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IN THE HIGH COURT OF ANDHRA PRADESH AT AMARAVATI
R. RAGHUNANDAN RAO, MAHESWARA RAO KUNCHEAM, JJ.
Sterling & Wilson Private Limited - Petitioner
Versus
The Joint Commissioner, (State Tax) and Appellate Authority (State Tax) Commercial Tax Department & Ors. - Respondents
W.P. No. 20096 of 2020
Decided On : 10-01-2025
(A) A.P. Goods and Services Tax Act, 2017 - Sections 2(30), 2(119), 7, 8, and 9 - Writ petition concerning GST assessment - Petitioner claimed refund of GST on solar power plant inputs, assessed as works contract at 18% instead of composite supply at 5% - Court held that solar power generating system is not immovable property, thus not a works contract. (Paras 2, 5, 36, 39)
(B) Taxation - Definition of composite supply and works contract - Composite supply includes multiple supplies, while works contract specifically involves construction of immovable property - Court distinguished between movable and immovable property based on attachment and permanence. (Paras 14, 19, 34)
Facts of the case:
The petitioner, engaged in solar power plant business, sought a GST refund for inputs taxed at a higher rate than the finished goods. The assessing authority classified the transactions as works contract, leading to a significant tax demand and penalty. (Paras 2, 3)
Findings of Court:
The court found that the solar power generating system does not constitute immovable property and thus does not fall under the definition of works contract, allowing the writ petition. (Paras 39)
Issues: The primary issue was whether the solar power generating system should be classified as a works contract or a composite supply. (Paras 15, 39)
Ratio Decidendi: The court reasoned that the solar power generating system is not permanently embedded in the earth and does not satisfy the criteria for immovable property, thus it is a composite supply subject to lower GST rates. (Paras 34, 39)
Result: Writ petition allowed; impugned order set aside.
ORDER :
R. Raghunandan Rao, J.
Heard Sri N. Govind Reddy, learned counsel appearing for the petitioner and learned Government Pleader for Commercial Tax, appearing for the respondents.
2. The petitioner, who is engaged in the business of setting up of Solar Power Plants, had been paying GST @ 5% of its turnover. As the rate of GST on the inputs, obtained by the petitioner, was higher than the GST rate of finished goods, the petitioner, invoking the provisions of Section 54 of the A.P. Goods and Services Tax Act, 2017 (for short 'the GST Act'), claimed refund of a sum of Rs.8,65,63,538/-, for the period January, 2018 to March, 2018.
3. This application was rejected and became the starting point of a fresh enquiry, for assessment of tax, for the period 30.11.2017 to 30.09.2018. The Assessing Authority issued a show cause notice, dated 17.09.2019, proposing to assess the turnover of the petitioner @ 18%, on the ground that the transactions undertaken by the petitioner are Works Contract, as defined under Section 2(119) of the GST Act. The petitioner objected to the same, on the ground that the activities of the petitioner would have to be treated as composite supply, as defined under Section 2(30) of the GST Act, attracting GST @ 5% on the turnover. This contention of the petitioner was rejected and the Assessing Authority assessed the turnover of the petitioner @18% and raised a tax demand for Rs.63,00,19,512/- (CGST of Rs.31,50,09,756/- and SGST of Rs.31,50,09,756/-) and a penalty of Rs.63,00,19,512/-.
4. Aggrieved by this order, dated 20.11.2019, the petitioner moved an appeal before the 1st respondent. The 1st respondent, after hearing the petitioner, by her order, dated 20.10.2020, bearing No.ZH371020OD19206, rejected the appeal to the extent of the assessment of tax and interest payable on the said tax. However, the penalty of Rs.63,00,19,512/- levied under Section 74 of the GST Act by the 2nd respondent-Assessing Authority was set aside and penalty of Rs.6,30,01,952/- was levied under the provision of Section 73 of the CGST Act.
5. Aggrieved by the same, the petitioner had approached this Court, by way of the present Writ Petition, contending that the remedy of appeal, to the Tribunal, constituted under the GST Act is not available as no Tribunal has been constituted.
6. This Writ Petition was initially disposed of by this Court, by an order, dated 25.11.2022, holding that the rate of tax could be ascertained on the basis of Circular No.163/19/2021-GST, dated06.10.2021, and remanded the matter back to the Appellate Authority.
7. Subsequently, the petitioner again moved I.A.No.1 of 2024 contending that the said circular has not been notified and as such, was not available for adjudication. The learned Government Pleader for Commercial Taxes accepted this contention. In that view of the matter, the review application filed by the petitioner was allowed, by an order, dated 20.09.2024, and the matter was taken up for fresh hearing.
8. Sri N. Govind Reddy, learned counsel for the petitioner, would contend that the Appellate Authority, after accepting that the transactions of the petitioner would amount to composite supply of services, falling under Section 2(30) of the Central Goods & Services Tax Act, 2017 (for short 'the CGST Act'), had erred in holding that the transactions would also fall under the ambit of works contract, as defined under Section 2(110) of the CGST Act. The learned counsel for the petitioner would submit that the 2nd respondent-Appellate Authority, taking into account various extraneous factors, had come to the conclusion that the supply of goods, by the petitioner, was a part of construction of immovable property. The learned counsel for the petitioner submits that the said finding is clearly not based on any facts and on misinterpretation of the provisions of the Transfer of Property Act.
9. The respondents have filed a counter affidavit disputing and denying the grounds raised by the petitioner. The learned Gover
AI
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