ITC to be Applicable to Rooftop Solar Systems Under GST Rules: AAR

The Gujarat Authority for Advanced Ruling (AAR Gujarat) in the matter of Unique Welding Products P Ltd. has said rooftop solar power systems constitute plant and machinery and, therefore, are eligible for input tax credit under the Goods and Services Tax (GST) Act.

The applicant supplies its products and services after discharging GST @18%. The applicant has entered into an interconnection agreement with a power distribution licensee (Madhya Gujarat Vij Company Ltd) for captive use of power generated by Roof Top Solar System and has recently installed a rooftop solar system with a capacity of 440 KW (AC) on the factory roof for power generation. The applicant further states that the generated power is solely and captively used for manufacturing welding wires within the same premises.

The Questions and Ruling are as follows:

1. Whether the applicant eligible to take ITC as ‘inputs/capital goods’ or ‘input services’ on the purchased rooftop solar system with installation and commissioning in terms of sections 16 and 17 of the CGST/ GGST/ IGST Act?

2. Whether the rooftop solar system with installation and commissioning constitute the plant and machinery of the applicant which are used in the business of manufacturing welding wires and hence not blocked input tax credit under section 17(5) of the CGST/ GGST/ I GST Act?

Ruling

1. The applicant is eligible to avail ITC on rooftop solar systems with installation and commissioning under the CGST/ GGST Act.

2. The rooftop solar system with installation and commissioning constitutes the plant and machinery of the applicant and hence is not blocked ITC under section 17(5) of the CGST/ GGST Act.

For Official Ruling Download PDF Given Below: