Kerala: Government not to lose any revenue if bars too sell liquor parcels

THIRUVANANTHAPURAM: The claim of the opposition parties that the sale of Indian-made foreign liquor (IMFL) through bar hotels as take-away parcels would lead to loss for the government is not factual, proves an analysis of the revenue breakup of IMFL sales. Instead, the new initiative would fetch more revenue in addition to saving some revenue for the government.

According to the detailed sales figures accessed by TOI, while the total contribution to the exchequer by way of IMFL sales in 2018-19 was Rs 12,426.13 crore, it slightly dipped to Rs 11,709.94 crore in 2019-20 (till February 29). The sale was seriously affected in March due to Covid-19 outbreak.
Out of Rs 11,709.94 crore fetched by the government from the sales, Rs 9,765.57 crore reached the state exchequer through the sales tax department, while Rs 1,944.37 crore came through the excise department. The components in sales tax revenue include sales tax and turnover tax, that amounts to Rs 9,073.11 crore and Rs 692.46 crore respectively. Though there were other components like surcharge, rehabilitation cess, social security cess and medical cess till 2017-18, all the four were discontinued in 2019-20 by increasing the sales tax steeply to 212%. Presently, the sales tax component stands at 247% which is the highest revenue fetching component in IMFL sales. In the case of turnover tax (TOT), 5% fee is slapped at the warehouse of Bevco (from where both the bar hotels as well as Bevco outlets procure IMFL for sale), and another 5% is slapped at the Bevco outlets in the case of Bevco. However, in the case of bar hotels, the TOT at the retail sales point is 10%. "This would mean that when a share of sale goes to the bar hotels, the total turnover tax collected would be more than what can be collected if the sales are only through the Bevco outlets," sources in the taxes department said.
The components in the excise revenue part includes excise fee, import fee, gallonage fee, licence fee on warehouses and licence fee on Bevco sales outlets. None of these have any bearing on the sales revenue, irrespective of whether the sale is through Bevco outlets or through bar hotels. While the excise fee, import fee and gallonage fee are collected when the IMFL is procured at the warehouses from the manufacturers, the remaining two fee are to be paid by Bevco, irrespective of the volume of sales.
"Since Bevco is the single point supplier of IMFL for both bar hotels as well as Bevco and Consumerfed outlets in the state, the revenue from all these heads would come to the state exchequer irrespective of who the retail seller is," sources added.
At the same time, the bar hotels have the leverage of claiming licence fee refund citing the Supreme Court verdict in Chitra versus State of Kerala case, if they are not able to function for no fault of theirs. As per the verdict by a bench comprising justices Vikramjit Sen and Shivakirti Singh in August 2015, the licence fee for the bar licence needs to be paid only proportionate to the number of days that it could function under normal circumstances. The government can save at least Rs 14 crore a month, if bar hotels are allowed to function, as per the calculations.