Hyderabad: The commercial tax department has issued a notice to the excise department seeking the payment of Rs 54.53 crore, intensifying an inter-departmental controversy in the state government. The demand was raised over the sale of holograms or HEALs (Holographic Excise Adhesive Labels) affixed on liquor bottles.
A notification issued by the Union Ministry of Finance, Department of Revenue, on September 30, 2019, under sub-section (2) of section 7 of the Central Goods and Services Act, 2017, stipulates that “service by way of grant of alcoholic liquor licence, against consideration in the form of licence fee or application fee or by whatever name it is called” shall be treated neither as a supply of goods nor a supply of service.
The explanation in the notification adds, “This notification is being issued to implement the recommendation of the 26th Goods and Services Tax Council meeting held on March 10, 2018, that no GST shall be leviable on licence fee and application fee, by whatever name it is called, payable for alcoholic liquor for human consumption.”
Similar to other products that go into the making of a liquor bottle like bottle, cork, label on the bottle, among others, the excise officials say GST on holograms is paid for by Uflex Private Limited, which makes the hologram. They explain that the excise department only facilitates the process of hologram-making between the distilleries and Uflex and pays the company 30 paise per label which also includes 18 per cent GST to be paid by the company.
Sources in the excise department further inform that an explanation of the issue has been sent to the government along with the commercial tax department.
When Deccan Chronicle sought the department’s response on the issue, commercial tax department commissioner T.K. Sreedevi said, “Every department endeavours to increase revenue for the government. The notice issued by the assessment officer is a pre-assessment one issued after the assessing officer suspected suppression of tax. A final decision will be taken based on the department’s response.”
