Circular No. 8T of 2011
8th floor, Vikrikar Bhavan,Mazgaon, Mumbai-400010.
Trade Cir. No. 8T of 2011, Mumbai, Dt. 04.05.2011
Sub : Budget 2011-12: Taxation of liquor.
Ref (1) Mah. Act No. XV of 2011 dated 218t April 2011.
(2) Notion No. VAT-1511/ C.R.57 /Taxation-1 dated 30th April 2011.
Gentlemen / Sir/ Madam,
A Scheme for taxation of liquor was announced in the budget for 2011-12 by the Hon’ble Dy. Chief Minister. To give effect to this, amendments are made to the Maharashtra Value Added Tax Act, 2002 and Rules, 2005. The Scheme and the amendments are as follows:
1. (i) Amendment to section 41:
The section 41 relates to exemptions and refund. A new sub-section, namely sub-section (5) is added enabling the State Government to issue notification in respect of liquor, exempting tax wholly or partly in respect of class or classes of dealers or class or classes of sales, subject to such conditions as may be prescribed.
(ii) Amendment to Schedule entries:
The Schedule rate of tax on liquor under entry 1, 2 and 3 of Schedule D to the Maharashtra Value Added Tax Act, 2002 is revised to 50% as against 25% earlier. However, this is subject to 25% of MRP as notified. There is no change in the rate of tax on wine.
2. Amendment to Rules:
Rule 54(i) is substituted. By this substitution, liquor covered by entry 1, 2 and 3 of Schedule D is put in the negative list. No set-off will be available on purchases of liquor covered by entry 1, 2 and 3 of Schedule D. This does not include wine, which is covered by entry 3A of Schedule D.
3. Notification under section 41 (5):
A notification dated 30th April 2011 is issued in respect of taxation of liquor.
(i) The notification applies to liquor covered by entry 1, 2 and 3 of Schedule D. It does not apply to wine.
(ii) It applies only to registered dealers. (iii) The notification is effective from 1st May 2011.
4. The taxation in respect of various class of dealers is as below:
Manufacturers of liquor holding licence in PLL, BR-L (for beer) and CL-I under the Maharashtra Prohibition Act, 1959 will pay tax at Schedule rate subject to the limit of MRP X 25/125. MRP is maximum retail price as printed on the bottle. They can collect this tax separately. They will have to mention MRP alongwith sale price in the sale bills issued by them. Set-off on inputs for manufacture of liquor will be available.
Wholesalers holding licence in FL-I, CL-II will be exempt from tax, if they have purchased liquor from registered dealer within State on which tax is paid or has become payable at earlier stage. It means exemption is available if goods have borne tax at earlier stage in the state.
Wholesalers importing liquor from outside the State or from other country will pay tax at Schedule rate subject to the limit of MRP X 25/125 on their sales of liquor brought from other States or from outside India. They can collect tax on sales of imported liquor. They will have to mention MRP alongwith the sale price in the sale bills issued for such sales.
No set-off will be available on liquor purchased from registered dealers within the state.
(iii) Retailers and Country liquor Bar:
Retailers holding licence under FL-II, FL-BR-II, CL/FL/TOD-III and Country liquor bar holding licence CL-Ill will be exempt from tax on sales of liquor purchased from registered dealers within State. This exemption is available if liquor has borne tax at earlier stage in the state.
(iv) Hotels, Bars, Restaurants and Clubs ( 3 star and below):
Bars, Restaurants and Clubs holding licence in FL-III or FL-IV or E with grading 3 Star and below will be required to pay tax at 5% on the actual sale price of liquor which is purchased from registered dealers within state and on which tax is paid or has become payable at earlier stage.
They can collect tax separately. No set-off is available on purchases.
(v) Hotels, Bars, Restaurants and Clubs (4 star and above):
Hotels, Bars and Restaurants with grading 4 Star and above will be required to pay tax at 20% of their actual sale price, if the liquor is purchased from registered dealers within State and on which tax is paid or has become payable at earlier stage.
If liquor is imported from other States or from out-side the country, then in addition to 20% above, they will be required to pay tax at Schedule rate subject to the limit of MRP X 25/125 of such liquor sold.
They can collect tax in the sale bills. No set-off is available on purchases of liquor.
5. Closing stock held on 30th April 2011:
The Schedule-II appended to the above notification provides for taxation of liquor held in closing stock on 30th April 2011.
All the dealers, except manufacturers, shall furnish a statement of closing stock of goods mention in entry 1, 2 and 3 of Schedule ID to MVAT Act, 2002 as on 30th April 2011, in the proforma appended to the notification by 31st May 2011. This stock statement is to be submitted by the dealers in Mumbai to the Joint Commissioner of Sales Tax (EIU) and in mofussil areas to respective Divisional Joint Commissioner of Sales Tax (VAT Adm.). Set-off on stock will not be available if the statement in proforma above is not furnished by the prescribed date. If set-off is already claimed on these purchases, the same will be disallowed.
Taxation of Stock for various categories of dealers is as follows:
a. Wholesalers holding licence in FL-i or CL-II and retailers holding licence in FL-II, FL-CL-TOD-III, will be taxed at Schedule rate subject to the limit of 25/125 X MRP. Set-off will be available on purchases subject to submission of stock statement.
b. Bars and Restaurants and Clubs (3 Star and below) holding licence in FL-Ill, FL-IV, or E or Country liquor bar holding licence in CL-III shall pay tax at 5% of actual sale price in addition to tax at Schedule rate subject to the limit of 25/125 X MRP. Set-off will be available on corresponding purchases subject to submission of Stock statement mentioned above.
c. Bars and Restaurants (4 star and above) shall pay tax at 20% of actual sale price in addition to tax at 25/125 X MRP. Set-off will be available on corresponding purchases subject to submission of Stock statement as mentioned above.
6. Canteen Stores Department:
(i) Canteen stores Department (CSD) including Naval Canteen Stores holding licence as wholesalers or retailers in FL-I, FL-II, CL-II will be taxed in the same manner as wholesalers and retailers above. They will have to furnish the statement of closing stock held on 30th April 2011.
(ii) The notification dated 27th July 2006 in respect of Canteen Stores Department issued under section 8(3B) of MVAT Act, 2002 has been amended w.e.f. 1st May 2011. This notification exempts sales by Canteen Stores Department to its units and members of armed forces, except the goods shown in Appendix to the notification.
(iii) Country liquor and IMFL were covered by entry (1) and (2) of this appendix. Entry (1) of appendix, namely country liquor is deleted and entry (2) is modified to include wine only instead of IMFL. The effect of this modification is that, sales of country liquor and IMFL, including Beer by Canteen Stores Department will be exempt.
(iv) A condition has been added in column (4) of the said notification to the effect that sales will be exempt only if tax is paid or has become payable at earlier stage.
(v) In case of imports by Canteen Stores Department, the sale will be taxable as in case of wholesalers importing liquor.
7. This circular cannot be made use of for legal interpretation of provisions of law as it is clarificatory in nature. If any member of the trade has any doubt, he may refer the matter to this office for further clarification.
8. You are requested to bring the contents of this circular to the notice of the members of your association.
Commissioner of Sales Tax, Maharashtra State, Mumbai.