The ‘irregular transfer’ of foreign liquor licences has again landed the Excise department in trouble with the Comptroller and Auditor General of India (CAG).
By permitting the transfer of FL-3 licences, irregular as per norms, rather than issuing fresh ones, the government lost ₹2.17 crore in revenue, the Compliance Audit Report of the CAG on the revenue sector for the year ended March 31, 2022, has found.
The report was tabled in the State Assembly in the just-concluded session.
The CAG found nine instances where the Excise Commissioner permitted the transfer of FL-3 (bar) licences for hotels, resulting in the short levy of ₹2.17 crore. Audits carried out in 2021-22 revealed that the transfer was allowed by levying ₹1 lakh and ₹2 lakh as fee.
The licence fee for FL-3 (bar) licence for hotels of three-star and above was ₹28 lakh in 2019-20 and ₹30 lakh in 2020-21. In the case of the FL-11 licence for beer/wine parlours, the fee is ₹4 lakh.
The CAG noted that the Kerala Excise Manual Volume II, says that the licences cannot be transferred from the name of one person to another. “Such transfers will help the pernicious habit of trading of licences and have to be discontinued, except for very strong reasons,” the report noted. If at all changes are required, the proper procedure is to make the holder surrender the licence and apply for a fresh one.
The CAG did not accept the government’s contention that if a licensee is asked to surrender the licence, it may not be possible to issue a fresh one on account of distance restrictions pertaining to religious and educational institutions that may have come up subsequent to the grant of the original licence.
The previous CAG report on the revenue sector - for 2020-21, had cited two similar instances of ‘irregular transfer’. The latest report noted that the issue persists even though the government was notified of it back then.
In a related case, the CAG report also found fault with the Government for failing to skip fines in cases where the board of directors of companies holding foreign liquor licences were reconstituted without authorisation. The government lost ₹ 1.32 crore in revenue by failing to impose the fine and collect regularisation fees, it said.
