The Gujarat bench of the Authority for Advance Ruling ( AAR ) ruled that the employer was eligible to avail Input Tax Credit ( ITC ) on the rooftop solar system, along with its installation and commissioning, under Section 17(5) of the Central Goods and Service Tax ( CGST ) Act.
The applicant, Unique Welding Products P.Ltd supplies its products & services after discharging GST at l8%. The applicant has entered into an interconnection agreement with power distribution licensee (Madhya Gujarat Vij Company Ltd) for captive use of power generated by Solar System and have recently installed a rooftop solar system with a capacity of 440 KW (AC) on the factory roof for power generation. ‘l-the applicant further states that the generated power is solely and captive manufacturing welding wires within the same premises.
The applicant further submitted that their business of manufacturing and sale of welding wires from their manufacturing plant in Anand, constitutes ‘business’ as per section 2(l7) of the CGST Act, 2017; that in terms of section 16(l), ibid, they are eligible for the benefit of ITC (input tax credit) on any supply of good or services which are used or intended to be used in the course of furtherance of business.
Mr. Kamal Mulchandani and Mr. Rohit Mulchandani representing the applicant, reiterated the submission made in the application. A further hearing in the matter was held on9.11.2023 wherein Shri Kamal Mulchandani appeared and sought 15 days’ time to submit additional submissions along with photographs and accounting treatment in their books of accounts etc.
The bench stated that the provisions of both the CGST Act and the GGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provisions under the GGST Act.
Further, considering the submissions made by the applicant in their application for advance ruling as well as the submissions made during the course of personal hearing. The members considered the issue involved, the relevant facts & the applicant’s submission/interpretation of law in respect of the question on which the advance ruling was sought.
It was clear that the roof solar plant, affixed on the roof of the building is not embedded to earth. Accordingly it was not an immovable property but a plant and machinery, which is utilized to generate electricity which was further solely and captive used in the manufacture of welding wires. The applicant is engaged in the business of supply of welding wires on payment of GST at the applicable rates.
The applicant has further stated that they have capitalized the roof solar plant in their books of accounts. The Roof Solar plant, as is evident, is not permanently fastened to the building. Thus, it qualified as a plant and machinery and is not an immovable property, hence, it is not covered under blocked credit as mentioned in Section 17(5)(d) of the CGST Act,2017. Therefore AAR held that the applicant was eligible for input tax on roof solar plant.
The two member bench of the tribunal comprising Riddesh Raval (member SGST) and Amit Kumar Mishra (member CGST) concluded that applicant was eligible to avail ITC on roof top solar system with installation & commissioning under the CGST/GGST Act. The roof top solar system with installation and commissioning constitute plant and machinery of the applicant and hence is not blocked ITC under Section 17 (5) of the CGST/GGST Act.
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