Whether hotels and restaurants who supply food etc to the people will get ITC in GST regime particularly in the light of the provisions embodied in Sub-section (5) of Section 17 of the CGST / SGST Act , 2017 ?
• It is pertinent to go through the relevant clause (b)(i) of sub-section (5) of section 17 which embodies that –
“17(5) Notwithstanding anything contained in sub-section (1) of section 16 and sub-section (1) of section 18 , input tax credit shall not be possible in respect of the following namely –
(b) the following supply of goods or services or both :-
(i) food and beverages , outdoor catering , beauty treatment , health services , cosmetic and plastic surgery except where an inward supply of goods or services or both of a particular category is used by a registered person for making outward supply of the same category of goods or services or both or as an element of taxable composite or mixed supply . “
• A plain reading of this clause makes it quite evident that there shall be no admissibility if ITC in respect of the supplies of food and beverages , outdoor catering etc. unless and until the recipient registered dealer further supplies such goods or services to any other person . It can be understood by the following example : If A supplies food and beverages , outdoor catering etc to B and B consumes such things and do not make further supply of such things then B shall not be able to claim any ITC in respect of such inward supplies, However if B further supplies these food and beverages , outdoor catering etc to another person C then B shall claim ITC in respect of inward supplies of aforesaid goods or services received from A .
• It is pertinent to note that aforesaid clause does not debar A from claiming ITC in respect of the goods or services consumed or utilized or used in the manufacturing of food or beverages. Thus any hotel or restaurant which supplies cooked food etc after its manufacturing shall be entitled to get ITC in respect of the goods or services consumed or utilized or used in the manufacturing of food etc.