Explainer: What went wrong with UT’s excise policy?

As per the Punjab Excise policy, there is a negligible value-added tax (VAT) in the state, just 1 per cent of the ex-distillery price or the EDP. This means that VAT on a ₹1,000 bottle is just ₹1,00. Whereas in Chandigarh, the VAT is 12.5 per cent VAT, a huge difference.

With the UT unable to frame its excise policy with a clear mind and facing flak for suffering losses, Hindustan Times’ Hillary Victor brings you the inside view on the entire matter.

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1. Why is Chandigarh unable to earn as much as Punjab from its excise policy?

As per the Punjab Excise policy, there is a negligible value-added tax (VAT) in the state, just 1 per cent of the ex-distillery price or the EDP. This means that VAT on a ₹1,000 bottle is just ₹1,00. Whereas in Chandigarh, the VAT is 12.5 per cent VAT, a huge difference. Even on excise fee, Punjab charges just 1 percent against the UT’s policy of charging between ₹445 and ₹3,500 per case, which is a lot more.

2. What is the biggest turn-off for liquor contractors in operating from the UT?

In the UT, there is a fixed liquor quota of 18 lakh liquor boxes a year. This means a liquor contractor in Chandigarh will be penalised for un-lifted liquor boxes. If the liquor remains unsold, there is a penalty of ₹ 900 per case on Indian Made Foreign Liquor; on foreign liquor, the penalty is ₹3,500 per case within the financial year, contractors said. In contrast, Punjab has an open quota, which means contractors can lift 100 cases or 1,000 cases, with no compulsion.

3. Why are liquor contractors so anti-UT administration as far the policy is concerned?

High license fee in Chandigarh is another reason for poor response to the vends. In Punjab, it is ₹1.5 crore to ₹2 crore, and on average, in Chandigarh, it is ₹6 crore. Contractors said that they had pointed this out to the UT administration while the excise policy was being formulated but officials allegedly did not pay heed to their demands.

4. Why is now MRP more in Punjab than Chandigarh, and by how much?

With the above policy changes, liquor is today more expensive in Chandigarh than Punjab. Contractors say that if a standard size Royal Stag bottle costs ₹ 300 in Punjab, it costs ₹ 500 in Chandigarh. A bottle of beer costs ₹ 110 in Chandigarh and ₹90 in Punjab. Blenders Pride is ₹740 per bottle in Chandigarh but ₹650 in Punjab, say contractors. Ironically, before July last year, the MRP in Chandigarh was less than that of Punjab.