Gandhinagar, Jan 17 (KNN) The Gujarat Authority of Advance Ruling (AAR) has determined that rooftop solar systems, when installed and commissioned, will be categorised as plant and machinery, granting eligibility for Input Tax Credit (ITC) benefits.

The primary query addressed whether the applicant can claim ITC under 'inputs/capital goods' or 'input services' for the purchased rooftop solar system, including installation and commissioning, in accordance with sections 16 and 17 of the Goods and Services Tax (GST) Act.

Another concern raised was whether these solar systems, utilised in manufacturing welding wires, can be considered as plant and machinery, exempt from blocked input tax credit under Section 7(5).

The AAR observed that the rooftop solar plant, affixed to a building's roof but not embedded in the earth, qualifies as plant and machinery.

It is not deemed as an immovable property and is utilised to generate electricity exclusively for the manufacture of welding wires.

The AAR ruled that as the roof solar plant is not permanently fastened to the building, it does not fall under the blocked credit provisions of Section 17(5)(d) of the CGST Act, 2017, making the applicant eligible for input tax benefits.

Unique Welding Products P. Ltd, the applicant, engaged in manufacturing and selling welding wires, discharged 8% GST on supplied products and services.

They recently installed a 440 KW (AC) rooftop solar system on their factory roof for power generation, exclusively used for manufacturing welding wires.

The AAR emphasised that manufacturing and selling of welding wires qualifies as 'business' under Section 2(l7) of the CGST Act, 2017. Consequently, as per Section 16(1), the applicant is entitled to ITC benefits on supplies used in the course of business.

The applicant asserted eligibility for ITC on inputs, input services, and capital goods used for erecting, commissioning, and installing rooftop solar power plants.

The AAR bench, led by Amit Kumar Mishra and Riddhesh Raval, affirmed that the applicants can indeed avail ITC benefits on rooftop solar systems with installation and commissioning under the GST Act.

(KNN Bureau)