March 23: A recent report about the Nashik collector Mr. B Radhakrishnan telling a newspaper that Sula was ‘among the biggest offenders in the collector’s notice for excise duty evasion to the tune of Rs 115 crore’, highlights the often not written-about Damocles’ swords that hang over the head of those involved in wine business in India from the government authorities, causing unexpected turbulence in the business years later, writes Subhash Arora who talks about the problem that came in public domain last month, years after it allegedly occurred
Headlined as ‘Sula gets notice for excise duty evasion’, the Article on March 20 in Mumbai Mirror seems to highlight Sula as the major ‘culprit’ for the ‘alleged’ excise duty evasion to the tune of Rs 115 crore, though it did clarify it was among several wineries in the state that have received the notices. Nashik collector B Radhakrishnan told Mumbai Mirror that Sula was among the biggest offenders, and that the notice was served to the winemaker on February 17.
The reason behind the whole action of the alleged duty evasion is in the misinterpretation of the tax sops granted according to the Maharashtra grape policy of 2001 applicable for ten years, later extended till 2021. According to the Maharashtra Grape Policy, formulated to help the farmer, the excise duty for wine produced from the grapes grown by the wineries within the State and sold within, were exempt from excise duty; otherwise they were liable to pay this duty, and the current demand is due to the interpretation.
The issue arose due to blending of wines that was not on the anvil when the policy was formed but occurred later –apparently in 2006 when due to the changing nature of the business, some wineries were obliged to sell their wines in bulk to wineries which bought them and used in blending. According to the interpretation of the excise department in 2012-13, these wine were not eligible for excise duty rebate and hence the calculations of the estimations made and the demands sent in February 2018.
Interestingly, GR (Government Resolution) issued in 2006 did not make a distinction between wine brought from outside and within the state. In 2012-2013, the excise department started making enquiries and in 2018 issued notices to wineries such as Sula which brought wine made within the state from grapes grown here,” says Yatin Patil, President of All India Wine Producers Association which has been talking to the government on behalf of those that have received the notices. He said they had spoken to the government. “We met the chief minister, and the excise minister has verbally assured us a stay until the government resolution is corrected.”
Yatin Patil, confirms to delWine that the notices were meant for wineries that purchased wine and blended them and included Sula, Good Drop Cellars, Seven Peaks Winery and a few from Pune and Sanghli as well. The Policy of 2001 and extension was done with cabinet approval but the DR of 2006 was apparently issued without the cabinet approval by the excise department, he says.
“As per the Maharashtra grape processing policy of 2001, there was no excise duty on wine made from grapes grown in the state until 2021. But if one bought wine from other states or countries, excise duty was to be levied,” said Patil. He added that there was no exemption in excise duty for wineries that brought wine from other countries or states.
At a recent meeting chaired by the additional chief secretary, one of the points discussed was evasion of duties by wineries in six districts in the state. Officials in the government told Mumbai Mirror that the excise commissioner was directed to write to all collectors about mopping up revenue. Acting on this, Radhakrishnan sent a demand notice to Sula and other wineries. A senior government official said that Sula Vineyards had approached the High Court and other appellate authorities, according to the Report.
One sided report, claims Sula
DelWine contacted Rajeev Samant, Founder CEO of Sula Vineyards. Apparently outside the country at the moment, Samant was quick to respond to delWine’s query. He says ‘the article is misleading and one-sided. Sula is no tax evader; we always strive 100% to meet our tax and regulatory obligations. The same goes for most of the other wineries that have also received notices. The reality behind this headline is a much more nuanced one related to differing interpretations of policy.’
He adds, ‘We are cooperating fully with the State Excise authorities to resolve this matter amicably and in the spirit of the Maharashtra Grape Processing Policy which had a simple aim - to greatly boost the wine industry in the state, for the wide benefit of the farmers and the rural economy. The wine industry has been one of the great successes of Maharashtra agriculture over the past 16 years since the policy came into effect and the higher authorities are well aware of that.’
He concludes by saying that ‘We are appealing this order and are confident that the higher authorities will rule positively in the industry’s favour. We hope that this unfortunate episode will soon be well behind us.’
We also hope this unfortunate episode is soon behind. Maharashtra government has been a role model of the country for being progressive and can take full credit for leading the wine revolution in India, bringing the wine industry in Maharashtra to the current level of quality and status on the world stage and one hopes that it will continue to support the industry positively in unlocking its enviable growth potential.
Subhash Arora
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