THE European Union (EU), which lodged a complaint at the World Trade
Organisation (WTO) against certain fees and taxes imposed on imported
liquor by Goa and Maharashtra, has now aimed its guns at the Karnataka
government. According to a recent consultation request filed by the EU
at the WTO, Karnataka too is applying discriminatory taxes against
imported wine from the EU, which need to be removed.
In its communication, the EU said Karnataka appeared to be applying the
“additional special fee” and the “special fee” in a way that subjects
imported wines to internal taxes in excess of similar domestic
products. “The additional special fee is not applied on domestic
in-state like products and the “special fee” appears to tax imported
bottled wines in excess of domestic in-state like products,” the
communication noted.
Earlier, the EU had complained that Goa and Maharashtra applied certain
taxes on imported liquor which is not applicable on domestic liquor. It
also complained against the Tamil Nadu government which, it said, does
not purchase European wines and spirits.
This is in violation of the WTO rule on national treatment for imports,
the EU said. The US and Australia, too, joined the EU in its complaint
against Goa, Maharashtra and Tamil Nadu.
The EU has requested for consultation with India on the issue to
examine how it could be settled. If the EU is not satisfied with the
consultations, it could file a dispute against India and let a panel of
judges take a decision.
Last year, India had reduced its import duties on wines and spirits to
150% following complaints filed by the EU and the US at the WTO against
import duties in the country being higher than levels committed at the
WTO.
While India brought down its duties on foreign liquor to below 150%,
state governments increased their taxes on imported wines and spirits.
The WTO allows state taxes to be imposed on imports as long as they do
not exceed the local taxes levied on similar domestic products.
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