GST Not Applicable on Rooftop Solar Plant Installation Under PPA

Case Details: Evolve Green Power (P.) Ltd., In re [2026] 186 taxmann.com 516 (AAR - TAMILNADU)

Judiciary and Counsel Details

C. Thiyagarajan & B. Suseel Kumar, Member

Facts of the Case

The applicant entered into a 25-year Power Purchase Agreement (PPA) to supply rooftop solar electricity to an off-taker. The applicant undertook the design, procurement, construction, commissioning, operation and maintenance of the solar plant installed at the off-taker’s premises, while the off-taker provided rooftop space and ancillary support. The entire cost of the plant was borne by the applicant, the asset remained under its ownership during the PPA term, and monthly invoices were raised only for electricity supplied. It was submitted that electricity classified under Heading 2716 00 00 attracted Nil rate under Notification No. 02/2017-Central Tax (Rate), dated 28-06-2017, and, being exclusively engaged in exempt supply of electrical energy, it was not liable to obtain GST registration or pay GST. The matter was accordingly placed before the Authority for Advance Ruling (AAR).

AAR Held

The AAR held that, under Sections 7 and 9 of the CGST Act and the Tamil Nadu GST Act, the transaction constituted only the supply of electrical energy and not a taxable supply of construction or erection services. It was observed that the plant was constructed and owned by the applicant and that the associated costs were incurred solely by it. Referring to Section 11 read with Sections 7, 23 and 25 of the CGST Act and the Tamil Nadu GST Act, it further held that electricity under Heading 2716 00 00 attracted Nil rate under Notification No. 02/2017-Central Tax (Rate), and that the applicant, being exclusively engaged in exempt supply, was not required to obtain GST registration or pay GST. Accordingly, it ruled that no GST liability arose on the construction and erection of the rooftop solar plant and GST was applicable only to the supply of electrical energy under the PPA.