Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2026 Supreme(AP) 999

IN THE HIGH COURT OF ANDHRA PRADESH AT AMARAVATI
R. RAGHUNANDAN RAO, T.C.D. SEKHAR, JJ.
Mytrah Energy India Private Limited, Represented Through Its Authorized Representative, Shri Krishna Rachuri, S/o. Prabhakar Rachuri - Petitioner
Versus
Union Of India, Through Secretary, Ministry Of Finance, Department Of Revenue – Respondent
Writ Petition No. 4725 of 2023
Decided On : 15-04-2026

Advocates Appeared:
For the Petitioner: Sai Sundeep Manchikalapudi
For the Respondents: Deputy Solicitor General Of India, Suresh Kumar Routhu (SR SC FOR CBIC), GP For Commercial Tax

The classification of a supply as a works contract resulting in immovable property or a composite supply of movable goods is a factual prerequisite for taxation, and retrospective application of tax deeming fictions via circulars is impermissible if such provisions were intended only as optional for the taxpayer.

Headnote:(A) Central Goods and Services Tax Act, 2017 - Section 2(30) and Section 8 - Solar Power Generating Systems - Composite supply of goods and services - Taxability - Assessment proceedings - Rate of tax on composite supplies - Interpretation of Notification No. 1/2017-Central Tax (Rate) and Notification No. 24/2018-Central Tax (Rate) - Whether the Explanation to Sl. No. 234 creates a mandatory legal fiction for tax apportionment or is optional for the taxpayer - Whether retrospective effect applies to tax periods prior to 01.01.2019.

Facts of the case:
The petitioner, engaged in manufacturing and installing solar power systems, challenged an assessment order dated 11.07.2024. The authority had bifurcated the petitioner’s turnover into 70% goods and 30% services, applying different tax rates based on an Explanation added to Notification No. 24/2018 effective from 01.01.2019. The petitioner contended that their work constitutes a composite supply of movable goods taxed at a flat 5% rate under Section 8 of the GST Act.

Findings of Court:
The court found that the assessing authority failed to determine whether the installations resulted in immovable property or remained movable goods. Furthermore, the court held that Circular No. 163/19/2021-GST does not grant automatic retrospective effect to the Explanation added by Notification No. 24/2018, as it is an option available to the taxpayer. The court set aside the order and remanded the matter for fresh assessment.

Issues: Whether the supply was composite involving movable property; whether the Explanation to Sl. No. 234 is a mandatory deeming fiction; and whether the tax liability can be retrospectively applied to periods before 01.01.2019.

Ratio Decidendi: The classification of a supply as composite depends on whether it results in immovable property or installation of movable goods. Legal fictions introduced by notifications regarding turnover apportionment cannot be forced upon a taxpayer retrospectively if the circular only mandates them as an option. (Paras 13, 14)

Result: Writ Petition disposed of; order of assessment set aside; matter remanded.

Table of Content
1. nature of composite supply of solar systems and disputed tax rates. (Para 1 , 2 , 3 , 4 , 5 , 6 , 7)
2. applicability of notification explanations and circulars for tax computation. (Para 8 , 9 , 10 , 11 , 12 , 13)
3. remand for factual determination of project nature and tax liability. (Para 14 , 15)

JUDGMENT :

R. Raghunandan Rao, J.

Heard Sri Avinash Desai, Sri Rishab Prasad learned counsel appearing for the petitioner, the learned Deputy Solicitor General of India, Sri Suresh Kumar Routhu and the learned Government Pleader for Commercial Taxes, appearing for the respondents.

2. The petitioner is in the business of manufacturing and installing Solar Panels and Solar Power Generating Systems. The 2nd respondent initiated proceedings for assessing turnover of the petitioner for the period from March, 2018 to April, 2019. At that stage, the petitioner had approached this Court, by way of this Writ Petition, contending that the 2nd respondent lacked jurisdiction. During the pendency of the Writ Petition, the 2nd respondent passed an order of assessment, dated 11.07.2024. The petitioner had thereupon amended the prayer in the Writ Petition to include a challenge to the order, dated 11.07.2024.

3. The 2nd respondent sought to tax the petitioner, at the rate of 5% for 70% of the turnover and at the rate of 18% for 30% of the turnover, based upon the explanation added to Notification No.24/18 with effect from 01.01.2019. The petitioner sought to dispute the proposed levy on the ground that the supply of goods and services made by the petitioner in the process of selling Solar Panels or Installing Solar Power Generating Systems has always been composite supply of services and goods, as defined under Section 2(30) of the GST Act, and that such supply should be taxed, in accordance with the provisions of Section 8 of the GST Act.

4. The 2nd respondent took the stand that even in case of such composite supplies, the explanation added to Sl. No.234 of Notification No.1 of 2017, introduced a legal fiction, whereby the value of the supply was to be deemed as supply of goods to the extent of 70% of the consideration and supply of services for the remaining 30% of the consideration.

5. The GST Act does not provide for any rate of tax on the supply of goods or services. The said rate of tax is stipulated under various notifications, issued under the GST Act. One of the first notifications issued for fixing rate of tax, on supply of goods, has been Notification No.1/2017-Central Tax (Rate), dated 28.06.2017. In this notification, Sl.No.234 provided for a rate of tax on non-conventional power systems. The said entry reads as follows:

234. Following renewable energy devices & parts for their manufacture

(a) Bio-gas plant

(b) Solar power based devices

(d) Wind mills, Wind Operated Electricity Generator (WOEG)

(e) Waste to energy plants/devices

(f) Solar lantern/solar lamp

(9) Ocean waves/tidal waves energy devices/plants

25(h) Photo voltaic cells, whether or not assembled in modules or made up into panels]

321 [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.]"

6. In the case of works contracts, resulting in formation of an immovable property, the rate of tax was fixed at 18%.

7. Various manufacturers and suppliers of solar equipment, including solar power generating systems, contended that the supplies made by them of solar power generating systems or any of the goods mentioned i

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