While Mohali’s excise department is celebrating its 12.5% higher revenue, Chandigarh is stuck with a major setback as they struggle to auction off liquor vends for the upcoming fiscal year. This situation has highlighted the significant impact excise duty and VAT have on revenue generation.
Even after two rounds of auctions in March, the Chandigarh excise and taxation department has managed only to allot 60 of their total 97 vends for the 2024-25 Excise Policy. A significant portion of their offerings is still unclaimed just a few days before the beginning of the new fiscal year. Darshan Singh Kler, president of the Wine Contractor’s Association, blames the Chandigarh Administration policies for this struggle.
“While Punjab imposes a 1% VAT on the ex-distillery price (EDP), Chandigarh levies a 12.5% VAT. Also, a liquor contractor pays ₹450 to ₹3,500 per liquor case as excise duty in Chandigarh, compared to only 1% duty in Punjab,” he explained.
These factors, according to Keller, have discouraged contractors. He exemplifies this, having reduced this investment in Chandigarh from seven vends last year to just one this year. Instead, he has chosen to focus on Punjab, where the tax is more favorable, and made him invest in two vends which was one previously.
Apart from Mohali’s lucrative tax structure with recent reductions, their vend allotment method played a major role in their 2.5% increase. Mohali uses the draw-of-lots system which is different from Chandigarh’s auction model. In draw-of-lots, participation fees are collected from the applicants, and then through random draws the vends are allocated while Chandigarh’s auction system system awards vends to the highest bidder.
An excise office in Mohali revealed that while Chandigarh stuck to its old auction model, Punjab’s decision to slash prices and utilize the draws-of-lots system incentivized. Previously, lower liquor prices in Chandigarh have attracted consumers from surrounding areas but with slashed prices, Mohali has become a more attractive option for consumers, this has also contributed to the return of Punajb-base contractors to the home state.
Mohali excise department is celebrating a remarkable achievement. They have successfully auctioned off all the 299 liquor vends in their district. This not only ensured the operation ability of all vends but will also bring in INR 528.52 crores in revenues. Mohali Excise department has further profited from the application process itself. They have charged a hefty INR 75,000 per application for their 299 vends, and have generated an additional INR74.40 crore in revenue. This means they have already collected a 30% share of the state revenue from the applications alone.
As per Mohali Assistant Commissioner Excise Department Ashol Chalhotra, the district was divided into 14 groups for the allotment of liquor vends. These groups included areas like Mohali MC, Kharar, Zirakpur, Kurali, New Chandigarh, Banur, Dera Bassi, and Lalru and Mohali expects to see additional revenues that stream beyond the application fees and annual license fees. Additionally, the successful applicants will also be required to pay a 15% security deposit, which is estimated to be around INR 79.27 crore.
The draw-of-lots for vend allocation was conducted in the presence of relevant officers, including an additional deputy commissioner (Rural Development) and representatives from the Excise and State Taxes Department. A large number of applicants were also present to witness the event.
