This article is written by Arunima Sharma, a 3rd year law student from School of Law, Christ University, Bengaluru pursuing her degree in BA LLB. The article elaborates on the alcohol laws in the city of Mumbai in situations where a licence applicant wants to sell liquor. 

Introduction

A liquor licence is a permit given to allow the trade of alcoholic beverages in each state by the state government. Every state has different regulations regarding granting the same but each involves a thorough examination of the details of the licence applicant. But as of 2019, Maharashtra is the only state that requires liquor licence for possession, consumption, or transportation alcoholic beverages.

In Mumbai, granting of licence is governed by Bombay Prohibition Act 1949 which governs possessing, consuming, purchase and transport of liquor. To get this licence, the holder must be 25 years of age or more.

Such liquor licence is issued under the Bombay Foreign Liquor Rules 1953. Rule No. 24, 44, 47 as well as the Special permit rules govern the process of licencing.

Classification

A licence may be an on-licence which allows the consumers in a bar or a restaurant to sit and consume alcohol but in the case of a permit to sell alcoholic beverages, an off-licence is required.

A broad classification of types of licence is in two parts- Wholesale and Retail- these two are differentiated, essentially, on the basis of the form in which the licence is given.

Wholesale 

A license in Form C.I.W II, which permits a licence holder to sell duty paid country liquor in wholesale, is a wholesale licence.

Examples of wholesale licences are as follows:

1. Trade and Import Licence for removal of custom in case of Wine.
2. Licence for trade and wholesale of duty paid country liquor to the retail stores.
3. Sale of foreign liquor in wholesale.

Retail 

Retail licence is the one obtained in Form C.L.III or C.L./F.L.

These may be of the following types:

1. Permit room license
2. Club License
3. Beer Shoppe Licence
4. Mild Liquor and wine bar License
5. Wine bar License
6. Wine Shop Licence

In which cases is a licence required 

According to the Bombay Prohibition Act, 1949, a liquor licence is required broadly in the following cases:

1. Sale of Liquor.
2. Purchasing of Liquor.
3. Consumption of Liquor.
4. Distribution of Liquor.
5. Transportation of Liquor.

Further, a licence is granted for other reasons as well. Some of them are as follows: 

1. For hosting parties and function where there is distribution of liquor.
2. For allowing consumption of liquor on premises.
3. For permission to use liquor for medicinal and other purposes.
4. Licence for Clubs.
5. Licence for tourists and visitors, etc. 

Conditions for granting a licence 

The following sections of the Act provide provisions under which a certain authority will grant a licence:

• Section 34 – Vendor’s Licence

“(1) The State Government may, by rules or an order in writing, authorise an officer to grant a vendor’s licence for the sale of foreign liquor.

(2) A vendor’s licence shall be granted on the following conditions:

(i) the stock of foreign liquor with the licensee (except what is permitted for the disposal in the shop) shall be kept by him at [godown] approved by Government.

[* * *]

(iii) the licensee shall pay all rent, costs, charges and expenses incidental to warehousing and supervision;

(iv) the licensee may sell any part of the stock of foreign liquor to foreign liquor licensees or to chemists, canteens, messes and clubs, holding licences in the State, or to any persons outside the State, subject to such conditions as the Commissioner may impose;

(v) the licensee shall be permitted to sell foreign liquor only to holders of permits of authorizations;

(vi) the licensee shall be entitled to keep in his shop such quantity liquor as may be required by him from time to time for retail sale;

(vii) the licensee shall keep accounts and shall dispose of foreign liquor according to such instructions as may be given by the Commissioner, or any officer authorized in this behalf by the commissioner.”

Section 34 is the provision for the state government to grant a vendor’s licence for the purpose of sale of foreign liquor. Subsection 2 of this section states the prerequisite / the conditions required to be fulfilled for granting the licence. They are as follows:

1. The stock to be sold is in a government approved godown.
2. The licence to be acquired should pay for expenses related to this godown.
3. The licensee may sell a part of his stock to any person holding a licence in the state or outside the state as per the conditions laid down by the commissioner.
4. The sale shall be permitted only to holders of permits/authorizations. 
5. Licensee is allowed to keep a particular quantity of liquor as required for retail sale.
6. The instructions of the commissioner regarding accounts and disposing off liquor should be followed.

• Section 35 – Hotel Licences

“(1) The  State Government may, by rules or an order in writing, authorize an officer to grant licences to the managers of hotels to sell foreign liquor to the holders of permits granted under this Act: Provided that the State Government is satisfied that such hotel has ordinarily a sufficient number of boarders eligible to hold permits. 

(2) Such licences shall be issued on the following conditions:

(i) liquor shall be sold to the permit holders residing or boarding at the hotel,

(ii) Consumption of liquor sold shall not be allowed in any of the rooms of the hotel to which any member of the public has access, 

(iii) The holders of hotel licences shall pay the expenses of any officer of the excise establishment, if any, required for grant and control of permits on the premises or for the supervision over the issue and consumption of foreign liquor in the hotel.”

