ITC on food and beverages is admissible only when they form part of composite event management package taxed at 18% GST: AAR [Read Order]
A consolidated invoice from hotels or vendors, itemizing room rent, hall charges, and food, is sufficient for ITC eligibility under Section 16(2)
A consolidated invoice from hotels or vendors, itemizing room rent, hall charges, and food, is sufficient for ITC eligibility under Section 16(2)
In a recent ruling West Bengal Authority for Advance Ruling (AAR) has clarified that Input Tax Credit (ITC) on food and beverages is admissible only when such supplies form part of a composite event management package taxed at 18% GST, in line with Section 17(5)(b)(i) of the GST Act.
The appeal arises from the applicant Citius Holidays Pvt. Ltd, which sought clarity on whether ITC could be availed on food and beverage costs incurred during corporate events. Applicant explained that hotels often provide consolidated packages including room rent, banquet hall, food, and beverages billed together to the event organizer.
The applicant argued that The applicant argued that food and beverages supplied during corporate events are not standalone items but part of a composite supply of event management services. Also pointed out that while ITC on food and beverages is generally blocked under Section 17(5)(b)(i), the proviso allows ITC when such supplies are used for making an outward taxable composite supply.
They argued that requiring separate invoices for food and beverages would be impractical and unnecessary. Issuing a single invoice at 18% ensures uniformity and avoids ITC complications for clients. Separate invoicing for food at 5% may trigger ineligibility of ITC as per Section 17(5).
On the other hand, revenue has not expressed any view on the merit of the instant case.
The authority noted that hat event management services are a composite supply, where food and beverages are inseparably bundled with other services like banquet hall rental, accommodation, and event coordination. Also noted that separate invoices are not required. While ITC on food and beverages is generally restricted, the proviso allows ITC when such supplies are used for outward taxable composite supplies.
It is also observed that ITC is admissible only when the composite package is taxed at 18% GST. If hotels apply the concessional 5% GST rate (common for restaurant services), ITC is blocked.
The bench, Shafeeq S and Jayadip Kumar Chakrabarti (members of the West Bengal Authority for Advance Ruling ) clarified that Input Tax Credit (ITC) on food and beverages is admissible only when they are part of a composite event management package taxed at 18% GST under Section 17(5)(b)(i) and nseparable conference packages qualify as composite supplies, and ITC remains available even if food costs are re‑billed with a margin.
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