In this article, Raghav Ajmera of Shri Navalmal Firodia Law College, Pune discusses how to get a license to set up a liquor store in Delhi.
Delhi is among the few cities in India which is famous for its nightlife. We all know that alcohol is the most consumed intoxicant around the world. The sale of alcohol usually takes place at liquor stores, bars, pubs, discos, clubs and restaurants. As compared to the other states Delhi comparatively has a cheap alcohol rates with a high demand for it. But to set up a liquor store it is not as easy as a setting up a general store. To operate a liquor store you need to have a license which allows you to sell alcohol in the country. To get a license for a liquor store it can take up to a year.
- In India, the laws governing alcohol which regulates the sale and buy of alcohol varies from state to state. They vary because the subject of alcohol is included in the state list which comes under the seventh schedule of the constitution of India.
- The excise department in Delhi regulates the liquor head. For the consumption of alcohol, there is a legal age for every state which is known as the consumption age.
- Consumption age is that age when a person can consume alcohol.
In Delhi, as per the Delhi Excise Act, 2010-SECTION 23 and Delhi Liquor License Rules, 1976 the legal age to consume alcohol is 25.
What is a liquor license?
A liquor license refers to the license which is required to sell alcohol at a certain place. It is produced by a legal authority. The liquor is supplied by the L-1 licensee to the holders of L-2, L-3, L-4, L-5, L-19 and L-19 A, L-52, L-53 licences in the National Capital Territory of Delhi. Every state has its different rules and regulations governing the sale of alcohol.
Kinds of Liquor available in Indian market
There are two types of liquor available in the Indian market.
- Indian made foreign liquor (IMFL): It refers to ‘Hard Liquor’ manufactured in the country.
- Imported foreign liquor (IFL): This refers to the liquors which are produced outside of India and later on imported to India. IFL is usually expensive than the IMFL.
Implementation of liquor laws in India
In Constitution of India, Article 47 it has been clearly mentioned that “The State shall endeavour to bring about a prohibition of the consumption except for medicinal purpose of intoxicating drinks and of drugs which are injurious to health.” In India there are 5 states where there is a strict ban on sale, purchase and consumption of alcohol.
Types of Licenses required to serve liquor
There are several rules which are called Delhi Liquor Licence Rules, 1976 which states about the types of licenses required to serve liquor in Delhi and alo describes the do’s and don’t to provide safe and quality liquor to the consumers in Delhi. There are 5 categories under which the license to sell the kinds of liquor are mentioned, those categories are as follows:
- Indian made foreign liquor (IMFl)
- Country liquor
- Denatured & Special Denatured Spirit
- Rectified spiri
Liquor licenses are of different kinds. These kinds of licenses are subject to sale of liquor at various places like the retail shops, bars, hotels, restaurants, pubs, clubs, and discos. For instance, if a person wants to sell liquor as a wholesaler then he/she need to obtain the license L-1 which prescribes the ‘Wholesale licensee of Indian Made Foreign Liquor’.
Granting of License
Grant of L-1 License
This is in regarding the granting of all liquor license for the wholesale vending to the company or a society or a partnership firm or proprietorship firm provided the applicant owns distillery/breweries/manufacturing units/bottling plants. The applicant has to follow the terms and conditions prescribed by the authority.
Grant of L-3 License
To get this license the state government issues tenders which are being issued to the distilleries or bottling plants which must be licensed by the state government or central government if the bottling plants follow the terms and conditions.
Grant of L-6 License
The L-6 license is in regarding the license for retail vend of foreign liquor/beer are granted only to selected undertakings of the Delhi government namely DTTDC, DSIDC, DSCSC and DCCWS. Any proposal in respect of premises for opening of a vend would come from above Corporations.
Grant of L-9 (Previously L-52 D)
The state government for the purpose of retail sale of various brands of Indian liquor and foreign liquor grants the license in collaboration with L-1. There are certain terms and conditions which are mandatory to be done after which only a person gets granted a license.
Grant of L-10
Licenses in form of L-10 is also for the purpose of retail sale of various brands of Indian liquor and foreign liquor as approved by the competent authority but the terms and conditions is not same as the L-9.
Grant of P-10 and P-13
This is in regard to the temporary license for service of liquor in parties/ functions/ conferences. The terms and conditions of the temporary license varies for the residences, For Licensees allowed for onside Consumption Hotels/Clubs/Restaurants, at any other premises.
Grant of L-15 and L-16
The authority grants licenses to the hotels holding star classification and approval of department of tourism, Govt. of India which are necessary for the conditions for grant of license. The guidelines laid down by the authority needs to be fulfilled.
Grant of L-17 and L-18
This is given to the independent restaurants approved by Department of Tourism, Govt. of India. One of the mandatory terms and condition is that the restaurant should be in a commercial area with an adequate parking space.
Grant of L-28
This is granted to a club registered with the registrar of firms/registrar of cooperative societies for service of the foreign liquor to it’s members. Any eligible club can apply here in accordance with the terms and conditions prescribed by the authority.
Grant of L-29
This is granted for service of Liquor/Beer at a club/mess whose membership is exclusively for Government Servants and which does not follow commercial rates and rules. The documents/procedure required for granting L-29 License is similar to the grant of L-28 license.
