SC ban on liqour vends near highways to affect 60% retail outlets in Maharashtra

After the Supreme Court (SC) ordered liquor vends along state and national highways to shut down, the state government admitted it faced a challenge in preventing tipplers from shifting​ to harmful illicit liquor.

The order will affect over 60% of retail liquor outlets like wine shops, permit rooms, county liquor shops and club licenses located in proximity to highways and burn a hole in the income of the state government from excise duty and sales tax. 

“According to the Supreme Court's order... any shop, restaurant, three-star, four-star or five-star hotel located at a distance of 500 meters from national and state highways will not be able to sell or serve liquor,” said Maharashtra excise minister Chandrashekhar Bavankule on Saturday.

This is expected to affect 15,699 liquor vends and hit the state excise department's revenues by almost Rs 7,400 crore. “We do not consider this as a loss since it is in public interest,” noted Bavankule.

“Before 1973, illicit liquor was brewed and sold to ensure people did not consume this brew and to make quality liquor available for drinkers, legal shops were opened,” he explained. 

“The biggest challenge for us is that since liquor shops are being closed, we will have to ensure that illicit liquor (sales) do not increase and are controlled,” admitted Bavankule.

In December 2016, the SC banned liquor vends within 500 meters of state and national highways from April 1, 2017, to reduce drunk driving and road fatalities. On Friday, the apex court said it would also include permit rooms, pubs and restaurants serving alcohol. It, however, relaxed this ban for cities, towns and municipal areas with a population of 20,000 or less which can have alcohol vends beyond a range of 220 meters from highways.

Excise officials said they were expecting directions from the state to map out liquor vends outside this 220 meter area.

According to the state excise department's figures, 15,699 licenses are functional in the 500 meter distance from state and national highways. This covers 61.53% of the 25,513 retail liquor vending licenses in Maharashtra, which will now have to be shut down or transferred depending on the rules.

The total number of licenses operating in the 500-meter area around national highways is 4,969 (19.47% of the total) and the figure for state highways is 10,730 (42%). This includes establishments like country liquor and IMFL retail vends, permit rooms, club licenses and beer shops.

State excise officials said this would cause a total revenue loss of about Rs 11,000 crore in 2017-18 in terms of state excise duties on liquor sales, license fees and sales tax. This includes an estimated Rs 7,398 crore towards excise duties.

Bavankule said on June 9, 2001, the state government had decided that local bodies like municipal corporations, which had ring-roads on the national and state highways around them, could acquire these highway stretches passing through their jurisdiction. These roads would be denotified as state or national highways and will have to be maintained by these bodies. 

This denotification will ensure that liquor vends can continue to do business there. 

Excise officials admitted they would have to work hard to ensure that the closure of authorised liquor vends did not lead to a rise in illegal sales, smuggling of liquor from other states or consumption of duplicate and spurious liquor.

The excise department, which is the third highest contributor to the state's kitty after sales tax and stamp duty and registration departments, had a target of Rs 15,343.86 crore to meet in the 2016-17 fiscal.

At present, permit rooms in hotels and restaurants are not allowed at a distance of 75 meters from the middle of the highways with distance curbs not being in place for any other class of permits.

As on March 31, 2016, Maharashtra had a total of 7,438 km national highways, 5,180 km major state highways and 33,330 km state highways. The total road length in the state is 2,99,368 km and this also includes major district roads, district roads and village roads.

TYPE OF LICENSE — TOTAL LICENSES — AFFECTED

CLIII (retail sale of country liquor) — 4,272 — 2,594 (60.72%)
FLII (liquor shop) —1,715 — 831 (48.45%)
FLIII (restaurant and bar) — 13,650 — 9,097 — 66.64%
FL IV (club licenses) —126 — 27 (21.42%)
FLBRII (beer shop) — 5,649 — 3,138 (56%)
E-bar (sale of wine/ mild liquor in hotels etc) —  101 — 12 (12%)
TOTAL —  25,513 — 15,699 —  61.53%