Validity of disallowing ITC on canteen facility in the guise of colon and semi colon

In a recent Advance Ruling, the Gujarat Authority of Advance Ruling held that Input Tax Credit of GST paid on the canteen facility provided by the applicant to its employees under Factories Act, 1948, would not be available.

The AAR observed that sub-clause (i) ends with colon (:) and is followed by a proviso and this proviso ends with a semicolon (;). Therefore, sub-clause (i) is to be read independently i.e. independent of Section 17(5)(b)(iii) and proviso given after it. The proviso given after sub-clause (iii) is not connected to the sub-clause (i) and same cannot be read with the later.

In this write-up, the admissibility of the ITC of the GST paid on the impugned Canteen Services and conclusions made by the Gujarat AAR (supra) have been analyzed.

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