GST on Extra Neutral Alcohol: AAR refuses to Clarify as final Decision pending before GST Council [Read Order]

Extra Neutral Alcohol - GST - ENA

The Authority for Advance Ruling (AAR), Telangana State, recently refused to clarify the applicability of the Goods and Services Tax (GST) on the Extra Neutral Alcohol (ENA) as the decision on the same is pending before the GST Council.

The applicants, Madhucon Sugar and Power, are manufacturers of Extra Neutral Alcohol(ENA) and Rectified spirits. The applicant approached the Advance Ruling Authority sought for a clarification on the tax consequences of a transaction or a proposed one.

Refusing to give opinion, the authority said that “The advance ruling sought in the application has been examined in detail and found that the issue of “Taxation of Rectified Spirit/ Extra Neutral Alcohol (ENA) under GST” is one of the agenda points placed before GST council for deliberation in the 20th meeting of the GST council held on 05.08.2017. The decision on the “applicability of GST on ENA” is pending before GST council and even in the 27th GST council meeting held on 04.05.2018 it was decided to defer the agenda point on the “applicability of GST on ENA” to the next meeting.”

Under the new tax regime, rolled out on 1st July 2017, alcohol for human consumption or potable alcohol is outside GST. While, industrial alcohol is within it.

Under the old regime, the States were levying sales ta Value Added Tax (VAT) on the alcohol for human consumption. When switched to the new regime, the Centre wanted to impose tax on alcohol for human consumption, the same was deferred since the States are not happy with the decision.

The Centre had sought the attorney general’s view on the matter, who gave a go-ahead, saying it was not fit for human consumption. So, bringing it under GST would not require a Constitutional amendment.

“Since the issue raised by the applicant is pending before GST Council for a decision, Advance Ruling on the issues raised in the application cannot be given at this juncture,” the authority said.

To Read the full text of the Order CLICK HERE