The Goods and Services Tax Appellate Tribunal (GSTAT), Court No. I, Hyderabad, has admitted a departmental appeal concerning the GST treatment of installation and maintenance of solar water pumping systems and solar rooftop power plants. 

The dispute centres on whether such activities are liable to GST as a composite supply of works contract service. 

The matter was considered by a Bench comprising Sushil Kumar Sharma, Member (Judicial), and Duvvuri Krishna Srinivas, Member (Technical).

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According to the order, the dispute relates to activities involving the installation and maintenance of solar water pumping systems and solar roof-top power plants.

The Adjudicating Authority had confirmed the duty demand raised in the relevant show-cause notice by treating the disputed works as a composite supply of works contract service. This classification formed the basis for the tax demand against the respondent.

However, the First Appellate Authority (FAA) took a different view and did not sustain the demand. The FAA consequently dropped the demand raised against the respondent.

The Department, aggrieved by the appellate decision, approached the GSTAT challenging the findings of the FAA.

During the hearing, the Departmental Representatives, Shri S. Gouri Shanker and Shri Mohd. Khalid, argued that the reasoning adopted by the First Appellate Authority in the findings portion of its order was not logical.

The Department therefore sought consideration of the issue by the GSTAT, particularly in relation to the treatment of the disputed solar-related activities as composite works contract services.

The order, however, does not record a final determination by the Tribunal on whether the installation and maintenance activities actually constitute a taxable works contract service. The present order is confined to the admission of the appeal and issuance of notice.

After hearing the arguments, the GSTAT Bench admitted the appeal. The Tribunal directed that notice be issued to the respondents through email or any other mode of electronic communication.

The matter has been directed to be listed after four weeks, giving the respondents an opportunity to respond to the Department’s challenge.

The central legal question arising from the appeal is whether the installation and maintenance of solar water pumping systems and solar rooftop power plants can be treated as a composite supply of works contract service for GST purposes.

The issue assumes significance because the original adjudicating authority had treated the disputed activities as works contract services and confirmed the demand, whereas the First Appellate Authority subsequently dropped the demand. The Department’s appeal seeks reconsideration of that appellate decision.

Importantly, the GSTAT’s August 10 order does not decide the substantive taxability issue. Admission of the appeal merely means that the Tribunal has agreed to examine the Department’s challenge.

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