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Delhi cites “element of privilege” for 70% tax on liquor

By Richa Banka, New Delhi
PUBLISHED ON MAY 28, 2020 11:12 PM IST

The Delhi government has informed the Delhi high court that trade or consumption of liquor is not a fundamental right and that the state is empowered to regulate the sale of liquor or impose a 70% special corona fee on the maximum retail price (MRP) since there is an “element of privilege” attached to it.

The Delhi government also told the court that it had collected a total of 227.44 crore (inclusive of 127 crore from the special corona fee) as excise revenue between May 4 and May 25. It pointed out that despite the corona fee, its excise revenue collection was far lower than the f 425.24 crore earnings registered in May 2019.

The order to levy a 70% ‘special corona fee’ on the MRP of every liquor bottle was issued by the Delhi government on May 4. The government had, on May 22, deliberated over revoking the cess after several representatives form the liquor industry demanded a roll-back. However, the government decided to defer the roll-back plan until next month at least.

Opposing several pleas challenging the imposition of 70% cess on liquor, advocate Gautam Narayan, the additional standing counsel for the government, told the court that owing to the lockdown, the revenue which the state earned through GST/ VAT was reduced by 90% in the month of April 2020.

“A citizen has no fundamental right to do trade or business in liquor or for that matter also to consume liquor. On the other hand, the state has the authority and jurisdiction to regulate (including prohibit—totally or partially) such trade and commerce as well as to regulate the sale, purchase and consumption of liquor,” the affidavit filed by the government read.

“In other words, there is an element of privilege viz a viz sale/dealing in liquor or for that matter consumption of liquor, which the state is free to accord and regulate under the state excise law….. Accordingly, the state is also free to impose and recover a price for the grant of such privilege,” the affidavit stated.

The Delhi government also contended that owing to the clampdown on all economic activities due to Covid-19 lockdown, “the revenue of Delhi government (which primarily comes from VAT/GST collection, state excise and stamp duty) shrunk by almost 90% in April 2020 and the total collections dwindled to a mere 300 crore as opposed to approximately 4,000 crore in the corresponding month of 2019”.

According to the affidavit, between May 4 and 25, the total sale of operational liquor vends has been 187 crore, which is way too less as compared to the sale figures of May 2019, as the number of shops operational last year were around 800, of which only 40% are currently open due to lockdown restrictions.

The matter will be heard on Friday.

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