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By: Dr. Sanjiv Agarwal
December 6, 2021
All Articles by: Dr. Sanjiv Agarwal       View Profile
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It is well known that supplies of all goods and services or both are liable to levy of goods and services tax (GST) except on the supply of alcoholic liquor for human consumption. The charging section in GST, i.e., section 9(1) of CGST Act, 2017 and Section 5(1) of IGST Act, 2017 provides for this. Thus, alcoholic liquor meant for human consumption can not suffer levy of GST at all- so far, so well.

However, this exemption or waiver is conditional and that mandatory condition for non-levy of GST is that such alcohol must be meant for human consumption. What does alcohol for human consumption mean ? These are rectified spirits (ethyl alcohol), Extra Neutral Alcohol (ENA) and Ethanol (alcohol, ethyl alcohol, grain alcohol). ENA is the  purest version of alcohol prepared from sugarcane, molasses, grain like barley, wheat, barley, rice etc.

These can be used for both- human as well as industrial consumption. If diluted and unless converted into denatured, they can be considered fit for human consumption. Once denatured, these can be used for producing country liquor.

Taxing liquor for human consumption is a State subject and is sole jurisdiction of state Government. The States levy State Excise Duty on production and Value Added Tax (VAT) on sale of such products. No GST at all. Country liquor, India made foreign liquor (IMFL) and beer, including other intoxicating drinks are thus, taxed by states only.

Then whether wheat alcohol gets covered under GST ? Following products of alcohol are taxed under GST-

HSN Code


Rate of GST


Ethyl alcohol or other spirits, denatured, of any strength



Ethyl alcohol supplied to oil marketing companies for blending with motor spirits


The above goods are meant for non-human consumption and for industrial use and thus, liable to levy of GST. In other words, ethyl alcohol made unfit for human consumption by the process of ‘denaturing’ is only taxed under GST laws. Not all types and forms of alcohols are liable to GST.


By: Dr. Sanjiv Agarwal - December 6, 2021


Discussions to this article



While manufacturing Alcohol, DWGS (Distillers Wet Grain Solubles) in Wet Form is also produced, which is termed as “Wet Cake” in the Industry. During distillation process, only the starch portion present in the Grain is utilized in production of the Alcohol, which is the main product, and the other components viz., protein, fibre and oil are not utilized in the production of Alcohol. The ARA Rajasthan in their Advance Ruling dated 25.10.2021 2022 (2) TMI 1210 - AUTHORITY FOR ADVANCE RULING, RAJASTHAN - IN RE: M/S. ADS AGRO INDUSTRIES PRIVATE LIMITED, have held that DWGS is a kind of brewing or distilling dregs & waste and is classifiable under Chapter Heading/Sub-heading/Tariff item 2303 of GST Tariff & is liable to GST @5%.

By: OmPrakash jain
Dated: 06/12/2021


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