McDonald’s franchise Hardcastle Restaurants Pvt Ltd, has dragged the government to court over no input tax credit in the Goods and Services Tax (GST) framework for restaurants. Restaurants are currently levied a 5% GST, but they can’t claim the input tax credit against the tax they paid on raw materials and other expenses like rent. GST rate on restaurants was slashed to 5% from 18% in November 2017.
While levying of 18% allowed them to claim input tax credit, under the 5% rate, they can’t do that. This essentially means that restaurants would not be able to set off taxes paid on raw materials against their sales. Rohan Shah, a council appearing for Hardcastle filed a writ petition in the Gujarat High Court last week and notices were issued to the government to file a reply in this regard.