Admisibility of Input Tax Credit on Hotel Stay

[Kaustubh Karandikar]

XYZ (Maharashtra) had arranged a Customer meet in a Hotel in Bangalore towards sales promotion. The Hotel is ready to issue to separate bills viz. one for food and other for stay. The Hotel will be charging IGST in the invoice issued to XYZ in the name of XYZ, Maharashtra. Can XYZ take input tax credit against the bill for hotel stay?

[DR.MARIAPPAN GOVINDARAJAN]

Since it is in furtherance of busines ITC is eligible.

[Alkesh Jani]

Dear Sir,

In this regards my point of view is that, the Hotel cannot charge IGST, for this purpose the definition of location of supplier give at Section 2(15) (a) of IGST,2017 may be taken into account, further, as the Hotel is located in the state and services are also supplied in the same state, in terms of Section 7(3) of the IGST, Act,2017, is not applicable.

Moreover, Section 12 (3)(b) of IGST, Act,2017, clearly states and mentions of Hotel, for which place of supply will be “Intra-state”.

In view of above, although, Hotel is ready to issue Invoice charging IGST, it is not advised to take the ITC. If audit is undertaken of Hotel even after 4 years, and if the same credit is disputed, XYZ is required to be reversed along with interest.

Any different view by our experts in the matter is highly solicited.

Thanks,

With regards,

[YAGAY and SUN]

We endorse the view of Mr. Jani as Hotel is liable to Charge only CGST + SGST and the ITC is claimed only when the service recipient is registered at this very State where such services are being provided.

[SHIVKUMAR SHARMA]

I agree with the Reply of Shri Alkesh Jani.

[KASTURI SETHI]

Well done by Sh.Alkesh Jani.

[Alkesh Jani]

Dear All,

Thanks for your support.

With regards,

[DR.MARIAPPAN GOVINDARAJAN]

The service recipient will register in Karnataka only he does supply in that State. Otherwise not required.

AI Summary

Place of supply rules: ITC for hotel accommodation available only if recipient is registered in the State where the service is supplied.
ITC on hotel accommodation depends on place of supply and recipient registration: accommodation provided and invoiced in the State is an intra state supply attracting CGST and SGST, and ITC can be claimed only if the recipient is registered in that State; invoices charging IGST are not the correct treatment and claiming ITC on such invoices risks future reversal with interest.