GST UPDATE ON LEVIABILITY OF GST ON LIQUOR LICENSE

In our earlier update, we had discussed the history of litigation as regards leviability of service tax on liquor license along with the probable opinion as regards leviability of GST on liquor license granted by State Governments. However, the issue is not free from dispute till date and we hereby discuss the other aspects in our present update. Before proceeding further, we briefly discuss the relevant provisions under the GST Law.

The definition of supply given under section 7(1)(a) includes all forms of supply of goods or services or both such as sale, transfer, barter, exchange, license, rental, lease of disposal made or agreed to be made for a consideration by a person in the course or furtherance of business. It is submitted that the definition of supply explicitly mentions license within its ambit and so it can be said that grant of license is liable to GST and that too, under reverse charge mechanism. However, at the same time, reference may also be made to entry no. 47 of the Exemption Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 which reads as follows:-
Services provided by the Central Government, State Government, Union territory or local authority by way of-

(a) registration required under any law for the time being in force;

(b) testing, calibration, safety check or certification relating to protection or safety of workers, consumers or public at large, including fire license, required under any law for the time being in force.
The grant of liquor license should be considered as variant of registration granted for trading in alcohol and so no GST should be leviable on the same. Although, GST Council in its 26th meeting held on 10.3.2018 decided that no GST is leviable on licenses for alcoholic liquor for human consumption but no notification has been issued in this regard till date. However, the recent decision rendered by the Hon’ble Delhi High Court in the case of Jagatjit Industries Limited & ANR Vs Union of India & Others and Sabmiller India Limited & ANR Vs Union of India & Others confirmed the fact that the Central Government has accepted the decision of the GST Council. Inspite of this, there is no legal backing available with the assessees to defend their case as regards non-leviability of GST on the license granted by the State Government for alcohol.
However, recently the minutes of the GST Council Meeting in which the decision as regards non-leviability of GST on grant of license for liquor was taken has been made available. The minutes of the meeting along with High Court decision can definitely be a strong ground for the assessee to justify non-payment of GST under reverse charge mechanism. It is pertinent to mention that certain assessees had paid service tax on liquor license along with interest and 15% penalty so as to conclude the proceedings but the decision of the Delhi High Court and minutes of GST Council meeting strongly indicate that no service tax/GST is payable. Now, the question arises is whether the assessee who has concluded the proceedings can claim refund of the tax paid in lieu of judgment pronounced by Hon’ble Delhi High Court and the minutes of the GST Council Meeting? Well, if refund is not granted to assessees who concluded their proceedings by paying tax along with interest and penalty, it will put such assessees at disadvantageous position from the assessees who did not respond to the departmental letters regarding levy of service tax on liquor license granted by State Government.
FAQ s are issued by the government to bring more clarity. However, it has no legal backing.The content of this GST update is for educational purpose only and not intended for solicitation.

Comments

GST UPDATE ON LEVIABILITY OF GST ON LIQUOR LICENSE

Post a Comment

Query