ITC Eligibility for Boutique Hotel and Restaurant Expenses: AAR Gujarat

In re Mangaldas Mehta & Company Ltd. (GST AAR Gujarat)

Introduction: In a notable decision, the Authority for Advance Ruling (AAR) in Gujarat addressed key queries from Mangaldas Mehta & Company Ltd., operating under the name “House of Mangaldas”, regarding Input Tax Credit (ITC) eligibility on various expenses incurred in running their boutique hotel and restaurant situated in a heritage property. The applicant sought clarity on claiming ITC for general business expenses, the basis of square footage for ITC claims, and the applicability of CGST Rules 42 and 43 given their tariff structure.

Detailed Analysis

The core issues presented before the AAR included whether the company could claim ITC on general expenses meant for business purposes, if ITC benefits could be calculated based on square footage of premises usage, and the relevance of CGST Rules 42 and 43 concerning their claims, considering their declared tariff never exceeded Rs. 7,499 at any time during the year.

General Expenses and ITC Eligibility

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