Following the easing of some lockdown-related restrictions—the most striking images in the media have been the ones which show long queues outside liquor vends. State excise duty on alcohol being among the largest contributors to the Tax Revenue of states—it is undeniable that the sale of liquor is fundamental to the financial health of State Governments. An analysis of the template being followed in Delhi, demonstrates that allowing home delivery of liquor is a better way to ensure social distancing—as opposed to following the present framework of restricting sale by exclusively permitting only neighbourhood stores, imposing limits by prescribing time, and increasing taxation—which will inevitably encourage ‘arbitrage’, once inter-State movement resumes.
The Problem With Allowing Sale of Liquor Exclusively By Stand-alone Shops
The Excise Department of Delhi Government has allowed the sale of liquor by passing the Order dated 03.05.2020. The Order permits liquor licensees running stand-alone, and neighbourhood stores to resume operations from 7 AM, to 6:30 PM. It may be worth noting that owing to political, and societal resistance—most ‘thekas’ are, in fact, not situated in neighbourhoods. By continuing to ban the liquor shops situated in market complexes, not only does the Order severely put pressure on a few stand-alone shops—but also unfairly ignores the fact that such neighbourhood shops are often smaller, and hence, inadequately equipped to undertake the requisite social distancing measures.
Further, the decision to impose a time limitation is also inadequate, in as much as it fails to take into account that last-minute rush by office-goers will prove to be a significant challenge to lockdown management. Given the fact that most offices are now operational at one-thirds of their total capacity—allowing sale for a fixed amount of time will lead to disorder, and chaos.
By Order dated 04.05.2020, the Delhi Government has further sought to impose a 70% additional tax on the sale of liquor, under the head ‘Special Corona fee’. Given that this will lead to widespread disparity in prices across borders, the decision is likely to encourage ‘arbitrage’, as consumers may look to flock to other states in the National Capital Region, once inter-state movement is fully resumed.
The Importance of Liquor Sales to State Revenue
The reopening of liquor vends comes at a time when most states have been struggling to fill their coffers, amid the disruption caused by the COVID-19 pandemic. Estimates suggest that the industry contributes close to 20 billion USD in Excise duty alone. In this regard, a report published by the Reserve Bank of India, titled ‘State Finances: A Study of Budgets of 2019-20’ is particularly insightful, in as much as it demonstrates that on an average—the states collected about Rs 15,000 crore per month from excise on liquor in 2019-20. This suggests that the pressure from State exchequer is perhaps even more intense than the one being imposed by the powerful liquor lobby.
The Benefits of Developing An Online Market-place Model for Liquor Vends
The need to generate revenue, has to be balanced against the object of ensuring the success of social distancing measures. The easiest way to ensure the safety of consumers, and retailers—is to permit vends to deliver booze to the doorstep. This can be done by allowing licensed vends to accept orders on the phone, and further by permitting them to register at an online platform, where such deliveries can be facilitated. A market-place model can be created, where delivery can be facilitated, upon age verification. Government can regulate the amount delivered, or control its frequency—and provide Curfew passes, to enable the movement of delivery agents. In the past, many startups have made an attempt to start such a model, but have been forced to shut their operations, on account of the shortcomings in excise laws. To take an example, Chennai-based alcohol delivery platform ‘HipBar’ was forced to close down despite having a license— after the Karnataka High Court ruled that the Karnataka Excise Act, 1965 lacks the power to award such a license.
How to Legally Facilitate Home Delivery in Delhi?: Three Answers
A closer analysis of the laws, and regulations guiding the sale of liquor in Delhi, suggests that the State Government can permit home delivery in three ways.
Firstly, it is important to note that selling or buying liquor online—has been considered to be an offence under the Delhi Excise Act, 2009, and the Delhi Excise Rules 2010. Rule 32 therein, enumerates the various classes for which a license can be issued; and Rule 33 provides the classes of permits. Neither of them explicitly contemplate, the award of a license which extends to online sale. The license to sell has been considered to be a license to sell on the licensed premises. Further, under Section 33, a person involved in a business in contravention of the law, may face an imprisonment of up to three years. First interpretation of the written word, will therefore, suggest that there is a need to amend the Delhi Excise Act, 2009, or the Rules therein—to provide for the creation of such a home delivery-based model.
The Government has, however, previously asserted that there is no need for an amendment, and that enabling provisions to permit online sale, in fact, already exist. In an Order dated 18.08.2015, the Excise department had categorically stated this, by saying that “there are enabling provisions for selling liquor online but the government has not yet decided to issue L-13 license for selling liquor online”. A closer look at the licensing mechanism suggests that there is no bar on an individual, to either consumer, or serve liquor at his residence. The only roadblock, therefore, is the process of delivery. There can be some logic in treating the process of delivery to be on par, with say, the grant of a ‘P-10’ license which allows temporary service of liquor—so long as it is procured from an authorised source in Delhi, is served to adults above 25 years of age, and served in an area which is screened off from public view. The second solution, is therefore, easier, as it simply calls for an Order exercising the powers which enable the Excise Department to permit home delivery.
Finally, Delhi Government has already invoked the provisions of The Epidemic Diseases Act, 1897, and accordingly notified The Delhi Epidemic Diseases, COVID-19 Regulations, 2020. The present circumstances are extraneous, and the Government reserves the right to create an online-marketplace, on an emergency basis, under the COVID-19 Regulations.
The optics of facilitating home delivery can be politically disastrous. But it is important to note that the resultant transparency in the process of consumption, will, in fact, help the masses. The pandemic-induced lockdown has given the State, an opportunity to develop a more wholesome approach, which can achieve the twin objects of achieving revenue targets, and maintaining social distancing —in the least restrictive way possible.
Image Source: ANI on Twitter.