GST Council Plans Amendments to Exclude Extra Neutral Alcohol (ENA) from GST, Bringing Relief to Spirits Industry
The GST Council is gearing up to amend GST laws concerning Extra Neutral Alcohol (ENA), a high-purity form of alcohol used in liquor production but not for direct consumption. These amendments aim to clarify that ENA should not be subject to GST, potentially alleviating the dual taxation burden on the spirits industry.
Alongside legislative changes, the Council is expected to propose a scheme allowing central and state tax authorities to waive the recovery of past tax dues, offering further support to the spirits sector. This initiative forms part of broader efforts to resolve tax disputes and streamline taxation processes.
Scheduled for a meeting in the national capital, the GST Council will review amendments recommended by a committee of officers tasked with drafting legislative changes. These changes seek to explicitly exclude ENA from the GST regime under Section 9 of the Central and State GST laws. Currently, this section imposes GST on goods and services excluding liquor for human consumption, but does not specifically mention ENA.
The proposed amendments aim to eliminate ambiguity and ensure uniform taxation practices across the country. Historically, ENA has been considered outside the GST framework since the implementation of indirect tax reforms in 2017. However, inconsistent application has led to confusion and challenges for producers.
IP Suresh Menon, Secretary General of The International Spirits & Wines Association of India (ISWAI), emphasized the importance of maintaining ENA under state excise and VAT regimes to preserve tax credits and avoid increased production costs.
The proposed amendments are expected to benefit both states and the spirits industry, while protecting consumers from potential price hikes due to additional taxes.
The GST Council will also consider transferring GST-related profiteering cases to the GST Appellate Tribunal from the Competition Commission of India, aligning responsibilities more closely with each organization’s core mandates.
