.2.6 Solar Water Pumping System (Solar panel, Controller, Solar Pump, Structure): Since, Solar Water Pumping System is not the whole device it is made of Solar panel, Controller, Solar Pump, Structure etc. includes procurement, development, testing, commissioning etc hence, it is a mixed supply for goods and services and highest rate of GST will be applicable amongst goods supplied by the applicant.
3.2.7 Solar panel + Solar Controller + Solar Pump, Solar Pump + Solar Panel, Solar Pump + Controller, Solar Panel + Controller: -Since the above composition is the mixed supply of goods, as already discussed in above para, hence the highest rate of GST will be applicable amongst goods supplied by the applicant.
3.2.8 Supply of Solar water pumping system as a whole comprising of goods (Solar Panel + Solar Controller + Solar Pump + Structure) along with the installation of Solar water pumping system for drinking water application: – It is a works contracts Service and attracts 18%rate if GST S. NO. 3 of Heading 9954 (ii) of Notification No. 11/2017 dated 28.06.2017.
4. Aggrieved by the ruling, appellant has filed appeal before this forum on following grounds: –
4.1 Appellant submitted that technical details and use of the products ‘Solar Controllers’ and ‘Structure’ in the relevant context has been ignored in determination of classification of the product which have been briefed out by the Ministry of Renewable Energy Devices itself.
4.1.1 Solar Controller: -In the Ministry of New and Renewable Energy (MNRE) Guidelines for Solar Water Pumping Systems for 2019-20 vide Annexure-I of Circular No. F. No. 41/3/2018-SPV Division dated 17.7.2019, SPV controller is defined as under:
SPV Controller – Pump Controller converts the DC voltage of the SPV (Solar Photovoltaic) array into a suitable DC or AC, single or multi-phase power and may also include equipment for MPPT, remote monitoring, and protection devices.
The power output of a solar array is used or manipulated by components to which it is connected. The controllers perform the function of regulating the frequency of current supplied into the device/system according to the voltage requirement of device/system to which it is connected.
The Solar controller converts the DC power produced by the solar array to match the voltage and current operating requirements of the system’s solar pump. It ensures that
(i) the pump operates at its maximum performance levels and
(ii) the pump will operate in less-than-perfect sun conditions, when sun rays are not available at required frequency such as on night time or cloudy days.
Solar charge controllers regulate the energy flowing from the PV array and to perform such function, they consist of following components and technology:
– Variable Frequency Drive
– Maximum Power Point Tracker (MPPT)
– Enclosure for Controller
With the variable voltage and frequency of solar power from PV array, solar drive converts the DC voltage input to AC output.
In the MINISTRY OF NEW AND RENEWABLE ENERGY (MNRE) Guidelines referred above, MPPT is defined as under:
Maximum Power Point Tracker (MPPT) — MPPT is an algorithm that is included in the pump controller used for extracting maximum available power from SPV array under a given condition. The voltage at which SPV array can produce maximum power is called ‘maximum power point’ voltage (or peak power voltage).
A maximum power point tracker (MPPT) can be installed between the Solar panel array and the pump motor to match the array’s output with the required current or voltage of the motor to be operated.
A MPPT is effectively an electronic DC power to DC power converter and is often called a ‘maxi miser’ as it aids in maximum use of power generated by the solar panel array.
In the sunlight, the MPPT algorithm of solar drive extracts maximum power and also operates the motor at a variable speed based on the power input to drive. When the sunshine varies during the day, the power input to the drive also varies and the solar drive generates variable ratio to control the speed of the motor.
The above drive with MPPT is assembled in an enclosure to form a solar converter.
MPPT technology is not used in conventional electric pumps and it has no use there because the technology functions to maximize the use of DC power generated by solar panel array by the solar pumping systems only.
It is a distinguishing factor of solar controllers. MNRE Guidelines for Specification for Solar Photovoltaic Water Pumping Systems specifically provide that Maximum Power Point Tracker (MPPT) shall be included to optimally use the power available from the SPV array and maximize the water discharge.
Since in the case of appellant the controllers comprise of Variable Frequency Drive (VFDs) with MPPT, it is apparent that these controllers are designed only for use in solar pumping systems.
Hence, solar controllers are essentially parts for manufacture of Solar Water Pumping System.
As far as classification of controllers in Customs tariff is concerned, the relevant Heading is as under:
HSN Description
8504 Electrical transformers, static converters (for example, rectifiers) and inductors
8504 40 – Static converters:
8504 40 40 — Voltage regulator and stabilizers (other than automatic)
8504 40 90 — Other
Hence the product is classifiable under Chapter 85 of Customs tariff.
Now, the relevant entries in GST Tariff for pumps classifiable under Chapter 85 are as under:
