Wet/Dry Grain Soluble Sold As Cattle Feed at Distilleries Attracts 5% GST: AAR

The Telangana Authority of Advance Ruling (AAR), presided over by a bench of Raghu Kiran (Central Tax) and S.V. Kasi Visweswara Rao (State Tax), ordered in the case of M/s. Allied Blenders and Distillers Private Limited, that 5% GST is due on distillery wet/dry grain soluble sold as livestock fodder.

The applicant M/s. Allied Blenders and Distillers Private Limited specializes in the production of alcoholic beverages. The applicant produces by-products known as distillery dry gain soluble (DDGS) and distillery wet grain soluble (DDGS) during the production of alcohol (DWGS). The application claims that these are solely sold as cow fodder since they have no other “recognized commercial usage.” It is their claim that they are tax exempt under the GST. As a result, this application has been submitted.

The issue at hand is, whether the applicant’s sale of Distillery Wet Grain Soluble (‘DWGS’) and Distillery Dry Grain Soluble (‘DDGS’) – ‘Cattle feed’ is covered by serial no. 102 of Notification No. 02/2017 – Central Tax (Rate) dated 28 June 2017, and whether these commodities are exempted from GST payments?

According to the application filed by the applicant, DDGS and DWGS are solely sold as cow feed because they have no other “recognized commercial usage.”

The AAR noted that the Notification No. 01/2017 classifies ‘brewing or distillery dregs and waste’ at S.No.104 under tariff item ‘2303’ and the GST rate applicable on these products is 5%.

The Authority determined that the HSN ‘2303’ is not included in the chapter headings of the tariff articles that qualify as cattle feed at S.No.102 of Notification No. 02/2017. As a result, ‘brewing or distillery dregs and waste’ are specifically excluded in S.No.102 of Notification No. 02/2017. The DWGS and DDGS plainly fit under the heading of ‘brewing or distillery dregs and waste,’ and are thus classified as tariff item HSN No. ‘2303’. As a result, the exemption Notification No. 02/2017 does not apply to them.

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