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Good news for tipplers as liquor turns cheap again in Puducherry after COVID tax withdrawn

However, this comes at a time when COVID-19 cases are spiking in the UT, raising concerns.

Published: 08th April 2021 08:19 PM  |   Last Updated: 08th April 2021 08:19 PM   |  A+A-

Liquor shop, Alcohol

Image for representational purpose only. ( File | EPS)

Express News Service

PUDUCHERRY: In good news for tipplers, liquor in Puducherry has once again become cheap, with the Special Excise Duty (SED), also known as the COVID tax, on it withdrawn by the excise department after nearly a year.

This follows the expiry of the validity of the previous notification issued with respect to the levy of the duty in all the four regions of the UT till April 7.

However, this comes at a time when COVID-19 cases are spiking in the UT, raising concerns.

The SED was levied in May last year to bring the prices of liquor equivalent to that of the adjoining states in order to arrest the spread of COVID-19.

After the first relaxation of lockdown rules, the SED (at the rate of 25 percent to over 300 percent) was levied on about 154 brands of IMFL products and 20 percent for arrack.

Around 920 brands of liquor are being sold in Puducherry of which 154 are being sold both in Puducherry and Tamil Nadu. The prices of these 154 brands were brought on par with that in Tamil Nadu with varying rates of SED which doubled and tripled the existing prices resulting in a slump in liquor sales in Puducherry. Initially, this SED was imposed from last May to August and subsequently extended till April 7 this year.

Due to the high rates of liquor as compared to before, not only was the booming liquor business in Puducherry hit but also the general trade as well as the hospitality sector. It also affected the government revenue from both excise and commercial taxes.

On November 30, the government tried to bring down the SED, but the then Lt Governor Kiran Bedi did not approve its recommendation to slash the SED and ordered its continuance.

Explaining the reasons for continuance of SED on liquor for another two months, Bedi said the COVID situation in Puducherry is just stabilising and there are a series of festivals, namely Christmas, New Year and Pongal coming up. Further the COVID status of the UT vis-a vis that of neighbouring states of Tamil Nadu, Kerala and Andhra Pradesh needs to be studied by the ICMR and their views taken before tinkering with the existing arrangements.

Even after COVID-19 cases in the UT came down, the government continued the SED, perhaps to keep the tourists minimal and ensure that cases do not spike again.

The quantum of excise revenue, a major revenue grosser, as well as its effect on VAT and GST revenue are not known. However, liquor merchants, tourists and traders in general were very unhappy about it.

Tourists were caught by surprise on finding out the price of liquor and felt disappointed on coming to Puducherry, said a trader.

"People from neighbouring places used to come to Puducherry to make purchases, have a drink, eat in a restaurant, fill petrol in their vehicles and leave. Others used to come and stay in hotels and guesthouses, enjoy a weekend and leave. But the high prices of liquor have become a deterrent, resulting in business remaining at a low ebb. When everything has been opened, why should the SED on liquor alone be continued," asked M Sivashankar, President of the Puducherry Traders Federation.

Liquor merchants had been sore over the extension of the SED as sales plummeted. "The business is down by 50 percent and will remain so till SED remains," V Arunanantham, President of the Liquor and Wine Merchants Association, had said. 

However, though the SED has been withdrawn, traders are not enthusiastic about it as COVID-19 cases are spiking and tourists are unlikely to come. Even locals who restricted their drinking habits due to high rates are yet to know about the lower prices now, said a liquor merchant. "It will take time to restore the business," he said.



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