INDIA – CERTAIN TAXES AND OTHER MEASURES ON IMPORTED WINES AND SPIRITS
Document: Request for Consultations by the European Communities
Date: 25 September 2008
Document codes: WT/DS380/1; G/L/855; G/SCM/D79/1
Complainant: EU
Respondent: India
Dispute stage: Consultation
Agreements cited: Art. III:2, III:4, XI, XVII  GATT 1994Art. 3.1(b), 3.2, 4.2  Subsidies and Countervailing Measures (SCM)

INDIA – CERTAIN TAXES AND OTHER MEASURES ON
IMPORTED WINES AND SPIRITS

Request for Consultations by the European Communities

 The following communication, dated 22 Sept ember 2008, from the delegation of the
European Communities to the delegation of India and to the Chairman of the Dispute Settlement
Body, is circulated in accordance with Article 4.4 of the DSU.

 The European Communities hereby requests cons ultations with India pursuant to Articles 4
and 30 of the Agreement on Subsidies and Countervailing Measures ("SCM Agreement"), Article 4 of
the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU) and
Article XXII:1 of the General Agreement on Tariffs and Trade 1994 (GATT 1994) regarding
discriminatory taxation applied on imported bottled wines and spirits by the Indian states of
Maharashtra and Goa as well as restrictions on retail sale applied by the Indian State of Tamil Nadu.
These measures adversely affect exports of wines a nd spirits (codes 22.04, 22.05, 22.06 and 22.08 of
the Harmonised System) from the European Communities to India.
1. Discriminatory taxation applied by the Indian State of Maharashtra

 The European Communities understands that the St ate of Maharashtra applies a "special fee"
which appears to tax imported bottled wines a nd spirits in excess of domestic like products.
Maharashtra exempts from "excise duty" wines manu factured as own brand from the grapes produced
within the State of Maharashtra without addition of alcohol or without blending of wine manufactured
in the State or brought from across customs frontier or from other States, therefore conferring a
subsidy upon the use of domestic over imported goods and subjecting imported wines to a higher tax
burden than domestic like products. It appears that recently modified legislation continues to tax
imported wines and spirits in excess of domestic like products.
 The measures in question include but are not limited to:
− Bombay Prohibition Act, 1949
− Bombay Foreign Liquor and rectified spirit (transport) fees rules, 1954;
− Bombay Foreign liquor rules, 1953;
− Maharashtra potable liquor (fixation of maximum retail price) rules, 1996;
− Notification MIS 1107/CR-40/II/EXC-3 of 28 August 2008;
− Notification No.BPA.1108/CR-23/EXC-3 of 4 August 2008 "Maharashtra Potable liquor
(Fixation of maximum Retain prices)(Second amendment) Rules, 2008;
− Notification No.BPA.1108/CR-23/EXC-3 of 4 August 2008 "Bombay Foreign Liquor
and Rectified Spirit (Transport)Fees (Amendment) Rules, 2008;

− Notification MIS 1107/CR-33 (1)/EXC-3; MIS 1107/CR-33 (2)/EXC-3 and MIS
1107/CR-33 (3)/EXC-3/ of 10 July 2007 amending the Bombay Foreign Liquor and
rectified spirit (transport) fees rules, 1954, the Bombay Foreign liquor rules 1953 and the
Maharashtra potable liquor (fixation of maximum retail price) rules 1996;
− Notification MIS 1107/CR/CR-33(1)/EXC-3 of 12 November 2007 amending Bombay
Foreign Liquor and rectified spirit (transport) fees rules, 1954;
− The Ready Reckoner on AD valorem Duty released by the Commissioner of State
Excise, Maharashtra, of 19 October 1996;
− Notification BWR 1105/CR-9/EXC-3 of 31 March 2006 amending Notification BWR
1105/CR-9(1)/EXC-3 of 31 March 2006;
 The European Communities cons iders that these measures are inconsistent with Article III,
paragraph 2 and paragraph 4 of the GATT 1994 as well with Article 3.1(b) and 3.2 of the Agreement
on Subsidies and Countervailing Measures. In particular:
− The "special fee" is inconsistent with I ndia's obligations under Article III:2 of the
GATT 1994, because it subjects imported BIO bottled wines and spirits to internal taxes
that are in excess of internal taxes applied on domestic like products.
− The "excise duty" exemption for domestic wine is inconsistent with Article 3.1(b) and
3.2 of the Agreement on Subsidies and Countervailing Measures, because the remittance
of the whole excise duty in respect of the wine manufactured from the grapes produced
within the State of Maharashtra and without using alcohol or without blending of any
other wine is a subsidy contingent upon the use of domestic over imported goods in
accordance to Article 3.1(b) of the SCM Agre ement and as such, is prohibited by virtue
of Article 3.2 of the SCM Agreement.
− The "excise duty" exemption is inconsistent with Article III:4 of the GATT 1994, by
failing to accord, to products of the territory of the European Communities imported into
the territory of India, treatment no less favour able than that accorded to like products of
national origin in respect of all laws, regula tions and requirements affecting their internal
sale, offering for sale, purchase, transportation, distribution or use.
 The European Communities consider that these measures also nullify or impair the benefits
accruing to the European Communities under the GATT 1994.
 Article 4.2 of the SCM Agreement requires that a request for consultations under Article 4.1
of the SCM Agreement include a statement of available eviden ce with regard to the existence and
nature of the subsidy in question. This request identifies the existence and nature of the subsidies, and
further available evidence is listed in the Annex to this request.
2. Discriminatory taxation applied by the Indian State of Goa

