In a significant move, the Gujarat Authority of Advance Ruling (AAR) has declared that rooftop solar systems, from installation to operation, are now classified as plant and machinery. This groundbreaking decision empowers businesses, allowing them to claim Input Tax Credit (ITC) under the GST Act.
The ruling, presented by Amit Kumar Mishra and Riddhesh Raval, emphasises the entitlement of applicants to ITC for rooftop solar systems’ installation and commissioning. The case in question involves a manufacturing firm specialising in welding wires, where a recent 440 KW rooftop solar system was installed for captive power generation.
The AAR’s scrutiny centered on two crucial aspects. First, whether the purchased solar system and its installation could be classified as ‘inputs/capital goods’ or ‘input services’ under GST Sections 16 and 17. Second, whether the solar system, along with installation, qualifies as plant and machinery, exempting it from blocked input tax credits under Section 17(5)(d).
The verdict is a game-changer, stating that the rooftop solar plant, despite being attached to the building, isn’t deemed immovable property. Instead, it’s recognised as plant and machinery actively utilized in the applicant’s welding wire manufacturing business.
This crucial distinction ensures that the solar plant falls outside the scope of blocked credits, as specified in Section 17(5)(d) of the CGST Act, 2017. Consequently, businesses like the applicant can now confidently claim input tax credits on rooftop solar plants, paving the way for sustainable and cost-effective energy solutions in industries across Gujarat.
Vakilsearch experts applaud Gujarat AAR’s progressive stance on GST credits for rooftop solar. Emphasising its positive impact on industries, they stress the need for legal guidance to navigate evolving regulations. This decision paves the way for sustainable energy solutions, and Vakilsearch stands ready to assist businesses in maximising benefits within the legal framework.
In the era of transformative energy solutions, Vakilsearch emerges as your legal ally. Navigating complex regulations demands expert advice. Secure your business with our legal expertise. Choose Vakilsearch for a reliable partner in unlocking the full potential of GST registration and filling.
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