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CS Executive · Tax Laws and Practice · Input Tax Credit and Computation of GST Liability

Rohan Foods Pvt Ltd, a registered restaurant chain, pays GST on outdoor catering services received and uses them to make outward taxable supplies of outdoor catering services to customers. Credit on the inward catering services is:

Credit is available. Although outdoor catering is generally blocked under section 17(5)(b)(i), the proviso allows credit when the inward supply is used for an outward taxable supply of the same category of services, as in this case.

  1. ABlocked because outdoor catering is always a blocked item
  2. BBlocked because the company is a food business
  3. CAvailable only if the catering is for employees
  4. DAvailable, because the inward supply is used for making an outward taxable supply of the same category of servicesCorrect

Explanation

Section 17(5)(b)(i) blocks outdoor catering and food and beverages, but its proviso allows credit where the inward supply is used for an outward taxable supply of the same category or as an element of a taxable composite or mixed supply. Here the inward and outward supplies are both outdoor catering, so credit is allowed. Option A ignores the proviso.

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