INPUT ON MEETING EXPENSES

[DURAISAMY ANANDHAN]

I am a Practicing Chartered Accountant. Al we know that in the year 2017 is GST year. In the year 2017-18, I incurred a sum of Rs. 100000 towards meeting expenses to explain the GST Act to my customers and other Business Persons. Meeting was conducted by Auditors' forum and Other association. I incurred towards supply of 'Biscuits & Confectionery Items ' which fall at 18% GST. In my GSTR, I have claimed this expenses as meeting expenses. Now the GST authority passed an order that this items fall in 17(5) of Foods & Beverages. Hence Input amount should be reversed and pay tax. Kindly help me to file an appeal.

Thanks in advance

[KASTURI SETHI]

Meeting expenses have been incurred for the business of 'biscuits and confectionary items' which are covered in the definition of 'food' and are hit by Section 17(5).

No benefit of filing an appeal in this scenario. See Notification No.20/19-CT (R) dated 30.9.20. This notification specifies that ITC is not available. ITC is allowed only in two situations if output service is in the same business line and input service is obligatory under any law.

This is NOT a situation if rate of output service is taxed @18%, ITC will be allowed. No option of rate is available.

Hence reply is in the negative.

[Sadanand Bulbule]

Dear querist

I endorse the explanation of Sh. Sethi Sir.

[Padmanathan KV]

Supply goods or service being food and beverage is blocked credit.

On lighter note, the case of the Dept must be that they did not get the biscuits & confectionery.

[Shilpi Jain]

Biscuits & Conf being food, credit will not be eligible.

AI Summary

Input tax credit blocked for food and beverages; meeting hospitality GST credit must be reversed, exceptions are narrow. Input tax credit on meeting expenses for biscuits and confectionery is blocked under the rule excluding credit for food and beverages, requiring reversal of claimed ITC; exceptions apply only where the input service is in the same business line or obligatory under law, and the output tax rate does not confer entitlement.