GST input tax credit applies only to business-linked use, with mixed-use expenses allowed proportionately and blocked items excluded.

Input tax credit under GST is available only for inward supplies used in the course or furtherance of business and not covered by blocked-credit rules. Credit was denied for residential township and colony maintenance to the extent linked to employee welfare or residential use, with only the plant-related portion allowed where services had mixed use. Credit was also denied for maintenance and operation of the hospital and pharmacy outlet. By contrast, credit was allowed for maintenance of the guest house, transit house and training hostel, except for food, beverages and catering inputs. Plantation, horticulture and other non-business services outside the plant area were denied, while plant-related and mixed-use services were allowed proportionately.

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Issues: (i) Whether input tax credit is admissible on goods and services used for maintenance of the residential township and related colony facilities; (ii) whether input tax credit is admissible on goods and services used for maintenance and operation of the hospital and pharmacy outlet; (iii) whether input tax credit is admissible on goods and services used for maintenance of the guest house, transit house and training hostel; (iv) whether input tax credit is admissible on plantation, horticulture and other plant-related services, and on services used partly for plant purposes and partly for non-business purposes.

Issue (i): Whether input tax credit is admissible on goods and services used for maintenance of the residential township and related colony facilities.

Analysis: Credit under section 16 is available only to the extent inward supplies are used in the course or furtherance of business and are not blocked by section 17. Services exclusively relatable to the residential colony were treated as employee-welfare or perquisite-linked supplies and not as business inputs. Services forming part of the residential colony, or used for colony upkeep, were held to fall outside the credit chain. Where a service was partly relatable to the plant and partly to the colony, only the business-linked portion was treated as eligible.

Conclusion: ITC is not admissible for township and colony maintenance to the extent relatable to residential colony use; proportionate credit is permissible only for the plant-related portion.

Issue (ii): Whether input tax credit is admissible on goods and services used for maintenance and operation of the hospital and pharmacy outlet.

Analysis: The hospital and pharmacy activities were treated as supplies made by the employer, but the inward goods and services used for dispensing medical services and running the pharmacy outlet were held to be tied to exempt or non-creditable supply. The authority also relied on the blocked-credit framework and the exemption entry for clinical establishments to hold that inputs used for such activities do not qualify for credit under the prevailing law.

Conclusion: ITC is not admissible on goods and services used for maintenance and operation of the hospital and pharmacy outlet.

Issue (iii): Whether input tax credit is admissible on goods and services used for maintenance of the guest house, transit house and training hostel.

Analysis: Maintaining guest houses, transit houses and hostels was treated as a business requirement connected with accommodation for guests and employees on tour. The authority held that inward supplies used for such maintenance are eligible for credit, but food and beverages or catering-related inputs remain blocked and do not qualify. The ruling also excluded credit on any supply not directly relatable to the maintenance of these establishments.

Conclusion: ITC is admissible on goods and services used for maintenance of the guest house, transit house and training hostel, excluding food, beverages and catering-related inputs.

Issue (iv): Whether input tax credit is admissible on plantation, horticulture and other plant-related services, and on services used partly for plant purposes and partly for non-business purposes.

Analysis: Plantation and horticulture undertaken outside the plant area, and services unconnected with the core business, were treated as non-business activities and denied credit. By contrast, plantation, gardening and allied maintenance within the plant area or around business establishments were accepted as business-linked. The authority accordingly applied a use-based segregation: credit was denied for purely non-business or colony-linked activities, but allowed for plant-related activities and for mixed-use services only to the extent relatable to the plant.

Conclusion: ITC is not admissible for plantation and horticulture outside the plant area or for other non-business activities, but is admissible for plant-related services and proportionately for mixed-use services.

Final Conclusion: The ruling grants input tax credit only to the extent the inward supplies are demonstrably connected with the business establishment or plant operations, while denying credit for residential colony, hospital and other non-business or exempt-linked uses.

Ratio Decidendi: Input tax credit under the GST law is available only for inward supplies used in the course or furtherance of business and not hit by the blocked-credit provisions, and where a supply has mixed use, credit is confined to the business-related portion alone.

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