Online sale of liquor: Legal angle

Reading time: 8-10 minutes.

An unmanageable crowd in serpentine queues thudded the alcohol vends all over the country when it opened for the first time since the announcement of the 1st phase of lockdown due to pandemic, the novel Coronavirus.

The Government was heavily criticized by the whistle blowers over its decision of re-opening of countable alcohol shops. Nevertheless, what was evident was the roaring business and the boost in the economy of the country because of tipplers, that is, the massive money that the sales of alcohol brought in. The Delhi government had announced 70% hike in the prices of alcohol as ‘special corona fee’, yet people could be spotted in kilometres of queues jostling and pushing to buy their favourite drink even in the harsh heat of May. Hundreds of people, outside the alcohol shops which had their shutters opened, lined up violating every ounce of the rules of social distancing which they had been maintaining from months. Without proper gloves, masks and the ‘do gaz’ distance between them, people thronged in the shops after the long alcohol abstinence, creating a situation similar to that of a riot. There was a drastic imbalance brought in the norms of social distancing even after the announcement of prosecution under the Disaster Management Act and the Indian Penal Code.

The honorable Supreme Court of India (SC) led by a bench of Justices B R Gavai, Ashok Bhushan and Sanjay Kishan Kaul via video conferencing, dismissed the petition of Mr Guruswamy Nataraj, through his counsel Sai Deepak and Anindita Mitra, against the May 1 circular of the Ministry of Home Affairs (MHA), which allowed the sale of liquor during the period of lockdown due to the spread of COVID 19 through direct contact. The SC directed states to use their discretion for the online sale of alcohol or home delivery services of the same to improve social distancing and encourage no- direct contact.

Reasons behind this development

Most of the governments all over the world view liquor as a basic thing, as much as food or medication. All things considered, individuals like it, need to drink it and reserve an option to do such. In any case, the ethical strain in Indian governmental issues went to the fore. Thus, all liquor deals were halted after the 1st lockdown announcement. After five weeks, when the exchequer was close to crumbling and its coffers unfilled, the administration altered its perspective. The sale of liquor was allowed on limited shops. However, the shattering of social distancing rules led the government to ponder over the opinions of two main organisation the International Spirits and Wines Association of India (ISWAI) and Confederation of Indian Alcoholic Beverage Companies. In the words of Amrit Kiran Singh, the chairman of ISWAI, it was important for the country to start the sale of the alcohol with social distancing. Alcohol sales solely generated around 25% of the state revenue but due to the jamming in the revenues from oil and GST, it might rise to 40%. Therefore, it is crucial to start the sale of alcohol online as well as for home delivery.

The court considered the petition by Mr. Nataraj which had all the valid points argued, relating the drastic crippling down of the norms of social distancing. The curve of the pandemic had flattened due to early lockdown announcement but the abrupt and mismanagement observed at the alcohol vends led to an unexpected increase in the number of positive cases of coronavirus thorough out the country. Clarificatory guidelines were sought by the petitioner over this issue for the protection of the interest of common people. Therefore, the SC ordered that it must be the decision of the states to decide the modus operandi of implementation of the suggestions of online sale and home delivery of liquor and alcoholic beverages.

Moving forward, the following developments are expected to result out of the current progress:-

B2B opportunities for selling alcoholic beverages online  

B2C customers are not the only one’s shopping for wine, beer, or liquor. The bigger opportunity in e-commerce is with wine and spirit manufacturers, distributors, and wholesalers. But since these businesses work with each other in a B2B relationship, the path to purchase significantly differs from those of B2C customers. Buying in bulk through negotiated contracts is one of the key distinctions between B2C vs B2B. This means managing multiple price lists, enabling quoting capabilities, and creating a personalized buying experience will be critical when selling online. These requirements call for a platform built from the ground up to address B2B eCommerce. To further showcase the opportunity in B2B wine & spirits sales, an alcohol delivery service Drizly found their corporate clients spend 300% more than consumers.

Generate money

States across the country are dealing with the pandemic in different ways, but the one common ask they all have is money. In the absence of economic activity, the states will have to borrow at high-interest rates, which is not feasible. Through the online sale of liquor, the government can generate money.

Revenue earner

Usually, the seized bottles are destroyed, but the excise department thinks selling them could be a revenue earner for the state government. The excise intelligence bureau is engaged in regular intelligence gathering about the violation of the excise laws and frequently carries out raids and seizes liquor found in circulation without conforming to the excise laws.
The evasion of stamp duty places a drain on the annual revenue of the excise department, thus on the revenue of the Delhi government. To make up for some of the revenue loss, the excise department thought of the idea of selling the seized liquor. Only foreign liquor and Indian-made foreign liquor will be put up for sale, not country liquor.