Apply online for liquor license
This is the world of technology where the work should be done on one click and same has been introduced by the Delhi government. The government of Delhi launches the portal to apply online for wine and beer shop/liquor license in Delhi. Now after the introduction of the portal there is no need for a person to visit the excise department.
The online liquor license program is launched by Delhi chief minister in excise department. This decision was taken by the Delhi government to make the work easy for the people applying for liquor license.
You can visit the official portal for apply online in Delhi for liquor license.
Choosing the right business structure
The purpose of setting up of any business structure is a person should shield themselves from liability and protect their assets from creditors. These days some of the business structure are very common and some of them are sole proprietorship, partnership, limited liability company (LLC), and corporation. Whatever the structure you’ll choose will help you to increase your money and assets and decrease your liability. For instance, if we choose the option of setting up a sole proprietorship we’ll have to invest it on our own and all risk should be suffered by us and also all the profits to be shared by the sole proprietor himself.
Paperwork, licenses and business permits are required to operate a business. The sole proprietorship is the best suited business form.
Legal framework and licensing required for setting up a liquor store in Delhi.
Part A – Understanding what type of license you need
Get knowledge of your state liquor laws
Every state in India has its own rules and regulations regarding the consumption, purchase and sale of alcohol. Before applying enquire as much as you can at your nearby liquor shops regarding the terms and conditions prescribing the regulations also you can go to the authority granting licenses.
- Every state has an Alcoholic beverage control (ABC) that governs the conditions of the sale, purchase, consumption and distribution of alcohol.
- Some of the states have license quotas which limits the number of places to sell alcohol within the state at any point of time.
Find out if you need an on-license or an off-license
There are two types of licenses which is required by the premises that offers liquor.
- The on-license refers to the kind where the alcohol is sold and consumed in the same premises. This type of license includes bars, restaurants, discos, etc.
- The off-license refers to the kind where the alcohol is consumed outside the premises. These are usually shops.
Figure out the specific kind of license you need
- Tavern license: It might be required in some states by business organisations that serves food but enjoy half of the benefits from the sale of liquor.
- Beer and wine: Some smaller restaurants are allowed only to sell smaller drinks like beer and wine and are not allowed to sell hard drinks.
- Restaurants: This helps and enables the sale of liquor in the premises which also helps in the profits of the restaurant.
Part B – Navigating the application process
Step 1 – Start as soon as possible
In case if you are thinking to open a bar or a restaurant serving alcohol you should be two steps ahead from all the events because getting a liquor license is not an easy job.
Step 2 – Consider the cost
The cost of obtaining the liquor license may vary from state to state and also from case to case. In some of the cases the price is very low but sometimes the price may go very high. Unfortunately because of the license quotas you may have to buy the license from an existing bar, liquor store, or restaurant.
Step 3 – Write a clear outline of business you are running
As explained in the above part -A you need to determine what kind of business you are running so that you may get the license accordingly.
- So as part of your application you need to write down what kind of business you would be running and whether you ought to sell liquor on your premises.
- You should also mention what kind of liquors you would be serving. Whether it is wine, beer or hard drinks or all the three.
Step 4 – Fill in all the necessary forms and complete the required documentation
Whatever asked in the form should be properly filled with the necessary information.
- The application should be prescribed with your personal details, business experience, your age, and your clean personal image.
- With your personal documents you also need to attach a personal agreement, a certificate of incorporation, with a municipal corporation approved building plan, a code compliance certificate and a copy of the certificate of title for the premises.
Step 5 – Be prepared to defend your proposal
After giving your documents and everything, a notice will be posted in the proposed area of business, including your name and sort of permit you are applying for.
- This notice must be publically displayed for a particular time in your area. During this time, anyone from the local community can come forward and contest your application.
- Depending upon the state or city laws you may also be required to post an announcement of your liquor license application in the local newspaper, and in some places, reach out to local neighborhood organizations such as schools, places of worship and nearby parks.
- If there are no objections to your application, local government will proceed with reviewing your application as normal.If there are objections, you may be called forward to defend your proposal at a public hearing, before a final decision is made.
Part – C Maintaining your liquor license
Renew your license yearly
If you wish to maintain your liquor license, you will need to renew it yearly by paying a certain amount of fees.
- If you stay at a good standing in your locality throughout the year, you may be entitled to reduction in fees.
Be aware that your license can be revoked
Your license can be revoked if you go against the rules and regulations of the authority.
- It can be revoked if you sell alcohol on dry days, or sell alcohol to minors or not incorporate according to the guidelines by the authority.
India is amongst the biggest manufacturer of liquor around the world. With time the consumption of liquor has increased and it is not a good thing. There have been instances where a person not having the legal capacity is drinking and which is not good for a country’s future. The process to get a liquor license is not an easy job it has very hindrances and obstacles also it requires a lot of capital but it is a profitable business. As per Delhi excise rules, no person can stock more than 18 liters of liquor, wine, cider, alcopop and beer and 9 liters of Indian and foreign alcohol (rum, whiskey, vodka, gin) at home or for parties.