By TIOL News Service

NEW DELHI, JULY 5, 2019: THE issue is regarding Service Tax liability on the license fee paid for liquor license.

By a letter F.No.336/14/2018-TRU dated 31st July 2018, the TRU had clarified thus -

Sub: WP No.3277/2017 filed by M/s. Jagatjit Industries in the Hon'ble High Court of Delhi related to service tax on license fee paid for liquor license - reg.

Sir,The undersigned is directed to refer to email dt. 18.07.2018 and 25.07.2018 (copy attached) in regard to Writ Petition No. 3277/2017 filed by M/s. Jagatjit Industries in the Hon'ble High Court of Delhi challenging levy of service tax on license fee paid for liquor license.2. The issue was discussed in the 26th GST Council Meeting held on 10.03.2018 [Agenda item 14(iv)] and it was decided that GST/Service Tax was not leviable on license fee and application fee by whatever name called for alcoholic liquor for human consumption.

3. The said decision of the GST Council has been accepted by the Central Government for implementation. The field formations have accordingly been requested vide letter dated 12.07.2018 that the show cause notices issued for the levy of Service Tax leviable on license fee and application fee by whatever name called for alcoholic liquor for human consumption during the period 01.04.2016 to 30.06.2017 may be kept in the call book till further directions from the Board.

The mighty black hole called "Call Book" has still not lost its relevance even in the GST era and enthusiatic field formations leave no stone unturned to pour cases into the same.

A few days back, an Audit team contemplated taking an objection for recovery of Service Tax dues on the said "license fee/application fee" and was heartened to know that such cases were to be kept in the call book after issuance of SCN but the audit point could, nonetheless be taken.

All eyes were on the further directions the Board had promised to communicate and it was almost a year they were waiting.

Thankfully, the Union Budget 2019 has found a solution.

Clause 116 of the Finance Bill (No.2), 2019 introduces a Special provision for retrospective exemption from service tax on service by way of grant of liquor licence.

It is laid down that no service tax shall be levied or collected in respect of taxable service provided or agreed to be provided by the State government by way of grant of liquor licence, against consideration in the form of licence fee or application fee during the period commencing from the 1st day of April 2016 and ending with the 30th day of June 2017 (both days inclusive).

Furthermore, any such service tax collected is to be refunded to the assessee upon an application being made in this regard within a period of six months from the date on which the Finance Bill (No.2), 2019 receives the assent of the President.

Importantly, this provision comes into play retrospectively notwithstanding that section 66B of Chapter V of the Finance Act, 1994 has been omitted vide section 173 of the CGST Act, 2017.

Also see 2018-TIOL-3000-HC-DEL-GST.

Cheers!