Months before licence renewal, permit rooms in city appeal to excise ministry to reduce licence fee by 20% as soaring liquor prices are endangering hospitality sector

While the coffers of the state excise department are abounding owing to the steep rise in liquor prices, permit room owners are drained to the last drop trying to make liquor as cheap as they can. Since liquor prices in Maharashtra have risen by almost 50% over the last year, patronage to bars is slowly eroding, proprietors complain.

Just a few months before bar licences are due for renewal, bar owners have put up a clause in front of the excise ministry asking them to reduce the licence fee by 20 per cent, especially for permit rooms (FL-III licence holders) operating in Mumbai whose returns have halved compared to last year, they claim.

"We had no choice but to beg the department to reduce the licence fee rather than increase it. A sharp drop in liquor sale due to a 40-50% hike in prices - because of 25% VAT at the first point, 10.3 % service tax by central government etc - is making the liquor dearer. As such, we have lost more than 50% of our business. We are now unable to absorb the losses of the last few months. We had to appeal to the ministry to consider our demand before the renewal period," said Sudhakar Shetty, president, Indian Hotel And Restaurant Association (AHAR), adding, "The taxes are threatening the existence of many bars as it is."

As per the excise norms, every year the excise department renews licences of all FL-III licensees where even the licence fee increases by Rs 10,000. Establishments that are not able to absorb the licence fee will change have to change their line of business or shut down, resulting in loss of employment for many, a Navi Mumbai bar owner said.

'Too meddlesome'
Shetty and other AHAR members will soon meet the excise minister over the "bleak future of the hospitality industry". He said, "There are multiple points of interference by police and other law implementing authorities to permit room-licensed premises. Even the traffic police have threatened to cancel our excise licence if they find any customer in the vicinity of our outlets without a drinking permit. These factors have added to our woes and before bars shut down or are forced to charge customers exorbitantly, the department has to give us some respite."

Saiprasad Shetty, general secretary of Thane Hotel Owners' Association, reverberated Shetty's sentiments. "The government needs to help us from going into debt. Time and again, our industry faces some or the other revision in laws and norms. People are reeling under some or the other debt," Shetty said.

Customers edgy
"This time I am with bar owners as we can see that they have no choice but to pass on the cost to consumers. The government has to do something before they start losing on revenues as well. Tipplers are frustrated," said Mohnish Arora, a resident of Andheri.