Liquor Licensing in India

 

Introduction

The production, distribution, and consumption of alcohol is usually a process that starts with acquiring a license to do the same. This License is to verify that all the sellers and distributors of liquor are working within the regulations stipulated by the Acts passed by the State Legislatures in our country. This is a requirement as liquor is a major seller in the local markets which indicates that without regulations, the local sellers will run rampant trying to earn greater and greater profits which might lead to cartelization and an increased uptick in crime rates. Alcohol is a much sought-after intoxicating substance that incidentally is the only intoxicant that is regulated and permitted to be sold in the local markets and in restaurants and pubs and other establishments for the purpose of recreation. Therefore, a license needs to be obtained to sell and distribute the same as this ensures that there is no monopoly in the liquor business and the entire process from production to consumption is carried out smoothly without causing any hindrance to society at large.

 

Regulations for Obtaining of License

The Constitution of India mentions in the Directive Principles of State Policy, particularly in Art. 47 that the State shall endeavor in trying to put an end to the consumption of intoxicating drinks and substances but this is just merely a directive lacking enforcement power from the judiciary. The Constitution has also put the regulation of alcohol in List II (State List) of the Seventh Schedule, more precisely in Clause 8 of the same. This means that the different states have complete autonomy in decisions regarding the production and sale of liquor. Since the regulations are state-wise, this article will focus on the production and sale of liquor in the State of Maharashtra. The regulations on alcohol sale in Maharashtra is primarily governed by the Maharashtra Prohibition Act of 1949 (‘Prohibition Act’). Specific provisions regarding the licenses under the Prohibition Act are discussed in brief below:

1. Section 25: This Section starts off chapter IV, which is the chapter on control, regulations and exemptions, requiring that the State Govt. may permit the preparation of alcoholic beverages which are below a specific cut-off point with regards to the percentage of alcohol contained therein by volume.
2. Section 26: This Section empowers the State to either establish or discontinue use of distilleries for the production of liquor within the State. It also authorizes the State to establish or discontinue warehouses for storage of intoxicants, hemp, mhowra flowers or molasses. In short, this Section authorizes the State Govt. to source and produce liquor locally.
3. Section 33: This Section empowers the State to authorize an officer to issue trade and import licenses to individuals who intend to trade or import from other countries, any kind of foreign liquor, i.e. liquor produced, bottled and imported form any country except India.
4. Section 34: This Section also empowers the State to authorize an officer to grant Vendor’s License for the sale of foreign liquor. These are subject to a few conditions stipulating where the vendor may store the foreign liquor; payment of all rent and incidental fees requisite to storage of the same; to whom the vendor may be permitted to sell to; storage of such foreign liquor for retail sale in the vendor’s shop itself and to keep accounts and dispose of the same, by and under instructions from the Commissioner.
5. Section 35: This Section empowers the State to authorize an officer to grant licenses to managers of hotels for the sale of foreign liquor to its customers, again subject to a few conditions. These conditions include that the sale of foreign liquor will be only to people who hold licenses for consumption of liquor, which in simple terms means people who have exceeded their age restriction for the same; the sale of liquor cannot be done in public places within the hotel premises, but to only private rooms; the hotel license holders shall pay for the expenses incurred by the officers of the excise department.
6. Section 39: This Section empowers the State to sell, by or under a general or special-order permit, to sell foreign liquor, to the members of the armed forces.
7. Section 44: This Section permits the State to authorize an officer to grant licenses to clubs for the sale of foreign liquor to license holders, i.e., people who have reached adulthood and the age of 25 for hard drinks respectively under the Prohibition Act.
8. Section 65 (c) & (d): This section, precisely sub-sections (c) and (d) states the penalty to be imposed in case the distilleries, breweries, shops or establishments are functioning without the requisite licenses. The penalty to be imposed is a maximum imprisonment term of 5 years and a minimum fine of Rs.25,000/-

 

