Taxation - GSTQuestion 5620 of 512
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Question 6 (a) M/s Poorvi Ltd, a registered supplier of various goods and services, provided the following information pertaining to GST paid on inward supplies for the month of August, 2024. Sr No. Particulars GST Paid (`) 1. Purchased goods which are used for activities related to his obligation under corporate social responsibility referred to in section 135 of The Companies Act, 2013. 3,00,000 2. Purchased raw material worth ` 5,90,000 including GST in 5 lots. 3. lots of raw material worth ` 3,00,000 excluding GST received in the current month and remaining lots will be received in the month of September, 2024. 90,000 3. Company paid for outdoor catering expenses for the lunch of its factory employees during the lunch hours as per the policy of the company. There is no legal obligation to provide such lunch facility to the employees. 50,000 4. Purchased goods from M/s Om Traders -all goods and invoices were received by the company in August 2024, but one invoice out of these invoices has not been furnished by the supplier in the statement of outward supplies (using IFF). The GST paid on the invoice not furnished is ` 50,000. 2,00,000 TAXATION 5. Purchased raw material to manufacture finished goods. Such finished goods to be sold to potential customers under Scheme ‘Buy one get one free’. 1,50,000 Compute the amount of net ITC available to M/s Poorvi Ltd. for the month of August 2024 with necessary explanations for the treatment of all the items in the table as per the provision of the CGST Act, 2017 or CGST Rules, 2017 wherever applicable. Subject to information given above, all other conditions necessary for availing the ITC have been fulfilled. (5 Marks) (b) Examine the following independent cases and determine whether the services are taxable under GST Law: (i) Dhruv Printing Press, a registered entity under GST, received an order of ` 1,50,000 from Vishwakarma Technical Institute, a private ITI providing courses notified under Apprentices Act, 1961 for printing of pre- examination items like question papers, OMR sheets, Answer booklets required for conducting of examination by the institute. (ii) State Board of Education, a registered entity, charged ` 50,000 per year as affiliation charges from a school run by Dharampal Trust, registered under section 12AA of Income Tax Act, 1961 which gives education from class 1 to class 10. (iii) Wecare Hospital, a registered entity, charged ` 19,500 for 3 days from Mr. Sahil who was admitted in Intensive Cardiac Care Unit (ICCU) due to heart attack. (iv) Citcare Hospital, a registered entity, entered into an arrangement with Swadisht Caterers, a registered entity, to supply food to in-patients as per advice of doctor/nutritionist. Swadisht Caterers sends monthly bill to hospital for the food supplied by them to the admitted patients of hospital. Determine the taxability of Citcare Hospital. (5 Marks)

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Detailed Solution & Explanation

**(a) Computation of net ITC available to M/s Poorvi Ltd. for the month of August 2024:**
1. **CSR Expenditure (GST Paid: ` 3,00,000):** Section 17(5)(fa) of the CGST Act, 2017 blocks ITC on goods or services used for activities relating to obligations under Corporate Social Responsibility (CSR) u/s 135 of the Companies Act, 2013. Thus, ITC available is **Nil**. 2. **Raw Material in Lots (GST Paid: ` 90,000):** As per the first proviso to Section 16(2) of the CGST Act, 2017, where goods are received in lots or instalments, the registered person is entitled to take ITC only upon receipt of the last lot or instalment. Since 2 lots are to be received in September 2024, no ITC is available in August 2024. Thus, ITC available is **Nil**. 3. **Outdoor Catering Expenses (GST Paid: ` 50,000):** Section 17(5)(b)(i) blocks ITC on outdoor catering services unless it is obligatorily provided by the employer to its employees under any law for the time being in force. Since there is no legal obligation, ITC is **Nil**. 4. **Om Traders Invoice not uploaded (GST Paid: ` 2,00,000):** Under Section 16(2)(aa) read with Rule 36(4), ITC can only be availed on invoices that are uploaded by the supplier in GSTR-1/IFF and communicated to the recipient. Therefore, the ITC of ` 50,000 for the un-uploaded invoice is disallowed. ITC available = `2,00,000 - 50,000 = 1,50,000`. 5. **Buy One Get One Free Scheme (GST Paid: ` 1,50,000):** Under the "Buy one get one free" offer, two goods are supplied for a single price. It is a single supply of two goods for the price of one, and is not a free sample/gift without consideration. Hence, the ITC blocking u/s 17(5)(h) does not apply. ITC is fully available on inputs used to manufacture these goods. Thus, ITC available is **1,50,000**.
**Total Net ITC available u/s 16/17** = `Nil + Nil + Nil + 1,50,000 + 1,50,000 = 3,00,000`.

**(b) Taxability of Independent Cases under GST Law:**
(i) **Vishwakarma Technical Institute:** It is a private ITI providing courses notified under the Apprentices Act, 1961, which qualifies as an "educational institution" since it provides an approved vocational education course. Services provided to an educational institution by way of printing of pre-examination items (question papers, answer booklets, etc.) are exempt. Hence, the service is **Exempt**. (ii) **State Board of Education Affiliation Charges:** Services by way of affiliation provided by State educational boards are taxable unless they are provided to a Government school. Therefore, affiliation charges of ` 50,000 charged from a school run by a private trust are **Taxable**. (iii) **ICCU Room Charges:** Health care services provided by a clinical establishment are exempt under GST. Renting of rooms in a hospital is exempt, unless the room rent exceeds ` 5,000 per day. However, this restriction of ` 5,000 per day does not apply to intensive care units (ICU/CCU/ICCU/NICU). Thus, the charges of ` 19,500 for ICCU are **Exempt**. (iv) **Food to in-patients:** Food supplied by a hospital to its in-patients as per the advice of doctors/nutritionists is part of a composite health care service and is exempt. The fact that the hospital outsourced the catering service to Swadisht Caterers does not affect the exemption on the supply from hospital to patients. Hence, the service is **Exempt**.

Key Concepts to Understand

Supply

Total amount of a good available to consumers.

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