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CS Executive · Tax Laws and Practice · Levy and Collection of GST

Ananya Distillers of Nashik sells rectified spirit to a Karnataka distillery, which uses it solely to make whisky for human consumption. Ananya also sells ordinary industrial chemicals to the same buyer. Which statement is correct under the IGST Act, 2017 charging provision?

Integrated tax is not levied on rectified spirit used to manufacture alcoholic liquor for human consumption, because the charging section excludes it. The industrial chemicals are ordinary inter-State goods and remain taxable at the notified rate. The deferral for petroleum goods does not apply to spirit.

  1. AIntegrated tax is not levied on the rectified spirit sale, but is levied on the chemicals sale at the notified rateCorrect
  2. BIntegrated tax is levied on both sales since both are inter-State
  3. CIntegrated tax is not levied on either sale because the buyer is a distillery
  4. DIntegrated tax on the rectified spirit is deferred until a date notified for petroleum products

Explanation

The IGST charging section excludes alcoholic liquor for human consumption and un-denatured extra neutral alcohol or rectified spirit used to manufacture it. The spirit sale is therefore outside the levy. The chemicals are ordinary goods and attract integrated tax. Deferral applies only to the five petroleum goods, so the last option is wrong.

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