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.

HRAWI WELCOMES THE GOA BUDGET - APPEALS TO MAHARASHTRA GOVERNMENT TO FOLLOW SUIT

Mumbai: Hotel and Restaurant Association of Western India (HRAWI) has welcomed the revisions announced in the Goa vote-on-account budget for the state. The state has granted several sops and reviewed existing schemes for the tourism sector. Citing this as an ideal example of a state promoting hospitality and tourism, the HRAWI in Mumbai has appealed to the Maharashtra government to emulate Goa and adopt some of the key policies that are in force there.

The HRAWI is the apex body of hotels and restaurants of western region of India. The States covered include Gujarat, Madhya Pradesh, Maharashtra, Goa and the union territories of Daman-Diu and Dadra & Nagar Haveli.

“We applaud the administration of Goa for being a pro-tourist state. The success of tourism in Goa is driven not by the beautiful beaches alone, but also by its tourism friendly policies. The Goa Government’s decision to relax tax burden by 60% during off season is a visionary move. This will not only help hotels to sustain during the slump and serve tourists better during the peak season, but will also encourage budget tourists to visit Goa during off season and increase absolute collection of tax,” says Mr. D.S. Advani, President, HRAWI.

Meanwhile, in Mumbai, hotels are paying the highest taxes in the country. “We’ve been requesting the administration to re-consider the taxes imposed as Luxury Tax in hotels. Hopefully, our government here will take notice of our neighboring state’s tax structures and give the hotel industry the much needed boost,” added Mr. Advani.

“We are urging the government to pay heed to Goa's policies. We being a neighboring state that’s just 45 minutes away by flight are losing most of our tourism to the state of Goa on the basis of tax disparity. This needs to change and our government needs to realize that tourism is the sleeping giant in Maharashtra. We have the kinds of terrain to make inbound tourists stay that many days longer,” says Mr. Gurbaxish Singh Kohli, Vice-President, HRAWI.

The hotel industry has been engaging with the Maharashtra Government at various levels for a revision in the Luxury Tax. Presently, any hotel room with a tariff of above Rs.750/- and up to Rs.1199/- attracts a tax of 4% and those above Rs.1200/- attracts 10%.

“We have been repeatedly requesting for an increase in the threshold limits. Since, a mere Rs.750/- does not justify being called luxury in today’s scenario, we are proposing that the limit be raised to at least Rs.2000/-. Also 10% tax is exorbitant. So we have proposed that the next applicable tax slab be 6% for a room tariff of above Rs. 3000/-,” adds Mr. Kohli.

“Maharashtra has one the most varied and beautiful landscapes in the country. The serene coastline alongside the bountiful forests and majestic mountains make Maharashtra a spectacular destination. Add a dash of culture and heritage, and the State becomes a powerhouse in Tourism. Mumbai is the icing on the cake. With a little bit of incentives, tourists who come here for business can easily be persuaded to extend their stay and add a few days of pleasure. Our request to the state administration is to harness the tremendous potential that our city has to offer and in the process create wealth for the State and job opportunities for its residents,” concludes Mr. Kamlesh Barot, immediate past-President, HRAWI.