Despite conducting 18 rounds of auctions since March, the UT excise and taxation department has been unable to sell 18 out of 95 liquor vends in the city, leading to a potential loss of nearly ₹100 crore in the financial year 2023-24.
During the 18th round of auction held on July 18, for the fifth consecutive time, the department failed to attract any bidders. The same lack of interest from bidders was observed during the 5th, 8th, 9th, and 12th rounds as well.
To entice potential buyers, the department has been reducing the reserve price by about 5% since the third round, and it escalated to 50% by the 18th round.
Due to the disappointing outcome of the auctions, the department has decided to put further auctions on hold. They plan to discuss the matter with higher authorities and are considering reducing the quota, given that four months of the financial year have already passed.
In the current financial year, the department had set a revenue target of ₹830 crore from liquor vends’ license fees, but they have only managed to collect around ₹500 crore so far.
Contrastingly, in the previous financial year 2022-23, the department succeeded in selling 93 out of the total 96 liquor vends after conducting seven auctions.
Liquor contractors have attributed the poor response to the auctions to the more favorable excise policy offered by Punjab, which provides better perks than Chandigarh’s policy.
In Punjab, the VAT is only 1% of the ex-distillery price (EDP), whereas in Chandigarh, it is a significantly higher 12.5%. Additionally, Chandigarh imposes an excise fee ranging from ₹445 to ₹3,500 per case, while in Punjab, it is a flat 1%.
The fixed quota of 18 lakh liquor boxes per year in Chandigarh has also been criticized by contractors, as unlifted liquor cases result in penalties of ₹900 per case for Indian made foreign liquor and ₹3,500 per case for foreign liquor. In contrast, Punjab has an open quota system with no such compulsion.
The higher license fee in Chandigarh, which averages around ₹6 crore, has further contributed to the lack of interest in the auctions, as compared to the license fee in Punjab, which ranges from ₹1.5 crore to ₹2 crore on average.
