Subsidy amount to be reduced for arriving at Taxable Value of Solar system, GST Liability shall be on Taxable Value: AAR

Subsidy - solar system - GST liability - taxable value - AAR - Taxscan

The Gujarat Authority of Advance Ruling (AAR) ruled that the Subsidy amount to be reduced for arriving at the taxable value of the solar system, GST liability shall be on taxable value.

The applicant, M/s. Greenbrilliance Renewable Energy LLP, supplies solar photovoltaic panels and Solar EPC services. The applicant is empanelled as channel partner to execute the solar rooftop system in Gujarat under the Surya Gujarat Yojna 2019-20 and 2020-21.

The applicant has sought the advance ruling on the issue of whether subsidy amount is to be reduced for arriving at the taxable value of the solar system from the system price declared by the Nodal agency? And the GST liability shall be on the taxable value calculated after subtracting the subsidy amount from the system price.

Yet another issue raised was in respect of implication of sub-section (2) of Section 17 if the taxable value is derived after subtracting the subsidy amount from system price.

The coram of Members Sanjay Saxena and Arun Richard held that the taxable Value on Tax invoice issued to the Customer shall be arrived after deducting the subject Subsidy from ‘System Cost’ and GST liability is on the Taxable Value.

“There shall be no implication of Section 17(2) CGST Act, if taxable value is arrived after subtracting the subsidy amount from the system price,” the AAR ruled.

“The applicant has collected Subsidy from the Government in this regard and this subsidy amount is inclusive of GST, as detailed in aforementioned paragraphs, the applicant is required by law to pay to the Government the said amount in the subsidy representing GST, irrespective of the position of law that subsidy portion is to be deducted from the value of supply charged to the customer, for arriving at the taxable value,” the AAR noted.

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