‘Supply of EPC for solar plants can’t be composite as per GST’

The Maharashtra Authority for Advance Ruling recently said that the supply of turnkey engineering, procurement and construction (EPC) for a solar plant cannot be construed to be a composite supply as per the Central Goods and Services Tax (CGST).

Giriraj Renewables Private Limited is an EPC contractor that enters into contract with various developers who desire to set up and operate solar photovoltaic plants. The company had sought an advance ruling with respect to the supply of turnkey EPC contract for construction of a solar plant, in which goods and services supplied can be construed to be a composite supply in terms of CGST. It had sought a ruling on whether the ‘principal supply’ in such a case can be said to be a solar power generating system, which is taxable at 5% of GST, and if so, will its parts be available to sub-contractors.

The authority ruled that the ‘principal supply’ in such a case can be said to be a solar power generating system, which is taxable under GST. But since the transaction is treated as a works contract and not as a composite supply, there would be no relevance of ‘principal supply’. Hence, the authority did not deal with the benefit of concessional rate of solar power generation systems and parts made available to sub-contractors.