Dear Experts,

We are a solar EPC supplier registered in Uttar Pradesh. Please advise on the GST treatment of the following.

Facts

  1. The customer already has a rooftop solar plant. The mounting structure was installed earlier by another party and is staying as it is.
  2. We will supply new panels, an inverter and BOS (cables, junction boxes, earthing, etc.), dismantle the old equipment, install, test and commission the system. We are not supplying or installing any structure.
  3. There will be one contract with one lump-sum price.
  4. The customer is unregistered (no GSTIN).
  5. In an earlier, separate order we supplied only panels with panel installation, billed on actual values (5% on panels, 18% on installation).

Our understanding
Under the explanation inserted by Notification 24/2018-CT(Rate) in entry 234 of Notification 1/2017 and entry 38 of Notification 11/2017, and Circular 163/19/2021-GST, 70% of the gross consideration is deemed to be goods at 5% and 30% services at 18% (about 8.9% effective). We think this applies even though the structure is outside our scope and the plant is a retrofit.

Questions

  1. Does the 70:30 deeming apply to this retrofit where the structure is excluded from our scope? Is there any ruling or clarification on a partial scope or on a replacement project?
  2. Is 70:30 mandatory, or can we pay tax on actual values or at 5% on the whole composite supply under Section 8? We have seen conflicting positions in High Court cases.
  3. If we take the old panels or inverter as scrap or part payment, how should it be treated for valuation? Does the 70:30 split apply to the gross consideration before or after adjusting it?
  4. For the earlier panels-plus-installation order, is billing on actual values defensible, or should 70:30 have applied?
  5. For an unregistered customer, any special points on invoicing (B2C invoice, place of supply, advance receipts)?

Thank you.