Proposed sale and execution

A committee will be set up by the excise and it is to draw up plans about everything related to the execution of this proposal. These include plans for the storage of the seized liquor, development of a model for the distribution of the liquor for sale for the general public and formulating a method to fix the price of the liquor being put up for sale.
The bottles are likely to be sold at discounted rates because people might not be amenable to purchasing a seized bottle of a particular brand at the market rate.

Legal provisions relating to the issue

The Seventh Schedule of the Constitution of India contains State list which includes the subject of alcohol. This implies that every state of the country is exclusively responsible for the rules to be made for sale, manufacture and marketing of liquor and alcoholic beverages within its territorial boundaries. Each state has its own Excise Department that keeps vigilance over the sale, manufacture, import, export and transport of intoxicating substances and drugs, collection of revenue from all these sources. Some states like Gujarat, Bihar, etc. consider the sale of liquor to be illegal. However, there is a general process for the issuance of the license which involves:

  1. The type of license required
  2. The person applying for the license needs to be aware of the state’s rules relating to liquor.
  3. Classify whether there is a need for an on-license, that requires sale and consumption from the same premises, or an off-license, that allows sale from one place and consumption can be anywhere off the premises.
  4. In some states, deciding the class of license is important, that is, one needs to decide whether a restaurant, a tavern or a beer and wine license is required.
  5. The process of application
  6. Be quick in starting the process of application for the license because it might take longer as the process is cumbersome and slow.
  7. One needs to be aware of the cost that might be incurred during the whole process.
  8. With a proper outline of the business that will be run, it is necessary to fill all the forms and required documents.
  9. The application for sale of liquor is open to any public objections that might be raised by locals of the area, therefore, one needs to be ready to stand up to defend his proposal.
  10. Once acquired the liquor license is needed to be maintained and renewed from time to time.

Throughout the years, numerous new web-businesses have attempted to wander into the online deal and conveyance of liquor. Nonetheless, these endeavours were impeded by state excise offices referring to laws that vary from state to state. The online sale of liquor is heavily regulated in the country. Now that the SC has left to the states to decide whether there should be online sales or not, many states like Delhi and Maharashtra have finally claimed that they agree on the same. Delhi has opted for a unique e-token system while Maharashtra is to start the same. With no specific provisions over this subject, in the wake of the pandemic, states are allowing the sales online with their means and ways.

Critical analysis

On analysing the situation some experts of the economy believe that the government’s decision of absolute ban on non- essential goods was a major step towards containment of the spread of COVID- 19. While, on the other side, there are experts who believe that the government ought to have never disallowed the offer of liquor considering it to be non- essential from the very beginning of the lockdown.

There exists a logical inconsistency between our protected perspective on drinking and the basic job it plays in filling the State’s coffers. Article 47 of the Constitution requires the State “to achieve forbiddance”. This is the good, paternalistic, and illiberal objective our establishing fathers had set down. But since the income earned from each bottle guzzled is a basic segment of government reserves, balance is only an ethical heading, not law, except in Gujarat. In Delhi, for example, the expense on alcohol is 14.1% of the regional government’s anticipated income during the current year.

In any case, the paternalism that decides how we see mainstream taste held its hold. So, instead of opening all retail locations, scarcely 20% were allowed. In Delhi, just 150 shops selling alcohol out of a sum of 863 raised their shades which ensured there will be an issue. States have been losing an expected Rs 700 crore daily because of the alcohol boycott. With concurrent misfortunes on the GST front, these lost incomes can’t be anything but difficult to acknowledge. The general wellbeing contention, with five crore Indians purportedly influenced by ‘alcohol dependence’ is reportedly experiencing alcohol withdrawal symptoms, waiting to be hospitalized. There is additionally the dread of expansion of false alcohol. With this view, a complete restriction on liquor deals is counterproductive. Or maybe, allowing on the web and disconnected deals, with shields, might be a superior alternative.

Conclusion

Alcohol has been one of the prime causes of domestic violence, financial clutches in a family including other social and mental problems to individuals consuming it and their respective families. An abnormal polarity goes through the economy maintained by alcohol. It can neither be claimed nor be abandoned. State governments, which regularly accentuate liquor guideline with moral hints, have no issue placing liquor at the front of the line as far as need is a snapshot of emergency.  Thus, if the economy of the country is to be kept in place, liquor sale is one of the most feasible options in the hands of the centre and the state. But the fact that social distancing has to be maintained stand firm in the guidelines and procedures which are to be issued by the government as it is the only weapon that can protect the country from the wrath of the deadly COVID- 19.

Author: Saumya Srivastava from Symbiosis Law School, Noida.

Editor: Harinie.S from Symbiosis Law School Hyderabad.

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