2026-VIL-506-KAR
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SGST High Court Cases

GST - Classification of Solar Inverters as parts of Solar Power Generating System or as general Electrical Devices – Petitioner supplies solar inverters to various customers engaged in solar power projects. Authorities classified solar inverters as general electrical devices under Chapter Heading 8504 and raised demand GST at the rate of 18% - Petitioner contends that the solar inverters are parts of solar power generating systems covered under Entry 234 of Notification No. 1/2017-CT(R) dated 28.06.2017, which prescribe a concessional GST rate of 5% - Whether solar inverters supplied for use as integral components of solar power generating systems are eligible for the concessional GST rate of 5% or whether they attract GST at the standard rate of 18% as general electrical devices – HELD - The solar inverters are integral parts of solar power generating systems and therefore eligible for the concessional GST rate of 5%. The solar power generating system comprises four essential components: solar panels, inverters, controllers, and batteries, which function together to produce the desired output. Following the principle established in CCE vs. Hewlett Packard India Sales Pvt. Ltd., a combination of elements or parts which function together to render a desired output constitutes a system. The solar inverter, by converting direct current produced by solar panels into alternating current, is indispensable to the functioning of the entire solar power generating system – Further, the Notification extends benefits to parts used in the manufacture of renewable energy devices and is not restricted only to suppliers of entire systems. The expression "for use" in the notifications means "intended for use" and not actual use. The documentary evidence, including purchase orders and invoices, clearly establishes the intention that the solar inverters are meant to be used as parts of solar power generating systems. Therefore, the petitioner satisfies the conditions of the exemption notification without requiring further proof of actual usage – The subject solar inverters supplied by the petitioner are intended to be parts of the solar power generating system and therefore, eligible for exemption - The impugned orders-in-appeal and orders-in-original are quashed – The writ petition is allowed
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