Case Reference:
Sterling & Wilson Private Limited v. Joint Commissioner (State Tax), Vijayawada & Ors.
High Court of Andhra Pradesh, Amaravati
W.P. No. 20096 of 2020 | Judgment dated: 10 January 2025
Category: Classification / Rate of GST
Relevant Sections: Sections 2(30), 2(119), 7, 8, 9, 54 of CGST Act, 2017; Schedule II para 6; Notifications 1/2017-CT (Rate) & 11/2017-CT (Rate)
Facts (Paras 2–5)
Sterling & Wilson Pvt. Ltd., engaged in construction of solar power plants, paid GST at 5%. Since input tax rates were higher, it sought refund of ₹ 8.65 crore under Section 54 for Jan–Mar 2018. The refund rejection triggered reassessment treating its solar EPC activity as a works contract taxable at 18% under Section 2(119), resulting in tax + penalty demand of ₹ 126 crore.
The appellate authority partly allowed appeal—reducing penalty under Section 74 to Section 73—but confirmed 18% tax. With the GST Tribunal unconstituted, the petitioner approached the High Court under Article 226.
Questions before the Court (Paras 15–20)
-
Whether installation of a solar power generating system (SPGS) constitutes a composite supply or a works contract?
-
Whether such supply results in creation of immovable property, thereby attracting 18% GST, or remains movable, attracting 5% under Notification 1/2017-CT (Rate)?
Observations (Paras 13–38)
-
The Court analyzed Sections 7, 8, 2(30), 2(119) and Note 6 of Schedule II—holding that every works contract is a composite supply, but not every composite supply is a works contract. The distinction rests on whether the final asset is immovable.
-
Referring to Solid & Correct Engineering Works (2010 5 SCC 122), Sirpur Paper Mills (1998 1 SCC 400), and T.T.G. Industries (2004 4 SCC 751), the Court held that attachment of machinery merely for operational stability does not make it immovable.
-
The Appellate Authority’s reasoning that solar modules were permanently embedded in earth was rejected. The foundation is embedded for the stability of modules, not for the beneficial enjoyment of land (Para 34–35).
-
Citing Duncan Industries (2000 1 SCC 633) was held misplaced because that case involved a fertilizer plant permanently fixed with intention to remain immovable (Para 37–38).
-
The solar plant could be dismantled and relocated; thus, it is movable.
Judgment (Paras 39–40)
The Court concluded that:
-
The solar generating plant is movable and does not amount to a works contract.
-
The impugned appellate order No. ZH371020OD19206 dated 20.10.2020 was set aside.
-
The supply qualifies as composite supply taxable at 5% (2.5% CGST + 2.5% SGST) under Entry 234 of Notification 1/2017-CT (Rate).
-
No order as to costs.
Cases Cited
| Sr. | Case Name | Citation | Principle / Verdict |
|---|---|---|---|
| 1 | Sirpur Paper Mills Ltd. v. CCE | (1998) 1 SCC 400 | Machine fixed for efficiency remains movable. |
| 2 | CCE v. Solid & Correct Engineering Works | (2010) 5 SCC 122 | Test for immovability—attachment intention & degree. |
| 3 | Sri Velayuthaswamy Spinning Mills v. IGR | 2013 (2) CTC 551 | Determined nature of property based on intention of fixation. |
| 4 | Vodafone Mobile Services v. CST Delhi | (2018) 100 Taxmann 245 (Del.) | Classification under service tax regime. |
| 5 | I.G.E. (India) Ltd. v. CCE | (1990) Taxmann 492 (CEGAT ND) | Movable machinery not deemed immovable. |
| 6 | Duncan Industries Ltd. v. State of U.P. | (2000) 1 SCC 633 | Fertilizer plant permanently fixed = immovable. |
| 7 | T.T.G. Industries Ltd. v. CCE Raipur | (2004) 4 SCC 751 | Heavy industrial plant permanently erected = immovable. |
Between Fine Lines (Practical Takeaway)
The ruling clarifies that solar power EPC contracts are movable composite supplies, not immovable works contracts. Hence, GST at 5% applies, not 18%. This distinction rests on the intention and degree of attachment—if the civil foundation merely supports machinery without making it a permanent fixture, it remains movable. The judgment offers vital precedent for renewable-energy developers seeking uniform tax treatment under GST.
Disclaimer – “The above summary is for academic purpose only; not formal legal opinion. Seek professional opinion before application. Author or publisher or website shall not be responsible for any usage in any form.”
