With a view to improve its resource position, the alliance government had last year revised the excise duty on country as well as Indian made foreign liquor. While earlier the excise duty was levied on per proof litre, subsequently, it was based on the maximum retail price of the item. It helped the alliance government to increase revenue from Rs 1,100 crore to Rs 1,700 crore last year.

Meanwhile, the liquor industry reacted with anger over the government decision. Imposition of sales tax on liquor, insiders said, would hit the liquor companies badly which are already going through a recessionary phase.

Jaidev Chatterjee of Rajasthan Breweries, makers of Stroh's Beer, said: ``Atpresent there is a steep 13 per cent sales tax on permit room sales. This additional 8 per cent tax would hit the wine shop sales. While the lower segment of the market would switch to illegal liquor, the premium segment, however, will continue to maintain its sales.''

The state government's fresh tax comes within a year of new excise policy for the liquor industry which had imposed steep levies on the production floor. ``Companies would now prefer other states for setting up new liquor projects as cost of production in Maharashtra has shot up to a new high,'' he said.

Officials of India's largest liquor firm -- United Breweries (UB) - said their margins would get squeezed as demand for liquor would slow down. ``This move would help the bootleggers more rather than shoring up state coffers,'' a UB official said.