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

Hotel Seeks Clarity on Availing ITC for Solar Project; Electricity Not Subject to GST, Affects Eligibility A private limited company operating a hotel business is seeking advice on availing input tax credit (ITC) for a solar project used for generating electricity for its own consumption. The company pays 5% GST on its restaurant services without availing ITC but collects GST on room tariffs. Responses indicate that electricity is not subject to GST, thus ITC on inputs for electricity generation is not eligible. However, if the solar plant is for the hotel's own use, ITC may be available for the room business. Clarity is needed on terms like 'investors purchased for solar module' and the distinction between sale and own consumption.