Skip to main content

Tax on liquor production input: AAR puts ball in GST Council's court

By
The central government wants to impose the levy; many states are opposed - at least, to the Centre doing so Is it legally permissible to impose the goods and services tax (GST) on extra-neutral alcohol (ENA), an input in liquor making? No one is quite sure at the moment. For, alcohol for human consumption or potable alcohol is outside GST. While, industrial alcohol is within it.
The central government wants to impose the levy; many states are opposed – at least, to the Centre doing so. They see this as their own prerogative; – they currently levy value-added tax (VAT) and sales tax on ENA.There is, however, counter-pressure from businesses. The pharmaceutical industry, for one, has been demanding inclusion of ENA within GST – if this happens, they can get input tax credit.
Advance ruling in GST: Classification-related disputes top the list
One company, Madhucon Sugar and Power, went to the Authority on Advance Rulings (AAR), an official body which is empowered to render an opinion on the tax consequences of a transaction or a proposed one. The latter declined to issue any opinion, saying the GST Council (a Centre-states body) must first decide on the applicability to ENA. The issues, it noted, was already before the Council.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.
GST: A common man's view
“Suppliers of ENA are looking at colossal contingent liability on account of tax, interest, and penalty. In the event such liability matures, recipients of such supplies would be denied tax credit,” according to Rajat Mohan, partner at AMRG Associates.ENA is a derivative of sugarcane molasses and used in a number of industries, from cosmetics to alcoholic beverages. Almost 80 per cent of it is used in making potable alcohol. The rest is used by the pharma industry to manufacture cough syrups and by the cosmetics industry to make perfumes.
GST: A year of learning and attainment
States also argued that if ENA goes under GST, they would not be able to monitor production of alcohol in the state."Technically, only alcohol meant for human consumption is excluded from GST. Therefore, any other kind of alcohol used for industrial purpose or inputs for production of alcohol should be covered within its ambit. Hopefully, the GST council will discuss this issue shortly since it has been pending for some time now,” according to Pratik Jain, partner, PwC India
The Business Standard, New Delhi, 09th July 2018

Comments

Post a Comment

Popular posts from this blog

Govt’s gamble on GST cuts: What do the bond and currency markets signal?

By
  It’s not just humans who suffer from cognitive biases; markets do too. Interestingly, different financial markets exhibit distinct biases, each interpreting events through its own prism of prejudice. Take the recent announcements on GST reforms: equity markets have chosen to view them through the lens of growth, while bond and currency markets are focusing on potential macroeconomic risks—fiscal pressures and current account challenges. So, which lens captures the true pulse?Equity markets may be right in expecting GST reforms to revive consumption, which has remained lacklustre for a while. But the key question remains—will this revival come at the cost of broader macro stability?It is well known that consumption stocks have rallied since the GST rationalisation announcement. But what about bond markets? What signals are they sending since this rejig was announced from the ramparts of the Red Fort?The signs aren't encouraging. Bond prices have slumped and yields have surged sinc...
Post a Comment
Read more

Luxury carmakers urge clarity on GST rates to boost festive season sales

By
  A clear picture regarding new GST rates at the earliest will help the overall auto industry, including the luxury car segment, to regain momentum in the ongoing quarter, which generally sees enhanced sales on account of the festive season.The high-powered GST Council, chaired by Finance Minister Nirmala Sitharaman, will meet on September 3-4 to discuss moving to a two-slab taxation.In an interaction with PTI, BMW Group India President and CEO Hardeep Singh Brar said the recent speculation about the change in GST rates has caused uncertainty in the minds of consumers.Consumer interest and demand is strong, but they (prospective buyers) have adopted a wait-and-watch approach, and this delayed decision-making is impacting new vehicle sales at a certain level, he noted."Expediting clarity on GST rates is essential to get back to speed and ensure the auto sector's contribution to economic growth during this quarter is robust," Brar stated.He also hoped that the sustainable p...
Post a Comment
Read more

Sebi proposes tighter norms for green bond third-party reviewers

By
  Sebi on Friday said it has proposed to tighten the norms to appoint independent third-party reviewers or certifiers for green debt securities to align them with requirements for other ESG-linked bonds.In a draft circular, Sebi said that the current norms for green bonds, introduced in February 2023, lack detailed requirements around reviewer independence, conflict of interest mitigation, and disclosure standards that are now in place for other ESG-linked securities under a June 2025 circular.The regulator's latest proposal seeks public comments on a revised framework that would bring parity by incorporating comprehensive criteria for third-party certifiers of green bonds on non-convertible securities.Under the proposed norms, issuers of green debt securities will need to appoint reviewers who are independent of their management, directors, and key managerial personnel. These reviewers will be remunerated in a way that prevents any conflicts of interest and possess relevant expert...
Post a Comment
Read more