GST law yet to be amended to exclude extra neutral alcohol used for human consumption
The wait for liquor companies to get clarity on taxation of Extra Neutral Alcohol (ENA), used for distilling alcoholic liquor for human consumption, is getting prolonged as GST Act is yet to be amended. Companies assert that they are paying Value Added Tax (VAT) in some states and GST in others. Also, they are getting notices for non-payment of GST in some states and for VAT by VAT authority in other states.
GST Council, in its meeting on October 7, ceded the right of levying GST on ENA outside GST and empowered the States to levy. It was also said that Law Committee will examine suitable amendment in law to exclude ENA for use in manufacture of alcoholic liquors for human consumption from the ambit of GST. However, the committee has not given its draft for the said amendment.
Industry is also expecting a detailed clarificatory circular on this issue. When asked whether there will be any circular regarding GST Council recommendation, a top Finance Ministry official said: “GST Council did not take decision to issue the circular.” Further he added that the minutes of the GST Council are available in public domain for everyone which means there should not be any confusion.
ENA is a key input to alcoholic beverages. According to industry sources, production of one case of Indian Made Foreign Liquor (IMFL) with 12 bottles of 750 ml each or a total of nine litres, needs four litres of ENA. The alcohol content in IMFL is uniform at 42.8 per cent. For India Made Indian Liquor (IMIL), alcohol ranges between 30 per cent and 36 per cent means less requirement of ENA.
