Chandigarh stares at ₹400 cr revenue loss as 8th liquor vend auction draws a blank
22 out of the 95 liquor vends in city have so far found no takers, UT has had to slash the reserve price multiple times; while the department had set a revenue target of ₹830 crore from the auction of 95 liquor vends, it has so far been able to earn only ₹400 crore.
Finding no takers for its liquor vends and left with no option but to slash the reserve price multiple times, the UT excise and taxation department is staring at a revenue gap of almost ₹430 crore this financial year (2023-24).
While the department had set a revenue target of ₹830 crore from the auction of 95 liquor vends, it has so far been able to earn only ₹400 crore.
As many as 22 vends are yet to find any takers even as the UT has slashed its reserve price by 25%.
In the eighth round of auctions, held on Thursday, no buyers came forward for any of the remaining 22 vends. During the seventh auction, UT was able to sell three liquor vends, while in the sixth auction too, no bidders came forward.
Now, UT will be holding a ninth round of auction on May 1.
UT excise and taxation commissioner Vinay Pratap Singh said the auction will continue till all the vends are sold. On whether the reserve price would be slashed further, he said, “We are yet to decide on it.”
Another senior official of the department revealed, “It is for the first time that we are compelled to slash the reserve price by 25%. It has happened due to the Punjab liquor policy.”
Last year too, the department had to hold seven auctions but three of its vends remained unsold. The liquor vend in Dhanas, located near Mullanpur, which had been fetching the highest bid for the last two years, has failed to attract buyers this time around. Last year, the vend had received the highest-ever bid of ₹12.78 crore against the reserve price of ₹10.39 crore, whereas in 2021, it had fetched ₹11.55 crore against the reserve price of ₹7.95 crore.
What the Punjab excise policy says
Punjab has set a negligible value-added tax (VAT) of just 1% of the ex-distillery price (EDP). This means that VAT on a ₹1,000 bottle in Punjab is roughly ₹100. In Chandigarh, however, the VAT is a whopping 12.5%. The excise fee in Punjab is just 1% while in Chandigarh, it ranges between ₹445 to ₹3,500 per case, which is a lot more.
Other factors driving buyers away from UT
In 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 unlifted 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.
The high licence fee in Chandigarh is another reason for the poor response to the vends. In Punjab, it is ₹1.5 crore to ₹2 crore, while in Chandigarh, it is ₹6 crore. Contractors said 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.
The minimum retail price is another reason. Contractors say that if a standard-sized 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.
Ironically, before July last year, the MRP in Chandigarh was less than that of Punjab.