The GST Council's decision to exempt ENA (potable alcohol) for human consumption from tax is a relief to the industry as it will bring stability, CIABC said on Saturday.
Confederation of Indian Alcoholic Beverage Companies (CIABC), the apex body for liquor firms, said the industry has been pleading with the council to bring finality to the matter.
"The GST Council's decision is a big relief to the industry, it will bring stability and settle nerves all over," Vinod Giri, Director General at CIABC, said.
Chhattisgarh Deputy Chief Minister TS Singh Deo, who is a member of the GST Council, said extra neutral alcohol (ENA) for industrial use will continue to attract Goods and Services Tax (GST).
"ENA (potable alcohol) for human consumption will be exempt from GST and the same will be communicated to the Supreme Court," Deo told reporters after the 52nd GST Council meeting.
ENA is a high-strength potable alcohol used as the primary ingredient for making alcoholic beverages after dilution with water.
"Ideally the industry would have liked all of the alcohol, including the finished product, to be under GST to bring parity in taxation across states.
"However, we know there are complexities involved in that but as long as alcoholic beverages are kept outside GST, putting ENA under GST and leaving the industry with a stranded cost would have made little sense, especially as companies do not have the freedom to pass on this tax in most states," Giri said.
So far, in the absence of clarity from the GST Council, courts have taken conflicting positions on the matter, which has further compounded the uncertainties, he added.
He also hailed the GST Council's decision to reduce GST on molasses to 5 per cent, from 28 per cent.