GST Authority Declines Ruling on Taxability of Extra Neutral Alcohol
Telangana GST authority declined to rule on Extra Neutral Alcohol taxability because the GST Council was actively deciding the issue.
- Ruling
- TSAAR Order No. 6/2018 Date. 02-07-2018
- Dated
- 02 Jul 2018
- Authority
- Authority for Advance Ruling
This page was written by Patron Accounting’s AI from the official release and reviewed before publishing. It explains the document in plain language. It is not the document itself. Where this page and the original differ, the original governs.
The short version
- A manufacturer asked if Extra Neutral Alcohol attracts GST.
- The company questioned HSN classification and input tax credit eligibility.
- The authority refused to issue a ruling on the merits.
- The matter was left pending due to ongoing GST Council discussions.
In short
The company produces Extra Neutral Alcohol (ENA) and Rectified Spirit (RS) for distilleries making potable liquor for human consumption. The company asked tax officers whether these supplies fall under GST or state excise, what GST rate applies, and whether input tax credit can be claimed on raw materials used to make them.
What has changed
How it worked before
Businesses were unsure whether industrial spirits meant for making liquor were subject to central GST or state excise laws. Different states treated Extra Neutral Alcohol differently, causing confusion over tax rates and input tax credit.
What has changed
The authority refused to answer the questions in TSAAR Order No. 6/2018. Because the GST Council had deferred its decision on Extra Neutral Alcohol taxability during its meetings, the advance ruling authority decided it could not issue a ruling at that stage. This order provided no practical change or clarification to tax rates or credit claims.
Who this affects
Sugar mills, distilleries, and chemical units manufacturing Extra Neutral Alcohol or Rectified Spirit for beverage manufacturers.
An example
A distillery in Hyderabad makes Rectified Spirit and sells it to a beverage manufacturer. They want to know if they should charge GST under HSN code 2207 and if they can claim input tax credit on purchases. They find TSAAR Order No. 6/2018, but see that the authority refused to give an answer because the matter was pending before the GST Council. The distillery cannot use this order as legal support for their tax filings and must follow official GST Council rules instead.
What you should do
Do not rely on this order to stop paying GST or to claim input tax credit. An advance ruling binds only the specific company that asked for it, and here no decision was made anyway. Businesses must check current GST Council notifications and statutory amendments to determine their tax duties.
If you do nothing
Assuming this order grants a tax exemption or confirms input tax credit rules is a mistake. Tax officers can audit your business and demand unpaid GST along with mandatory interest and penalties. Relying on an unanswered ruling offers no legal protection against future tax assessments.
The terms explained
- Extra Neutral Alcohol (ENA)
- High-purity industrial alcohol made from sugarcane molasses or grain, used as the main raw material to manufacture alcoholic drinks.
- Input Tax Credit (ITC)
- A GST mechanism that allows a business to deduct the tax paid on raw materials and purchases from the tax owed on final sales.
- Advance Ruling
- A legal decision issued by tax authorities to a specific business clarifying how tax laws apply to their specific situation.
- HSN Code
- A standardized code number used under GST to classify goods and identify their applicable tax rates.
The ruling in detail
Authority for Advance Ruling
M/s. Madhucon Sugar and Power Industries Ltd
TSAAR Order No. 6/2018 Date. 02-07-2018 · Telangana
Questions before the authority
- Whether HSN Code 2207 covers both “ denatured Ethyl alcohol and other spirits”(Not fit for human consumption) and“Un-denatured alcohol”(Fit for human consumption).
- If Un-denatured ethyl alcohol of any strength of percentage or higher by volume i.e., ENA/RS being sold by them for potable application to State Distilleries & Beverages / Manufacturers, in turn who is making liquor for human consumption shall be covered under GST? or it is out of the purview of GST?, If covered under GST what is the rate of duty to be charged by them?
- If Un-denatured alcohol is not under purview of GST, i.e., ENA/RS sold by them for potable purpose to State distilleries and beverages used for human consumption, what is their obligation and eligibility of Input credit taken on materials/ consumables ?
Facts
The applicant is engaged in the manufacture of Extra Neutral Alcohol (ENA) and Rectified Spirits (RS). They supply ENA/RS to state distilleries and beverage manufacturers for potable applications to produce liquor fit for human consumption. The applicant sought an advance ruling to clarify the HSN classification, taxability under GST, applicable rate of duty, and eligibility of input tax credit on inputs and consumables.
Ruling
The Authority held that since the core issue regarding the applicability of GST on Extra Neutral Alcohol (ENA) and Rectified Spirit is pending decision before the GST Council, **an Advance Ruling cannot be given at this juncture**. Consequently, the application filed by the applicant was disposed of without answering the substantive questions.
Reasoning
The Authority observed that the issue of taxation of Rectified Spirit / Extra Neutral Alcohol (ENA) under GST was an agenda item placed before the GST Council during its 20th meeting held on 05.08.2017. Furthermore, in the 27th GST Council meeting on 04.05.2018, the Council decided to defer the decision regarding the applicability of GST on ENA to its subsequent meeting. Since the issue was actively **pending before the GST Council for a final decision**, the Authority concluded that it could not issue a ruling on the merits at that time.
Provisions relied on
- Section 9(1) of CGST Act, 2017 / TGST Act, 2017
- Section 96(1) of TGST Act, 2017
- Section 97(1) of TGST Act, 2017
- Section 100(1) of CGST Act, 2017 / TGST Act, 2017
- Rule 103 of CGST Rules, 2017 / TGST Rules, 2017
- Notification No.12/2012 dated 17.03.2012
For the practitioner
This order illustrates that Advance Ruling Authorities may decline to pass a substantive ruling when the subject matter—such as the **taxability of Extra Neutral Alcohol (ENA)**—is under active deliberation and deferred by the GST Council. It does not settle the rate, classification, or ITC eligibility for un-denatured ethyl alcohol, leaving the practitioner to rely on official GST Council decisions or statutory amendments.
Source
This is a summary prepared from the published order, which is a scanned document. It is a reading aid and not the authority: where the two differ, the order governs. Verify every provision against the original before relying on it.
Original order: https://www.gstcouncil.gov.in/sites/default/files/AAR/tsaar_06-2018_telangana.pdf
Legibility of the scan, as read: high.
Prepared 20-10-2026.
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