In a climbdown from its firm stand, the Kerala Government has allowed Bevco to pay the excise duty for firms selling liquor in the state. Earlier, the government had ordered the liquor firms to pay the excise duty directly to the treasury.
As per the latest decision, liquor companies should maintain a security deposit with Bevco equal to the amount of excise duty they have to pay. Firms whose deposits are lower than the duty amount should remit the difference to Bevco. This arrangement will be effective from January 15.
Bevco or the Kerala State Beverages Corporation is the sole liquor wholesaler and retailer in Kerala.
Every year, Bevco has to pay around Rs 2,500 crore as excise duty to the government on behalf of the liquor companies. More than 100 firms supply liquor to Bevco. Even though the Abkari Act says that companies should pay excise duty directly to the government, the amount was being routed through Bevco for the past several years. Bevco reduced the excise duty amount from the price of liquor paid to the companies and transferred it to the government.
However, an audit report pointed out that this arrangement – which was a violation of the law – caused additional financial burden on Bevco. Subsequently, in November 2021, Bevco’s Managing Director ordered that companies should pay excise duty directly to the government.
As a mark of protest against this order, the liquor firms reduced their supply to Bevco. Facing pressure over lack of adequate supplies to Bevco, the then Excise Minister M V Govindan held talks with representatives of the companies and the order was put on.
During the meeting between the minister and the companies, it was also decided to allow firms to directly pay excise duty from the financial year 2022-23. But this decision was not implemented. Now, it is alleged that the latest order was issued to sabotage this decision to favour the liquor firms.