In re Grand Centre Mal (GST AAR Kerala)
Grand Centre Mall, a partnership firm in Kerala providing property rental and common area maintenance (CAM) services, sought an advance ruling on the eligibility of Input Tax Credit (ITC) for a 500 KW rooftop solar power plant. The electricity generated from this plant is exclusively used to power the mall’s common facilities, such as lighting, air conditioning, and security systems, which are integral to the taxable CAM services provided to licensees. The applicant contended that the solar plant qualifies as “plant and machinery” under Section 17(6) of the CGST Act, 2017, as it’s fixed to the structure and capitalized in their books, thus making the GST paid on its procurement and installation eligible for ITC under Section 16(1) of the CGST Act. They emphasized that the plant is used “in the course or furtherance of business” for making taxable outward supplies.
The Authority for Advance Ruling (AAR), Kerala, affirmed that the solar power plant is indeed used in the course and furtherance of business, specifically for rendering taxable CAM services. The AAR noted that the components of the solar plant are not permanently embedded to the earth and can be dismantled without significant damage, therefore not qualifying as immovable property. This distinction is crucial as it bypasses the restrictions on ITC for immovable property under Section 17(5)(c) and 17(5)(d) of the CGST Act. The AAR referenced previous rulings from Gujarat and Tamil Nadu that supported similar claims for rooftop solar installations, reinforcing the position that such plants, when capitalized and not permanently affixed, are eligible for ITC. Furthermore, the AAR clarified that since the electricity generated is consumed internally for taxable CAM services and not supplied or sold as exempt electrical energy, Section 17(2) of the CGST Act, which deals with ITC reversal for exempt supplies, does not apply. Consequently, Grand Centre Mall is eligible to claim ITC on the solar plant, subject to fulfilling other general conditions of Section 16 of the CGST Act, 2017.
