Bizarre Rule for Hotels and Restaurants announced by Delhi Excise

According to the government notification of 26 August, received by the trade this evening , all stocks of wine and beer transferred from store room to the bar counter –read wine cellar and cold beer storage, must be sold within 3 days. Similarly, the cheaper liquor with MRP of under Rs. 1500 must be cleared within 5 days; those costing up to Rs. 6,000 have a nominally higher period allowed of 8 days.

‘Ludicrous, stupid, ridiculous, downright rubbish, autocratic, so-out-of-tune and times , preposterous, grotesque-  were some of the remarks expressed by producers and wine importers alike’. Never has been the alcohol and wine industry so strong in expressing their disgust and disappointment.

What if the sale does not take place within this period. Such stocks are to be destroyed. It does not specify that the excise department would at least credit the purchase price of the product. How much more bizarre and ludicrous can it be? How can the restaurant ensure the sale. At times the stocks might even lie in the wine cellar for weeks and months and still not sell. The restaurant takes a chance on buying a wine hoping to sell it at a profit that would take care of costs and give a decent return. But invariably one would go wrong in assessment. Does it mean the wine cellars in hotels like Oberoi, ITC Maurya or Lalit stop storing their wines or should they keep them in the warehouse, away from the prying naked eyes of the excise department and more importantly the consumer.

The ruling defies any logic and prima facie there seems to be something missing. At its worst, it has been a hasty decision to solve a problem that does exist in the Delhi NCR region- and surely in a much bigger way all throughout the country. According to some importers delWine talked to, on conditions of anonymity, there have been some raids and heavy fines including cancellation of the licenses and black listing the restaurants in the recent past and the new policy is a step to supposedly stop the illegal sale of liquor.

Apparently, these restaurants in connivance with the distributors and importers would display a couple of bottles of expensive wines, say Dom Perignon. In theory, these should be sold before the next ones are brought in- First In First Out (FIFO basis). In practice, they pay customs, excise duty and VAT only on these 2 bottles and conveniently bring in more from outside the system from bootleggers who make handsome profits and so does the restaurant as they continue to sell the illegal stuff. Importer does not suffer but the distributor loses the sale. Importer makes his profit anyway. The government is a big loser of taxes and is fully justified in taking some remedial steps.

This brings to memory the days of government auctions when the crafty businessmen would pick up small lots of duty-paid imported goods, display these in their windows and sell the smuggled goods at cheaper prices.

The policy however, would increase corruption many-fold and the restaurants and hotels would be at the mercy of their new lords and masters who draw considerable clout in any case, immaterial of which government is currently ruling. One importer sincerely suggests that this could be a campaign to collect funds for the soon-to-be-held Assembly elections. This appears to be ridiculous logic considering that on paper the AAP government is committed to honesty, a notch more than even the central government.

After the expiry of the period, the stocks have to be destroyed within 7 days and inventory maintained of such stocks. Imagine the plight of hotels and restaurants that have to suffer the bureaucracy and face the suspension and cancellation of the licenses and black-listing.

The order comes into effect on 31 August at 10 am. The honest Restaurants and Hotels have limited time to meet the authorities and explain to the authorities that this is the best way to kill the market and will bring prohibition from the backdoor in Delhi- unless there is some other plausible explanation from the excise department. It is a classic case of a few rotten fish spoiling the whole tank and is akin to throwing the baby with the bathwater. Not to mention that the ease of doing business and Make in India business take a big hit.

The government had sent a strong signal with heavy penalties in recent times and such strong measures are more important to keep the honest businesses run their business smoothly. Else the excise department ought to have a PR department that convinces the restaurants and hotels and consequently the importers, producers and distributors that all eez well!

For earlier Article, please visit

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27 August 2019

Subhash Arora

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