A customer was recently charged 20% extra on the value-added tax (VAT) for beer at a bar in Jodhpur. This additional amount was charged as 'cow cess', a tax aimed at supporting cows and cow shelters in Rajasthan, which led to a heated debate online after a copy of the bill went viral.
The bill showed that the customer had ordered corn fritters and six beers at Geoffrey's bar at Jodhpur's Park Plaza on September 30. The order total was Rs 2,650, and after GST, VAT, and a 20% cow cess, the net bill amount stood at Rs 3,262.
The viral bill has left many users questioning the logic behind such a move. But government and hotel authorities have clarified the cess was introduced in 2018 and has been charged on liquor sales since.
What Park Plaza Said
The 'cow cess' isn't a new tax. The hotel's manager, Nikhil Prem, told NDTV they have been collecting the cess on liquor sales and duly depositing it online for cow protection and conservation since 2018.
"This government notification has been there since 2018. Every time we charge 20% VAT, we charge a 20% cow cess on the VAT amount, which would work out in this case to about 24%. This is only for beer and liquor. Most hotels simply call it a surcharge, but we mention a cow cess. We deposit this money as a cow conservation and propagation cess on government portals," he said.
This explicit mention of the 'cow cess' has likely led to the renewed focus on the matter, despite it being in place since 2018.
The cess is imposed only on VAT for liquor sales, Prem added. Food items attract GST and not VAT.
Value Addition And Surcharge
The cow cess is imposed as a surcharge every time a value addition is charged on a bill, said Kumar Pal Gautam, Rajasthan's Finance Secretary (Revenue).
When a customer orders liquor at the table, it usually costs more than the MRP and is thus treated as a value addition. It attracts a surcharge, and the customers end up paying more. This surcharge is called 'cow cess' in Rajasthan.
"If a restaurant or a bar charges extra for a bottle of liquor, then they must pay VAT since there is value addition to the liquor sale, and with that, the cow cess is also charged," the Finance Secretary added.
A 2018 Notification
On June 22, 2018, the then Vasundhara Raje government had notified the 20% surcharge on foreign liquor, Indian-made foreign liquor, country liquor, and beer sold by dealers under the Rajasthan Value Added Tax Act, 2003. It is deposited in a fund meant for cow conservation and protection.
Earlier during Raje's tenure, the surcharge was at 10%. The then chief minister extended it to liquor in 2018 to help support cow shelters and promote cow conservation.
The successive Congress government led by Ashok Gehlot continued with the cess.
The Rajasthan government spends over Rs 2000 crore on grants and subsidies for cows, of which over Rs 600 crore goes to support cow shelters. But finance ministry sources say the entire fund for cow conservation is not met through the cow cess but also needs government grants and outlays.
