18% GST Applicable on cables supplied to manufacturer of Solar Power Generating System: AAR

Ws Leoni Cable Solutions (India) Private Limited, the applicant, manufactures and supplies solar cables commonly known as photo-voltaic DC cables (PVDC cables). The impugned cables are used between solar modules & inverters in a photovoltaic system and are required to connect solar panel/arrays and inverters to carry electricity between solar panels and inverters. Applicant states that, the said cables are exclusively used by the manufacturers of Solar Power Generation Systems/(SPGS)/EPC Company, for transmitting Direct current (DC) from PV module in SPGS and cannot be used alternatively since they are specifically designed & tailor-made for Solar Based Power Projects.

The applicant wanted to prove that the impugned cables would be covered under Chapter Heading 8544 of the Customs Tariff Act, (CTA) & be considered as parts for the manufacture of SPGS, etc for companies setting up a solar power plant. Further, the impugned goods would be covered by Entry No. 234 and 395 Schedule I of the CGST Act, 2017 Applicant submits that each of the devices mentioned in Entry 234 are for the generation of electrical energy using different renewable energy sources. Thus, SPGS satisfies the description of renewable energy device and falls within the scope of Entry number 234.

Sr. No. 234 covers Solar Power Generating Systems (SPGS), which are used to generate electricity from sunlight which can be further used as electrical energy. The impugned cables are connected between the SGPS and Inverters. The impugned cables as per the application have no part to play in the generation of Solar Power which is the function of SGPS. These cables only transfer the electrical energy generated by the SGPS, to the Inverters where such electrical energy is stored for further use.

As to the impugned cables being covered under Sr. No. 395 of Schedule III at 18 % GST, the applicant submitted that this is the most relevant tariff entry, “Insulate (including enamelled or anodised) wire, cable (including co axial cable), other insulated electric conductors. Whether or not fitted with connectors optical cables, made up of individually sheathed fibres, whether or not assembled with electric conductors or fitted with connectors.” Hence, it was held that the impugned PV DC Cables manufactured and supplied by Leoni Cable Solutions (India) Pvt Ltd to its Customers would be classified and covered under Sr. No. 395 and liable to CGST at 18%.

To Read Judgment Click on The PDF given below.