Notification No. 25/2019 - Central Tax (Rate) Explained

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Notification No. 25/2019 - Central Tax (Rate): Seeks to notify the grant of alcoholic liquor license neither a supply of goods nor a supply of service as per Section 7(2) of CGST Act, 2017.

[TO BE PUBLISHED IN THE GAZZETE OF INDIA, EXTRAORDINARY, PART II, SECTION 3, SUB-SECTION (i)]

G.S.R......(E).- In exercise of the powers conferred by sub-section (2) of section 7 of the Central Goods and Services Tax Act, 2017 (12 of 2017), the Central Government, on the recommendations of the Council hereby notifies that the following activities or transactions undertaken by the State Governments in which they are engaged as public authorities, shall be treated neither as a supply of goods nor a supply of service, namely:-

“Service by way of grant of alcoholic liquor license, against consideration in the form of license fee or application fee or by whatever name it is called.”

(Ruchi Bisht)
Under Secretary to the
Government of India

Explanation. - This notification is being issued to implement the recommendation of the 26^th Goods and Services Tax council meeting held on the 10^th March, 2018 that no GST shall be leviable on license fee and application fee, by whatever name it is called, payable for alcoholic liquor for human consumption.

📚 Frequently Asked Questions (FAQs): Notification No. 25/2019 - Central Tax (Rate)

Q1: What is Notification No. 25/2019 – Central Tax (Rate)?

Answer:
Notification No. 25/2019 – Central Tax (Rate) clarifies that the grant of alcoholic liquor licence by State Governments is neither a supply of goods nor a supply of service, and hence outside the scope of GST.

Q2: From which date is Notification No. 25/2019 applicable?

Answer:
The notification was issued on 30 September 2019 and applies from that date, giving clarity to past and future GST treatment of liquor licence fees.

Q3: Which section of GST law allows such exclusion?

Answer:
This exclusion is notified under Section 7(2) of the CGST Act, 2017, which allows the Government to specify activities that are neither goods nor services.

Q4: Is GST payable on liquor licence fee paid to the State Government?

Answer:
No ❌. GST is not payable on:
Liquor licence fee
Liquor application fee
Renewal fee
This applies irrespective of the name given to the fee.

Q5: Why was this clarification necessary?

Answer:
Before this notification, many businesses received GST notices demanding tax on licence fees, treating them as services. This notification ends that confusion.

Q6: Who benefits the most from Notification No. 25/2019?

Answer:
The notification directly benefits:
Liquor shop owners
Bars & pubs
Hotels serving alcohol
Clubs & event venues
Restaurant businesses
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Q7: Does this exemption apply to private parties issuing licences?

Answer:
No. The notification applies only to State Governments acting as public authorities. Private licensing or franchising arrangements are not covered.

Q8: Is Input Tax Credit (ITC) available on liquor licence fees?

Answer:
No ❌. Since liquor licence fee is outside GST, ITC cannot be claimed on such payments.

Q9: Does this affect GST on sale of alcoholic liquor?

Answer:
No. Alcoholic liquor for human consumption is already outside GST. This notification only clarifies the licence fee aspect, not sale of liquor.

Q10: Should liquor licence fee be reported in GST returns?

Answer:
No. Since it is neither supply nor service, it does not need to be reported in GSTR-1 or GSTR-3B.
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Q11: Does this notification override earlier circulars or doubts?

Answer:
Yes ✅. Being a statutory notification, it has overriding legal effect and settles earlier interpretational doubts conclusively.

Q12: Can GST department still issue notice on liquor licence fee?

Answer:
Post this notification, no GST demand should survive on liquor licence fees. Existing disputes can be defended using this notification.

Q13: How does this notification help hotels and restaurants?

Answer:
Hotels and restaurants no longer need to:
Pay GST on licence fees
Litigate GST demands
Block working capital
This improves cash flow and compliance clarity.

Q14: Does this notification apply uniformly across all States?

Answer:
Yes. Since it is issued under the CGST Act, it applies uniformly across India, irrespective of State excise laws.

Q15: What compliance steps should businesses take after Notification No. 25/2019?

Answer:
Businesses should:
Stop charging GST on liquor licence fees
Review past GST demands
Maintain proper documentation
Seek expert advice for dispute resolution
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