My Client is registered dealer under GST Act and was dealing in Non GST Items (Petroleum Product) and GST item both and is also receiving the rent from BPCL on land on which GST is payable. Now he wants to take ITC on LFR (licensing fees receipt) charged by the BPCL on Pump dispensing unit, storage tank and building. Can we take ITC paid on the said charges and adjust the same against the output liability arises on rental receipt from pump land.

Reply— There is no restriction to claim input tax credit of taxes paid on account of license fee recovery charges. But if taxpayer is engaged in both exempted and taxable outward supply, input tax credit can be claimed to the extent of taxable outward supply only.

In this case petrol pump dealer can utilise input tax credit of LFR charges to the extent of outward liability in respect of rental income.