Foreign liquor sale: Govt waives tax penalty of ₹1.86 cr for BSF canteen, ignores Finance dept's demand

The State Government has waived ₹1.86 crore slapped as differential tax and penalty for short levy on BSF Sector Headquarters, Thiruvananthapuram for the sale of Indian Made Foreign Liquor(IMFL), overruling the objection raised by the Finance Department. K R Jyothilal, Additional Chief Secretary, Department of Taxes issued the order relaxing the penalty amount which was finalised for 2018-19.

The state GST Deputy Commissioner issued an order in 2022 and later in 2023 noting that there were irregularities in payment of tax for the sale of IMFL in 2018-19 at the BSF canteen. As per the notice, there was a default of ₹1.19 crore as GST and an amount of ₹67.84 lakh was fixed as penalty for the period between April 2019 to December 2023.

The GST rate of IMFL sale was increased from 135% to 210% in 2018-19. BSF canteen however continued with the old rate of 135%, resulting in dues. Comd SHQ BSF Trivandrum submitted requests in December 2024 and July 2025 to waive the amount saying that it was not proper to put the tax liability on the pensioners and dependants of the late BSF officials and to collect the amount from them. The BSF officials cited that collecting the required amount to clear tax dues would adversely affect the pension benefits of retired BSF personnel and writing off the tax dues would be a major relief to the pensioners and the families.

In the request, it was also cited that the liquor canteen is being run at the BSF Sector Headquarters without any profit motive. "The IMFL is procured fom the warehouse of CRPF, Pallipuram through a centralised system and sale is limited only to those serving in BSF and pensioners. All the transaction records, receipts of purchase and sale are maintained in accordance with the state government's rules," the communication from the BSF Sector HQ pointed out.

The GST commissioner forwarded the request to the state government citing that the Kerala General Sales Tax rules do not allow relaxation of penalty or demand raised by the assessment officer.

When the matter came up before the Finance Department, it was communicated that the short levy of the GST is due to the fault from the BSF beverage outlet authorities. "The rate of KGST is equally bound to all liquor outlets across the state and waiver of any part of it to any of the outlets would set a bad precedent and hence the proposal for waiver of the differential amount of the GST cannot be agreed," read the communication from the Finance department.

This was also approved by the Finance Minister. The cabinet however, overruled this decision and directed the Department of Taxes to waive the amount of ₹1.86 crore.