An ‘Elite’ liquor licence holder of an upmarket outlet in the city has been issued a show-cause notice for GST evasion of ₹53 crore.
According to sources, officials from the Commercial Taxes department found that the outlet was selling the products of 1,189 brands against the 350 enlisted by Telangana State Beverages Corporation Limited (TSBCL). The high-end outlet is also accused of having illegally imported the products of many brands of foreign liquor and engaging in wrong invoicing. The officials were inspecting the outlet for lapses in VAT and GST taxation.
The licensee has eight other outlets with similar names across Hyderabad, Cyberabad and Rachakonda police commissionerates.
During the inspection, the Commercial Taxes officials found that these outlets were importing products of top-end brands not registered with the TSBCL, which, as such, had no role in either labels or price fixation of the products, according to sources. In normal course, the TSBCL identifies the distilleries to supply the foreign liquor and fixes the price.
Officials now believe that as the brands are not yet formally recognised, the question of payment of VAT and excise tax either by the TSBCL or the importers has to be probed further. The full quantum of the evasion by these outlets and also the prices they had fixed without consulting the TSBCL are yet to be ascertained.
The GST on display rentals and the right to use the ‘brand’ was also not being paid. Moreover, an under declaration of taxes by the interior decorator of these nine liquor outlets by ₹1.18 crore was found.
Earlier, the government issued an order giving special concessions to these Elite licensees to run high-end liquor outlets. When the G.O. was first issued in 2016, the licensees were allowed to import foreign liquor directly. Subsequently, however, the order was modified to ensure that the imported brands were routed through the TSBCL.
Major GST violations are incorrect input tax credit, sale of contraband items such as cigars and dubious financial transactions with the other liquor stores. According to sources, an examination of the accounts showed cash transactions among these liquor shops, indicating that they are working as a cartel.
“A probe into tax liability under the VAT Act, 2005 is under way. As the first point of sale is the TSBCL and not the retailer, we may lose the opportunity to collect the short levy later, but we are not getting the required cooperation from the corporation,” said the sources.