Types of Liquor Licenses

In general terms, there are two broad classifications of liquor licenses, these are the Wholesale Liquor License and the Retail Liquor License. The former is granted to people who carry license under the Form C.I.W II for the wholesale of liquor, governed under Part-III of the Prohibition Act. The Retail Liquor License is granted under the Form C.L. III or C.L./F.L./. These two classes of licenses are further sub-divided into the following sub-classifications: –

Sr. No	Retail Liquor License	Wholesale Liquor License
1	Permit Room License	Wholesale of Wine
2	Club License	License to Approve Storage
3	Beer Shoppe License	Wholesale of duty-paid country liquor to retail shops
4	Mild Liquor and Wine Bar License	License for the wholesale of foreign liquor
5	Wine Bar License
6	Wine Shoppe License

 

All these sub-classifications indicate where and what type of liquor sales are taking place, and accordingly, different licenses are made and granted to these different individuals or shops selling the different types of liquor.

There are also On Consumption License and Off Consumption License which are in essence Permit Room license or FL-II licenses respectively for the sale and consumption of liquor within the premises where they are sold, like bars and pubs, to name a few examples or for consumption outside the premises, like general liquor stores respectively.

 

Procedure to Obtain Licenses

The restaurants in the State of Maharashtra with a Grade 1 tag, have the right to obtain a Permit Room License for on Consumption purposes and FL-II Licenses for the shops which sell retail liquor. The duration of these licenses are for one year. The necessary requirements for the application process to initiate and obtain such licenses are as mentioned hereinbelow: –

1. The prescribed forms as per the State Excise Authority;
2. A Rs.5/- Court Fee Stamp;
3. An application fee, the price of which depends upon the different licenses;
4. The license fee challan as fixed by the State;
5. The Income Tax/Sales Tax clearance Affidavit;
6. A copy of the Partnership Deed or Declaration stating that there is no change in the partnership status of the obtaining party;
7. Documents declaring the ownership or tenancy status of the premises where the liquor will be sold.

Now, once the documents and requirements are met, the obtaining party may visit the Old Customs House in South Mumbai or other regional excise offices in Malad West, Andheri, Bandra or Chembur to receive the Application Form. This Application form has to be filled up and passport photos, address proofs and other relevant information has to be affixed to such form and finally submitted to the State Excise Department. The State Govt. has made it possible to apply for the same via an online portal as well.

There is also a specific ban imposed by the Supreme Court of India in the year 2016, banning thus, the operation of liquor stores and establishments which serve liquor within a proximity of 500 meters from the State and National Highways. In local municipalities, the liquor shops are banned within a distance of 50 meters from all religious places and educational institutions. A distance of 100 meters is to be maintained by liquor shops from the above-mentioned places including hospitals in other local jurisdictions

 

Conclusion

The production, sale and consumption of liquor require licenses granted under the State Government as these come under the purview of the State List in the Constitution of India. The sale of liquor, in particular requires licenses as they are intoxicating drinks whose sale and consumption needs to be regulated in order to avoid high crime rates and cartelization, which in turn would describe a situation of utter chaos and crime. In order for the society and economy to function properly, proper regulations need to be put and thus, licenses need to be held by the sellers and vendors and establishments selling alcohol in their premises. These licenses, after arranging the necessary documents, need to be applied for from the Permit Issuing Authority in each state. Most of these permits/licenses are valid only up to a period of 1 year beyond which they need to be renewed. Thus, the business and sale of liquor can be carried out efficiently without causing many hindrances to the community at large and the government can reap some benefits form the tax returns on the profits earned by businesses in the sale of liquor.

 

 

Bibliography

1. How Do I Obtain a Liquor Licence in India? | Vakilsearch
2. Mumbai Liquor License – Eligibility & Application – IndiaFilings
3. How to obtain a Liquor license in Mumbai to set up a store (ipleaders.in)
4. https://stateexcise.maharashtra.gov.in/Type_Of_License.aspx
5. ttps://www.indiatoday.in//auto/latest-auto-news/story/no-more-liquor-shops-along-national-and-state-highways-says-sc-1832785-2021-07-26?onetap=true
6. Maharashtra Prohibition Act of 1949