Outdoor catering service

[yateen vyas]

Respected Experts,

We have manufacturing unit and we are running our canteen by a outdoor caterer.AS we are not able to take credit of outdoor catering service,I wan your input on below suggestion if we can use-

1. Can we purchase all material used in canteen in the name of our unit and only service portion is done by outdoor caterer.

2. If we purchase all material than can we able to take credit on canteen material purchase or is it fall under category of furtherance of business.

[KASTURI SETHI]

Not possible.

[Ganeshan Kalyani]

Is this your main business. One of the condition for input tax credit is purchases should be in course of or furtherance of business.

[KASTURI SETHI]

To establish furtherance of business in this aspect is a hard nut to crack.

Manufacturing Unit , running the canteen at company premises , and the input tax credit ( ITC ) is allowed under GST.

[Yatin Bhopi]

Dear expert,

As per section 17(5) (b) of GST Act there are specific restriction on ITC on food and beverages, outdoor catering etc. even though all expenses are for business purpose and it is mandatory to maintain Canteen in factory as per Factories act 1948. ITC will not be available.

Please share your views

AI Summary

Input tax credit restriction on food and outdoor catering likely bars ITC for canteen expenses despite business necessity.
Whether input tax credit is available for a company canteen served by an outdoor caterer if materials are bought in the unit's name while only the service is outsourced. Experts disagree: some say ITC is not possible or that proving furtherance of business is difficult; one says ITC is allowed for an on-premises canteen; another cites a statutory exclusion for food, beverages and outdoor catering that likely prevents ITC despite mandatory canteen obligations.