Advocate R C Verma
Section 16 of the Central Goods and Service Tax Act, 2007 allows the credit of input tax charged on any supply of goods or services or both to a registered person which are used or intended to be used in the course or furtherance of his business. And section 17(5) of the Act, disallows the credit in respect of goods and services specified therein. Hotel accommodation facility availed by the Director/partner/proprietor/employee is not under the exclusion clause of section 17(5).
But if the facility of the same is availed in the same state where the registered person is situated, GST credit is admissible, and if availed in an another state then credit of SGST is not available on account of the following provisions:–
As per section 12 of the IGST Act, 2017, place of supply in case of Hotel Accommodation shall be the location at which the immovable property is located. Obviously, Hotel shall charge CGST PLUS SGST. The credit of SGST cannot be availed by the registered person situated in another state, though the facility was availed by his staff in the course or furtherance of his business. Section 16 allows credit of Input Tax. “Input Tax” has been defined under section 2(62) of the Act, means —the Central Tax, State Tax—. There is no problem regarding availing credit of Central Tax but credit of State Tax is not admissible. Because, as per definition given at section 2(104), “State Tax means the tax levied under this (means of that particular state) Act”. Here State Tax means the TAX paid at such place where the service of Hotel Accommodation was rendered. Obviously State Tax (SGST) paid in another state does not qualify for availing the credit.
Similar position also exists in case of goods/ services procured from another state where CGST/SGST have been paid.
It appears that Govt. has no such intention but due to drafting of law this anomaly might have occurred, which needs rectification retrospectively.
Author: R C Verma is the Author of this article and is an Advocate by profession. The Author can be reached at firstname.lastname@example.org/Mobile:09810525780
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