Maharashtra Govt’s move to hike 15% license fee for 2022-23 stuns cash strapped restaurant and bar industry

The restaurants and bars industry, which is severely hit due to the coronavirus induced lockdown and the successive curbs, faces yet another shock as the Maharashtra Government has increased the liquor license fee by 15% for the year 2022-23. The rise in license fee ranges between Rs 66,500 (against Rs 57,750 in 2021-22) and Rs 7,97,000 (against Rs 6,93,000 in 2021-22) for restaurants and bars depending on the population size. There are about 20,000 bars and restaurants in the state who will have to shell out more money. The state government has released a gazette notification signed by the Excise Commissioner Kantilal Upam. With the hike the government expects to mop up additional Rs 300 crore.

The government’s notification came a day after the state cabinet decided to allow sale of liquor from the supermarkets and walk-in stores including grocery shops across Maharashtra. The 15% hike is done as per the Rule 4 of the Maharashtra Potable Liquor (Periodicity and Fees for Grant, Renewal or Continuance of License) Rules, 1996.

However, the state government has justified the hike saying that the government had rolled back a 15% increase for 2020-21 and also gave a 50% concession for payment of license fee for 2020-21. For the year 2021-22, the government did not hike the license fee considering the pandemic situation. ” The government has considered demands made by the industry. Overall the government has given a 33% relief in license fee for restaurants and bars in 2020-21 and 2021-22,” said a senior officer.

The National Restaurant Association of India in a letter to the Excise Minister Ajit Pawar has urged to roll back the 15% fee hike citing that industry has been subjected to most severe restrictions in Maharashtra over last 2 years ranging from complete shutdown to restricted use of capacity, truncated operating hours, mandate to serve only to double vaccinated and more. The Association’s Mumbai Chapter President Pranav Rungta also urged the minister to allow restaurants and bars to pay the license fee quarterly instead of yearly. This would allow them some liquidity support to enable them to pay salaries and rent on time.

Further, Rungta said the Association has demanded that license fees be charged on a pro rata basis to the capacity of restriction and timing to operate.

On the other hand, the Hotel and Restaurant Association (Western India) has demanded a waiver of 50% license fee for 2022-23 and allow payment in four installments. ‘’Presently, there is a considerable amount of fear and anxiety in the sector. Significant capital has been ploughed in the industry to reopen and restart operations. Also, there has been a lot of effort put in to bring back workers. Under these circumstances, it is impossible for FL3 (restaurants and bars) license holders to pay license fees,’’ said the Association President Sherry Bhatia.

Additionally, the Indian Hotel and Restaurant Association (AHAR) President Shivanand Shetty demanded that the state government should waive 50% license fee for 2021-22 in view of the present delicate state of finances of the industry. ‘’The 15% rise in license fee for 2022-23 needs to be rolled back. The industry has brought to the state government’s notice that establishments were closed for 81 days, for 48 days they were allowed to operate until 4 pm, for 82 days allowed to operate until 10 pm with 50% capacity, for 66 days allowed to function until 12 am which helped the revenues to come to 50%. The restaurants and bars were fully operational as per licensed timings for only 15 days out of 292 days for 2021-22,’’ he noted.

Both Bhatia and Shetty claimed that the relief is needed as the successive COVID 19 waves has rendered the restaurant industry severely affected due to low footfalls and fear in the minds of patrons to visit bars.

Rungta argued that the upward revision in license fee was quite harsh on the industry as it is not in a position to bear any additional burden.

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