Table of Contents
The Delhi High Court has held that Solar Energy Corporation of India Limited (SECI) cannot issue any binding clarification as to the chargeability of the Battery Energy Storage Systems (BESS) service to GST.
The bench of Justice Vibhu Bakhru and Justice Sachin Datta has observed that in terms of Section 168 of the CGST Act/ SGST Act, the CBIC, if it considers it expedient for the purpose of uniformity in the implementation of the CGST Act/SGST Act, may issue orders, instructions or directions to the Central Officers as it may deem fit. However, there is no provision where CBIC is required to issue clarifications on separate queries raised by taxpayers directly.
Background
The petitioner claims to be an Association of Power Producers and states that it has filed the present petition on behalf of its members.
The petitioner stated that an appropriate writ or order or directions be issued to Solar Energy Corporation of India Limited (SECI) and Union of India, through Ministry of Power to decide on the clarifications sought by the petitioner in terms of its representation dated 27.08.2024 in a time bound manner.
The petitioner submitted that directions be issued to the Central Board of Indirect Taxes (CBIC) to clarify the applicability of the Goods and Services Tax (GST) on Battery Energy Storage Systems (BESS).
On 26.06.2024, SECI invited Request for Selection (RfS) for setting up of 1000 MW/2000 MWh standalone BESS in India under Tariff-Based Global Competitive Bidding. Clause 30.2 (III)(e) of the RfS, which is the centre of the controversy in the present petition, expressly provides that tariff to be quoted in the Financial Bid by bidders would be exclusive of GST. GST on the said service (BESS) would be passed through to the Buying Entity.
Arguments – Whether SECI Can Ascertain GST Liability on Battery Energy Storage Systems?
The petitioner contended that the clause has created some confusion in the minds of the bidders. If GST is leviable on BESS service then, the bidders would be entitled to input tax credit (ITC), however, if GST is not leviable on the service in question, then the bidders would not be entitled to ITC on their input supplies.
The petitioner stated that it would make a difference of as much as 20% in the value of the bids. There was no ambiguity in the applicability of the GST at the time of the issuance of RfS, however, the same has arisen on account of the Government of India, Ministry of Power issuing the Draft ‘Tariff based competitive bidding guidelines for procurement of storage capacity/stored energy from Pumped Storage Plants’ (Draft PSP Guidelines), which were issued on 22.08.2024. In terms of the Draft PSP Guidelines, GST is applicable to the service of storage of energy from Pumped Storage Plants.
The SECI points out that the RfS was issued on 26.06.2024. The last date of submitting of the bids was 12.08.2024 and the pre-bid meeting for clarifying any issue was held on 12.07.2024. The petitioner has approached this Court on the eve of the opening of the bids which is scheduled for tomorrow (11.09.2024) and therefore, the petition ought to be rejected.
Conclusion – SECI Can’t Ascertain GST Liability on Battery Energy Storage Systems
The court stated that the petitioner as well as its members have to ascertain whether GST is payable in reference to the relevant GST statutes.
The court held that if the bidders had entertained any apprehension regarding the terms and conditions of RfS, the same were required to be clarified in the Pre-Bid Meeting held on 12.07.2024.
FAQs
Can SECI Issue Binding Clarification To Ascertain GST Liability on Battery Energy Storage Systems?
The Delhi High Court in the case of Association Of Power Producers V/S Solar Energy Corporation Of India Limited has held that Solar Energy Corporation of India Limited (SECI) cannot issue any binding clarification as to the chargeability of the Battery Energy Storage Systems (BESS) service to GST.
Under Which Provision CBIC can Ascertain GST Liability?
In terms of Section 168 of the CGST Act/ SGST Act, the CBIC, if it considers it expedient for the purpose of uniformity in the implementation of the CGST Act/SGST Act, may issue orders, instructions or directions to the Central Officers as it may deem fit. However, there is no provision where CBIC is required to issue clarifications on separate queries raised by taxpayers directly.
Case Details
Case Title: Association Of Power Producers V/S Solar Energy Corporation Of India Limited & Ors.
Citation: W.P.(C) 12511/2024 & CM APPL. 51976/2024
Counsel for the Petitioner: Venkatesh
Counsel for the Respondent: Shikha Ohri
Decision Date: 10.09.2024
