Licence fee for hotel, restaurant bars rolled back partially

SHIMLA: Under pressing demand from hotels and restaurants running bars, the government has partially rolled back the increase in licence fee for bars and also reduced the minimum annual quota, but the rates are still high and not competitive.

Bhanu P Lohumi

Tribune News Service

Shimla, August 25

Under pressing demand from hotels and restaurants running bars, the government has partially rolled back the increase in licence fee for bars and also reduced the minimum annual quota, but the rates are still high and not competitive.

The licence fee for bars run by hotels and restaurants had been increased by nearly 700 per cent during the last six years and the fee for bars, which was Rs 2,50,000 in 2018-19, was hiked to Rs 3,75,000 in 2019-20, which was unsustainable.

The minimum annual quota for bar licence holders was another bone of contention. Stakeholders were demanding the abolition of minimum quota but the government only reduced it and kept intact the other punitive measures like imposition of penalty for not lifting the minimum quota and cancellation of licence for repeated default.

The licence fee for hotels having bars is fixed on the basis of the number of rooms and classification of the area. The reduction in fee effected by the government ranged between 18 and 22 per cent.

Further, the minimum annual quota for Indian-Made Foreign Liquor (IMFL) and beer has been cut by 40 to 50 per cent. The cut in licence fee will incur a loss of about Rs 5.25 crore to the state exchequer but it will be wiped out by an increase in sale, said Principal Secretary (Excise and Taxation) Sanjay Kundu.

The move was aimed at promoting tourism and sale in bar and restaurants was declining due to increase in the price of liquor, he added.

The Shimla Hotels and Restaurants Association (SHRA) had been demanding rollback of the hike in licence fee and scrapping of the minimum annual quota system but the government only gave a marginal relief, said president of the association Sanjay Sood, adding that while bar owners suffered losses due to drop in sales, the condition of lifting the minimum annual quota added to their woes.

The increase in licence fee had hit the tourism industry.

“The government has partially modified the licence fee but the action is far short of our demands and more rate cuts and the abolition of minimum quota is essential for bailing out the tourism industry which is already in recession,” said president of the Tourism Industry Stake Holders Association Mohinder Seth.

Now cheaper by 22 pc

The licence fee for bars run by hotels and restaurants had been increased by nearly 700 per cent during the last six years
The fee for bars, which was Rs 2,50,000 in 2018-19, was hiked to Rs 3,75,000 in 2019-20
The reduction in fee effected by the government ranged between 18 and 22 pc
The minimum annual quota for IMFL and beer has been cut by 40 to 50 pc
It will incur a loss of about Rs 5.25 crore to the state exchequer