2026-VIL-26-AAAR
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SGST AAAR

GST – Rajasthan AAAR - Input Tax Credit on Solar Power Plant for Captive Consumption - Treatment of Electricity Supply in GST - Setting up a solar power plant at a different location within the same State, registered as an additional place of business under a single GSTIN - The entire electricity generated from the solar power plant is transferred to the DISCOM, which provides energy credits that are adjusted against the actual electricity consumed in the manufacturing factory. The manufacturer claims input tax credit on goods, capital goods, and input services used in the design, engineering, installation, commissioning, and operation of the solar power plant - Whether input tax credit of GST paid on inputs, capital goods, or input services used in the installation, commissioning, and operation of a remotely located solar power plant is admissible when electricity generated therein is transferred to the grid and credited against factory consumption – HELD - The transfer of electricity from the solar power plant to the DISCOM grid constitutes a 'supply' under GST. The appellant has characterized the arrangement as a 'transfer of credits in lieu of electricity', which is an exchange, a mode of supply explicitly enumerated under Section 2(83) of the CGST Act, 2017 - The DISCOM credits constitute consideration as defined in Section 2(31), representing monetary value flowing to the appellant in response to the supply of electricity. Absent a wheeling and banking agreement, the transaction operates as a bilateral arrangement where the appellant supplies electricity to DISCOM in exchange for credits, meaning title in the electricity passes to DISCOM upon injection into the grid – Further, electricity is charged at nil rate under the GST regime as per Notification No. 02/2017-CT(Rate) dated 28.06.2017, making it an exempt supply. The term 'captive' qualifies the location where electricity is generated, not where it is consumed. Once power is transferred to the grid, it cannot be treated as captively consumed. The 'same GSTIN' principle does not assist the appellant since the supply runs from the appellant to DISCOM, a third party, not from one unit to another within the same entity - The appellant is not eligible to avail input tax credit of GST paid on inputs, capital goods, or input services used in the design, engineering, erection, installation, commissioning, and operation of the solar power plant, as the generation and transfer of electricity constitutes a supply of exempt goods under GST - The advance ruling order is upheld and the appeal is rejected
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