The Karnataka High Court Dharwad Bench has stayed the adjudication of the show cause notice (SCN) demanding GST on extra neutral alcohol.
The bench of Justice M. Nagaprasanna has observed that the show causes notices demanding GST for multiple tax periods (i.e. for multiple years) which itself is flawed and therefore without jurisdiction.
The issue raised was in respect of taxability of Extra Neutral Alcohol / Rectified Spirit (subject goods) to GST.
The department/Respondents have issued Show Cause Notices dated 29.09.2023 and 26.11.2024, demanding GST on the Extra Neutral Alcohol / Rectified Spirit, for the period from July 2017 to March 2020 and April 2020 to March 2023, respectively, which are challenged by the petitioner.
The petitioner submitted that the Karnataka State Beverages Corporation Ltd. (KSBL) acts as a canalizing agency in the State of Karnataka. Petitioners have supplied the entire quantity of the subject goods, covered by the impugned Notices, to KSBL. KSBL by a clarification dated 19.07.2017, has clarified that the subject goods do not attract GST and hence, the Petitioners have not paid the same.
The Petitioners, therefore, have been sandwiched between the Central Government and the State Government, and that both these Departments must put their stand in their respective Affidavits.
The Notices allege that the subject goods are classifiable under Heading 2207 1011 of the Customs Tariff, which describes these goods as “Concentrates of Alcoholic Beverages”.
Attention is drawn to Section 9(1) of the CGST Act which is a charging provision and which categorically excludes “supply of alcoholic liquor for human consumption” from levy of GST. Therefore, the subject goods are specifically excluded from levy of GST by section 9 of the Act.
The court admitted the Writ Petition be admitted and stayed the proceedings initiated by these Notices dated 29.09.2023 and 26.11.20.
Case Details
Case Title: Venkateshwara Power Project Versus GST Commissioner
Case No.: WP 101112 OF 2024
Date: 17/02/2025
Counsel For Petitioner: Makarand Joshi, Sharad M. Patil
Counsel For Respondent: Girish Hulamani
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