Page 10 - Ch_10 ITC

Ü However, ITC in respect of such goods or services or both shall be available where an inward supply of such
goods or services or both is used by a registered person for making supply to its employee which is under

an obligation of law.(As per the circular no. 172/04/2022 of GST)
Ü Hence, ABC Ltd. is eligible to avail the ITC.

Combined Questions on Sec 17(5):-

CCP 10.03.14.00
Determine the eligibility of Input tax credit for the following cases u/s 17(5) of CGST Act:-
(i) Aspire Ltd. is a registered person engaged in passenger transport services. It purchased two motor
vehicles (seating capacity is 10 persons) for ₹ 25,00,000 plus GST @28% for its business as on

10.10.20XX. Determine whether Aspire Ltd. can avail Input tax credit of the GST paid by it on motor
vehicles.
(ii) Nirmitee Pvt. Ltd. is engaged in supply of works contract services. It gives a part of the construction
work to a sub-contractor. The sub-contractor charges GST in his invoice to Nirmitee Pvt. Ltd.

Determine the eligibility of input tax credit available to Nirmitee Pvt. Ltd.
Answer:
(i) Yes, Aspire Ltd. can avail ITC.
Legal Provision:-

Ü As per section 17(5)(a) of CGST Act, ITC is blocked on Motor vehicle for transportation of persons
having approved seating capacity of not more than 13 persons (including driver), except when they are
used for Transportation of passengers.
Discussion & Conclusion:-
Ü In given case, Aspire Ltd. is engaged in transportation of passengers & thus, it will be eligible to avail ITC

of Rs 7,00,000 i.e. (Rs 25,00,000 * 28%).
(ii) Yes, Nirmitee Pvt. Ltd. can avail ITC.
Legal Provision:-

Ü As per section 17(5)(c) of CGST Act, ITC is blocked on works contract services supplied for construction
of an immovable property (other than plant and machinery) except where it is an input Service for
further supply of works contract service.
Discussion & Conclusion:-
Ü The given case falls under the exception criteria of section 17(5)(c) as the services are supplied by a sub-

contractor & hence, the company can avail ITC of GST charged by the sub-contractor.

CCP 10.03.15.00

PQR Ltd, a registered supplier from Madhya Pradesh, is engaged in the manufacturing of heavy
machines. Company provides following details of purchases made/services availed by it during month of
Feb, 20XX:-
S.No. Particulars GST
1 Payment for fitness club membership availed by employee as one of the terms of 25,000
employment

2 Payment made to outdoor catering service to run a free canteen in factory as it is 55,000
required under the Factories Act, 1948

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