Discover the complexities surrounding the inclusion of alcoholic beverages in the GST regime, as they remain excluded due to legal provisions and taxation structures.
GST in India is now nearly six years old and appears to be more or less settled in terms of its scope. Every now and then there are voices raised on inclusion of petroleum products into the GST net, more so to allow input tax credit which may lead to some cost control. However, there has never been a convincing claim in these years to include alco-beverage sector into the GST fold.
To understand the legal position, let’s look at what the charging section, i.e. section 9 of CGST Act, 2017 has to say on levy and collection. Section 9 of CGST Act, 2017 deals with levy and collection which is a charging section. Sub-section (1) reads as follows:
“Subject to the provisions of sub-section (2), there shall be levied a tax called the central goods and services tax on all intra-State supplies of goods or services or both, except on the supply of alcoholic liquor for human consumption, on the value determined under section 15 and at such rates, not exceeding twenty per cent., as may be notified by the Government on the recommendations of the Council and collected in such manner as may be prescribed and shall be paid by the taxable person.”
Though alco-beverage is a ‘good’ as defined in section 2(52) of CGST Act, 2017, it does not qualify for levy of GST thereon.
In the CGST Act, 2017, ‘goods’, as per section 2(52), means every kind of movable property other than money and securities but includes actionable claims, growing crops, grass and things attached to or forming part of the land which are agreed to be severed before supply or under the contract of supply.
As per section 9(2) of CGST Act, 2017,
“The central tax on the supply of petroleum crude, high speed diesel, motor spirit (commonly known as petrol), natural gas and aviation turbine fuel shall be levied with effect from such date as may be notified by the Government on the recommendations of the Council.”
Going by section 9 of CGST Act, 2017, it is observed that :
- Petroleum crude, High speed diesel, motor spirit (Petrol), natural gas and aviation turbine fuel, though has been included in GST but it has been decided that tax on these would be levied from the date to be notified by government on the recommendation of GST Council. No such date has been notified yet.
- Alcoholic liquor for human consumption has been kept outside the GST.
Alcoholic liquor for human consumption has been excluded from the GST purview, due to which this will continue to be taxed under the present scheme of taxation. Presently, alcoholic liquor for human consumption is taxed by the States of India under the State Excise Act and under State VAT Acts. These will continue to be applicable on alcoholic liquor for human consumption.
Accordingly, specified petroleum products as above are already in the scope of GST law but their date of inclusion and rate will first have to be decided by GST Council which is represented by Union of India and all states / Union Territories and States will not easily agree to this.
As a result, alco-beverages meant for human consumption will continue to suffer taxation in the form of State Excise Duty, State Value Added Tax and other applicable levies, cesses etc. along with tax cascading which further adds to cost.
It may be worth mentioning here that India’s Finance Minister recently stated that central government is ready to bring petroleum products into the ambit of levy of GST. The law permits the same. Unfortunately nobody talks of plea of alco-beverages meant for human consumption, though industrial products are taxed.
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