Input tax credit— Section 16, 17(5) of CGST Act— The applicant has sought advance ruling on following question-

(1) Whether the GST paid on inputs/input services procured by us for promotional scheme are eligible for input tax credit under the GST law in terms of Section 16 read with section 17 of the CGST Act, 2017?

(2) Also, whether Input Tax Credit is admissible to us in respect of tax paid on

i) Services provided by the hotel including accommodation, food & beverages.

ii) Supply of food and beverages by outside caterer to our employees in respect of Business conference meetings.

The applicant is engaged in the business of trading of Animal Health Products. The applicant has introduced sales promotional offers named as “BUMPER OFFER, WINTER BONANZA”. Under the said scheme, they offer some free additional products (such as lunch box, sandwich maker etc) along with purchase under several offers/schemes.

The applicant has sought ruling on admissibility of input tax credit involved on procurement of said promotional items and also on meetings and conferences-for business promotion within India and outside India. The applicant has also submitted that promotional items distributed to retailers are to be treated as inputs/input services used in furtherance of business and the promotional materials are not gifts and are not covered under Section 17(5)(h) of the CGST Act, 2017.

The applicant is engaged in the business of trading of animal health products and not in the business of provision of food or catering. Even if the provision of food and catering had been in the course of furtherance of business, the applicant is not entitled to the input tax credit in light of the express bar provided under Section 17(5)(b)(i) of the CGST Act, 2017.

Held that— GST paid on inputs/input services procured for promotional scheme are not eligible for input tax credit under the GST law in terms of Section 16 read with section 17 of the CGST Act, 2017.