GST: ITC not allowable on Food and Beverages consumed in Industrial Canteen, rules AAR [Read Order]

ITC - Food and Beverages - Industrial Canteen - AAR - taxscan

The Maharashtra Authority of Advance Ruling (AAR) ruled that the Input Tax Credit (ITC) is not allowable on Food and Beverages consumed in Industrial Canteen.

The applicant, Ordnance Factory Chanda (OFCh), the applicant, is a unit of Ordnance Factories Board (OFB) functioning under the Department of Defence Production and Supply. Ministry of Defence, Government of India. Established in the year 1964, the main business of OFCh is, to manufacture various types of ammunition like bombs, shells, cartridges, rockets etc. It is also engaged in manufacture of explosive and non-explosive components such as Initiator. Primer Cap, Fuze, Paper Components & Packages. The said products are supplied mainly to Indian defence and military forces. Some of the products are also supplied to sister Ordnance factories that use such goods for their production and manufacturing process. OFCh also supplies a small part of its manufactured goods to state police. Defence Public Sector companies like Bharat Dynamics Ltd, units under the Ministry of Home Affairs and defence laboratories like Defence Research & Development Laboratory.

The applicant has sought the advance ruling on whether the exemption to a ‘defence formation for preparation and generation of E way bills is applicable to Ordnance factories & other Central Government & Public Sector Undertakings (PSU’s) that function under the Ministry of Defence; whether exemption on payment of GST on transport of ‘military or defence equipment through a goods transport agency applicable to goods transported by  organization; Whether availing of eligible Input Tax Credit on inputs & input services relating to the main business activity of manufacturing is allowed against GST liability on renting of immovable property; Whether Input Tax Credit is allowable in respect of manpower services hired for industrial canteen and LPG cylinders refilled for use in industrial canteen; and Whether Input Tax Credit is allowable in respect of medicines purchased in factory hospital and other inputs and input services used in factory hospital.

The coram of Rajiv Mangoo and T.R.Ramnani ruled that the exemption to a ‘defence formation for preparation and generation of E way bills is applicable to Ordnance factories & other Central Government & Public Sector Undertakings (PSU’s) that function under the Ministry of Defence.

The Authority ruled that exemption on payment of GST on transport of ‘military or defence equipment through a goods transport agency applicable to goods transported by  organization.

The AAR held that availing of eligible Input Tax Credit on inputs & input services relating to the main business activity of manufacturing is not allowed against GST liability on renting of immovable property.

The AAR said that Input Tax Credit is not allowable in respect of manpower services hired for industrial canteen and LPG cylinders refilled for use in industrial canteen.

Lastly, the AAR ruled that Input Tax Credit is allowable in respect of medicines purchased in factory hospitals and other inputs and input services used in factory hospitals and it would be applicable with effect from 01.02.2019, and not for the prior period.

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