Challenging Case Studies.
Research Document Studies.
Due to the ongoing COVID-19 pandemic human
welfare and safety have been put on high risk all over the nation.
Government of India is taking various measures
& actions to overcome this COVID-19 pandemic by issuing several orders&
guidelines from time to time. The Ministry of Housing Affairs issued order no
40-3/2020-DM on 29th March 2020 laying out the guidelines / directions to be
followed during the lockdown period.
Revised consolidated guidelines along with
directions to strictly implement the guidelines were issued on 15th
April 2020. As per Annexure-II of the revised guidelines, some of the measures
and standard operating procedures
(SOP)to be implemented by all offices, workplaces,
factories and other establishments are given
herein below :
scanning of everyone entering and exiting the workplace to be done.
for the workers to be made mandatory.
hand wash & sanitizer will be made at all entry & exit points and
common areas. Sufficient quantities of all items should be available.
shall have adequate arrangements for temperature screening.
cover to be made compulsory.
Now the question
arises whether the employers/registered persons can take input tax credit under
GST on these expenses incurred on account of measures against COVID -19??
Let us refer to the different relevant points
or provisions for a better
Under GST law as per section 16 of CGST Act, All
registered persons shall be entitled to take credit of input tax of goods services
received by them, which are used or intended to be used in the course or
furtherance of their business subject to certain conditions & restrictions.
Section 17(5)(b)of CGST Act restricts availment
of ITC on various goods & services like rent-a-cab, health insurance, etc unless
it is obligatory for an employer to provide the same to its employees under any
law for the time being in force
Section 17(5)(g) of CGST Act restricts
availment of ITC on goods or services used for personal consumption.
Therefore the input tax credit in respect of such goods or services or both
shall be available, where it is obligatory
for an employer to provide the same to its employees under any law for the time being in
force and provided such goods or services are not used for personal
Disaster Management Act (DMA) was enacted to tackle disasters at all
levels of government. The Central Government has notified COVID as notified
disaster under this Act.
Various Guidelines and orders have been issued periodically by the
Ministry of Home Affairs under provisions of DMA. These orders & guidelines are
binding on all the State Governments and Union Territories. The State
Government and local authorities have issued further guidelines based on the
Green/Orange/Red/Containment zones in the respective local boundaries. The MHA
guidelines as applicable to the person in his respective area of operations
should be considered while applying the law.
Further, the guidelines of MHA issued under the
powers conferred under Section 10(2)(l) of the Disaster Management Act, 2005
and as per section 72 of the Disaster Management Act,2005 states that the DMA act
will have an overriding effect on any other law for the time being in force.
Therefore guidelines issued by MHA are of obligatory nature on businessmen/dealers
registered under the GST law. Hence, it could be said that all measures, SOP & guidelines
are obligatory for an employer to provide the same to its
employees under any law for the time being in force.
Let’s understand the same in tabulated form.
ASSESSMENT-DUE TO COVID19
ITC generally Eligible under GST Law
ITC Eligible if it is obligatory
under any law for the Employer
Whether Covered by MHA Guidelines
for Covid19(Zone wise)
Under GST law due to Covid19
Medical Insurance for Workers
Yes *(from 20-04-2020 to 17-05-2020)
Food & Beverages
Hand wash & Sanitizers, thermal
scanning, face mask & others sanitization related product.
Rent a Cab/Hiring of motor vehicles for
Yes *** (Special transport facility)
Communication and Training on good hygiene
Checkup of Employees showing COVID
persons can take ITC on medical insurance paid in the time period from
20.04.2020 to 17.05.2020
** ITC is eligible if incurred in the course or
furtherance of business. However, ITC will not be admissible if used for
*** For workers
coming from outside special transportation facility will be arranged without
any dependency on the public transport.
APMH Comments :
mention that medical insurance of workers is mandatory. The issue which arises
is whether the employees could be covered under the definition of worker?
– There is no proper definition of workers under the DMA Act and Guidelines. It
would not be appropriate to confine the meaning of workers only to employees
working in a factory, since the guidelines are applicable to workplaces, offices,
factories and other establishments.
The ITC on the
expenses tabulated hereinabove can be availed subject to the restrictions,
conditions and MHA guidelines and that too only for the periods and areas in
which the MHA guidelines are applicable at the local authority level. Department may dispute the ITC on these
supplies by arguing that these goods or services would be used for personal consumption of the
employees. However, in our view, such expenses incurred by the dealers are in
consonance with the guidelines issued by MHA and become an obligation under the
DMA law and these expenses are not for personal consumption of the dealer but
are in relation to carrying on its business activities during these tough
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