Can Restaurant Can Claim on input

[YUWRAJ KOTHARI]

Dear Sir/Madam,

Can Restaurant holding Franchise, and leving GST on Foods Sales @5%, claim ITC for Royalty or any other input.

[DR.MARIAPPAN GOVINDARAJAN]

In my view no.

[KASTURI SETHI]

I support the view of Dr.Govindarajan, Sir.

[CA Hemanth Kumar]

Dear sir,

Rate of 5% is subject to ITC restriction. Therefore cannot claim ITC.

Further to note that ,this change is made by Notification No. 46/2017- Central Tax (Rate) dated 15.11.17 with an explanation that the turnover of 5% would be considered as exempted TO and reversal of ITC will be applicable in terms of section 17(2) read with rule 42 and 43 of CGST Rules, 2017

[YAGAY and SUN]

We endorse the views of our experts.

AI Summary

Input tax credit restriction precludes claiming ITC on royalty or inputs when reduced-rate supplies are treated as exempt turnover.
A restaurant franchisor/franchisee applying the reduced GST rate on food supplies cannot claim Input Tax Credit for royalty or other inputs because turnover under the reduced-rate category is treated as exempt turnover, triggering the statutory allocation and reversal mechanism for input tax credits which disallows credit attributable to such exempted turnover.