Andhra Pradesh finances have already gone to dogs after Center showing extreme insensitivity towards the state in the recent Union Budget. The state government already went over draft for paying the regular salaries and pensions every month. At this juncture, the Hyderabad High Court had dropped a bomb on AP government.
Hearing to the case of Income Tax department attaching few liquor depots in Telangana and Andhra Pradesh, High court allowed the sale of liquor in those depots but asked both the states to deposit the money from the sale to a common account and not to touch the money until further instructions from the court.
Liquor Sale income generate huge revenues for the state governments. Ignoring the income for some time will prove to be very dangerous for both the state economy. After running in to a deficit budget, it is even dangerous for Andhra Pradesh government. We will have to see how the state government battle this.
The attachment is due to the evading of Income Tax since 2009. Andhra Pradesh Beverages Corporation since then maintains that it need not pay Income Tax as it is a government corporation. However Income Tax department says it should pay the tax since it is making money through business. There is an arrears of 1500 Crore by the both the states.
