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CMA Intermediate · Direct and Indirect Taxation · Levy and Collection of CGST and IGST

A distillery in Punjab sells alcoholic liquor for human consumption to a wholesaler in Haryana, so the supply is inter-State. Which statement follows from Section 5(1) of the IGST Act, 2017?

IGST is not levied on this supply. Section 5(1) of the IGST Act excludes the supply of alcoholic liquor for human consumption from the levy, even when the supply is inter-State. Registration of the buyer does not change this exclusion.

  1. AIGST is levied at the notified rate, since the supply is inter-State
  2. BIGST is not levied on this supply, because alcoholic liquor for human consumption is excepted from the levyCorrect
  3. CIGST is levied only if the buyer is a registered person
  4. DIGST is levied, but only at half the notified rate

Explanation

Section 5(1) levies IGST on all inter-State supplies except supply of alcoholic liquor for human consumption. The inter-State character of the supply does not override this exception, and the buyer's registration status is irrelevant to the exception.

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