In an Interim Order, the Delhi High Court has directed Goods and Services Tax Council ( GST Council) review the Tax Structure of Solar Projects.
The Petition was filed by the Solar Power Developers Association (SPDA) that challenges the new tax formulation structure for solar projects.
Last December in its 31st GST Council Meeting, the Council has decided that, GST rate of 5% rate has been prescribed on renewable energy devices & parts for their manufacture (bio gas plant/solar power based devices, solar power generating system (SGPS) etc) [falling under chapter 84, 85 or 94 of the Tariff]. Other goods or services used in these plants attract applicable GST.
Certain disputes have arisen regarding GST rates where specified goods attracting 5% GST are supplied along with services of construction etc and other goods for solar power plant. To resolve the dispute the Council has recommended that in all such cases, the 70% of the gross value shall be deemed as the value of supply of said goods attracting 5% rate and the remaining portion (30%) of the aggregate value of such EPC contract shall be deemed as the value of supply of taxable service attracting standard GST rate.
The division bench comprising of Justice S. Muralidhar and Justice I.S Mehta said that, “considering the ramifications of the prayer of the Petitioners, it is directed that that the present petition of the Solar Power Developers Association be placed for consideration before the GST Council at its next meeting”.
The Court also directed that, “Preparatory, to the above step the Petitioners will be called before the Central Board of Indirect Taxes & Customs through their authorized representatives for a consultative meeting within the next four weeks. If necessary, the concerned Ministry which is Ministry of Renewable Energy, Government of India will also be invited to the such consultative meeting and the deliberations of that meeting also be placed before the GST Council for its consideration”.
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