Blocked Credit Sec 17 (5)

[V Rajalakshmi]

Company has organised a customer meeting to discuss about the various new scheme proposing to be introduced by the company. The company has incurred the following expenditure

1.hall rent 2. Food 3. Gift voucher

Query is whether the company can claim ITC on food expenses. What is the impact if the company has received a consolidated bill from supplier with out any break up of amount but duly mentioning the nature of service alone in the invoice.

[Amit Agrawal]

ITC against 'food and beverages, outdoor catering' etc. is specifically blocked u/s 17(5)(b)(i) (i.e. unless where it is obligatory for an employer to provide the same to its employees under any law for the time being in force).

Hence, ITC against food in given situation is not allowed, though one can claim ITC against hall-rent.

W.r.t. second situation about consolidated bill, what is the nature of services rendered (along-with HSN code) & tax-rate mentioned on the invoice for the consolidated amount?

These are ex facie views of mine and the same should not be construed as professional advice / suggestion.

[Shilpi Jain]

The assessment of the nature of service done at the supplier's end cannot be questioned at the recipient's end.

So knowing the HSN and classification adopted by the supplier would be relevant to answer the eligibility of credit.

As stated by Amitji, in case it is classified as supply of F&B / outdoor catering, credit will be blocked.

AI Summary

Input tax credit restriction: food and catering expenses generally ineligible for ITC; supplier classification governs entitlement. Food and beverages and outdoor catering are blocked for ITC under section 17(5)(b)(i) unless an employer is legally obliged to provide them; hall rent is claimable. A consolidated invoice without breakup requires examination of the supplier's stated nature of supply, HSN and tax rate, since the recipient cannot reclassify the supplier's service and if the supplier classifies it as F&B/catering the credit will be blocked.