- The Andhra Pradesh High Court ruled that the supply of Solar Power Generating Systems (SPGS) is considered a composite supply and not a works contract, leading to a reduced GST rate of 5% instead of 18%.
- The court determined that SPGS does not qualify as immovable property because it is not permanently embedded in the earth, distinguishing it from structures that are considered immovable.
- The ruling arose from a case brought by Sterling and Wilson Private Limited against the GST Department, which had classified the supply as a works contract.
- The court clarified that while the civil foundation may be embedded in the earth, the solar modules themselves are not attached for beneficial enjoyment of the foundation, supporting the classification as a composite supply.
- The decision is seen as advantageous for taxpayers, allowing them to benefit from the lower GST rate and potentially claim input tax credits for solar power plants used for captive consumption.
Source A2ztaxcorp
