Input tax Availability

[Bayyareddy DK]

Sir,

My client is a private limited company operating Hotel business which has restaurant on which paying 5% GST without availing input tax credit. Hotel has also rooms on which GST is collected based on the tariff value & availing input tax proportionately.

My client has given contract to construct solar project & sale of electricity is only to Hotel business i.e. own consumption. Can I avail input tax on the Contractor bill and investors purchased for solar module? Can I avail & set off input against the hotel room business?. Please advice

[Rajagopalan Ranganathan]

Sir,

Electricity is not chargeable to GST. Hence you are not eligible to avail input tax credit in respect of inputs and input services used for generating electricity.

[Shilpi Jain]

Looks like some more clarity required in the query.

Is it that the solar plant is installed by the hotel for itself and whatever electricity is generated is for own consumption?

If yes, then there is no supply of electricity by the Hotel and thereby the credit cannot be restricted by considering it as an exempt supply.

The credit relating to the equipment should be eligible to the extent of the room business.

Whenever looking at the eligibility of ITC, the end use has to be seen and then decided

[Amit Agrawal]

I agree with Ms. Shilpi Jain Mam! But and as said by her, some more clarity is required .... For example: Sale / Own consumption cannot be same .... meaning of 'investors purchased for solar module'? etc.

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

[Padmanathan KV]

I agree with shilpi Ma'am, ITC shall be available if the electricity is captively consumed by the hotel itself.

AI Summary

Input tax credit availability depends on captive consumption of solar-generated electricity; credit limited to proportionate taxable hotel supplies. Whether input tax credit may be claimed for inputs and input services used to install a solar plant whose electricity is captively consumed by the hotel: if the plant is for the hotel's own consumption and there is no supply of electricity outward, ITC is available, subject to proportionate allocation to the taxable room business on an end-use basis; factual clarity is required to determine final entitlement.