Hookah bars in Pune come under radar for charging GST on alcoholic drinks

Hookah bars in Pune booked under GST raids by the Directorate General of GST Intelligence (DGGI), Indian Express reported. 

The hookah bars came under radar for serving alcoholic beverages levied with GST even after the PM Modi government had kept alcoholic beverages out of the GST ambit.  

The officials from DGGI raided a number of hookah bars and lounges on March 27 and 28 as part of its drive to catch GST evaders. The searches were co-ordinated by Vikram Wani, additional director, DGGI, Pune, the publication reported. 

The owners of these raided lounges and bars were filling up their pockets with the GST collected, DGGI claimed. 

The report stated that the lounge owner did not have GST registration despite having a turnover of over Rs 6.5 crore. 

“Alcoholic drinks are outside the purview of GST. However, some lounges have adopted the modus operandi of charging GST on alcoholic drinks also and not paying that to government exchequer. In the case of one lounge, the GST collected in such a manner was found to be around Rs 20 lakhs,” said a statement issued by DGGI Pune.

“Such cases of blatant tax evasion where GST is collected from customers and pocketed by businessmen, instead of depositing in to government account , are also a fraud on the general public. The general public should come forward and contribute in the effective implementation of GST by sharing information about GST evasion instances,” Vaishali Patange, deputy director at DGGI Pune, who is probing the case told the newspaper. 

At present, liquor had been kept Liquor outside the goods and services tax (GST) as it requires a constitutional amendment to bring it under the ambit of the new tax regime. However, there are expectations that the decision can still impact the sector.

Currently,  the tax rate for traders of goods in the composition scheme is 1%, and for manufacturers and suppliers of food or drinks for human consumption (without alcohol) is 2% and 5% repectively.