The GST Council convened on October 7, announcing crucial decisions. Extra Neutral Alcohol (ENA), a vital component in alcoholic beverage production, will no longer be subject to GST, granting states exclusive taxation authority on this item. ENA used for industrial purposes, however, will remain under the GST ambit with an 18% tax rate.

To clarify taxability concerns surrounding ENA, a distinct tariff HS code has been established in the Customs Tariff Act, covering industrial rectified spirit. This move resolves a long-standing debate and emphasizes the Council’s willingness to empower states on tax matters.

Previously, the Allahabad High Court’s judgment had stated that states lost legislative competence to tax ENA for human consumption following the 101st Constitutional Amendment, which introduced the GST. Currently, tax practices on ENA vary across states, leading to discrepancies in GST and VAT payments among distilleries.

Additionally, the Council reduced the GST rate on branded, pre-packaged millet-based flour from 18% to 5%. Unbranded millet flour with at least 70% grain composition by weight, when sold loose, will now have nil GST.

Furthermore, the GST on molasses has been decreased from 28% to 5%, aiming to support cane farmers by expediting dues clearance and lowering cattle feed production costs. Age limits for President and members of the GST Appellate Tribunal (GSTAT) have been raised to a maximum of 70 and 67 years, respectively.

Indian Railways will now be taxed under the Forward Charge Mechanism, allowing them to avail input tax credit (ITC) under GST, ultimately reducing their costs. The Council has also recommended issuing a circular to clarify the admissibility of export remittances in Special rupee Vostro accounts for ITC.

Lastly, a decision to exempt conditional Integrated GST (IGST) for foreign-flagged, foreign-going vessels during their conversion to coastal operations has been approved, aiming to promote tourism.

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