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PJ/Case Law/2020-2021/3558

Admissibility of ITC in respect of expenses incurred for maintenance of employees
Case- M/s. Kandla Port Trust (GST AAR Gujarat) GUJ/GAAR/R/13/2019 dated 22.02.2019
Facts of the Case-The applicant, M/s. Kandla Port Trust (Deendayal Port Trust) is engaged in port service to various clients. The applicant has residential colony for employees of the port. Specific expenses occurred by the applicant for maintaining its employees:-
a. Purchase of medicines for employees as prescribed by their doctor from outside on contractual basis.
b. Purchase of movable medical equipment at hospital.
c. AMC for repair and maintenance of residential colony and hospitals and school (other than new constructions, ITC for which is blocked u/s 15 of CGST Act, 2017).
d. Telephones & Mobiles at residence of officers and at hospitals.
e. Caretaking /housekeeping services at Guest House.

Issue-Admissibility of ITC in respect of expenses incurred mentioned above
 
Contentions by Applicant-The Applicant submits that the employees are backbone for any organization for providing output services to customers/clients. It is not possible for any organization to do business activities without employees. Accordingly, expenses are incurred in the course and furtherance of business.
Reasoning by Authority- The said expenses are for providing common facilities to their employees within the residential colony and the same are not relates to furtherance of their business/output service i.e. “Port Service”. It is very clear from the provisions of Section 16(1) and Section 17(1) of the CGST Act, 2017, that a registered person is entitled to take credit of input tax charged on supply of goods or services or both to him which are used or intended to be used in the course or furtherance of his business only..
Decision-The applicant is not entitled to take credit of input tax charged in respect of above mentioned expenses, as the same is not used in the course or furtherance of his business.

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