EXAMPLE

Determine whether the following input /Input services eligible for ITC.

 

(1)    XY Ltd (manufacturer) used Work Contract Services for construction of factory shed.

 

(2)    Service related to outdoor catering used by the restaurant service provider supplying food beverages or any other article for human consumption.

(3)    AB Ltd manufacturer of goods used “high speed diesel” along with other input for the purpose of manufacturing of Final product.

 

ANSWER

 

Input / Input Services

 

ITC Eligibility

 

Remarks

 

(1)               Work Contract Services used for construction of factory shed.

 

 

 

 

  (2)               Service related to outdoor catering used by the restaurant service provider supplying food beverages or any other article for human consumption.

 

 

 

  (3)               AB Ltd manufacturer of goods used “high speed diesel” along with other input for the purpose of manufacturing of Final product.

 

 

 

 

 

 

 

 

 

No

 

 

 

 

 

 

  Yes

 

 

 

 

 

  

No

 

 

 

 

 

 

 

 

 

 

Clause (c) of section 17(5) disallows credit of GST paid on Work contract services, when supplied for construction of immovable property, other than plant and machinery. This clause also provides that credit shall be available when work contract services are used for further supply of Work contract services.

 Thus,

LY Ltd ( manufacturer) not allowed credit of input tax paid on work contract services.

 

  (i)                  Clause (b) of section 17(5) specifies that GST paid on inward supply of goods or services, such as food and beverages, outdoor catering, beauty treatment, health services, cosmetic and plastic surgery will not be available as input credit. But where such inward supply of goods or services of a particular category is used by a registered taxable person for making an outward taxable supply of the same category of goods or services even whether as an element of a taxable composite and mixed supply then credit will be available on inward supply of goods or services.

In view of above provision as restaurant is providing same nature  of service whether as mixed or composite supply Thus, is eligible for credit on tax paid on outdoor catering.

   As per section 9(2) of CGST Act, central tax on the supply of petroleum crude, high speed diesel, motor spirit (commonly known as petrol), natural gas and aviation turbine fuel shall be levied with effect from such date as may be notified by the Government on the recommendations of the Council.

 However, at present, the above said goods have been kept outside the purview of GST and special excise duty as earlier is livable, the same will continue to be livable on such goods.

 Hence, the duty paid on high speed diesel is not eligible for credit.