12% GST Payable On ‘Solar Home Lighting System’: AAR

The Uttar Pradesh Authority of Advance Ruling (AAR) has held that 12% GST is payable on solar home lighting systems.

The bench of Rajendra Kumar and Harilal Prajapati has observed that ‘solar home lighting systems are classified as solar-based devices covered under HSN Code 94055040.

The applicant intends to supply a solar home lighting system consisting of Solar photovoltaic Modules, a lithium ferro phosphate battery, a solar charge controller, LED Lights, a solar DC Fan, a module mounting structure, a subscriber-end visual display or tablet, an AC-DC adapter, and Conduit items like cable, PVC Pipes, and PVC Fittings.

A solar home lighting system is a fixed installation designed for domestic applications that illuminate the home by drawing power from solar energy. It uses solar cells to convert solar energy directly received from sunlight into electricity. The electricity thus generated is stored in batteries and used for the purpose of lighting the home whenever required.

The applicant sought an advance ruling on the issue of whether the said supply of goods will be covered under solar power-based devices’.

The AAR noted that the Central Board of Indirect Taxes and Customs [CBIC] notified changes in the GST rates for a host of products with effect from October 1, 2021, including solar panels and modules, solar power-based devices, solar power generators, windmills, solar lamps, tidal wave energy devices or plants, and their parts, which will be charged a GST of 12% against 5% earlier.

The AAR found that if the goods are supplied along with supplies of service by way of installation or other technical services in relation to the setting up of Solar power-based devices, the value of the supply of goods shall be deemed to be 70% of the gross consideration charged for all such supplies. The remaining 30% of the gross consideration charged shall be deemed the value of the taxable service. 70% of the gross consideration will attract 12% GST as goods, whereas 30% of the gross consideration will suffer 18% GST as services.

The AAR ruled that no installation or maintenance service is bundled with the product. The buyer of a product can always get it installed and maintained by any local vendor of his choice. Therefore, no service is supplied by the applicant with the said product; the applicant only intends to sell the product called the Solar Home Lighting System. Therefore, 12% GST is payable.

Applicant’s Name: R2V2 Technologies Private Limited

Date: 08/05/2023

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