Andhra Pradesh High Court – Amravati
Tata Power Renewable Energies Limited vs Joint Commissioner & Ors on 29 April, 2026
Author: R Raghunandan Rao
Bench: R Raghunandan Rao
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W.P.No.10314 of 2025
APHC010201652025
IN THE HIGH COURT OF ANDHRA PRADESH
AT AMARAVATI [3529]
(Special Original Jurisdiction)
WEDNESDAY,THE TWENTY NINETH DAY OF APRIL
TWO THOUSAND AND TWENTY SIX
PRESENT
THE HONOURABLE SRI JUSTICE R RAGHUNANDAN RAO
THE HONOURABLE SRI JUSTICE T.C.D.SEKHAR
WRIT PETITION NO: 10314/2025
Between:
1. TATA POWER RENEWABLE ENERGIES LIMITED,, (FORMERLY,
TATA POWER SOLAR SYSTEMS LIMITED) A COMPANY
INCORPORATED UNDER THE COMPANIES ACT, 1956. HAVING
ADDRESS AT D. NO. 12/4593 KOTA STREET, PRODDATUR, YSR
DISTRICT, ANDHRA PRADESH - 516360. REP BY ITS AUTHORIZED
SIGNATORY MR. SURESH GOENKA
...PETITIONER
AND
1. UNION OF INDIA, REP BY ITS REVENUE SECRETARY, MINISTRY
OF FINANCE, NORTH BLOCK, NEW DELHI.
2. STATE OF ANDHRA PRADESH, THROUGH ITS PRINCIPAL
SECRETARY, REVENUE DEPARTMENT (COMMERCIAL TAX) A.P.
SECRETARIAT, VELAGAPUDI, GUNTUR DISTRICT, ANDHRA
PRADESH.
3. THE DEPUTY COMMISSIONER ST, SPECIAL CIRCLE KADAPA
DIVISION, 1/499, OPP YSR GUEST HOUSE, SMITH ROAD, NEAR
ZILLA PARISHAD, KADAPA 516 001, YSR DISTRICT, ANDHRA
PRADESH.
...RESPONDENT(S):
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W.P.No.10314 of 2025
Petition under Article 226 of the Constitution of India praying that in the
circumstances stated in the affidavit filed therewith, the High Court may be
pleased to to issue a writ, order or direction in the nature of Writ of
Mandamus or any other Writ, declaring the actions of the Respondent No.3 in
passing the Impugned Assessment Order in Form DRC-07 bearing
DIN3706032567381 dated 06.03.2025 (at Annexure A) as being illegal,
arbitrary, and violative of applicable law and Article 14 of the Constitution of
India and consequently set aside the same and pass such
IA NO: 1 OF 2025
Petition under Section 151 CPC praying that in the circumstances stated
in the affidavit filed in support of the petition, the High Court may be pleased
may be pleased to stay the operation of the Impugned Assessment Order No.
ZD370325008138J in Form DRC-07bearing DIN3706032567381 dated
06.03.2025 (at Annexure A) including the proceedings initiated / intended to
be initiated thereunder and pass such
Counsel for the Petitioner:
1. DODDALA PRUDHVI TEJA
Counsel for the Respondent(S):
1. GP FOR COMMERCIAL TAX
Date of Reserved : 22.04.2026
Date of Pronouncement : 29.04.2026
Date of Upload : 29.04.2026
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W.P.No.10314 of 2025
The Court made the following Order:
(per Hon'ble Sri Justice R. Raghunandan Rao)
Heard Sri Kumar Visalaksh, learned counsel appearing on behalf of the
Sri Doddala Prudhvi Teja, learned counsel appearing for the petitioner and the
learned Government Pleader for Commercial Taxes, appearing for the
respondents.
2. The petitioner is in the business of supply of Solar Power
Generating Systems and Solar Power-based Devices. In this process, the
petitioner also offers services of design, installation, testing, commissioning
and maintenance of such systems and devices.
