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Date of Question Nov. 14, 2020, 2:25 p.m. Date of Answer
Q.

Whether an online marketplace can sell and deliver liquor in India? Can e-commerce websites or mobile applications in India sell and deliver alcohol?


A.

Alcohol is a widely utilized intoxicant and one of the most consumed psychoactive substances in the world. As indicated by the information distributed by the World Health Organization (WHO), the allout per capita utilization of alcohol by people over 15 years of age is 6.2 L of unadulterated liquor every year, which approaches 13.5 g of unadulterated liquor every day. India has a thriving liquor market as compared to various other countries. However, the legislations regulating sale, manufacture and distribution of alcohol in India are inconsistent and vary from state to state. Alcohol is generally sold in liquor stores, restaurants, hotels, bars, pubs and clubs. However in some states, it may be sold in departmental stores and served at banquet halls and farmhouses. Some tourist destinations have unique laws permitting the sale of alcohol on beaches and houseboats. Furthermore, the minimum drinking age also differs across states. It is the state Excise Departments that deal with regulations relating to the manufacture, production, possession, distribution, transport, supply, sale and purchase of liquor and other intoxicants.

Entry 51 of the State List under the Seventh Schedule of the Constitution, makes alcohol a state subject. It states:

“Duties of excise on the following goods manufactured or produced in the State and countervailing duties at the same or lower rates on similar goods manufactured or produced elsewhere in India:—

(a) alcoholic liquors for human consumption;

(b) opium, Indian hemp and other narcotic drugs and narcotics;

but not including medicinal and toilet preparations containing alcohol or any substance included in sub-paragraph (b) of this entry.”

QUERIES:

The representatives of the Company have raised the following queries:

  • Whether an online marketplace can sell and deliver liquor in India?
  • Can e-commerce websites or mobile applications in India sell and deliver alcohol?

1. APPLICABLE RULES/NOTIFICATIONS/ORDERS

Before addressing the specific queries as stated above, it may be relevant to broadly set out the important provisions of the relevant legislations in India which may be applicable to queries raised above.

  • The Government of Maharashtra on May 11, 2020, issued an order No. FLR0520/COVID/C.R.1/EXC-2 which stated “In exercise of the powers conferred by clause (f) and (n) of Section 139 of Maharashtra Prohibition Act (XXV of 1949; and of all other powers enabling it in that behalf, the Government of Maharashtra hereby permits the licensee holding the licenses in Form FL-II,FL/BR-II,FL/W-II, as appended to the Bombay Liquor Rules, 1953, to sell the IMFL-Spirits, Beer, Mild Liquor, Wines, to the permit holders by effecting delivery at the home address of the permit holder…” This Order was to be in force “until the orders of Lockdown issued by the Government from time to time under the Disaster Management Act, 2005 (Act 53 of 2005) or any other Act are in force in the State”.
  • The Government of Orissa in its Order no. 2373/Ex. dated May 23, 2020 stated “In exercise of the powers conferred by Section 93 of the Odisha Excise Act, 2008, Government hereby allows home delivery of liquor by the existing FL OFF shop/FL ON shop licensees (except those situated in containment zones and in shopping malls) w.e.f 24th May 2020 till further orders..”

    The Order further went on to state “Home delivery of liquor can be taken up by retailers directly and also through their authorized agents. Authorized agents for this purpose would mean food aggregators, standard technology platforms/delivery service providers acting as retail aggregators etc. having NOC from the excise commissioner for this purpose”

    “Even when a retailer is taking up home delivery directly, for the purpose of better service delivery leveraging technology, it will be advisable for him/her to tie up with atleast one of the food aggregators/technology platforms/delivery service providers also for the purpose of receiving orders/payments and for taking up home delivery. Home delivery orders can also be placed through an online platform being developed for this purpose by OSBC1”
  • The government of West Bengal in May, 2020 issued a notice inviting ‘online ordering and delivery platform providers’ to express their interest in the sale and distribution of alcohol. The notice bearing NIE No. BEVCO/2020/54 stated “To use the channel for home delivery of liquor in a more focused and effective manner, the West Bengal State Beverages Corporation Ltd (WBSBCL) invites Expression of Interest from reputed online ordering and delivery platform providers including Start-ups and Stake Holders Association for handling electronic ordering, purchase, sale and home delivery of alcoholic liquors from licensed retail outlets to eligible consumers of legal drinking age located within the state of West Bengal.”

    Various terms and conditions were laid down including quantity of potable alcohol which could be delivered, place of delivery, age, annual turnover, experience in the e-commerce industry.

2. RESPONSES TO SPECIFIC QUERIES

2.1 Whether an online marketplace can sell and deliver liquor in India?

As discussed in the introductory paragraph, the laws regarding sale and delivery of alcohol lack uniformity. Although, online marketplaces have traditionally not been allowed to sell liquor, the COVID-19 pandemic has caused state governments to revise their policies. A few states have modified their legislations governing sale and distribution of alcohol.

