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'We have set an excise duty target of Rs 2,400 crore'

Renni Abraham in Mumbai

Anil Deshmukh, Maharashtra's minister for excise and food and drug administration, has sought the merger of the functions of the sales tax department pertaining to levies upon alcohol, with the states excise department. This move, he says will result savings of at least Rs 400 crore (Rs 4 billion).

Deshmukh, who took on the gutkha lobby earlier this year by banning its manufacture and distribution in the state, has now ordered curbs on the pharmaceutical firms in respect of malafide advertisements that mislead and attempt to induce sales through false promises.

The excise minister has also announced that henceforth in rural and urban regions liquor bars and permit rooms may be asked to relocate if even 25 per cent of the local womenfolk find them a nuisance and vote for their closure. Excerpts from an exclusive interview:

What about the proposal on merging certain functions of the sales tax department with the excise department?

Sales tax collections are effected by the finance department. We have requested the finance department, through a proposal, to allow the state excise department to collect ST related to alcohol along with the duties it levies.

This proposal, if accepted by the finance department, will effectively ensure that one single department is entrusted the task of regulating and collecting levies saving a lot of manhours. It will result in a saving of Rs 400 crore approximately per year.

How do you compute this saving?

Excise is levied on goods at the manufacturing stage itself, while ST is collected on the basis of the estimated sales of the product in many cases. What we propose is to change the nomenclature of the ST levy on alcohol and introduce something like a special excise duty or advance sales tax levy which will be done at the manufacturing stage itself.

Take a look at the permit rooms and bars functioning in your own vicinity. You will notice that they never actually register the actual sales of liquor that take place. Most of these do not even issue bills to customers.

In this manner they understate their sales on alcohol which according to our estimate results in a tax evasion, costing the state exchequer around Rs 400 crore annually.

This amount will be saved if the proposal is accepted by the finance department. I will be bringing this proposal for the consideration of the state's cabinet of ministers soon. Even the Bhatija committee that has sought similar changes.

The state has issued a resolution that would make it possible for a majority of people living in a rural or urban ambience to force the relocation of a liquor bar or permit room from their region.

This resolution is applicable to country liquor and Indian manufactured foreign liquor dispensing permit rooms and bars located in rural and urban areas.

The government resolution provides for a secret ballot method for ascertaining the public will.

Within a gram panchayat, municipal council or corporation jurisdiction if the panchayat, decided by a majority vote or even if a minimum 50 per cent voter presence if recorded for the ballot or even if 25 per cent of the women residing in the region submit their objection to the outlet, it will have to be closed.

Will this not result in a misuse of the provisions by unscrupulous permit room and bar owners who might seek to shift their outlets from a rural to urban address? Is there any safeguard against this?

Under the provisions, a liquor selling outlet in a rural area can relocate only to another rural area. Hence there is no scope for misusing the government resolution.

What has happened to the proposal to allow the sale of mild beers from departmental stores and grocery stores?

We are still considering the proposal. Unfortunately, when we first broached the idea an impression was created among the masses that we intended to allow beer sales at the friendly neighbourhood 'kirana' shop where people go to buy their general provisions such as the public distribution system.

This, though incorrect, created a misunderstanding among people and objections were raised.

Look at the situation of the beer industry. Today beer manufacturing factories are operating at only 40 per cent of their capacity due to the slump in sales.

Unless the retail outlets selling beer are increased, the demand cannot match the supply potential and boost revenues for manufacturers as well as the government from this sector. We are considering how to introduce this concept in Maharashtra without creating a confusion on the issue.

The government's decision to raise the annual liquor licence fees for wine shops, bars and permit rooms by more than 300 per cent has come in for a lot of criticism from the industry.

The facts are actually to the contrary. Not a single wine shop licensee has sought to surrender his liquor license whereas some permit rooms that were not really enjoying good business have started to surrender their licenses.

In respect of wine shops you must remember one thing. Twenty nine years back the state government had issued 1,500 licenses for operating wine shops in the state.

In all these years no further licenses were issued. In 29 years these wine shops owners who started off as small outlets have managed to grow and prosper.

They are certainly not constrained by the tariff hike and this fact is proved since none of them has surrendered his licence.

What fresh initiatives are in store in respect of the wine parks policy? Has there been much success?

The wine park policy of the state government, which among other things provided for an 100 per cent excise duty exemption in the first year, followed by a 75 per cent exemption, has offered a boon to investors.

Although wine is not consumed in large quantities in India, the benefits it would mean to grape farmers in the state is tremendous. Already 100 licenses have been issued for wine processing units.

What are the state's excise collections pegged at and how does it compare to the same period last year?

Excise collections have registered a 10 per cent increase between April 1, 2002 and September 30, 2002, when Rs 780 crore (Rs 7.80 billion) was collected.

While the last fiscal saw an excise duty collection of Rs 1,950 crore (Rs 19.50 billion), we have set a target of Rs 2,400 crore (Rs 24 billion) for the current fiscal.

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