GST on Liquor License Fees and State Government Grants
<p>The Circular No. 121/40/2019-GST provides important clarifications on the GST applicability to the license fees charged by state governments for granting liquor licenses. Key highlights include:</p><ul><li><strong>GST Exemption on Liquor Licenses</strong>: The GST Council decided that license fees and application fees for alcoholic liquor for human consumption are exempt from GST, both under the pre-GST era (from 01.04.2016 to 30.06.2017) and post-GST implementation.</li><li><strong>Reverse Charge Mechanism</strong>: Earlier, such services were taxable under the Service Tax regime, with tax paid by business entities through the reverse charge mechanism. The current decision exempts such services from GST.</li><li><strong>Legal Framework</strong>: The decision, which was formalized through Notification No. 25/2019-Central Tax (Rate), clarifies that the grant of liquor licenses by state governments is not considered a supply of goods or services under GST.</li><li><strong>Scope of Application</strong>: This exemption is limited to the grant of liquor licenses by state governments. It does not apply to other licenses or privileges for which GST may still be applicable.</li></ul><p>This circular marks a significant move to reduce tax liabilities for liquor vendors and align the tax system with the GST Council's recommendations.</p><p><a href="https://cms.plasament.com/storage/chirag-singla/circular-cgst-121.pdf">circular-cgst-121</a><br> </p>