Wherever permitted by the state, an online marketplace can now tie up with authorized retailers for selling liquor. This type of business model works on a commission basis but they have to comply with all state rules and regulations.

Liquor can be sold online only if a) the respective State Government has permitted online marketplaces to sell and deliver alcohol; b) if the service provider complies with all the rules and regulations as laid down by the State Government. The remainder of the response to this query is contained in the reply to query 2.2.

2.2 Can alcohol be sold and delivered through e-commerce websites or mobile applications in India?

Each state has a different set of requirements which sellers need to meet to conduct sales. Recently, while disposing a PIL filed at the Supreme Court, (Writ Petition (Civil) No. 474/2020) a bench of Justice Ashok Bhushan, Sanjay Kishan Kaul and B.R Gavai observed that “It shall be open for the concerned state government to consider non-direct sale including online sale/home delivery of liquor to facilitate social distancing” . Following this, many states have taken drastic steps for an increase in alcohol sales and thereby enhancing their revenue during the COVID-19 pandemic and subsequent lockdowns. For example:

  • In Maharashtra, the government has allowed sale of alcohol through online platforms. Sale and delivery of alcohol was permitted vide the vide Government of Maharashtra’s Order No.FLR-0520/COVID/C.R.1/EXC2 dated 11.05.2020 (elaborated in Clause 2(a) of this Memorandum) which came into operation from the midnight of May 22, 2020. The licensee is permitted to sell IMFL - Spirits, Beer, Mild Liquor and Wine as per the already existing liquor license through e-commerce websites.
  • The Odisha government, vide Order no. 2373/Ex dated 23 May 2020 (elaborated in Clause 2(b) of this Memorandum), allowed home delivery of alcohol through retailers and their authorized agents eg. food aggregators, standard technology platforms/delivery service providers etc. having NOC from the Excise Commissioner. Home delivery orders can also be placed through an online platform of the State Beverage Corporation.
  • The government of West Bengal issued a notification NIE No. BEVCO/2020/54 (referenced in Clause 2(c) of this Memorandum) and subsequently issued a ‘Result of Evaluation’ vide which certain online marketplaces and food delivery Apps have been allowed to sell and deliver alcohol. The various e-commerce platforms include Amazon, Hip Bar Pvt. Ltd., Spencer’s Retail Ltd., Swiggy, Zomato.
    One can also place their orders for online purchase and delivery of alcohol through the West Bengal State Beverages Corporation’s website by feeding all relevant details (such as name, age, mobile number etc).
  • The Tamil Nadu State Marketing Corporation (TASMAC) has started an application (“App”) for home delivery of alcohol, where one can feed in their details, add the order to their cart and pay online, hence encouraging web-based buying and home delivery of alcohol.
  • In Chhattisgarh, online delivery of alcohol is allowed but only through the Chhattisgarh State Marketing Corporation Ltd. (CSMCL) website or mobile application.
  • In many states like Meghalaya, West Bengal, Punjab and Haryana, home delivery of alcohol has been permitted directly by retail outlets or through online portals of the Excise Department, subject to various terms and conditions. (Although the state of Punjab has allowed home delivery of alcohol, it has also clarified that this permission has been granted only as long as lockdown restrictions are in place.) Web based Apps or online marketplaces like Amazon or Flipkart have not been permitted to sell or deliver alcohol in the states of Punjab, Haryana and Meghalaya.
  • Certain other U.T.s/states like New Delhi and Kerala have developed an “e-token” system, whereby one can apply for tokens online to avoid large queues at liquor and wine shops in the times of COVID-19.
  • Jharkhand had initially allowed food delivery providers like Swiggy and Zomato to deliver alcohol, however the excise department had to soon roll back its permissions due to low demand by consumers.

In conclusion, state legislations governing online sale and delivery of alcoholic beverages, lack uniformity, as do the regulations governing retail sale, manufacture or distribution of alcohol.

3. DISCLAIMERS:

  • This memorandum is solely for the benefit of the Client. This memorandum will not, without Khoji.Law’s prior written consent, be disclosed by the Client to any third party or be used, circulated, quoted, referred or relied upon by any other person other than the Client, nor may it or any part of it be quoted or referred to in any public documents or filed with any government agency, regulatory or other authority or any other person without Khoji.Law’s prior written consent.
  • This memorandum is strictly limited to the matters expressly addressed herein and is not to be read as an opinion with respect to any other factual or legal matter.
  • This memorandum is based on the provisions of applicable Indian law prevailing at the present time. Any variance of law may cause a corresponding change in the analysis set out in this memorandum.
  • We have not been provided with, and are not aware of, any facts or information, other than the queries that have been put forth to us.
  • Views expressed in this memorandum are a matter of our professional judgment and need not necessarily be accepted by any court, tribunal, statutory authority or regulatory agency.
  • Our liability to any person (whether under contract, tort, equity or otherwise) in relation to the analysis and advice contained in this memorandum shall be limited to the contribution made by the Client (if any) towards our services.
  • We recommend that a detailed legal opinion is sought on specific facts and this memo is not treated as a substitute for the same.

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