Alcohol is likely to become more expensive in Pune with owners of hotels, bars and restaurants thinking to increase prices after a state government directive hiked the license renewal fee by 10 per cent. As per the Excise Commissioner’s government resolution, the license renewal fee has been increased by 10 percent for permit rooms serving a population of more than 30 lakh.

Protesting against the hike, the Pune Restaurant and Hoteliers’ Association has called for a rollback of the decision from the state government and none of the near 1,200 hotels and restaurants running permit rooms in Pune, that are part of the association, have paid the renewal fee. “We are left with no other choice but to increase the rates. We are being subjected to harsh taxation, and as a result, prices of liquor will increase by at least 15 percent,” said Sudhakar Shetty, owner of Apache Bar on Fergusson College Road.

The government’s decision to increase the license fee by 10 percent would mean that the hotel owners will have to pay in advance almost 3.55 lakh as an annual renewal fee. “This is a tax which will certainly be difficult for us to pay. Furthermore, the decision has come in addition to the already hiked service tax which the government announced during the Union budget,” said Ganesh Shetty, president of Pune Restaurant and Hoteliers’ Association. Hotel owners complain that they are already paying 25 percent VAT on sale of liquor, and an additional 5 percent on serving the food. The additional license renewal fee and service tax are bound to increase the rates of alcohol.

Ganesh Shetty further informed that the association has already started negotiating with the state government over the issue and are waiting for March 15, 2011, when the government is expected to clarify its stance on the problem. “In a worst case scenario, where the government doesn’t roll back the license renewal fee, there will be no option left with those running the permit rooms but to increase the prices. I know that the decision is not in the best interest of the consumers, but we have no other choice left,” he said.

If the prices of alcohol finally rise, then each bottle of beer which cost around Rs 140 now, will come at a price of Rs 165-170. Similarly, the cost of 60ml peg of whiskey may increase up to Rs 155-185, from its current price of Rs 135-155.

However, superintendent, State Excise, Pune, Vijay Chinchalkar said that the hike is not happening for the first time, and the hotel owners are unnecessarily creating a fuss about it. “The license fee is being revised every year and this is not for the first time that we have decided to hike it. This time around it has been increased only by 10 percent,” he said. Furthermore, Vijay warned that the hotels will have to pay the lease renewal fee by March 31, and all those who defy the tax and decide to run without valid licenses will be shut down. The government is not forcing the owners of the permit rooms to opt for license renewal. It is for hotel owners to decide on lease renewal, but the government will allow only those hotels with valid license to run, and others will be taken out of business.

- Siddhartha Laik