Eligibility of Input Tax credit of solar power panels: AAR Tamil Nadu
In M/s KLF Nirmal Industries Private Limited, the applicant has installed a captive roof top solar grid connected power plant in an edible oil extracting plant. The Electricity generated from the solar plant has been fully consumed to produce taxable goods. The applicant has sought advance ruling on whether the company is eligible to take input tax credit (‘ITC’) as inputs/capital goods or input services of the items used in Design, Engineering, Supply, Execution (EPC) of Solar Power Plant ? further whether ITC is eligible for inputs and services for running the solar plant?
The Tamil Nadu AAR ruled that the applicant is eligible for availing ITC as inputs/capital goods or input services of the items used in Design, Engineering, Supply, Execution Solar Power Plant as they comply with the provisions of Sections 16(1) and (2) of the CGST Act, 2017 (‘Act) wherein, the condition for availing ITC is provided. Further it was noted that the installation of the captive roof top is a works contract and also fulfils the conditions laid down in Section 17(5) of the Act.
The AAR noted that the electricity so generated was captivated only in the process of manufacture of edible oils, which is a taxable commodity. For the second issue relating to ITC eligibility of inputs and services in running the solar plant, no ruling was pronounced due to lack of proper documents to verify the details such input goods/ services.