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Excise revenue is the second largest source of revenue in the state. Despite various administrative measures from time to time a general perception prevailed prior to 2003 that the State has not been able to maximize revenue collections from this source due to evasion of duty. Such a view has also been voiced in the report of the Tax Reforms Commission. Considering the potentiality of garnering additional revenue, Government initiated a set of reforms in June 2003, which broadly consists of reduction and rationalisation of excise duty structure, simplification of procedures and establishment of a Government owned distribution company for canalisation of IML, beer and spirit.
Thus, Karnataka State Beverages Corporation Ltd., emerged as a private limited company of the Government of Karnataka on 02.06.2003 for the purpose of canalising sale of liquor in the State and commenced operations from 01.07.2003.
As a canalising route, the manufacturers, both within and outside the state, keep their stocks in the Corporation’s godowns across the State of Karnataka for distribution to wholesale licensees till the end of 30th June 2006 and effective from 1st July 2006 the distribution is now made to the retail and other licensees subsequent to abolition of wholesale business. To self sustain its activity, the Corporation is collecting a margin on the goods transacted as prescribed by the Government of Karnataka. Initially the distribution was confined only to IML and Beer and later the Government entrusted the partial canalisation of Rectified Spirit with effect 01.11.2003 and subsequently a total canalization of Spirit was implemented with effect from 01.09.2004.
Corporation operates its activity through 71 liquor depots located in all districts and for handling spirit operations, 30 depots have been established in all the functioning primary distilleries. Spirit depots obtain delivery from the primary distillery for delivery to the buyers. All depots are equipped with suitable IT infrastructure which enables data transfer between depot and head office through electronic mode and all critical activities are automated. The activities of the Corporation are managed by 411 employees drawn from certain State PSU’s, and 52 contract employees. The Housekeeping, Security guards, data Entry Operators and support staff services are outsourced from the outsourcing agencies.