Excise Dept rebuts CAG findings, says pending arrears were not from past 5 years

Thiruvananthapuram: The latest report by the Comptroller and General of India (CAG), which was tabled in the Legislative Assembly, flagged the ineptitude of the State Government in collecting on time due revenues including taxes. The central agency pinpointed the shortcomings of the State Government departments in recovering revenue arrears. Now, the Excise Department has responded to various critical observations about its functioning in the CAG report and claimed it has certain limits in recovering due revenues promptly.

Old abkari dues

Among the major issues raised by the CAG is that the Excise Department had failed to collect abkari (liquor tax) arrears amounting to Rs 269 crore over the last five years. In response, Excise authorities said that these arrears were due over the very long period from 1950 to 2001, and not the previous five years as mentioned in the CAG report.

Incidentally, the State Government had announced an amnesty scheme to recover abkari arrears as part of the Liquor Policy. As the plan did not achieve its goal, the scheme was included in the latest State Budget also.

Penalising bar hotels

Another finding of the CAG is that the Excise had committed a grave lapse by not collecting fines totaling Rs 88 crore from bar hotels.

Regular notices are being sent to bars, said Excise officers.

According to the Excise, these fines are related to transfer of ownership of bars.

“Many bar hotels are owned by several partners. Often, some partners are changed. The partners who leave the ownership do so after collecting their share of the investment. Sometimes, another person replaces the partner who leaves the ownership. On other occasions, a new partner joins the ownership. Under the rules, the Excise Department should be informed about these changes in ownership along with payment of a fee of Rs 1 lakh,” explained an Excise officer.

“However, in order to evade this fee, most bar owners conceal changes in ownership from the Excise Department,” the officer added.

The rules also state that concealing ownership change from the Excise would invite a fine of Rs 3 lakh.

“As procedures related to ownership change are carried out through the Registrar of Companies, the Excise Department would not be aware of the matter,” the officer said.

The Excise authorities notice ownership changes only later, when bar owners approach them for any matter.

“As soon as the ownership change is detected, we serve the bar owners with a notice,” the officer added.

Bar licence transfer fees

The CAG had also criticized the Excise Department over its failure to collect the fees of Rs 26 lakh charged during transfer of bar licence. In its report, the CAG suggested that when a hotel having a bar licence is sold, the licence should be returned to the Excise Department before the sale of the hotel building takes place.

However, according to the Excise authorities, this suggestion cannot be implemented. “When a new bar licence is issued, the rule that the hotel should be located at a specific distance away from educational institutions and religious places is applied. At the same time, this rule does not apply to a bar licence which is renewed. As a result, when a person buys a bar hotel, the sale takes place for the building and the bar licence together,” said Excise authorities.

As reported earlier the revenue that went uncollected by the State Government till March 31, 2021, was a whopping Rs 21,797.86 crore as per the CAG report.

There are big players who have defaulted in tax payments to various departments, the CAG 2020-21 report pointed out.