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Sunday, August 16, 2015

what is in a Name ? - a rose by ....AP to rename Beverages Corporation to avoid Tax

Some say, that the  sweetest music to a human is hearing their own name.  On the contrary,   "A rose by any other name would smell as sweet" is a quotation from William Shakespeare's play Romeo and Juliet, meant to say that the names of things do not matter, only what things are  !!

The dictionary meaning of  ‘ beverage ‘ - : anyone of various liquids for drinking, usually excluding water. Photo of Aavin’s Andhra equivalent - Vijaya

Today’s  The New Sunday Express, Tirupathi edition screams ‘ AP to rename beverages Corporation to avoid Tax’ …..bemused read on !

Having learnt a lesson through the hardway from Income Tax Dept, the State Government of AP is now contemplating no to remain na├»ve but act with a little bit of foresight.  The Govt. had a bitter experience when the Central tax sleuths slapped notices for payment of tax arrears amounting a whopping Rs.9000/- cr for the last 10 years.  Not it has become sober and is planning to rename ‘ AP Beverage Corporation Ltd’ as “ AP State Beverage Corporation” and make it a totally Govt institution to seek exemption from payment of income tax on the income that it earns from the sale of liquor.  For renaming the Corporation and making it a govt institution, an amendment to the Act has to be made under which the Corpn was instituted.  A bill could be moved in the next session of Assembly on this.

Quoting a source the newspaper states that if the Corpn became a Govt entity, whateer,the Govt earned through it would not be considered as income.  The proceeds from liquor sales will go into the Treasury and therefore IT cannot lay it hands on Govt.  Further no vestiges of the Corporation will be allowed to remain with the new Govt entity. 

The IT Dept slapped a notice on AP Beverages Corpn for Rs.1468.63 crores for 2012-13 and 2013-14.  The arrears, according to IT Dept, wre of the order of Rs.9000 crores if  the last 10 year period was taken into consideration.  As the Corpn, did not pay up, the IT seized liquor depots across the State forcing the Corpn to take legal recourse.  The case is yet to be disposed by the Court.

The newly born Telengana is luckier, though notices were served on it too – it could obtain stay from the High Court on the ground that Telengana Beverage Corporation was not in existence during the time for which the notices were slapped.  The AP State could ill-afford such a luxury as it is the residuary state.  AP officials believe that as regards the sale of liquor either to private licensees or to the Govt, the Corpn will not have to pay income tax once the amendment is made to the act.  However, at the retail outlets, the private licensees will have to pay income tax based on their income.  

Miles away, in Salt Lake city, Utah, USA, a barbershop is doing brisk business since opening their doors in the new town – due to one key addition ! In addition to haircuts, Jed’s Barbershop has been serving complimentary root beer in the bottle to customers at their downtown location for the past 4 years. But when they opened a second location in Sugar House three months ago, they changed it up a bit for the sheer fun of it.  They  installed the root beer tap, but  didn’t expect his first customer to be the Health Department, telling them that they  had to shut the tap down. The rules said that they would have to have a food-handler’s permit and  need a door that separates the waiting area from the saloon.

In Tamilnadu, anti-liquor agitations are on and took a violent turn when an employee died when a TASMAC shop was torched.   One could recall that decades ago,  two corporations — one exclusively to market liquor and another to manufacture it were formed.   The marketing arm was called TASMAC, or Tamil Nadu State Marketing Corporation, and the manufacturing arm was called Tamil Nadu Spirit Corporation, or TASCO.  It was stated that considering that illicit liquor affect the health and economic conditions, the State’s aim was to wipe out illicit liquor.  Years later  TASCO was abandoned and private companies were allowed to manufacture liquor, and you know why ! .

With regards – S. Sampathkumar

16th Aug 2015.

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