Thiruvananthapuram: Reeling from allegations that the proposal on low-alcoholic beverage gathered momentum during the LDF tenure, CPM state secretary M V Govindan on Friday said it was never discussed by the previous government.

He also criticised the UDF government for introducing a tax structure for low-alcohol beverages and alleged that Chief Minister V D Satheesan included the proposal in the Budget without consulting either the Congress leadership or the United Democratic Front (UDF).

His reaction comes in the wake of allegations that as the Excise Minister, Govindan had forwarded the proposal of Bacardi India Private Limited in 2021 to the GST Commissioner and sought a report. 

Bacardi India Private Limited had requested the inclusion of a new category, 'low-alcoholic beverage', to boost revenue and the tourism sector, in its letter to the then Excise Minister Govindan.

The letter, sent by Joji J Kakkattil, Senior Manager, Bacardi India Private Limited, on September 17, 2021, sought steps to introduce the 'low-alcoholic beverage' category to ensure the availability of quality liquor.

Govindan claimed that the previous LDF government had never discussed such a proposal and that the issue surfaced only after Satheesan assumed office as Chief Minister.

"The Budget has proposed this measure, which will result in a revenue loss of at least ₹600 crore to the state exchequer. We will have to see how the government plans to implement it. The proposal is expected to be incorporated in the Finance Bill, and if that happens, companies, including Bacardi, will stand to benefit," he said.

His remarks come days after Satheesan told the Assembly that the Budget proposal introducing a new tax regime for low-alcohol beverages would first be discussed within the UDF. The Chief Minister said the government would proceed with the proposal only if it received the coalition's approval; otherwise, it would be dropped.

Govindan said the LDF had earlier discussed promoting the production of low-alcohol beverages on the lines of Goa's feni by utilising Kerala's cashew sector. "Low-alcohol beverages can also be produced from fruits, vegetables and grains. Such a policy would help farmers who often struggle with poor prices for their produce," he said.

However, he maintained that the Left had never discussed reducing taxes on such beverages or promoting their commercial sale. "But soon after Satheesan became Chief Minister, he took up the issue and proposed a substantial tax reduction by bringing the sales tax rate down to 120 per cent. This would cause a revenue loss of ₹600 crore to the treasury," Govindan alleged.

Under the new tax structure proposed in the Budget, beverages containing more than 0.5 per cent and up to 10 per cent alcohol by volume will be subject to a 120 per cent sales tax. Products containing more than 10 per cent and up to 20 per cent alcohol by volume will be taxed at 175 per cent.

Govindan further alleged that Satheesan cleared the files related to the proposal within three days of assuming office and presented the Budget just 24 days later.

"He did not discuss the proposal with the UDF or the Congress leadership. Why did he introduce such a significant policy without consulting either his party or the ruling front? He must answer that. It shows that he had already made up his mind. Now he is trying to shift the blame to the Left to save face," Govindan said.