Clarification related to supply of grant of alcoholic liquor license.
Circular No. 121/40/2019-GST
F. No. 354/136/2019-TRU
Government of India
Ministry of Finance
Department of Revenue
Tax research Unit
North Block, New Delhi,
Dated the 11th October, 2019
The Principal Chief Commissioners/ Chief Commissioners/ Principal Commissioners/
Commissioner of Central Tax (All) / The Principal Director Generals/ Director Generals
Subject– GST on license fee charged by the States for grant of Liquor licences to vendorsreg.
Services proved by the Government to business entities including by way of grant of
privileges, licences, mining rights, natural resources such as spectrum etc. against payment of
consideration in the form of fee, royalty etc. are taxable under GST. Same was the position under
Service Tax regime also with effect from 1st April, 2016. Tax is required to be paid by the
business entities on such services under reverse charge.
2. GST Council in its 26th meeting held on 10.03.2018, recommended that GST was not
leviable on license fee and application fee, by whatever name it is called, payable for alcoholic
liquor for human consumption and that this would apply mutatis mutandis to the demand raised
by Service Tax/Excise authorities on license fee for alcoholic liquor for human consumption in
the pre-GST era, i.e. for the period from 01-04-2016 to 30-06-2017.
3. Grant of liquor licences by State Government against payment of consideration in the
form of licence fee, application fee etc. was a taxable service under Service Tax, therefore to
implement GST Council’s recommendation, Central Government decided to exempt service
provided or agreed to be provided by way of grant of liquor licence by the State Government,
against consideration in the form of licence fee or application fee, by whatever name called,
during the period from 01.04.2016 to 30.06.2017. Clause No. 117 of Finance (No. 2) Act, 2019
may be referred in this regard.
4. GST Council in its 37th meeting held on 20.09.2019 further recommended that the
decision of the 26th GST Council meeting be implemented by notifying service by way of grant
of alcoholic liquor licence, against consideration in the form of licence fee or application fee or
by whatever name it is called, by State Government as neither a supply of goods nor a supply of
service. Therefore, in exercise of powers conferred under sub-section 2 (b) of section 7 of CGST
Act, 2017, Notification No. 25/2019-Central Tax (Rate) dated 30th September, 2019 has been
5. GST Council further decided in the 37th meeting held on 20.09.2019, to clarify that this
special dispensation applies only to supply of service by way of grant of liquor licenses by the
State Governments as an agreement between the Centre and States and has no applicability or
precedence value in relation to grant of other licenses and privileges for a fee in other situations,
where GST is payable.
6. Difficulty if any, in the implementation of this Circular may be brought to the notice of
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