ITC ON FOOD ITEMS, DISPOSAL ITEMS, FOLDING BADS,SOAPS,SENITIZORS USED FOR EMPLOYEES IN FACTORY DUE TO CORONA

[PRADEEP GARG]

Dear Sir,

We are a mfg company of STEEL & IRON PRODUCTS-PIPES, STRUCTURES, ETC. In present crucial position occurred due to CORONA COVID 19, we are running our various factories with limited man power with terms and conditions as imposed by state and central govt of India. Under the conditions, all workers and staff are staying in the factory premises for which our management has made adequate arrangements for the employees like, three times diet, sleeping arrangements, safety arrangements by sanitization, masks, hand glubbes. In all these arrangements, there are huge expenses on which GST has been paid. We are aware that under section 17 of GST ACT, ITC on food items is not available but under some condition, it is available. We would like to have your valuable expert opinion on the above all items which have been purchased under special condition i.e. CORONA, that whether we can avail ITC of GST paid on purchase of these items. Thanks,

PRADEEP GARG

SR.GM-GST&LOGISTICS

GOODLUCK INDIA LTD, UP

[Rajagopalan Ranganathan]

Sir,

As per the second proviso to Section 17 (5) (b) of CGST Act, 2017," the input tax credit in respect of such goods or services or both shall be available, where it is obligatory for an employer to provide the same to its employees under any law for the time being in force.” Therefore If the items mentioned by you are supplied to the workers as per provisions of any law (e.g. Factory's Act etc.) you are eligible to take ITC of gst paid on the items mentioned by you.

[KASTURI SETHI]

Proviso to Section 17 (5) says,

" Provided that the input tax credit in respect of such goods or services or both shall be available, where it is obligatory for an employer to provide the same to its employees under any law for the time being in force.]

Emphasis is on the phrases "any law" "for the time being in force". MHA has issued order no.40-3/2020/BM-1(A) dated 15.4.20 along with Standard Operating Procedure under Disaster Management Act and these orders are mandatory for all the employers/registered persons/manufacturers. Health crisis i.e.emergency like situation in the whole India. In my view, ITC cannot be denied.

[YAGAY andSUN]

In our view, obtaining clarification from your Jurisdictional GST Commissioner and from GST Council will be beneficial for Trade, at large.

AI Summary

Input tax credit on employer provided health and welfare supplies permitted when legally obligatory; obtain GST authority clarification. Availability of input tax credit on food, disposables, sanitizers and protective items supplied to employees hinges on the proviso to Section 17(5)(b): ITC is allowable where it is obligatory for an employer to provide such goods or services under any law. If central emergency directions or other statutory obligations require employers to supply these items during the health crisis, ITC would be supported; seeking confirmation from the jurisdictional GST authority or GST Council is advised.