3. The petitioner, who is registered under the GST Act, had been
filing its returns and paying tax. Entry 234, in Notification No.1/2017-Central
Tax (Rate), dated 28.06.2017, read with Services Rate Notification
No.11/2017-Central Tax (Rate), dated 28.06.2017, fixed rate of 2.5% under
CGST and 2.5% under SGST, in relation to supply of goods involved in solar
power generating systems and a separate rate of 18% for supply of services,
in this regard, in entry 38 of Notification No. 11/2017. This entry, in Notification
No. 1/2017, was further amended by Notification No.24/2018 which added an
explanation to the said entry. The said explanation reads as follows:
Schedule 1-2.5%
S.No. Chapter/Heading/Sub- Description of Goods
Description of Goods
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W.P.No.10314 of 2025
234 84,85 or 94 Following renewable energy devices &
parts for their manufacture
.......
(b) Solar power based devices
Explanation: If the goods specified in
this entry are supplied, by a supplier,
along with supplies of other goods
and services, one of which being a
taxable service specified in the entry at
S. No. 38 of the Table mentioned in the
notification No. 11/2017-Central Tax
(Rate), dated 28th June, 2017 [G.S.R.
690(E)], the value of supply of goods
for the purposes of this entry shall be
deemed as seventy per cent. of the
gross consideration charged for all
such supplies, and the remaining
thirty per cent. of the gross
consideration charged shall be
deemed as value of the said taxable
service.
4. At the same time, another explanation was added in entry No.38,
of the Services Notification, which was dealing with services relating to solar
power generating system. The said explanation reads as follows:
Sr.No Chapter, Description of Service Rate(%) Condition
Section of
Heading
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W.P.No.10314 of 202538 9954 or Service by way of construction 9 or
9983 or engineering or installation or other
9987 technical services, provided in
relation of setting up of following,-
…
(c) Solar power generating system
Explanation – This entry shall be
read in conjunction with serial
number 201A of Schedule II of the
notification No. 1/2017-Central Tax
(Rate), published in the Gazette of
India, Extraordinary, Part II, Section
3, Sub-section (i) dated 28th June,
2017 vide GSR number 673(E)
dated 28th June, 2017.
5. The petitioner took the stand that these amendments to the said
entries effectively levied GST @ 5% on 70% of the value of supply and 18%
on 30% of the value of supply resulting in an effective rate of 8.9%. It would
also be necessary, to note that, that a circular had also been issued by the
Central Board of Indirect Taxes and Customs (CBIC) bearing Circular
No.163/19/2021-GST, dated 06.10.2021, making the aforesaid explanation
applicable with effect from 01.01.2019. The petitioner on the basis of such
notifications had been paying taxes of 5% on 70% of the supply price and
18% on 30% of the supply price. The returns filed by the petitioner, on this
basis, for the tax period 2020-2021, were not disputed till a show cause
notice, dated 30.11.2024, was issued by the 3rd respondent. In this show
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W.P.No.10314 of 2025
cause notice, various issues were raised. However, all the issues, except one
issue, had been resolved and are not the subject matter of the present writ
petition. The issue which is the subject matter of this Writ Petition, is the rate
at which tax is to be collected.
6. The 3rd respondent proposed tax on supply of solar power
generating systems at 18% and issued a notice, under Section 74 of the
CGST Act, on the ground that there has been evasion of tax. The petitioner
replied, to this show cause notice, on 24.12.2024 and 24.01.2025. The 3rd
respondent rejected the objections raised by the petitioner, in these two
representations, and passed an order of assessment, under Section 74 and
74(9) of the CGST Act on 06.03.2025, raising the tax demand of
Rs.9,19,14,507/- as well as an equivalent amount as penalty along with
interest. The petitioner being aggrieved by this order, has approached this
Court, by way of the present Writ Petition.
7. The petitioner in its objections, filed before the 3rd respondent had
contended that the petitioner had been supplying solar power generating
systems, as a composite contract and as such, the petitioner would be entitled
to the benefit of the aforesaid entries which levied effective rate of 8.9%. The
petitioner also took the contention that the assessment proceedings were
barred by limitation as section 74 of the CGST Act, which gives extended
limitation to the third respondent, could not have been invoked. The petitioner
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W.P.No.10314 of 2025
contended that none of the ingredients of section 74, had been made out in
the show cause notice.
