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Delhi Wine Club

Posted: Tuesday, April 07 2009. 12:04

Blog: Hibernating April for Excise Department

It is that month of the year when the wine and liquor supply chain in Delhi and many other states goes completely dry- at least from the distributor to the retail shops or hotels. Reason: the excise license has to be renewed and till the process is completed, no can move from the excise warehouse.

The excise licensing period coincides with the fiscal year, i.e., April 1-March 31. All fees have to be paid for one full year, even if the application is made for a month or even less. There are the annual license charges of Rs. 5 lakhs which are same whether you import only one label of wine or the whole range of alcoholic beverages from 4 or 40% and beyond. Then each label has to be registered and the registration charges for each label have to be paid.

The procedure for filing and the documentation is quite harrowing. The overseas manufacturer has to give a clearance letter to his distributor (a clause which incidentally, has been deleted by the progressive little city of Chandigarh), VAT clearance certificate is required, labels have to be re-submitted and God knows what all papers are to be deposited (that is not the focus of the article).

What is not comprehensible to a common man is why there should be a complete stoppage in issuing the all-mighty Transfer Permits during the most of April when the fresh applications are being processed.

It is not that the department goes into hibernation in April. As they rightly claim, they need time-30 days, to clear the application. Naturally, it is not possible to do multi-tasking by looking at the applications before March 30th as they get busier too.

Importers too play the role

Granted it takes time to scrutinize the applications. It is also a fact that this year the department reportedly wrote to the license holders on March 12 that they could apply for the license and the policy had been announced well on time. But how can an importer deposit a VAT clearance certificate which can be given only after March 31?

A detailed discussion with many importers surprisingly revealed that they are much to be blamed too. Hardly anyone had applied in March when the letter had been received on or around March 12. The paperwork takes a few weeks to complete, they say. The truth is that they are also busy with the year-end sales. Since the hotels and retail shops know that April may be dry, everyone is placing the orders and distributors are filling the orders.

Suggested solution

It would serve the purpose of natural justice and keep the clock ticking if a system of an interim order of clearing the goods is evolved. For those assesses who have had the license during the previous year, and have paid the Rs. 5 lakhs (or the current fees) for the current year, they should be allowed to get the TPs for an interim period of 30 days (it wont be a precedent, as interim budgets have been passed even by the central government in the past). The usual excise fees according to the Act ( there is no change in the excise duty of Rs. 150 a bottle for wine) may be levied.

If for any reason, the application is not competed or is rejected for any reason,  no more TPs from May 1. The department does not lose a paisa. In fact, by stopping the issuance of TPs, they might be losing out on the excise duty, which has an opportunity cost to it. The licensee does not lose his business and the customer gets the product- the big wheel keeps on moving.. and the world does not laugh at us!

I solicit qualified comments from the readers, keeping in mind that the government must not lose any revenue but the system should become more efficient.

Subhash Arora


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