GST is applicable on the transfer of a liquor licence from one person to another

[rajashekharaiah AM]

Whether GST is applicable on the transfer of a liquor licence from one person to another, where the transfer is between two private individuals and there is no involvement of the Government?

[KALLESHAMURTHY MURTHY K.N.]

Sir, 

In the CBIC Circular No. 121/40/2019-GST dated 11-10-2019, it was clarified in terms of Notification No. 25/2019-Central Tax (Rate) dated 30th September, 2019 that the grant of alcoholic liquor license by State Government, against consideration in the form of license fee or application fee by whatever name it is called, as neither a supply of goods nor a supply of service. So also, the transfer of a liquor license from one person to another is a nontaxable transaction.

[Sadanand Bulbule]

I welcome this clear reply.

[Anand Lobo]

Dear Murthy Sir, The matter at hand concerns the subsequent sale of a liquor licence by an existing shop owner to another person. I want to understand the taxability of this secondary transfer, not the taxability of purchasing the licence from the Government.

[KALLESHAMURTHY MURTHY K.N.]

Dear Sri Anand Lobo, 

Sir, 

The grant of a liquor license is non-taxable under GST. As it appears in the query, transfer of the license does not form a supply of service, hence no GST is applicable. It was clear in my answer at Sl. No. (1).

In case of any other segments in the transfer of licensing liquor unit, please refer to an advance ruling delivered by Hon’ble Karnataka Appellate Authority for Advance Ruling, in the case of United Breweries Ltd., 2018 (11) TMI 283 - APPELLATE AUTHORITY FOR ADVANCE RULING, KARNATAKA, wherein it has held that GST is liable to tax under the Service Code 999799.

[Shilpi Jain]

In this case the purchaser may be paying the license fee to the state government whereas it may be paying a transfer fees or some other commercial consideration to the seller. If thats the case then the amount paid to the seller may not be in the nature of a license fee and could be taxable. Contract terms relevant

AI Summary

GST on transfer of liquor licence can be taxable or non taxable depending on government grant versus private sale.
A State grant of an alcoholic liquor licence against a licence or application fee is treated as neither supply of goods nor services and thus non taxable; by contrast, a subsequent private transfer or sale of an existing licence involving commercial consideration paid to the seller can attract GST depending on contractual terms, identity of payor/payee, and service classification.