The Tamil Nadu Authority of Advance Ruling (AAR) ruled that Input Tax Credit (ITC) eligible on input services used in installation of Solar Power Panel.
The applicant, KLF Nirmal Industries Private Limited has stated that their company has a plant in Erode for extracting edible oils etc. The applicant is in the process of installing/ has installed a captive roof top solar grid connected power plant in the edible oil extracting plant. They have furnished the copy of the order placed on KCP Solar Industry vide purchase order reference KLF/PO/PRI/20-21/43 dated 6.8.2020 and invoice no 135/20-21 dated 10.9.2020. The solar panels have been installed at the top of the roof of the factory building and oil tanks. Electricity generated from the solar plant has been fully consumed to produce taxable goods. A consolidated contract was placed for design, engineering, supply, erection of 265Kw Rooftop Grid Solar PV Power Plant as per MNRE & IEC Standards. The system includes 790 panels. Each panel has 335 watt peak and a total capacity is 264.65 KW. They have stated that the Roof top Grid solar PV Power is for captive consumption within the premises. There is no third-party sale and the units generated by the solar plant are consumed for operating the edible oil extraction plant.
The operation is done by a reference signal received by the smart meter from the main panel which is synchronised with the solar system. In case there is a failure of the smart meter there is a system called reverse base relay protection fixed in the main panel room which will shut down the solar generation. In order to avoid any discharge to the grid (zero discharge). Solar generation is done only when there is a consumption (discharge) in the main panel which is being sensed by the smart meter. If there is no consumption the smart meter will shut down the complete solar system.
The applicant has sought the advance ruling on the issue whether the company is eligible to take input tax credit as inputs/capital goods or input services of the items used in Design, Engineering, Supply, Execution (EPC) of 265KW Rooftop Grid Solar PV Power Plant as per MNRE & IEC Standards
Yet another issue raised was whether the company is eligible to take input tax credit for inputs and services for running the solar plant.
The two-member bench of Kurinji Selvaan and B. Senthilvel|var ruled that the applicant is eligible for availing input tax credit as inputs/capital goods or input services of the items used in Design, Engineering, Supply, Execution (EPC) of 265KW Rooftop Grid Solar PV Power Plant as per MNRE & IEC Standards procured from M.s KCP Solar Industries as they have been found to comply with the provisions of Sections 16(1) and (2), 17(5) of the CGST Act,2017 and that they are found to be using the electricity so generated captively only in the process of manufacture of edible oils, which is a taxable commodity.
“In respect of eligibility to credit of goods/services utilised in running the plant, no ruling is pronounced as the details of such input goods/ services which are proposed to be or used in running the plant have not been furnished before us,” the AAR said.
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