LEGAL OPINION LETTER

A. Legal Framework and ITC Eligibility Analysis

Based on the provisions of the Central Goods and Services Tax Act, 2017 (CGST Act) and relevant judicial precedents, we provide our legal opinion on the eligibility of Input Tax Credit (ITC) for your hotel establishment.

Statutory Provisions:

Under Section 16 of the CGST Act, a registered person is entitled to take credit of input tax charged on any supply of goods or services made to him, subject to the conditions specified therein. The documentary requirements for claiming ITC are prescribed under the CGST Rules, which mandate that “input tax credit shall be availed by a registered person, including the Input Service Distributor, on the basis of” specified documents including invoices issued by suppliers in accordance with Section 31.

For supplies attracting reverse charge mechanism, the provisions under Section 37 and Rule 37 become applicable. Rule 37 specifically addresses “Reversal of input tax credit in the case of non-payment of consideration” and requires that where a registered person “fails to pay to the supplier thereof, the value of such supply along with the tax payable thereon, within the time limit specified,” details must be furnished in FORM GSTR-2.

B. Judicial Precedents Supporting ITC Claims

Recent judicial decisions have consistently upheld the rights of genuine taxpayers to claim ITC where proper documentation exists:

In M S JYOTI TAR PRODUCTS PRIVATE LIMITED AND ANR Vs THE DEPUTY COMMISSIONER, STATE T (2026), the court held that “when all documents and payments are genuine and correspond with GST portal records, the ITC should not be denied” and that “retrospective cancellation of a supplier’s registration does not by itself invalidate past ITC claims.”

In M s Sahil Enterprises Vs Union of India and ors (2026), the court emphasized the principle against double taxation, noting that “taxation law should not result in double taxation of the same transaction” and acknowledged “the practical difficulty for a purchaser to verify the seller’s tax remittance.”

C. Compliance Roadmap

To ensure valid ITC claims under reverse charge mechanism, the following compliance steps are mandatory:

Maintain records as specified in FORM GSTR-2 requirements

Maintain proper tax invoices as per Section 31 requirements

Ensure actual receipt of goods or services

Verify tax payment to government within prescribed timelines

File returns under Section 39 with accurate details