2025 Supreme(Online)(AP) 21160

HIGH COURT OF ANDHRA PRADESH
R RAGHUNANDAN RAO,T.C.D.SEKHAR
M/S SIEMENS GAMESA RENEWABLE POWER PRIVATE LIMITED – Appellant
Versus
ASSISTANT COMMISSIONER – Respondent
WP 17132/2024

The court determined that a Wind Turbine Generator is movable property, making its supply a composite supply taxable at 5%, not a works contract.

Headnote:

(A) Central Goods and Services Tax Act, 2017 - Sections 2(30), 50, 50(3) and 78 - State Goods and Services Tax Act, 2017 - Transfer of Property Act, 1882 - Section 3(26) - General Clauses Act, 1897 - Section 3(36) - Constitution of India - Article 226 - Classification of Wind Turbine Generators (WTG) as movable or immovable property - Determination of tax rate on composite supply of goods and services (5%) versus works contract involving immovable property (18%) - Imposition of interest under Section 50(3) on reversal of credit.

(B) The court applied the tests from M/s. Bharti Airtel Ltd. vs. The Commissioner of Central Excise, Pune, (2024) 132 GSTR 404: (i) Nature of annexation; (ii) Object of annexation; (iii) Intendment of the parties; (iv) Functionality Test; (v) Permanency Test; (vi) Marketability Test. The court held that a WTG can be dismantled and relocated without damage, its attachment to the foundation is for its own beneficial enjoyment, and it can be sold in the market, thus it is movable property (goods) and not immovable property. (Paras 17, 18)

(C) The judgment in T.T.G. Industries Ltd. Madras vs. Collector of Central Excise, Raipur, (2004) 4 SCC 759, was distinguished on facts, as the 'permanency test' invoked there does not apply where goods are brought in a knocked-down condition and erected/installed at the site, and can be relocated without damage. (Para 16)

Facts of the case:
The petitioner, a company registered under the CGST/SGST Acts, is in the business of designing, manufacturing, supplying, erecting, and installing Wind Turbine Generators (WTGs). For the periods 2017-2018 and 2018-2019, the petitioner treated its contracts as composite supplies of goods and services, paying tax at 5%. The Assistant Commissioner (ST) assessed the tax at 18%, treating the contracts as works contracts involving immovable property. The Joint Commissioner (Appellate Authority) confirmed this. Separate penalty proceedings were also affirmed on appeal. The petitioner challenged these assessment and penalty orders via writ petitions. (Paras 2-5)

Findings of Court:
The court found that the WTG can be removed and relocated; its attachment to the foundation is for the beneficial enjoyment of the WTG itself, not for the foundation; the intention is to erect it in a place conducive to wind generation, which can change; it can be dismantled and relocated without damage; and it can be sold in the market. Consequently, the WTG is movable property (goods), and the supply of services and goods constitutes a composite supply, not a works contract involving immovable property. Therefore, the tax rate of 5% applies. (Paras 18, 19)

Issues: The central issue was whether a Wind Turbine Generator, assembled and erected at a site, is movable property (goods) or immovable property, thereby determining the applicable GST rate (5% for composite supply vs. 18% for works contract).

Ratio Decidendi: A Wind Turbine Generator, which can be dismantled and re-erected without damage, and whose attachment to the earth is for its own operational efficacy rather than for the permanent beneficial enjoyment of the land, constitutes movable property under the GST Acts. Contracts for its supply, erection, and commissioning are composite supplies of goods and services, taxable at 5%.

Result: Writ Petitions allowed. The orders of assessment and penalty, along with the appellate orders, were set aside. The matters were remanded back to the Assistant Commissioner for completing the assessment proceedings in line with the judgment. No order as to costs. (Para 20).