GST Council Relinquished the Authority to Levy GST on ENA Outside the GST Ambit
Liquor companies are eagerly awaiting clarity on the taxation of Extra Neutral Alcohol (ENA) used in distilling alcoholic beverages for human consumption, as the amendment to the GST Act is still pending. This delay has led to confusion among companies, with some paying Value Added Tax (VAT) in certain states and GST in others, receiving notices for non-payment both VAT and GST in various jurisdictions.
Background
In its meeting on October 7, the GST Council relinquished the authority to levy GST on Extra Neutral Alcohol outside the GST ambit, empowering states to impose taxes. The Council also highlighted the need for a suitable amendment to exclude Extra Neutral Alcohol (ENA) used in the production of alcoholic liquors from the scope of GST. However, the Law Committee is yet to provide a draft for this crucial amendment.
Industry Concerns
Liquor industry representatives are grappling with inconsistencies in tax payments and notices from different states. They emphasize the essential role of ENA as a key input in alcoholic beverages, particularly in the production of Indian Made Foreign Liquor (IMFL). Industry sources reveal that one case of IMFL requires four Liters of ENA, with a uniform alcohol content of 42.8%.
Legal Context
The GST Council’s recommendation follows a ruling by the Allahabad High Court in Jain Distillery Private Limited vs. Government of UP, where the court declared the state’s loss of legislative competence to tax sales of ENA. However, the State Government has appealed to the Supreme Court, and a decision on the matter is expected next month.
Expectations from the Industry
Liquor companies are anticipating a detailed clarificatory circular addressing the GST Council’s recommendation. However, a Finance Ministry official clarified that the Council did not decide to issue a circular. The industry is hopeful that a mechanism based on the amendment will be established to exclude ENA from GST, ensuring no additional liability or compliance, regardless of prior VAT or GST payments.
Conclusion
As the liquor industry awaits clarity on the taxation of ENA, the pending Supreme Court decision and the anticipated amendment to the GST Act are crucial factors. A streamlined mechanism is expected to provide resolution, bringing uniformity and coherence to tax regulations on ENA used for manufacturing alcoholic beverages for human consumption.
To Access Recent Verdict of Allahabad HC Against Penalty for Typographic Error in E-Way Bill CLICK HERE
Read More
Budget 2024: NRAI Appeal to Govt to Reinstate GST ITC and Enhance GST Rate
Kerala High Court Upholds Constitutional Validity of Section 16(2)(c) and Rule 36(4) of GST
I loved as much as you will receive carried out right here The sketch is attractive your authored material stylish nonetheless you command get got an impatience over that you wish be delivering the following unwell unquestionably come more formerly again since exactly the same nearly a lot often inside case you shield this hike