Suzlon’s Specially Designed Transformers for Wind Operated Electricity Generators attracts 18% GST: AAAR [Read Order]

As per the ruling by the Gujarat Appellate Authority of Advance Ruling (AAAR), Suzlon's specially built transformers for wind-operated electricity generators that are intended to serve as both step-down and step-up devices are subject to 18% Goods and Service Tax (GST).

The appellant/assessee is involved in the supply of goods needed for the establishment of power projects that enable the generation of power through renewable energy sources, both directly and through its subsidiary companies. For example, it manufactures Wind Operated Electricity Generators (WOEG), which are covered under chapter 85023100; parts such as Nacelle and Blades Towers, which are covered under chapter 8503; and transformers, which are covered under chapter 8504.

WOEG transformers, which connect the electricity produced by the WOEG to the distribution grid and render it suitable for distribution and consumption, are situated on the ground next to WOEG. In order to determine whether GST is due on specially made transformers for wind-operated electricity generators, the appellant requested an early determination. According to the AAR, transformers are subject to CGST 9% and are not included in WOEG, as stated in Sr. No. 375 of Schedule-III of Notification No. 1 2017-CT (Rate), which was issued on June 28, 2017.The appellant filed an appeal against the AAR's ruling.

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According to the appellant, the order ignored the fact that the wind turbine system and WOEG are used interchangeably and that there is no distinction between the two. The appellant never anticipated a decision that would take into account a composite supply. Since the transformers are particularly made to work with WOEGs, they should be considered a part of WOEG.

The Authority of Advance Ruling (AAR) ruled that the specially designed transformers for WOG, which execute the dual function of step down and step up, supplied by the appellant-assessee are not a part of Wind Operated Electricity Generators (WOEG) and, as a result, would not be eligible for the benefit of Sr. No. 234 and Sr. No. 201A of exemption notification No. 1/2017-CT (Rate), as amended. The bench of Rajeev Topno and B V Siva Naga Kumari rejected the appeal filed by the appellant Suzlon Energy and upheld the AAR’s ruling.

To Read the full text of the Order CLICK HERE

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