2026-VIL-209-AAR
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SGST Advance Ruling Authority

GST – Karnataka AAR - Rooftop Solar Power System as ‘Plant and Machinery’ - Explanation to Section 17 of CGST Act, 2017 - The Applicant, engaged in wholesale and retail trading of grocery and general merchandise, installed a rooftop solar power system comprising solar panels, inverter and mounting structures on its shop building using bolts, screws and structural supports, capable of being dismantled and relocated, and surplus electricity is injected into the grid under a net-metering arrangement - Whether the rooftop solar power system with installation and commissioning constitutes plant and machinery used in the business - HELD - The Explanation to Section 17 defines ‘plant and machinery’ as apparatus, equipment and machinery fixed to earth by foundation or structural support that are used for making outward supply of goods or services, but excludes land, building or other civil structures. A rooftop solar power system is an integrated system with an independent functional identity and utility, and its support on the rooftop by bolts, screws or other structural supports does not make it a part of the building or a civil structure. The expression ‘fixed to earth by foundation or structural support’ does not require the apparatus to be permanently embedded in the earth or incapable of removal, as the definition itself recognises structural support as a means of fixing – The occasional surplus generation injected into the grid does not alter the essential character of the system or convert it into a commercial power-generation plant established principally for making outward supplies of electricity - The rooftop solar power system, including the solar panels, inverter, mounting structures and associated components, qualifies as plant and machinery – Ordered accordingly - Input Tax Credit on Erection, Installation and Commissioning - Section 17(5)(d) and Section 16 of CGST Act, 2017 - Whether the Applicant is eligible for input tax credit on inputs, input services and capital goods used in the erection, installation and commissioning of the rooftop solar power system - HELD - Section 17(5)(d) restricts input tax credit on goods or services received for construction of an immovable property, other than plant or machinery, on own account. The inward supplies relate to the erection of a system held to be plant and machinery, which is not itself the land, building or civil structure on which it is installed, so the restriction cannot be invoked merely because the system is installed on the rooftop or uses structural supports. The inward supplies have a nexus with the business and satisfy Section 16(1), but the finding does not confer an unconditional right to credit, and the conditions of Section 16(2), the time limit for availment and the restriction under Section 16(3) on depreciation continue to apply - Surplus electricity injected under net metering does not sever the nexus with the business, and any question of apportionment or reversal under Section 17(2) and Rules 42 and 43 requires separate examination. The ruling is confined to the erection, installation and commissioning, and no finding is recorded on repair or maintenance expenditure - The Applicant is eligible to avail input tax credit on the inputs, input services and capital goods used in the erection, installation and commissioning of the system, subject to the conditions and restrictions of Section 16 and other applicable provisions – Ordered accordingly
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