Glad GST Council clarified it cannot tax alcohol which is under state purview: Som Distilleries' Chairman

On Saturday, the Goods and Services Tax (GST) Council made the decision to reduce the GST rate on molasses from 18% to 5% and granted an exemption on alcohol intended for human consumption from this taxation.

JK Arora, Chairman of Som Distilleries told CNBC-TV18 that, “The alcohol which we use, GST department has been disputing and putting the tax on the alcohol which we use. However, one thing is very clear from the constitution of India, the manufacturing of liquor, storage, transport, and licensing are all within the state's domain. So from day one, I have been saying that the GST Council cannot impose a tax on alcohol because it is a state subject.”

“This is a good clarification and a lot of litigation will end since they are going to issue the clarification also,” he added.

The GST council, however, chose to retain GST on extra neutral alcohol (ENA) for industrial use.

During the press conference, Finance Minister Nirmala Sitharaman pointed out the ruling of the Allahabad High Court that imposing a tax on ENA was solely left to the Centre and the GST Council.

However, the GST Council has decided to cede the right to the states, she said. "If the states want to tax it, they are welcome to do it. If the states want to leave it, they are welcome to take a call on it," she said.