ITC not available for GST paid for Hotel Stay on Rent-free Accommodation provided to Company Director and Manager: AAR [Read Order]

Cenvat Credit - GST Hotel - Taxscan

The Authority for Advance Ruling ( AAR ), Maharashtra has held that the input tax credit not available for GST paid for the hotel stay in case of rent-free hotel accommodation provided to General Manager and Managing Director of the company.

Before the authority, the applicant has submitted that as per POSCO group policy, key personnel like the Managing Director (MD) and General Manager (GM) are deputed to the Indian POSCO group companies from POSCO overseas entity. The MD and the GM are provided accommodation in a hotel and the cost of the same is part of the cost to the Applicant and is included as perquisites in the salary as per the provisions of Income Tax Act, 1961. The Applicant would like to know whether they can claim ITC in respect of the GST charged by the hotel on the stay expenses of the MD/GM as per the provisions of the GST Law.

The authority noted that providing residential accommodation in a Hotel is not in furtherance of their business.

It was observed that the MD/GM could have been provided with any other residential accommodation and still would have performed their duties for the applicant. In the case of residential accommodation, as per the provision of the GST laws, GST is not liable to be paid on the rent received.

“It is the intention of the Govt. not to tax the rent paid by any person when the rent is paid for any place of residence. In this case, if the MD/GM were staying at any residential place or society, the applicant would have paid only rent without GST. It is seen that the applicant has made various submissions supporting their contention that Input Tax Credit is admissible in respect of GST paid for the hotel stay in case of rent-free hotel accommodation provided to GM/MD of the company. However in view of the above discussions we find that the Hotel Accommodation is being used by the applicant as a residential premises of their MD/GM which is for the personal comfort of both and therefore in view of the provisions of Section 17(5)(g) we hold that they are not eligible to claim the ITC for the same,” the authority said.

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