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IN THE HIGH COURT OF ANDHRA PRADESH AT AMARAVATI
R RAGHUNANDAN RAO, T.C.D.SEKHAR, JJ.
Tata Power Renewable Energies Limited – Petitioner
Versus
Union Of India, Rep By Its Revenue Secretary, Ministry Of Finance – Respondent
Writ Petition No: 10314 Of 2025
Decided On : 29-04-2026
ORDER :
R. Raghunandan Rao, J.
Heard Sri Kumar Visalaksh, learned counsel appearing on behalf of the Sri Doddala Prudhvi Teja, learned counsel appearing for the petitioner and the learned Government Pleader for Commercial Taxes, appearing for the respondents.
2. The petitioner is in the business of supply of Solar Power Generating Systems and Solar Power-based Devices. In this process, the petitioner also offers services of design, installation, testing, commissioning and maintenance of such systems and devices.
3. The petitioner, who is registered under the GST Act, had been filing its returns and paying tax. Entry 234, in Notification No.1/2017-Central Tax (Rate), dated 28.06.2017, read with Services Rate Notification No.11/2017-Central Tax (Rate), dated 28.06.2017, fixed rate of 2.5% under CGST and 2.5% under SGST, in relation to supply of goods involved in solar power generating systems and a separate rate of 18% for supply of services, in this regard, in entry 38 of Notification No. 11/2017. This entry, in Notification No. 1/2017, was further amended by Notification No.24/2018 which added an explanation to the said entry. The said explanation reads as follows:
Schedule 1-2.5%
| S.No. | Chapter/Heading/Sub Description of Goods | Description of Goods |
|---|---|---|
| 234 | 84,85 or 94 | Following renewable energy devices & parts for their manufacture ....... (b) Solar power based devices Explanation: If the goods specified in this entry are supplied, by a supplier, along with supplies of other goods and services, one of which being a taxable service specified in the entry at S. No. 38 of the Table mentioned in the notification No. 11/2017-Central Tax (Rate), dated 28th June, 2017 [G.S.R. 690(E)], the value of supply of goods for the purposes of this entry shall be deemed as seventy per cent. of the gross consideration charged for all such supplies, and the remaining thirty per cent. of the gross consideration charged shall be deemed as value of the said taxable service. |
4. At the same time, another explanation was added in entry No.38, of the Services Notification, which was dealing with services relating to solar power generating system. The said explanation reads as follows:
| Sr.No | Chapter, Section of Heading | Description of Service | Rate(%) | Condition |
|---|---|---|---|---|
| 38 | 9954 or 9983 or 9987 | Service by way of construction or engineering or installation or other technical services, provided in relation of setting up of following,- … (c) Solar power generating system Explanation - This entry shall be read in conjunction with serial number 201A of Schedule II of the notification No. 1/2017-Central Tax (Rate), published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) dated 28th June, 2017 vide GSR number 673(E) dated 28th June, 2017. |
5. The petitioner took the stand that these amendments to the said entries effectively levied GST @ 5% on 70% of the value of supply and 18% on 30% of the value of supply resulting in an effective rate of 8.9%. It would also be necessary, to note that, that a circular had also been issued by the Central Board of Indirect Taxes and Customs (CBIC) bearing Circular No.163/19/2021-GST, dated 06.10.2021, making the aforesaid explanation applicable with effect from 01.01.2019. The petitioner on the basis of such notifications had been paying taxes of 5% on 70% of the supply price and 18% on 30% of the supply price. The returns filed by the petitioner, on this basis, for the tax period 2020-2021, were not disputed till a show cause notice, dated 30.11.2024, was issued by the 3rd respondent. In this show cause notice, various issues were raised. However, all the issues, except one issue, had been resolved and are not the subject matter of the present writ petition. The issue which is the subject matter of this Writ Petition, is the rate at which tax is to be collected.
6. The 3rd respondent proposed tax on supply of solar power generating systems at 18% and issued a notice, under Section 74 of the CGST Act, on the ground that there has been evasion o
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