About 5 years ago when I visited Chandigarh to conduct a cheese and wine evening and check out the wine trends, it was a sleepy ol’ town where the locals picked up their quota of wine from Delhi or were obliged to pick up whatever the local liquor shop had to offer. I met the excise commissioner who was one of the invitees at the opening of the upscale watch retail showroom Ethos, who was young and sounded very dynamic.
The usual plea to ask him to make the policies wine-friendly- and he told me to wait till the next policy was out. It was not revolutionary when it was released a couple of months later but certainly encouraging for the wine consumer. Chandigarh has never looked back since then. Starting in April, 2006 it took a quantum jump in introducing reforms in the Excise procedures and every year the policy introduces pleasant surprises.
The reforms in the excise policies have introduced more initiatives every year and the Policy for 2009-10 does not disappoint except perhaps the increase the VAT from 4 to 12.5%. This step was perhaps anticipated because of constant pressure from the nearby Punjab, Haryana and Himachal which, with 12.5% VAT faced a significant amount of leakages of wine and liquor into their states.
A number of innovative steps have been taken with no increases in excise duties or introduction of any significant negative features.
Modern Liquor Shops
Unlike Delhi, Chandigarh was one of the first cities to allow sale of wine in supermarkets. This year a new concept of the establishment of a Modern Liquor Shops has been introduced to give a modern look to these stores. The annual license fee has been reduced from Rs. 2.5 million for the conventional retail shop to Rs 2 million for these shops which must be air-conditioned and would be allowed in the SCOs / SCFs on the sectorial grid roads or malls only, and will be allowed to sell liquor too. Apart from the obvious advantage of easier availability, the step will ensure better storage for wines.
The Modern shops would be allowed to have tasting sessions not allowed hitherto without paying any additional fees to run ‘taverns’. Each shop must have a minimum carpet area of 500 sq ft. and may not sell other products using it as a department store.
In order to discourage and eventually phase out the liquor retails shops operating in the existing temporary structures, their license fee has been raised by Rs. 0.5 million to Rs 3.0 million. Moreover, no new license will be issued for shops in such structures.
The excise duty continues to be negligible-being as high as only Rs. 13-14 a bottle.
Reduced label registration charges
In order to promote low alcohol beverages, the Wholesale License fee for wine has been reduced from Rs. 5,000 per brand to Rs. 2, 000 per brand. Besides, sale of domestic wines has been allowed from licensed Departmental Stores.
Earlier the Licensed Departmental Stores were allowed to sell only imported wines and liquor. To facilitate introduction of more brands of imported liquor, the brand registration fee of these brands has also been reduced from Rs 5,000 per brand to Rs 2,500 per brand.
Requirement of authorization from manufacturer or his authorized importer in case of Imported Foreign Liquor has also been waived off. This had been an un-necessary and mindless bureaucratic requirement which the progressive excise has been able to comprehend, unlike many other states still swimming in the sea of non-productive paper.
Relaxation of bar times
Keeping in mind the changing social trends and mores the closing time for bars has been relaxed further to 1 am instead of midnight, at present.
No change in private storage limits
The Private Possession limits have been kept unchanged. Presently, the private possession limits are 18 bottles of IMFL/Imported Foreign Liquor (750 mL), 36 bottles of Beer (650 mL), 18 bottles of Wine (750 mL) and 2 bottles of Country Liquor. One may increase the possession limits by obtaining Special Permits from the Department at an annual fee of Rs 200 or one time fee of Rs 2000 for life.
Relaxation in license fee payments
In order to facilitate the payment of license fee, the terms and conditions of payment of license fee have been relaxed. The licensees will have to pay 25% of the license fee within 72 hours of the grant of the license or a renewal; 25% will have to be made by 10th April and the balance 50% may be made by 31st July. Now the 50% payment has to be made within 24 hours by the individuals.
In case of companies, the payment of license fee has been relaxed to 25% within 72 hours of the grant or renewal but the balance may be paid by 10th April as opposed to payment within 24 hours as is required to be made now.
The procedure for grant of license to the new applicants is being simplified by introducing the submission of Bank Guarantee in lieu of Solvency Certificate required thus far.
VAT increased
Excise duty rates on wine and liquor remains unchanged. However, in order to curb the existing outflow and smuggling of liquor to the neighboring states of Punjab and Himachal Pradesh, the rate of VAT has been increased from the present 4% to 12.5%. Since VAT is charged at the first point of sale, the net increase in the retail price would be around 6 % or less.
Marginal decrease in number of shops
The permissible limit of India Made Foreign Liquor (IMFL) shops has been nominally reduced from 156 to 152. However, there is no change in the number of Country Liquor vends. There is also no change in the Annual Quota of these vends.
Other highlights
The bar license fee of 5-star hotels (L-3/L-4/L-5) has been reduced by 55%, from Rs. 0.5 million to Rs. 2,25,000. The license fee of other bar licenses has been kept unchanged.
There is no change in Excise duty on the wine and liquor sold through the military canteens. Maximum number of liquor shops that can be owned by an individual has been increased from 2 to 3 for IMFL shops.
Process of approval of various labels has also been further simplified through decentralization.
The Excise Policy of the UT of Chandigarh may not be ideal but is certainly role models for the other wine consumption states to emulate- even though its website is a tad slow to publish latest details.
Subhash Arora |