In a major relief to the Andhra Pradesh Governement, the Hyderabad High Court allowed interim relief against the Centre’s Service Tax demand on AP Beverages for the sale of liquor.
In a notice send to the Corporation, the centre, for the AY 2010.12, demanded payment of 612 crore as service tax and an equal amount as penalty for non-payment of the tax on sale of liquor. It gave an ultimatum to the AP Beverages Corporation to pay the entire 1,224 crore in order to avoid further penal action.However, the Court,restrained the Centre from taking any coercive steps.
Challenging the order of the principal commissioner of service tax, the Corporation contended that the Centre has no jurisdiction to impose tax on them in this manner.
AP’s Advocate general Dammalapati Srinivas told the bench of Justice V Ramasubramanian and Justice J Uma Devi that excise income is a state subject and the Centre’s Service Tax wing has no purview to act on it.
“The privilege fee we collect from licensed liquor shops and bars should not be seen as a consideration for the purpose of levying service tax,” the AG said and sought interim relief.
The bench, while seeking a counter from the Centre and its service tax principal commissioner, directed them not to resort to any coercive steps in the meantime.
The case was posted to two weeks for further hearing.
