In this blog, we look at a query on whether IGST credits can be availed in respect of hotel accommodation, by obtaining an ISD registration.
We have a head office in Mumbai and 3 other branch offices. However, we have several meetings with clients across the country. For this purpose, we have entered into a contract with a Hotel chain having Hotels across various cities in the country. Can we ask such Hotels to issue an IGST invoice to the ISD registration applied for in the location where we have our Head Office?
No. The nature of supply would be an intra-State supply and consequently would be liable to CGST and SGST.
It is important to note that the nature of tax to be paid on a supply would be an interplay of (a) location of the provider of services and (b) place of supply of services. Where these are within the same State, it would be an intra-State supply; and where they are in different States, it would be an inter-State supply. Applying this rule is mandatory and not the choice of the recipient or the supplier.
With specific reference to accommodation in hotels, the place of supply is the State where the hotel is located – accordingly, all such supplies (accommodation) would always be intra-State supplies and hence would be liable to CGST and SGST. Therefore, the Hotelier cannot issue an invoice for IGST.
Additional comments: Where the recipient obtains a registration as an ISD in the State where the accommodation was taken; an ISD can distribute the credits accumulated on a monthly basis, by issuing an ISD invoice to the Head Office/ Branch(es) to which the service is attributable, in the proportion of their turnover.
Legislative reference: Section 19 of the CGST Act, 2017 read with Section 7, 8 and 12 of the IGST Act, 2017 and Rule 54 of the CGST Rules, 2017.
Authors: Meghana Belawadi and NR Badrinath
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