Published On : Mon, Jul 10th, 2017

Liquor producers snatching away GST benefit from booze lovers!

Nagpur: As the general shopkeepers, restaurant chains and bigger malls are making the dent into the consumers’ pockets by not reducing VAT and Service Tax before loading GST on the goods they are selling, the liquor manufacturers too are making the kill by not removing LBT from the sale. Though the liquor is not covered under GST, the end consumer has got no benefit from it.

The NMC used to levy 10% of LBT on liquor and earn revenue of Rs 31crore/annum as turnover on liquor was shown as Rs310 crore/annum. The NMC has stopped levying LBT of 10% on liquor from July 1. Liquor is exempted from GST but continues to be under Value Added Tax (VAT). Percentage of VAT is also the same with implementation of GST. Thus, the manufacturers, who used to pay LBT through distributors of the city, got saving of 10% with GST implementation.

President of Maharashtra Wines Merchant Association, Vidarbha unit, Pratap Dewani said that manufacturers have not reduced the prices on liquor from July 1. “Distributors used to pay LBT to the NMC but the same was bore by manufacturers. There is no communication from the manufacturers about reducing the prices,” he said.

Dewani added that the manufacturers do no pass on benefit when there are any changes in tax system. “When the government abolished LBT on liquor in August 2015, the manufacturers did not reduce the rates. However, when the government restarted LBT on liquor in August 2016, the manufacturers increased the rates. The same is happening since long and no benefits are passed on to the end consumers,” he added.

Under octroi system, the NMC used to levy 15% on liquor which was reduced to 10% in LBT. The end consumers were not given the benefit of reduction in tax. The consumers of the city can get benefit of Rs31 crore/annum in case 10% is passed on to them.

The NMC has also stopped levying LBT of 2% on 32 traders whose turnover was Rs50 crore and above from July. Most of the traders included automobile dealers and couple of big corporate companies. The NMC also used to recover LBT while sanctioning the building plans. It is to be seen whether all these sectors are covered under GST and benefits are passed on to the consumer.

NMC source said that the government should implement anti-profiteering clause made available in GST. “There is no agency to check whether benefits are passed on to the end consumers whenever there as reduction in taxes. It happened with many items during replacement of octroi with LBT. Now, there is a provision in GST and it should be implemented strictly. Registration of traders/manufacturers can be cancelled under anti-profiteering clause,” official said.