 The European Communities understands that the State of Goa appears to apply the "import
fee" and the "label recording fee" in a way that subj ects imported wines and spirits to internal taxes in
excess of domestic like products. According to recentl y modified legislation the "import fee" appears
to be applied in slabs to imported spirits and wi nes according to the value of their maximum retail
price. The "import fee" is not applied on domestic in -State like products. The rate of the initial "label
recording fee" to be paid annually for each label of imported spirits amounts to at least four times the
amount of the rate applied on domestic like products. The rate of the initial "label recording fee" to be

paid annually for each label of imported wines amo unts to twenty five times the amount of the rate
applied on domestic like products.
 The measures in question include but are not limited to:
− The Goa Excise Duty Act, 1964
− General clauses act, 1897 (Central Act 10 of 1897), Section 21
− Notification No Fin(Rev)/2-35/15/75(C) of 25 March 1976 as amended by notification
1/1/2004-Fin(R&C) of 22 March 2004
− Notification 1/6/2006-Fin (R&C) of 31 March 2006;
− Notification 1/2/2007 Fin (R&C) of 20
th November 2007
− Notification 1/1/2008 Fin (R&C) (A) of 23rd April 2008
− Notification 1/1/2008-Fin(R&C)Part of 13 rd August 2008

 The European Communities cons iders that these measures are inconsistent with Article III,
paragraph 2 of the GATT 1994. In particular:
− The "import fee" is inconsistent with Indi a's obligations under Article III:2 of the
GATT 1994, because it subjects imported BIO bottled wines and spirits to internal taxes
that are in excess of internal taxes applied on domestic like products;
− The "label recording fee" is inconsistent with India's obligations under Article III:2 of the
GATT 1994, because it subjects imported BIO bottle d wines and spirits to internal taxes
that are in excess of internal taxes applied on domestic like products.
 The European Communities considers that these measures also nullify or impair the benefits
accruing to the European Communities under the GATT 1994.
3. Restrictions on sale applied by the Indian State of Tamil Nadu

 The European Communities understands that according to Tamil Nadu's legislation the
importation into, transportation within and sale within the State of Tamil Nadu of wines and spirits
appears to be prohibited, and punishable by fine or imprisonment. Exceptions to this prohibition
apply to holders of licences for importation, transportation and sale issued by the State of Tamil Nadu.
The measures currently applied appear to estab lish a legal basis for awarding licences for the
importation into, and transportation within, Tamil Na du of wines and spirits produced in other Indian
States as well as wines and spirits imported into In dia from other WTO Members. They also appear
to establish a legal basis for awarding licences for the sale (including wholesale and retail distribution)
within Tamil Nadu of wines and spirits produced in other Indian States, but, even after recently
modified legislation, they appear not to establish a legal basis for sale of wines and spirits imported
into India from other WTO Members. Moreover, the practice of the authorities of the State of Tamil
Nadu seems to confirm that the sale (including whole sale and retail distribution) within Tamil Nadu
of wines and spirits imported into India from othe r WTO Members is prohibited and that licences for
such sale are not issued.
 In addition, it appears that recently amended le gislation applies a "special fee" which seems to
tax imported spirits and wines in excess of domestic like products.

 The measures in question include, but are not limited to, the following:
− Sections 3, 4, 17-B, 17-C, 17-E and 24 of the Tamil Nadu Prohibition Act, 1937
− Section 18-B of the Tamil Nadu Prohibition Act, 1937
− Prohibition and excise department notification NII//PE/239d)/81
− G.O. MS 113 of 3 June 2003
− G.O. MS 112 of 3 June 2003
− The Tamil Nadu Liquor (Licence and Permit) Rules, 1981
− Amendments to Tamil Nadu liquor (licence and permit rules), 1981 (G.O.Ms. No40,
Prohibition and Excise (VIII), 1
st July 2008), No SRO A-19 (a-1)/2008 and SRO
A-19(a-2)/2008
− The Tamil Nadu Liquor Retail (in Bars and Shops) Rules, 2003
 The European Communities considers that th ese measures are inconsistent with India's
obligations under the GATT 1994:
− India seems to act inconsistently with Article III:4 of the GATT 1994 by failing to accord
to the products of the territory of other Members imported into the territory of India
treatment no less favourable than that accorded to like products of Indian origin in
respect of all laws, regulations and requirements affecting their internal sale, offering for
sale, purchase, transportation, distribution or u se; or, alternatively, with Article XI of the
GATT 1994, by maintaining prohibitions or rest rictions on the importations of products
imported into the territory of India from other members.
− India seems to act inconsistently with Article III:2 of the GATT 1994, because it appears
to apply a "special fee" on imported wines a nd spirits only, therefore subjecting imported
wines and spirits to taxation in excess of domestic like products.
 The European Communities consider that these measures also nullify or impair the benefits
accruing to the European Communities under the GATT 1994.
 For each of the measures referred to in this document, the request for consultations also
covers any amendments, replacements, extensions, implementing measures and the related measures.
 The European Communities reserves the right to address additional measures and claims
under other provisions of the WTO Agreement regard ing the above matters during the course of the
consultations.
 The European Communities looks forward to receiving in due course a reply from India to
this request. The European Communiti es is ready to consider with India mutually convenient dates to
hold consultations.

ANNEX

STATEMENT OF AVAILABLE EVIDENCE

 The evidence set out below is evidence availa ble to the European Communities at this time
regarding the existence and nature of the subsidies se t out in the request for consultations. It reflects
the presently available evidence regarding the clai ms reflected in the European Communities for
consultations and is supported by the documents that are listed below. The European Communities
reserves the right to supplement or alter this li st in the future, as required. The European
Communities' request for consultations describes in more detail the nature of these subsidies.
− The Bombay Prohibition Act, 1949
− Notification BWR. 1105/CR-9/EXC-3 of 31 March 2006