8. The 3rd respondent, while considering these objections, held that
the petitioner had raised bills separately for goods supplied at different rates
with different rates of taxes and that separate invoices were raised for
services, due to which the formula of 70:30 set out in entry 234 and entry 38
mentioned above would not be applicable. The third respondent, on the
ground that separate invoices were issued for supply of goods and separate
invoices were issued for erection and installation, held that the supply cannot
be treated as a single contract of supply of goods and services.
9. Apart from this, the third respondent also held that the effective
rate of 8.9% could not have been applied for goods which have been supplied
and covered under different HSN codes, which were liable to be taxed at the
rate of 18%. The present writ petition challenges this order of assessment.
10. The learned counsel for the petitioner, would contend that the
impugned order is without jurisdiction and beyond limitation. Apart from this,
the petitioner would also contend that the 70:30% mechanism brought in by
the above notifications was applicable in the present case. The petitioner also
relied upon the judgment of a Division Bench of this Court, in the case of
Sterling and Wilson Pvt. Ltd. vs. Joint Commissioner & Ors., in
W.P.No.20096 of 2020, wherein it was held that supply of solar power
generating systems is a composite supply. In paragraph No.23, of the affidavit
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W.P.No.10314 of 2025
filed in support of the writ petition, the petitioner had taken a specific ground
that the supply of goods and services, in the course of installing solar power
generating systems, was under one contract and that the petitioner, in the
alternative, would also contend that the notifications clearly stipulate a specific
rate of tax by virtue of a deeming fiction, and the issue of whether the goods
supplied could have been taxed at higher rates would not arise in view of the
explicit provisions of the notifications.
11. The 3rd respondent has filed a counter-affidavit and an additional
counter-affidavit. In the counter-affidavit, the third respondent, except
reiterating that the petitioner had issued separate invoices for the supply of
goods and separate invoices for the supply of services, has not disputed the
contention of the petitioner that all these supplies were made in pursuance of
contracts executed between the petitioner and its customers. The additional
counter affidavit, also does not contain any averments on this issue.
Consideration of the Court:
12. The supply of solar power generating systems, and the tax
payable on such supply has been considered by a Division Bench of this
Court in Sterling and Wilson Pvt. Ltd. vs. Joint Commissioner & Ors. In
that case, the issue before the Court was whether such supply of solar power
generating systems would result in the installation of an immovable property
or would only be a composite supply of services and goods. The Division
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Bench, after going into the facts of the case, had held that such supply of solar
power generating systems was a composite supply of goods and services.
13. In the present case, this Court does not require to go into those
facts as the petitioner is accepting tax liability set out in Entry 234 of
Notification No. 1/2017 C.T (R), dated 28.06.2017 and Entry No.38 in Service
rate Notification No.11/2017-C.T (R), dated 28.06.2017. A conjoint reading of
both these notifications, and the explanations appended to the relevant entries
would show that the consideration received for supply of solar power
generating systems, even under erection, procurement, and commissioning
contracts, would have to be taxed by applying the 70:30 mechanism, wherein
70% of the supply price would be taxed at 5% while 30% of the supply price
would be taxed at 18%.
14. The 3rd respondent sought to make out a case of separate
supply of goods and service due to which the petitioner would not be entitled
to the benefit of these notifications. This view is incorrect, for the reasons that
follow.
15. The original entry, No. 234, in Notification No. 1, levied GST at the
rate of 5% on the supply of Solar Power Generating Systems and it’s parts.
This would mean that any goods, which are supplied as a part of such Solar
Generating Systems, would attract GST at the rate of 5%, even if they fall
under different heads. Similarly, the services, supplied, as a part of the
installation, maintenance etc., of Solar Power Generating Systems, would
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attract GST at the rate of 18%. Prior to the introduction of the explanation, the
registered person would have to pay GST at the rate of 5% on the supply of
goods and 18% on the supply of services. For this purpose, the value of
supply of goods and the value of supply of services, would have to be
disclosed separately and different rates of tax would have to be paid. The
registered person, in Sterling and Wilson Pvt. Ltd. vs. Joint Commissioner
& Ors., in W.P.No.20096 of 2020, had contended that in such a situation, the
registered person would be entitled to the benefit of paying GST, on the entire
supply, at the rate of 5%, by treating the supply of goods and services as a
composite supply, wherein the registered person would pay GST at the rate of
5%, fixed for the supply of goods, which was the predominant part of the
supply. This contention was accepted by a Division Bench of this court, in the
above judgment.
