GST on License Fee Charged by
State Govt for Grant of Liquor Licences
to Vendors
·
Special dispensation applies only to supply of
service by way of grant of liquor licenses by the State Governments as an
agreement between the Centre and States and has no applicability or precedence
value in relation to grant of other licenses and privileges for a fee in other
situations, where GST is payable
[Circular
No. 121/40/2019-GST dated 11 October 2019]
Subject– GST on license fee
charged by the States for grant of Liquor licences to
vendors.
Services proved by the Government to business entities including by way of
grant of privileges, licences, mining rights, natural
resources such as spectrum etc. against payment of consideration in the form of
fee, royalty etc. are taxable under GST. Same was the position under Service Tax
regime also with effect from 1st April, 2016. Tax is required to be paid by the
business entities on such services under reverse charge.
2. GST Council in its 26th meeting held on 10.03.2018, recommended
that GST was not leviable on license fee and application
fee, by whatever name it is called, payable for alcoholic liquor for human consumption
and that this would apply mutatis mutandis to the demand raised by Service Tax/Excise
authorities on license fee for alcoholic liquor for human consumption in the pre-GST
era, i.e. for the period from 01-04-2016 to 30-06-2017.
3. Grant of liquor licences by State Government
against payment of consideration in the form of licence
fee, application fee etc. was a taxable service under Service Tax, therefore to
implement GST Council’s recommendation, Central Government decided to exempt service
provided or agreed to be provided by way of grant of liquor licence
by the State Government, against consideration in the form of licence fee or application fee, by whatever name called, during
the period from 01.04.2016 to 30.06.2017. Clause No. 117 of Finance (No. 2) Act,
2019 may be referred in this regard.
4. GST Council in its 37th meeting held on 20.09.2019 further
recommended that the decision of the 26th GST Council meeting be implemented
by notifying service by way of grant of alcoholic liquor licence,
against consideration in the form of licence fee or application
fee or by whatever name it is called, by State Government as neither a supply of
goods nor a supply of service. Therefore, in exercise of powers conferred under
sub-section 2 (b) of section 7 of CGST Act, 2017, Notification No. 25/2019-Central
Tax (Rate) dated 30th September, 2019 has been issued.
5. GST Council further decided in the 37th meeting held on 20.09.2019,
to clarify that this special dispensation applies only to supply of service by way
of grant of liquor licenses by the State Governments as an agreement between the
Centre and States and has no applicability or precedence value in relation to grant
of other licenses and privileges for a fee in other situations, where GST is payable.
6. Difficulty if any, in the implementation of this Circular may be brought
to the notice of the Board.
F.No. 354/136/2019-TRU