2019 (8) TMI 1281 - AAR - GST

Input tax credit (ITC) - Procurement of health benefit equipments for personal consumption of employees - inward supply of medical, diagnostic equipment, apparatus, instruments, consumables, disposables, spares and repairing services - supply of port services and incidental supply of goods like disposal of discarded assets - blocked credit as per Section 17 (5) (g) of CGST/TNGST Act - medicines used for consumption of its employees and pensioners and their dependents - HELD THAT - As per Section 17 (5) (g) of CGST/TNGST ACT, input tax credit is not available for medical, diagnostic equipment, apparatus, instruments, consumables, disposables, spares and repairing services for these which the applicant is procuring for the consumption of its employees and pensioners and their dependents. The applicant has stated in their application that these are not goods or services used for personal consumption as the applicant pays for the same - The argument does not hold - The fact of who pays for the goods and services here is irrelevant to the usage of the said goods and services. They are used by the employees and dependents and hence are for personal consumption and the applicant is ineligible to take input tax credit on the inward supply of medical, diagnostic equipment, apparatus, instruments, consumables, disposables, spares and repairing services for these used to provide health facilities to its employees in its hospital. The applicant is not entitled to take credit of input tax charged on the inward supply of medical, diagnostic equipment, apparatus, instruments, consumables, disposables, spares and repairing services for these, which are used to provide medical facilities to the employees, pensioners and dependents in the in-house hospital.

Summary

Issues Involved:
1. Eligibility for Input Tax Credit (ITC) on inward supply of medical and diagnostic equipment, apparatus, instruments, consumables, disposables, spares, and repairing services used in an in-house hospital.

Issue-wise Detailed Analysis:

1. Eligibility for Input Tax Credit (ITC) on Inward Supplies:
The applicant, engaged in supply of port services and incidental supply of goods, sought an advance ruling on whether they are entitled to take credit of input tax charged on inward supplies used in their in-house hospital. The hospital provides medical services exclusively to the applicant's employees, pensioners, and their dependents without any consideration, as mandated by the Chennai Port Trust Employees' regulations.

Applicant's Argument:
The applicant argued that the inward supplies of medical and diagnostic equipment, apparatus, instruments, consumables, disposables, spares, and repairing services are used in the course or furtherance of their business. They claimed that these supplies do not fall under blocked credits as per Section 17(5) of the CGST/TNGST Act and are essential for providing health benefits to employees, which is part of the employment package.

Authority's Analysis:
The authority examined the provisions of Section 16(1) and Section 17(5) of the CGST/TNGST Act. Section 16(1) allows ITC on supplies used in the course or furtherance of business. However, Section 17(5)(g) restricts ITC on goods or services used for personal consumption. The authority noted that the in-house hospital provides free medical services and medicines to employees and pensioners, which constitutes personal consumption. The fact that the applicant pays for these supplies is irrelevant to their usage.

Jurisdictional Officer's Remarks:
The state jurisdictional officer contended that providing medical services to employees and pensioners is not part of the applicant's business activity. Since these services are provided free of charge, the inward supplies used in the hospital do not qualify for ITC as they are for personal consumption.

Conclusion:
The authority concluded that the inward supplies used in the in-house hospital are for personal consumption of employees, pensioners, and their dependents. Therefore, as per Section 17(5)(g) of the CGST/TNGST Act, the applicant is not entitled to ITC on these supplies.

Ruling:
The applicant is not entitled to take credit of input tax charged on the inward supply of medical, diagnostic equipment, apparatus, instruments, consumables, disposables, spares, and repairing services used to provide medical facilities to employees, pensioners, and dependents in the in-house hospital.