This action has led to fines being slapped on errant establishments.
In a major crackdown, the state excise department has filed over 1,500 cases against retailers who charge consumers above the maximum retail price (MRP) for liquor. This action has led to fines being slapped on errant establishments and their licences being cancelled or suspended.
Most of this overcharging has happened in the case of retailers supplying country liquor, which is consumed by the working class and masses and sees the highest sales in terms of volumes, and also with Indian Made Foreign Liquor (IMFL) licencees.
"We sell around 34 crore litres of country liquor in a year, of which 80% or around 28 crore litres is in 180ml bottles. This means about 160 crore of these bottles are sold," Vijay Singhal, state excise commissioner, told dna.
"The official rate (for 180ml bottles) is Rs47.31 but some retailers levy a minimum of Rs 50, while some even sell it for Rs 55," he noted, adding that presuming that each bottle was sold for Rs 2.5 over the MRP, this translated into around Rs 400 crore annually.
"We will strictly implement the MRP rule," said Singhal, adding that so far, they had lodged over 1,500 cases for violation of MRP rules. Apart from fines being levied, licences had also been cancelled or suspended.
Most of these MRP violation cases are against country liquor bars and shops and even against IMFL vendors.
According to a 1996 policy, a sealed bottle of liquor has to be sold based on the MRP mentioned on the label. This is inclusive of all taxes.
Then, the levying of excise duty had been remodelled on the basis of the MRP to an 'ad valorem' taxation system based on the manufacturing cost of liquor, replacing the earlier one which levied it at a specific rate for all categories of liquor (leading to the same tax rate for expensive and cheap liquor).
For country liquor, excise duty is charged per proof litre of alcohol or as a percentage of the manufacturing cost, whichever is higher.
"The maximum MRP violations happen in country liquor bars," said a state excise official, adding that this happened despite the margin of retailers being increased from just around Rs1-1.50 per bottle to around Rs5-7 now after a revision in the MRP formula around two years ago due to demands for an upward revision of margins.
"These country liquor bars claim that they charge extra because they are providing service to the people and also because of overheads like the salaries of waiters and other costs. Our contention, however, is whether asking people to go to the counter for buying a bottle of liquor can be interpreted as service," he added.
"The MRP is an odd figure and charging a few paise above the price can also be interpreted as overcharging… there should be a clause to enable rounding off to the nearest rupee," the official said.
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