Hyderabad: The GST Council exempting service tax on liquor licence has brought relief to state governments, including TS and AP. After GST came into force, the Centre had been collecting 18 per cent service tax on liquor licences.
In a communication to state governments, the Centre said the GST meeting held on March 10 decided not to levy service tax on licences for liquor meant for human consumption. This would also be applicable on licences from from April 1, 2016, to June 2017. After GST came into force, the TS government as part of avoiding service tax had changed the name of licence fee as excise tax as there was no service tax on any tax. The AP government reduced the licence fee to avoid huge payment under service tax.
After TS government made the change, it had been sending notices to liquor traders asking them to pay service tax. For 2015-16, under service tax, TS had to pay about `75 crore. It asked liquor traders to pay the service tax who in return said it was to be paid by the government as it had been collecting the fee.
With the latest GST Council decision, the issue appeared settled. TS revenue department Principal Secretary Somesh Kumar said the council’s decision did not matter much to TS since it had amended the Act. In AP, the government had reduced the licence fee to avoid paying service tax.