Page 24 - GSTL_7th May 2020_Vol 36_Part 1

J6 GST LAW TIMES [ Vol. 36

GST INPUT TAX CREDIT ON EXPENSES INCURRED TO CONTAIN CORONAVIRUS
GST INPUT TAX CREDIT ON EXPENSES
INCURRED TO CONTAIN CORONAVIRUS
By
CA Keshav R. Garg, B.Com., FCA, CS, ISA (ICAI),
LLB.

Most of the GST taxpayers are getting their office
premises/building sanitized and special arrangements
are being made to ensure proper hygiene to avoid spread
of COVID-19 amongst the employees. Moreover, most of
the companies are taking special care of their employees
who had recently travelled from outside India.
The question arises whether a registrant is eligible to take credit of input
tax paid on the expenses made to avoid spread of disease and in case the taxpay-
er is an exporter or supplier to SEZ unit, whether he will be eligible for refund
under GST Act or not.
The provisions of Input Tax Credit are governed by Section 16 read with
Section 17(5) of the CGST Act, 2017. Under normal circumstances a taxpayer cer-
tainly fulfils the conditions prescribed under Section 16(2) of the CGST Act, 2017
which are as under :
(a) He is in possession of a tax invoice
(b) He has received the goods/services
(c) Tax has been actually paid to the Government
(d) He has furnished the return under section 39.
Though the conditions under Section 16 are fulfilled, Section 17(5) places a re-
striction on availment of input tax credit in case of :
(g) goods or services or both used for personal consumption.
This would mean that where a taxpayer uses goods/services for personal con-
sumption either for himself or for his staff members, no input tax credit would be
permissible. On this pretext expenses made on staff welfare including expenses on
refreshment, playing area, etc. are not permitted under GST Law.
In the case of Chennai Port Trust - 2019 (28) G.S.T.L. 600 (A.A.R. - GST)
authority for advance ruling has held that the credit in respect of inward supply
of medical, diagnostic equipment, apparatus, etc. used in own house hospital for
the treatment of employees shall be treated to have been used for personal con-
sumption and hence credit shall not be permitted as per Section 17(5)(g).
As per Black’s Law Dictionary, term “personal” means “of or constitut-
ing personal property” and term “consumption” means the use of thing in a way
that thereby exhausts it. The term “welfare” means well being in any respect;
prosperity.
[Continued on page J8]

GST LAW TIMES  7th May 2020  24