A taxpayer engaged in cement trading organises a dealers meet in a hotel on behalf of the supplier company. The hotel issues an invoice as catering services to the taxpayer. The taxpayer will recover this amount from the Company. On these facts, I have the following 2 queries:
1. What document needs to be issued by the taxpayer to the Company to recover these expenses? A tax invoice as catering service or any other document mentioning reimbursement expenses.
2. If the taxpayer can issue tax invoice to the Company, can the taxpayer avail ITC on inward catering services received from the Hotel?
Note: Can we refer proviso to Section 17(5)(b)(i) to say that the inward supply of catering services has been used to make an outward supply of the same?
ITC on Catering Services Allowed Only If Part of Composite Taxable Supply Under GST Rules A taxpayer organizing a dealers meet on behalf of a supplier company incurs catering service expenses billed by a hotel. The taxpayer seeks clarification on the appropriate document to recover these expenses from the company and whether input tax credit (ITC) on the catering services can be claimed. ITC is allowable only if the inward catering service is used to make an outward taxable supply of the same category, supported by a contract or agreement demonstrating it as part of a composite or mixed supply. If the taxpayer issues a tax invoice to the company for the catering service as an element of such supply, ITC may be claimed. However, if the service is classified as outdoor catering, the supplier company may not be eligible for ITC, and alternative options should be explored to enable credit recovery. (AI Summary)
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