QUESTION
Dealer is running a Restaurant in a commercial premises paying rent ? The dealer is selling Food items at 5% GST. Can he avail the ITC of the rent paid to the owner as ITC can be claimed for services used in furtherance of Business? Please clarify.
ANSWER
Facts of the case: Whether a Restaurant service provider selling food items at 5% GST is eligible for ITC of the GST paid on rent?
Law Applicable: Notification No. 11/2017-Central Tax (Rate)
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(ii) Supply of 'restaurant service‟ other than at 'specified premises' |
2.5 |
Provided that credit of input tax charged on goods and services used in supplying the service has not been taken [Please refer to Explanation no. (iv)] |
Interpretation: As per Notification No. 11/2017-Central Tax (Rate) GST rate of 5% is notified for 'restaurant service' subject to the condition that credit of input tax charged on goods and services used in supplying the service has not been taken. Therefore Dealer supplying restaurant service is not eligible to avail ITC of GST paid on rent.
Conclusion: Restaurant service provider will not be eligible to take ITC on goods and services used for supplying the service. (Reply dt.06.01.2021)