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2018 (7) TMI 283 - AAR - GSTTaxation of Rectified Spirit/ Extra Neutral Alcohol (ENA) under GST - Applicability of GST on ENA - Classification of manufactured goods - levy of GST - Held 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. 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 - application disposed off.
Issues involved:
1. Interpretation of HSN Code 2207 regarding alcohol fit for human consumption. 2. Taxability of Un-denatured ethyl alcohol (ENA/RS) under GST for potable application. 3. Eligibility of Input credit on materials/consumables for alcohol used for human consumption. Analysis: Issue 1: Interpretation of HSN Code 2207 The applicant sought clarification on whether HSN Code 2207 encompasses both denatured and undenatured alcohol. They argued that un-denatured alcohol, such as ENA for potable use, falls outside the scope of GST due to constitutional amendments and Section 9(1) of the GST Act. They highlighted that HSN Code 220710 includes items fit for human consumption not covered by GST. Additionally, they specified the appropriate HSN codes for invoicing rectified spirit and ENA. However, the Authority noted that the GST Council is yet to decide on the applicability of GST on ENA, as discussed in their meetings on 05.08.2017 and 04.05.2018. Consequently, the Authority deferred the ruling on this issue pending the GST Council's decision. Issue 2: Taxability of Un-denatured ethyl alcohol under GST The applicant inquired about the GST implications of selling un-denatured ethyl alcohol (ENA/RS) for potable use to state distilleries producing liquor for human consumption. They questioned whether such transactions are subject to GST and, if so, at what rate. The applicant highlighted the historical exemption of ENA/RS from Central Excise duty and its previous taxation under state VAT. However, the Authority refrained from providing an advance ruling on this matter due to its pending consideration by the GST Council. The Authority emphasized that without a definitive decision from the Council, they cannot issue a ruling on the taxability of ENA under GST. Issue 3: Eligibility of Input Credit for alcohol used for human consumption The applicant also sought clarification on the obligation and eligibility for input credit on materials and consumables when selling un-denatured alcohol for potable purposes to state distilleries. They referenced the exemption of such spirits from Central Excise duty and their previous taxation under state VAT. However, similar to the previous issues, the Authority refrained from issuing a ruling on this matter, citing the pending decision of the GST Council on the applicability of GST on ENA. Consequently, the application by M/s Madhucon Sugar and Power Industries Ltd was disposed of without a definitive ruling due to the unresolved status of the issues before the GST Council.
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