Liquor supply to bars having tax arrears: Bevco asks government to clear its dilemma

Thiruvananthapuram: The Kerala State Beverages Corporation (Bevco), which is the sole distributor of foreign liquor in the state, has urged the state government to clarify whether it could continue the supplies to bars which had failed to clear dues related to turnover tax.

While the Tax Department says that the turnover tax arrears amount to Rs 200 crore, bar owners claim that the figure is only Rs 70 crore.

The issue cropped up when Bevco stopped liquor supply to 24 bars which had not cleared turnover tax arrears based on directives of the GST (Goods and Services Tax) deputy commissioners. However, the distribution was soon resumed after the bar owners approached the High Court and obtained a favourable verdict.

According to the Tax Department, the bars owe around Rs 200 crore as arrears of turnover tax and interest since 2014. Bevco subsequently stopped distribution to 24 bars which had the highest arrears for a few days.

Meanwhile, the High Court has posted the next hearing of the case on November 3.

Following these developments, Bevco has now approached the government seeking its stand on supplying liquor to these 24 bars. In its letter to the Tax Department, Bevco pointed out that liquor supplies to bars could not be curtailed as long as they held a valid licence.

Bar owners’ stand
Meanwhile, bar owners said that their establishments were closed down as part of the liquor policy of the previous UDF government and later reopened. Turnover tax could not be paid when the bars were shut, the owners said.

Later, bars downed shutters again for a long period during the COVID-19 lockdown.

The owners also said that as online tax payments could not be carried out regularly during these periods when bars remained shut, they were not able to do so now.

In view of this situation, the bar owners want the government to allow them to pay the arrears directly to the treasury. The owners told the government that the arrears amount to only Rs 70 crore, which they were willing to pay in six equal instalments by March 2024.

Opposition targets government
At the same time, Opposition Leader V D Satheesan alleged that the government was causing huge losses to the exchequer by failing to collect the arrears. “There exists an unholy alliance between the bar owners and the government,” he said.

“The Opposition had earlier taken up the issue with the government, which admitted to the lapses in tax collection. Even then, the government has initiated no measures to collect the dues,” he said.

A blunder by the government
According to tax experts, the Tax Department’s directive to stop liquor supply to bars would cause a huge revenue loss to Bevco and the government. “Ninety per cent of the taxes received from bars constitute excise duty and sales tax. Turnover tax makes up only 10 per cent of the total tax revenue from bars. In effect, the Tax Department’s directive to Bevco would lead to loss of the 90-percent tax revenue over the arrears on the 10-percent tax,” said an expert.