LOCKDOWN, LIQUOR, LICENSING: BALANCING THE HEALTH AND REVENUE DICHOTOMY

This article has been authored by Tamanna Gupta, a fourth year student at RGNUL, Punjab.

Introduction

“Alcohol may be man’s worst enemy, but the bible says love your enemy”- Frank Sinatra

The outbreak of COVID-19 has wreaked havoc world over, with several nations, including India, instituting lockdown measures. However, a phenomenom unique to India has emerged, which is yet to be witnessed. The outbreak of COVID-19, and subsequent lockdowns has led to an increase in demand for alcohol; wherein several state governments banned the sale of alcohol as a public health measure. According to statistics, alcohol consumption is the third-biggest reason for road accidents in India, after over-speeding and lane-indiscipline. Over 1/3rd of men and 1/4th of women in India who consume alcohol state that it impairs their health, financial stability, and domestic responsibilities. But since the inception of the lockdown, it can be easily ascertained that alcohol is essential-both for personal needs and public revenue. In light of the present context, India has witnessed an exponential rise in demad for liquor, which made several state governments open the doors for sale of liquor in order to assuage the cash crunch being faced by such states.

Liquor Boom: Lockdown Revenue fuelled by Alcohol

It has been observed worldwide, that while alcohol is perilious to health, no nation completely disassociates itself from alcohol trade. Several regional administrations, while chiding the general public against alcohol consumption, by way of awareness campaigns, taxes etc., face no qualms allowing alcohol sale at the forefront in order to generate revenue during situatios of public health crisis, including pandemic. The reason is not hard to unearth: Indian states, put together, earned about ₹2.25 trillion from taxes on alcohol in the year of 2020. On the flipside, it was observed that banning the sale of liquor during the lockdown had a negative impact on the state economy. To fill the emptying state treasury, the government had no option but to open liquor trade, which attracted huge crowds ironically defeating the rationale of social distancing.

In the Indian context, revenues generated by sale of liqour act as a cash cow, especially during the pandemic.[1] To illustrate, four states, Tamil Nadu, Uttar Pradesh, Maharashtra, and Telangana, collected more than ₹20,000 crores in taxes from the sale of liquor in the year 2018-19. Almost 21 states, including several well developed states, generated more than 15% of their tax output from the sale of alcohol. Anlayzing the north-eastern states, which leads in terms of the share of the male population drinking alcohol, the contribution of liquor taxes to the exchequer is even higher. For example, in 2018-19, about 58% of Mizoram’s tax revenues came from liquor taxes. The figure for Meghalaya was about 47%.

In the present context, several major states decided to resume the sale of liquor due to factors such as financial strain, lack of revenue etc. The states have instituted temporary measures in order to facilitate the smooth sale of alcohol. Furthermore, the states pressed the police forces to tackle the negative outcomes associated with resuming the sale of liqour, thus risking the life and health of the officials. In Delhi, E-Tokens were issued to facilitate the sale of liquor. In Maharashtra, several districts made provisions for allowing “home delivery” of liquor, demarcating specific time slots for delivery and creating an app to facilitate the same. Hence, it can be deduced that concerted efforts are being made by the states in order to generate revenues, even if it is at the cost of public health.

Legal Provisions governing Liquor Trade

Liquor sale & production falls under the state list, thus different states have laid down different acts governing the production, consumption, sale and distribution of liquor. The taxes levied on the sale of liquor also differs from state to state. While several states have temporarily or permanently banned the sale of liquor, such as Gujarat, Bihar, etc. most states have their statewise acts governing the same. In New Delhi, Delhi Liquor License Rules, 1976 governs several aspects relating to liquor, and the act also lays down the minimum age for consumption. Several states permit consumption of liquor at the age of 18, such as Rajasthan, Himachal Pradesh, etc., while the upper age limit for consumption is 25 years, enforced in states such as Delhi, Punjab, etc.

In the COVID-19 context, several states which had instituted partial bans relaxed provisions regarding the same, in a desperate attempt to generate revenue. In Kerala, shops governed under Kerala State Beverages Corporation, which had previously made provisions for closing down certain liquor establishments, were functioning at normal capacity. Thus, it can be ascertained that it is highly impracticable to implement restrictions on liquor trade, especially during the lockdown.

Judicial Interventions

Examining the present context through its legalities and implications, In the case of Tamil Nadu State Marketing Corporation Ltd and Ors vs. B Ramkumar Adityan (2020), the Supreme Court asked the states to consider no contact sales, or provisions for online ordering and sales or home delivery of liquor during lockdown period to prevent the spread of coronavirus on account of crowding at the liquor shops. The Supreme Court issued these directions in light of several disconcerting issues, such as unmanageable crowding and physical contact due to sale of liquor.

A Three Judge Bench comprising of Hon’ble Justice Ashok Bhushan, Hon’ble Justice Sanjay Kishan Kaul & Hon’ble Justice B. R. Gavai, who took up the matter relating to liquor sales through video conferencing, disposed off a plea challenging the guidelines issued by the Ministry of Home Affairs issued on May 1, 2020. The notification issued by Ministry of Home Affairs allowed the sale of liquor through direct contact sales amid lockdown period.

Furthermore, the Delhi High Court sought a response from the Delhi government regarding the institution of several pleas which challenged the Delhi Government’s decision to levy a 70% “Special Corona Fee”, calculated on the MRP of all liquor brands in the National Capital Region. In this regard, a plea was filed in the HC challenging the “Special Corona Fee” on liquor. It was contended by the petitioner that the charged fee is excessive compared to what has been authorized by law and therefore it is levied arbitrarily. Also, the MRP of liquor in Delhi includes already includes the taxes and duties that have been imposed by the Centre or the state government for production, transportation, wholesale and retail sale of the product, and hiking the MRP by 70 percent utilizing an executive order was "illegal and bad in law".

While several of these pleas remain sub-judice, it highlights the major role that liquor plays, especially in the COVID-19 context. It can be discerned from the judgments that no uniform policy for taxation, dissemination, delivery, sale or social-distancing exists. This also proves the lackadaisical approach of the administration towards tackling an issue of such severe proportions. In light of this, several measures should be instituted.

Probable Way Forward

The Road ahead lies with institution of actions by the concerned state, wherein the state should balance between the financial needs, the obligations of the state, and the rights of the citizens. A “Harmonious Construction” of the provisions must be done. Under the doctrine of Harmonious Construction, a balance is made between different facets and a middle path is carved for the same. In light of this, several actions must be taken.

Measures should be instituted in order to ensure proper social distancing & crowd management at the queues of liquor shops. The concerned state governments mut lay down strict guidelines concerning alcohol distribution or sale, which must be followed up by way of proper implementation, coupled with stringent fines. On the other hand, the citizens too can contribute to a better liquor sale experience by adopting proper measures such as wearing masks and gloves, adopting alternate measures of sale, such as online orders, or home delivery, coupled with no-contact payments. Only when both the states and the citizens work in tandem, can the ever-growing business of liquor sale be fruitfully governed. A pressing need exists to regulate the entire set-up in the COVID-19 context, which can also be implemented for times to come.