Delhi decides to Roll Back Corona Cess of 70% on Alcohol

With more wine and liquor vends opening up and more availability of alcohol available at the last year’s price, it is going to help the excise to collect more revenues, the loss of sales already resulting in crores of rupees of excise lost notwithstanding.

Reports have claimed that the decision had been taken earlier due to unprecedented lines of alcohol buyers when the rule was relaxed to allow the government-owned (DSIDC and DTDC shops) stores to sell liquor on May 4. The government in all its myopic vision and non-application of mind, decide to increase tax by 70% thinking it would help them collect extra revenues and make up for the lost taxes but the demand at the extra cess came to a trickle after the first few days. It is also a moot point as to how much of the extra tax was really collected by the excise department at the sales points- the shops are government owned but not the employees.

When the lockdown was further extended on June 1, there was confirmed news by Aaj Tak that the tax had been rolled down, only to be retracted within minutes and a statement was issued that the tax had not been withdrawn and would be considered at a later date. In line with that statement, the government has now taken the apt decision.

Blow to Haryana and bootleggers

The decision will be a big blow to Haryana retailers who had jacked up the prices overnight and were charging what the market bore- that meant at prices similar to Delhi without tax being increased There is no MRP to follow and retailers are welcome to charge whatever they want and the government has no interest provided they get their minimum excise duties. Consumer interest is not on their mind.

This will also curtail the activities of bootleggers who had a field day selling wine and liquor at cheaper than the very high official and unofficial prices in Haryana. There were also rumours of a few retail shops in Delhi removing the products from their stores and selling in black. But our sources inform us that the excise department caught up with offenders and sealed their businesses.

According to a report in Times Now, The Confederation of Indian Alcoholic Beverage Companies (CIABC) had urged the Delhi government to bring cess to a realistic and sustainable level, pointing to a drastic drop in sales for May. There had been a sharp criticism by delWine also.

delWine has been very vocal and critical about the government’s myopic view and lack of understanding the issue of alcohol and marketing. We recommended a Corona Tax of 15-20% which people would have gladly paid as long as the problem of Corona existed but the enormous rate resulted in a crash of sales and antagonised the people. Now, it would be another knee jerk reaction if they were to add a reasonable cess once again. Also, if the law allowed it, the cess should have been added at the distributor level since it is easier to monitor and it would have had to be deposited before the goods could leave their warehouse.

Allow department stores to sell wine and beer

The government also urgently needs to rethink its decision disallowing department stores from selling wine and beer to the customers- justifying the inability of the department to come with a heavy hand and catch the culprits breaking the rules. They can now collect the license charges for the year (from June onwards) immediately and get a lot of revenue on the sale of beer and wine which should also be allowed home delivery along with groceries and other provisions. Personal prejudices should not have a role to play in politics and especially administration. –editor

In the meantime, VAT has been increased from 20% to 25%. This may sound as rather innocuous but unfortunately, it has a ring of permanence. The Covid cess was going to be temporary. But there is no indication that VAT will be reduced to 20% later. There are already examples of VAT at 25% in the country and the government might decide to stick with the increase permanently-resulting in a 5% increase in prices for ever,

For an earlier related Article, please visit:

Blog: Alcohol Sale becomes a Darling Topic for Media

Subhash Arora

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