Home Finance KAT rejects tax declare on ethanol used to mix with petrol

KAT rejects tax declare on ethanol used to mix with petrol

Bengaluru: The Karnataka Appellate Tribunal (KAT) has rejected the tax demand made by the Business Taxes Division on oil advertising and marketing firms (OMCs) over denatured anhydrous ethanol that’s blended with petrol.

The division had below the Karnataka Tax on Entry of Items (KTEG) Act thought of denatured anhydrous ethanol as ‘Ethyl Alcohol’ and imposed entry tax individually on the ethanol already blended with petrol.

The tax demand made by the evaluation authorities of the Division is from the 12 months 2008-09 onwards and based mostly on a 2002 notification below the regulation.

Oil advertising and marketing firms Indian Oil Company, Bharat Petroleum Company Restricted and Hindustan Petroleum Company Restricted had challenged the tax demand.

The businesses claimed that entry tax on the sale worth of the blended petrol was paid below the Act and subsequently a separate entry tax on that ethanol can’t be thought of as ethyl alcohol and no separate entry tax on the denatured anhydrous ethanol utilized in it can’t be levied.

Their appeals have been dismissed on grounds that tax might be levied on buy of ethyl alcohol and for the aim of tax, denatured anhydrous ethanol is taken into account ethyl alcohol. The businesses then filed appeals earlier than the KAT.

The bench of District Decide Member BL Jinaralakar and Business Tax Member SR Thulasidas heard the appeals not too long ago and dismissed the tax claims of the Division. The bench additionally directed the assessing authorities of the Division to attract revised proceedings. Both a revised demand discover or a refund order might be issued to the businesses, the bench stated.

The bench famous the fundamental distinction between the denatured anhydrous ethanol and ethyl alcohol and stated the previous was not for human consumption whereas the latter might be consumed. The latter must be taxed below the Karnataka Excise Act and never the Central Excise. Since 2017, KTEG has been subsumed below the Items and Providers Tax (GST).

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