GST on license fee charged by the States for grant of Liquor licences to vendors - GST - States - 121/40/2019-GST 50/2019 (ST/Tech//2019/11241)

Circular No. 121/40/2019-GST 50/2019 OFFICE OF COMMISSIONER OF STATE TAX CHHATTISGARH, NAYA RAIPUR, ATAL NAGAR, DISTRICT-RAIPUR No./ST/Tech//2019/11241 Atal Nagar, Raipur Dated : 15.10.2019 To, Special Commissioner Additional Commissioners/ Joint Commissioners/Deputy Commissioners/ Assistant Commissioner/State Tax Officers/ State Tax, Chhattisgarh (All) . Madam/Sir, Subject - GST on license fee charged by the States for grant of Liquor licences to vendors-reg. A circular dated 11.10.2019 has been issued by CBIC regarding GST on license fee charged by the States for grant of Liquor licences to vendors. In accordance with the said circular and in order to ensure uniformity in the implementation of the provisions of the law across the State, the Commissioner, in exercise of its powers conferred by section 168 of the Chhattisgarh Goods and Services Tax Act, 2017 (CGGST Act for short) hereby clarifies the issues. 2. Services provided 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 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 licenees 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 CGGST Act, 2017, Notification No 25/2019-State Tax (Rate) dated 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 or suggestions, if any, may please be brought into the notice of this office. (Reena Babasaheb Kangale) Commissioner, State Tax Chhattisgarh, Raipur