Gst is applicable on spirit for production of liquor

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

21 November 2017 Dear Sir/Madam,
Please clarify GST is applicable on Sale of Spirit for production of Liquor. IF Yes or No with reason with HSN code.

Amitav

Amitav (Expert)
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21 November 2017 HSN Code-2207-Ethyl alcohol and other spirits, denatured, of any strength-

GST Rate @ 18%.

Querist : Anonymous

Querist : Anonymous (Querist)

05 December 2017 Sir Sale of Spirit for production of Liquor is undenatured spirit and HSN 2207 for denatured spirit. Please resolve my above query.

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Asha Kanta Sharma online

Asha Kanta Sharma

(Expert)
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26 July 2024 GST treatment on the sale of spirit for the production of liquor, particularly undenatured spirit, involves understanding how GST applies to alcoholic products and their use in production.

### GST on Sale of Spirit for Production of Liquor

**1. **GST on Spirit (Undenatured Spirit)**

- **Nature of Spirit:** Undenatured spirit, used for the production of alcoholic beverages (liquor), is a different category from denatured spirit.

- **HSN Code for Undenatured Spirit:** The HSN code for undenatured spirit is 2207. Denatured spirit, which is not used for the production of beverage alcohol, is categorized under the same HSN code but with specific denaturation characteristics.

- **GST Applicability:**
- **No GST on Alcoholic Liquor for Human Consumption:** As per the GST Act, alcoholic liquor for human consumption is specifically excluded from the GST regime. Therefore, GST is not applicable on the sale of alcoholic liquor itself.
- **GST on Spirit:** For undenatured spirit used in the production of liquor, GST is generally applicable as it is considered a product used in the production process of excisable goods. However, the applicability and rate can depend on the specific use and classification.

**2. **Specifics for Undenatured Spirit:**

- **HSN 2207:** The HSN code 2207 covers "Undenatured ethyl alcohol of an alcoholic strength by volume of 80% vol. or higher; ethyl alcohol and other spirits, denatured, of any strength."
- **GST Rate:** The GST rate on undenatured ethyl alcohol (spirit) is 18% under the HSN code 2207. This is applicable to the sale of undenatured spirit as it is used as an input in the production of liquor.

**3. **Documentation and Compliance:**

- **Invoices:** When selling undenatured spirit, ensure that the invoices are issued correctly with GST mentioned, specifying the HSN code 2207 and the applicable GST rate.
- **GST Returns:** Report the sale of undenatured spirit in GST returns, including the applicable GST on such sales.

### Summary:

- **GST Applicability:** Yes, GST is applicable on the sale of undenatured spirit (HSN 2207) at a rate of 18%. This is because undenatured spirit is considered a product used in the production of alcoholic beverages and is subject to GST.

- **HSN Code:** Use HSN code 2207 for undenatured spirit.

This ensures compliance with GST regulations while correctly categorizing and taxing your products. For precise advice tailored to your specific situation, especially if there are nuances or changes in legislation, consulting a tax professional is recommended.