India’s non-alcoholic malt drinks attract GST of 28%, cess of 12% including United Breweries’ Kingfisher Radler

INDIA – The Karnataka bench of the GST-Authority for Advance Rulings (AAR) has ruled that a non-alcoholic malt drink will be classified as ‘carbonated beverages or fruit drink’ and would be subject to a goods and services tax (GST) at 28% along with cess of 12%.

The ruling came after an Indian conglomerate headquartered in UB City, Karnataka, United Breweries (UB) had submitted that its drink Kingfisher Radler, which was launched in 2018 as an alternative to alcoholic beer and sweetened aerated water but replicates the ingredients, tastes, feel, and packaging of beer.

UB argued that beer contains 1. 2% to 8% alcohol by volume (ABV) while non-alcoholic malts are agri-based products containing barley malt and substantially lesser sugar and 0% ABV.

UB added that non-alcoholic malts are classified as non-alcoholic beer and are liable to GST at an 18% rate, however, the AAR bench stated that the drink was nothing but a carbonated beverage.

After 63 years, United Breweries plans to leave the Cherthala plant

Meanwhile, after more than six decades of producing Indian-made foreign liquor (IMFL), United Breweries Ltd is set to leave its unit at Varanad near Cherthala in the Alappuzha district.

The company was established on 14.8 acres of land taken on lease for 99 years after Vittal Mallya who started the brewery, acquired McDowell’s.

The company opened India’s first distillation plant to manufacture extra-neutral alcohol (ENA) at Cherthala in 1961. The plant began bottling products for Herbertsons Ltd of the Anglo Thai Group the same year.

The company launched Golden Grape Brandy, its first original product, in 1962 and McDowell’s No.1 brandy in 1963-64 when its contract with Herbertsons expired. In the early 1960s, the company acquired Carew and Co and Phipson and Co, manufacturers of rum, gin, and other hard liquors,” said a former employee.

 Later, when Vijay, the son of the founder, took over the company, he bifurcated it into two divisions — United Breweries (beer) and United Spirits (IMFL).

In 2016, the British Brewery Diageo took over the company, continuing the production of beer for the three consecutive years,

With the spread of Covid in 2019, the unit stopped the production of beer, too. In 2021, Diageo handed over the ownership to another international liquor producer Heineken, which owns UBL now

UB, also one of the oldest breweries in the state is said to have started serving termination letters to its employees as it wraps up its operations at the Cherthala plant.

 With the employee unions raising protests, the state government convened a meeting of management and the unions in Thiruvananthapuram on Thursday, however, it was postponed since company representatives did not turn up.

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