LEVY OF GST ON EXTRA NEUTRAL ALCOHOL (ENA)
By: – Dr. Sanjiv Agarwal
Goods and Services Tax – GST
Dated:- 14-9-2018<\/p>\n
The year 2018 so far has seen revival of demand of Indian Made Foreign Liquor (IMFL) by 2-3 percent, which was in negative for last two years. The slow down during 2016-2018 was mainly due to adverse effect of demonetization in November, 2016 followed by highway sale ban by Supreme Court in March, 2017 and then GST w.e.f. 1st July, 2017. The impact of all these reasons has now been stabilized and business is returning to near normal now.
\nOn whether to include a alcoholic beverages and alcohol into GST ambit is still a big question mark. The GST Council, the supreme body to take decisions on GST under the Constitution, is expected to take first steps in this direction but that will happen only when all the states are on board. With opposition (political parties other than the ruling party at centre) still governing few States \/ Union Territories, consensus<\/p>\n
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Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n are required to be registered under GST Act and GST is to be levied on the supply of ENA @18% GST in terms of Entry No. 25 of Schedule-III of the Notification No. 1\/2017-State Tax (Rate), dated 30.06.2017 and 1\/2017-CT (Rate) dated 28.06.2018. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n jected to GST whereas output, i.e., alco-beverages being out of GST net, leading to enhanced cost of production without any set off benefit of input taxes in the form of GST. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n","protected":false},"excerpt":{"rendered":" LEVY OF GST ON EXTRA NEUTRAL ALCOHOL (ENA)By: – Dr. Sanjiv Agarwal Goods and Services Tax – GSTDated:- 14-9-2018 The year 2018 so far has seen revival of demand of Indian Made Foreign Liquor (IMFL) by 2-3 percent, which was in negative for last two years. The slow down during 2016-2018 was mainly due to … Continue reading “LEVY OF GST ON EXTRA NEUTRAL ALCOHOL (ENA)”<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-13724","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/posts\/13724","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=13724"}],"version-history":[{"count":0,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/posts\/13724\/revisions"}],"wp:attachment":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=13724"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=13724"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=13724"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
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\nThe relevant clarification reads as under:
\n“This is with reference to the issue raised on the captioned subject during the Video Conference held on 30.06.2018. This matter was discussed in the 20th meeting of GST Council on 05.08.17 wherein it was decided to obtain legal opinion of Attorney General of India. Attorney General of India vide reference no AGI 6\/2017-Adv.C dt 03.12.18 has given following opinion on the issue:
\n 'ENA typically contains 95% alcohol by volume and as such is not fit for human consumption. Under article 246A (1) read with 366(12A), GST cannot be levied on the supply of “alcoholic liquor for human consumption”. ENA that is used for manufacture of alcoholic liquor is not supply for the purpose of human consumption as it is<\/p>\n
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\nWhile it may be technically correct to levy GST on ENA as it is not a potable liquor (meant for human consumption), yet it will bring in more distortions but of course, more revenue too to the exchequer. However, the VAT paid on the purchase of ENA can be used as a set-off on the VAT payable on sale of potable alcohol. But, if ENA is subject to the GST, input tax credit will no longer be available. While ENA is a major input for alco-beverage sector, it is also used in cosmetic, pharmaceutical and perfume formulations. There it would be allowed a set off and will therefore, be a welcome change.
\nGST or no GST, be it on raw material and inputs or the output supply, alco-beverage sector is facing challenge on costing front which accrues because of GST. The only possible solution lies in two fold strategy -one, to r<\/p>\n
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