HOTEL INDUSTRY FILES WRIT PETITION WITH HC - OPPOSES 50% HIKE IN THE EXCISE LICENSE FEE OF PERMIT ROOMS

Mumbai: In response to Maharashtra Government’s proposal to increase the license fee of permit rooms and wine shops, the Hotel and Restaurant Association of Western India (HRAWI)  in Maharashtra has filed a writ petition in the Bombay High court opposing the proposed hike.

The Maharashtra Government had in the month of February proposed to hike the license fee of permit rooms and wine shops by as much as 50%. This had come in for heavy criticism from the hospitality industry which had termed the proposal as regressive and a certain death knell for the hotel industry.

“Hotels in Maharashtra are one of the most taxed in the world. The industry cannot bear any more burdens. As it is, the hotels pay an aggregate of direct and indirect taxes to the tune of 38% overall, compared to 5-7% taxes in countries like Japan and China. We have now reached the stretch point. If the proposed hike in fees comes into effect many hotels will shut down. Hence, we’ve taken this step to protect the interests of the hotel industry and will hope for justice,” says Mr. D.S. Advani, President, HRAWI.

HRAWI has informed all its hotel & restaurant members regarding the development and requested to await the outcome of the case before renewing their excise license. The hearing of the same is likely to come up for Hearing before the 25^th of March 2014.

“As it is customers have been complaining of high costs. Any more increase and they will entirely stop visiting permit rooms. This does not mean that they will stop consuming alcohol; it will merely result in customers opting to drink at their houses or shifting to spurious liquor or country liquor. Consequently a lot of permit rooms will close down and employees will lose jobs, besides of course the gross tax collections witnessing a drop,” says Mr. Gurbaxish Singh Kohli, Vice President, HRAWI.

License fee for permit rooms is proposed to be increased from Rs. 366,000 to Rs. 544,000 and that for beer shops, from Rs. 95,000 to Rs. 150,000. 

HRAWI has been engaging with the Government at various levels to rationalize license fees and taxes. “On one hand the Government is bringing in departments within the Municipality like Ease of Business for promotion of Tourism in the State, facilitating a Single Window Clearance for simplifying procedures and on the other hand create such arbitrary revenue faux pas like the Entertainment Duty and now this steep rise in Excise fees,” says Mr. Kamlesh Barot, the immediate past President of HRAWI.

“The complacency that the Maharashtra State always gets into for such anti-tourism policies, is due its gateway privilege geographical position, that it ranks in the highest among all States of India on tourist arrivals. Very small stimulants to hoteliers will show a major effect due to sheer numbers in revenue maximization, but the mindset on tourism with the Government is missing, albeit at a cost of our hotel industry’s progress, an example being this hike in the excise fee,” concludes Mr. Barot.