The Bangalore bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that the service tax cannot be levied on the amount of liquor license fee paid to the State Government.
The department held that the appellant is liable to pay service tax on reverse charge basis on various fees paid by the appellant to the State Excise Department or to the Government or Government agencies during their business of manufacture, import and sale of alcoholic beverages for human consumption. Accordingly, a demand was raised towards the payment of various fees such as permit fee, import/export pass fee, excise escort charges, supervision charges, and other related charges, additional fees paid in relation to manufacture, import distribution and sale of liquor.
The appellant contended that the licence fee, permit fee, import pass fee and export pass fee are payable to the State Government for parting with its exclusive privilege to import, export and transport liquor, which is in terms of Entry 8 of List-II of Seventh Schedule of the Constitution of India.
A bench of Mr. Ramesh Nair, Judicial Member and Mr. P. Anjani Kumar, Technical Member relied on the decision of the Tribunal in the case of Anheuser Busch Inbev India Ltd wherein it was held that the appellant is not liable to pay service tax on Export Pass fee, Import Pass fee, Permit fee, Excise Staff Salary and overtime allowances/charges and we set aside the demand on all these services. We confirmed the service tax demand on Storage License fee for CO2 which the appellant is liable to pay along with interest.
Granting relief to the appellant, the Tribunal concluded that “Following the ratio of the above judgment, we are of the clear view that the fees paid by the appellant to the State Government during the course of manufacture and trading of alcoholic beverages does not amount to provision of any service. Accordingly, no service tax can be demanded. Hence, the impugned order is modified and appeal is allowed with consequential relief, if any.”
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