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ITC eligibility on Food, Goods and Services Tax - GST

Issue Id: - 115306
Dated: 10-8-2019
By:- THYAGARAJAN KALYANASUNDARAM
ITC eligibility on Food

  • Contents

Dear Experts,

One of my clients running a Training institute in Chennai and providing food to the student who join the course during the course period. We are collecting the course fees from the student along with food, now my query is that, do we eligible to claim the input tax credit on the food bill.

Thanks in Advance.

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Posts / Replies

Showing Replies 1 to 15 of 22 Records

1 Dated: 10-8-2019
By:- Rajagopalan Ranganathan

Sir

According to Section 17 (5) (b) (i) of CGST Act, 2017 input tax credit shall not be available in respect of food and beverages, outdoor catering, beauty treatment, health services, cosmetic and plastic surgery, leasing, renting or hiring of motor vehicles, vessels or aircraft referred to in clause (a) or clause (aa) except when used for the purposes specified therein, life insurance and health insurance :

Provided that the input tax credit in respect of such goods or services or both shall be available where an inward supply of such goods or services or both is used by a registered person for making an outward taxable supply of the same category of goods or services or both or as an element of a taxable composite or mixed supply;

Provided that the input tax credit in respect of such goods or services or both shall be available, where it is obligatory for an employer to provide the same to its employees under any law for the time being in force


2 Dated: 11-8-2019
By:- KASTURI SETHI

In the scenario explained by the querist, his client is clearly hit by exclusion clause as mentioned above by Sh.Ranganathan, Sir. Not eligible.


3 Dated: 11-8-2019
By:- Alkesh Jani

Sir,

In this regards, the definition of Mixed supply is give below for ready reference

“(74) “mixed supply” means two or more individual supplies of goods or services, or any combination thereof, made in conjunction with each other by a taxable person for a single price where such supply does not constitute a composite supply.

Illustration - A supply of a package consisting of canned foods, sweets, chocolates, cakes, dry fruits, aerated drinks and fruit juices when supplied for a single price is a mixed supply. Each of these items can be supplied separately and is not dependent on any other. It shall not be a mixed supply if these items are supplied separately”

Further, proviso to Section 17(5)(b) (i) is also reproduced below

“Provided that the input tax credit in respect of such goods or services or both shall be available where an inward supply of such goods or services or both is used by a registered person for making an outward taxable supply of the same category of goods or services or both or as an element of a taxable composite or mixed supply”

In the instant case, the client is supply “Mixed supply” of training and foods and charges of food is also includes in the course fees, i.e. for a single price.

Based on above, I am of the view that ITC is admissible.

Thanks,

With Due regards


4 Dated: 11-8-2019
By:- VISHWNANATH NR

Dear sir,

Kindly light your views on the views expressed by the Aklesh Jain


5 Dated: 11-8-2019
By:- KASTURI SETHI

What type of training is being provided ? Is it coaching centre or vocational centre ? If we treat both as mixed supply, the highest rate of the two (mixed supply) will be applicable. If applicable rate on food is at lower rate i.e. 5% , then ITC is not admissible. There is also a question mark on the mixed supply. Whether we can treat both supplies as mixed supply or composite supply ? Or both are individuals. . All facts have to be verified before arriving at correct decision.


6 Dated: 11-8-2019
By:- Alkesh Jani

Sir,

I agree with the question raised by Sh. Kasturiji Sir, as query raised may be different from the factual transaction and facts mentioned. It can only be ascertain on scrutiny of the documents and relevant transactions.

However, as per the query raised and words used in it, clearly states that food is included in the fees, the commercial training and coaching is classified under HSN Code 99929 and food and beverages is classified under 99633, both are distinct services and are made in conjunction with each other and are supplied for a single price, and both the services are not dependent on any other. therefore, we can conclude that it falls within the ambit of “Mixed supply”, as both the services i.e. training and food are not dependent on each other, moreover, it cannot be termed as “composite supply” as both the services are not naturally bundled.

Further, the proviso clearly states that for making outward supply as an element of Mixed supply, therefore, supply of food and beverages is an element of taxable supply.

Thanks,

With due regards


7 Dated: 12-8-2019
By:- Ganeshan Kalyani

The credit on food is not eligible. In my view, the discussion is taking place on tax applicable on outward supply. The input tax eligibility is the other side of the same coin. The input service need to read with section 17(5) to determine its eligibility. It cannot be correlated with the outward tax payable to take credit.


8 Dated: 13-8-2019
By:- KASTURI SETHI

Dear Sh.Kalyani Ji,

What I understand you want to say one should not resort to "Mixed Supply" in order to take credit. In mixed supply, GST is attracted at highest rate of tax involving two or more services or goods. One should not go backward rather than going forward.


9 Dated: 13-8-2019
By:- Ganeshan Kalyani

Sir, I mean to say that outward supply can be mixed or composite or individual supply of service. These terms will help to arrive at tax rate applicable on the outward supply. These will not help to arrive at the eligibility of inward supply which is food in this case. For eligibility of input tax credit on inward supply section 17(5) has to be seen. This I accept. But how the determination of type of outward supply will help to find out the eligibility of input tax credit that I need to understand.


10 Dated: 13-8-2019
By:- Alkesh Jani

Dear Experts,

Please re-comment after perusing Proviso given at Section 17 (5) (b)(i) of CGST Act,2017. I also Invite you to share your interpretation on the above referred proviso.

Thanks,

With due regards.


11 Dated: 14-8-2019
By:- Himansu Sekhar

It is not a mixed supply. Itc on food is not pernissible


12 Dated: 14-8-2019
By:- KASTURI SETHI

Yes. It is not a package. Both services can be supplied separately without any legal hurdle. Nobody would like to be a 'victim' of 'Mixed Supply' which attract higher rate of GST in the form of mixed supply. Otherwise, it would also be costly for the assessee for the purpose of ITC. Govt.'s kitty would be enriched.


13 Dated: 14-8-2019
By:- Alkesh Jani

Sir,

In this matter, the views expressed by Shri Ganeshan Kalyaniji is not acceptable as the same is without taking into account the proviso. The views expressed by Shri Himashuji is also not acceptable as, it does not negate as why it is not a mixed supply.

The views forwarded by Shri Kasturiji Sir, and arriving at the conclusion that it not a 'package' so it cannot be termed as “mixed supply” is also not acceptable by me, as the package word is used in illustration and is with regards to supply of different (items) goods and not for services.

Concluding from my side, I wish to add that there are two services supplied by the querist, training and food. The cost of course includes food and no separate cost is recovered, it is not naturally bundled. Therefore, the said supply is not composite supply and even if it is composite supply, as per the proviso, ITC on food and beverages is admissible in case of supply of mixed or composite supply.

Thanks,

With regards


14 Dated: 14-8-2019
By:- Himansu Sekhar

Interpretational difference


15 Dated: 15-8-2019
By:- KASTURI SETHI

The word, 'package' though in an illustration, is not superfluous.

Let us agree to disagree !!! and use our time and energy towards next query. Life becomes listless without problem (complexities). We can not learn and enjoy if question is so simple. Only complicated questions should find place in this forum.


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