The Kerala State Beverages Corporation (Bevco), responsible for distributing foreign liquor in the state, has sought clarification from the state government regarding the continuation of liquor supplies to bars with unpaid turnover tax dues. The Tax Department claims the arrears to be around Rs 200 crore, while bar owners insist the figure is only Rs 70 crore.
This issue emerged when Bevco temporarily halted liquor distribution to 24 bars due to outstanding turnover tax arrears, following directives from GST deputy commissioners. However, the distribution was resumed after bar owners obtained a favorable verdict from the High Court. The Tax Department maintains that bars owe approximately Rs 200 crore in arrears since 2014.
Bevco has now approached the government to determine its stance on supplying liquor to these 24 bars, emphasizing that liquor supplies should not be disrupted as long as they possess a valid license.
Bar owners argue that their establishments were closed due to the previous government’s liquor policy and later faced extended closures during the COVID-19 lockdown. They highlight challenges in making regular online tax payments during these periods when bars remained closed. Bar owners propose paying the arrears of Rs 70 crore directly to the treasury in six equal installments by March 2024.
Opposition Leader V D Satheesan accuses the government of causing substantial revenue losses by failing to collect these arrears, alleging an alliance between the government and bar owners.
Tax experts caution that the Tax Department’s directive to halt liquor supplies to bars would lead to significant revenue losses for Bevco and the government. The majority of taxes collected from bars come from excise duty and sales tax, with turnover tax constituting only 10% of the total tax revenue. Consequently, stopping liquor distribution over this 10% tax arrear would result in a loss of 90% of tax revenue.
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