Services by Way of Job Work for Manufacture of Alcoholic Liquor Taxable at 18% Of GST: Andhra Pradesh High Court [Read Order]

The Andhra Pradesh High Court while recently considering a writ petition, held that the services by way of job work in relation to manufacture of alcoholic liquor for human consumption should pay 18% GST under the Central GST Act, 2017.

The division bench of the High Court held that, alcoholic liquor for human consumption  does not constitute food or food product falling within Chapters 1 to 22 of First Schedule of Customs Tariff Act, 1975 hence the petitioner cannot demand for the respondent pay of tax 5% instead of 18%

The writ petition was filed by the M/s.Esveeaar Distilleries Private Limited who is a liquor manufacturer company in Chittoor District Andraradesh. Against the assessment made by the Assistant Commissioner State Tax in the year. 2017-2018, 2018-2019 & 2019-2020 respectively. The ground for challenging the matter was  job work charges relatable to manufacture of Alcoholic liquor in view of Notification No.6/2021-Central Tax (Rate) dated 30.09.2021 issued by the Department of Revenue, Ministry of Finance, Government of India, published in the gazette on 30.09.2021, at the rate of 18% as against 5% is illegal and contrary to law.

The counsel for petitioner Sri S. Suri Babucontented that “since the product manufactured by the petitioner i.e., alcohol/beverages/liquor falls under Chapter 22 of the First Schedule to the Customs Tariff Act, the respondents can only demand payment of tax at 5% and not at 18%.”

Sri Y.N. Vivekananda counsel for the respondent contented that only food and food products falling under Chapter 1 to 22 in the First Schedule alone are included and the same would not cover alcohol.

After considering the contention of the both side, the bench of  Justice C. Praveen Kumar and  Justice A.V. Ravindra Babu dismissed the writ petition thus ruled that “alcoholic liquor for human consumption” does not constitute food or food product falling within Chapters 1 to 22 of First Schedule of Customs Tariff Act, 1975, we hold that the petitioner is liable to pay tax at the rate of 18% in terms of Notification No.6/2021, dated 30.09.2021. Apart from that, it is also to be noticed that at no point of time, any exemption was specifically granted to “alcoholic liquor for human consumption”.

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