16. By virtue of the inclusion of the explanations, in entry 234 and
entry 38 of the two notifications, a legal fiction has been created, that in the
supply of Solar Power generating Systems, the value of supply of goods is
70% and the value of services is 30%. The explanation, incorporated in Entry
234, stipulates that the 70:30 mechanism would be applicable if the goods
mentioned in Entry 234 are supplied along with other goods, which could be
taxed and supply of services, which are taxable under Entry 38 of Notification
No. 11 of 2017. That part of the explanation is being extracted:
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W.P.No.10314 of 2025“If the goods specified in this entry are supplied, by a supplier, along
with supplies of other goods and services, one of which being a taxable
service….”
17. In view of these provisions, any supply of a Solar Power
Generating System, or it’s parts as one supply or as separate parts would not
make any difference, to the rate of tax. The view of the 3rd respondent to the
contrary is incorrect and has to be rejected.
18. In the present case, even if the view of the third respondent, is
to be taken into account, there has been a separate supply of goods in
relation to Solar Power Generating Systems and systems, falling under Entry
234 of Notification No. 1 of 2017, and there has been a separate supply of
services, falling under Entry No. 38 of Notification No. 11 of 2017, it is not
clear as to how the 3rd respondent can claim that the petitioner would not be
entitled to pay tax, under these entries. Except stating that separate invoices
were issued, the third respondent has not explained how issuance of separate
invoices would take the case of the petitioner out of these two entries. Further,
the petitioner has specifically contended that these supplies were made under
contracts executed with the purchaser. In such circumstances, mere issuance
of separate invoices, cannot mean that there is no overall contract and that
the supply price can be taxed at whichever rate, the third respondent seeks to
levy. Another issue that would come up is that, even if the third respondent
was right, an exercise of ascertaining the value of the goods which had been
supplied and the rate of tax payable on such goods should have been carried
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out. There is no such clarity or exercise, undertaken by the third respondent.
Similarly, another exercise in relation to the value of services would have to be
conducted. Instead of doing the same, the third respondent simply levied tax
at the rate of 18% on the entire supply. It is not clear as to how such a rate of
tax could have been applied on the entire turnover, especially when the third
respondent had taken the view that there was a separate supply of goods and
a separate supply of services.
15. The impugned order appears to be an attempt by the third
respondent to simply raise revenue for the state without applying his mind to
the facts. In any event, the view of the 3rd respondent is incorrect and it would
have to be held that the petitioner was required to pay GST, as per the 70:30
mechanism, set out in the explanation to the entries in the above notifications.
16. For the aforesaid reasons, the order of assessment passed by
the 3rd respondent on 06.03.2025 is set aside. In view of the decision on
merits, this Court is not going into the question of whether the impugned order
of assessment was within limitation or not.
17. Accordingly, this Writ Petition is allowed, and the impugned
Assessment Order in Form DRC-07 bearing DIN3706032567381, dated
06.03.2025, is set aside to the extent of the levy of differential rate of tax, on
the supply of goods and services of solar power generating systems and solar
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power based devices, and the 3rd respondent is further directed to pass
necessary consequential orders. There shall be no order as to costs.
As a sequel, pending miscellaneous petitions, if any, shall stand closed.
_______________________________
R. RAGHUNANDAN RAO, J
_____________________
T.C.D. SEKHAR, J
RJS
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W.P.No.10314 of 2025
THE HON’BLE SRI JUSTICE R. RAGHUNANDAN RAO
&
THE HONOURABLE SRI JUSTICE T.C.D.SEKHAR
WRIT PETITION No: 10314 of 2025
(per Hon’ble Sri Justice R.Raghunandan Rao)
29.04.2026
RJS
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