Hyderabad: The Telangana state and Andhra Pradesh governments are expected to face a tough legal battle from retail liquor traders on the Central government’s decision to impose service tax on the license fee.
The Central Board of Excise and Customs (CBEC) has issued a circular on April 13, 2016, directing both the states to collect 15 per cent as service tax from each of the retail liquor outlets.
Based on the circular, the Telangana state government has issued notices to all retail liquor outlets to pay a 15 per cent service tax on their licence fee. The AP government too has issued similar circulars to the excise superintendents to collect the service tax from wine dealers.
Mr D Venkateswara Rao, president of Telangana Wine Dealers Association, said there are over 6,000 retail liquor shops in Telangana and Andhra Pradesh. “If they are asked pay to service tax, they will have to shell out about '400 crores now.”
Reeling out statistics, he said there are 350 shops in the Hyderabad Metropol-itan Development Authority and within five km of its periphery and each of them have paid Rs 1.08 crore as the licence fee.
According to him, “There are 2,200 shops in Telangana state. The minimum licence fee for a liquor shop in the state is Rs 39 lakh and the maximum fee is '1.08 crore. Similarly, there are 4,000 shops in Andhra Pradesh. The maximum fee for licence in Andhra Pradesh is Rs 85 lakh.”
Aggrieved by the action of the authorities of both states, he said liquor shop owners have moved the Hyderabad High Court contending that the state governments should pay service tax and not the dealers.
As there was no clarity from the commissioner of the Central Board of Excise and Customs on the applicability of the circular on the liquor dealers, the High Court had stayed the circular with regard to one dealer for a period of four weeks.
In their petitions, the other dealers claimed that officials in Telangana have asked them to pay the service tax as per the Central Board of Excise and Customs circular. The Hyderabad High Court may take up these cases on Monday.