Section 35 provides the provision to give licence to hotel owners to allow the sale of liquor to the  holders of drinking permit. The primary condition under section 35(1) is that the state government should be satisfied that the hotel has sufficient number of boarders to hold the permit.

Subsection 2 lays down certain other conditions which are as follows:

1. The liquor should only be sold to permit holders.
2. Liquor consumption will not be allowed in public roms.
3. All expenses paid to any officer of an excise establishment are to be paid by the holder of hotel licence.

Documents required for obtaining a licence 

The documents required to obtain a liquor licence are as follows:

• An application that is addressed to the Excise & Taxation Officer as required.
• A treasury receipt of Rs. 2000 (for lifetime permits) and a treasury receipt of Rs. 200 (for one year permit) has to be deposited under the head 039-State Excise.
• Age Proof.
• Address Proof.
• Aadhaar Card.

Licencing processing 

The licencing process for application of a liquor licence involves the following steps:

Obtain a Court Stamp 

The applicant needs a stamp for Rs. 10 from any court or the town house.

Go to the Permit issuing office 

The permit issuing office in Mumbai is the Collector’s office or also known as the Old Customs House. This office is located at Fort area, South Mumbai. Permit can also be issued at the regional offices in Malad West, Andheri, Bandra and Chembur.

Application form

At the issuing authority, the applicant has to collect an application form which will be available free of cost. This form has to be filled with the applicant’s correct details. These details include the following specifications:

1. 1. Name of the Applicant
   2. Date of Birth
   3. Occupation
   4. Age (Must be above 25 years of age)
   5. Residential address of the applicant

Affixation of the stamp 

The court fee stamp of Rs. 10 must be fixed on the application form after entering all the details.

Submission of form

The applicant now has to submit the application form filled with all the details along with the required documents as mentioned above, i.e., Photographs of the applicant, age proof, address proof and Aadhar card.

Payment of Fees

Lastly, the required prescribed fees must be paid along with the application from to initiate the process of grant of licence.

Digitalisation of licencing process

The state excise department has launched a portal- exciseservices.mahaonline.gov.in for granting of liquor licence. The required task is to key in your Aadhar card number online. A digital licence is granted soon after. The portal also allows you to check the status of a pending application.

A person applying for the liquor licence must be 25 years or above.

The following are the types of licence granted through the online portal but an applicant can apply for only one permit in a day:

Drinking Permit

• One Day Permit.
• Annual Permit.
• Lifetime Permit.

Other Permits

• Temporary licence- for hosting a function.
• Licence for owning a functional brewery.
• For Manufacturing wine, portable liquor and country liquor.
•  Possession, sale and import of molasses.
• Licence is also required to manufacture medical and toilet preparations containing Alcohol, opium and other narcotic drugs.

Renewal of licence

The license granted to the liquor stores as an off-licence to distribute liquor as well as the on-licence where consumption is allowed on premises is valid only for a period of one year after which the licence holder may apply for renewal of the licence.

Certain documents required during renewal of any licence are as follows

• Application in the prescribed form. 
•  Rs.1/- Court fee stamp.
• A challan of Rs. 25/- as application fee.
• Licence fee challan as per the state government regulations..
• Income tax/Sales Tax clearance certificate or affidavit.
• A deed or a declaration for the current partnership status of the institution.
• Ownership/ Tenancy papers.
• The original licence.

Application Process 

1. The application of renewal must be filled 30 days before the expiry of the original licence.

2. The challan worth Rs. 25/- is to be submitted along with the application form as application fees.

3. Renewal fees as per the state government regulations is to be paid in order to finish the process of renewal of a licence.

Cost of obtaining a licence 

• Temporary club Licence/ Party permit:

Above 100 people: Rs. 15,000.

Below 100 people: Rs. 10,000.

• Mandatory FL-4 Licence for a private liquor party in a flat or a resort- Rs. 13,000.
• Permit Rooms Licence- Rs. 5,44,000.
• Licence for Beer Shops- Rs. 1,50,000.
• In case only a few friends are together, they must have a drinking permit- Rs. 5. 

In these cases if the person does not have the appropriate licence, he may be charged for illegal possession of Liquor. This is also applicable to a group of people drinking in an apartment.

Places where sale of liquor is prohibited 

The sale of liquor is banned at the following places:

1. Within 500 Meters of any state and national highways. 

• This does not prohibit sale in municipalities.

2. Within 50 Meters from an existing place of worship.

• This includes prohibition of Liquor in Municipalities and Municipal corporations.

3. Within 50 Meters from any educational institute.

• This includes prohibition of Liquor in Municipalities and Municipal corporations.

4. Within 100 Meters of each other near any Local body.

5. Within 100 Meters of a hospital.

Taxational aspect 

1. No service tax/GST can be levied on sale of liquor in retail shops. This was decided at the GST Council Meeting in 2018 and approved by the central government. 
2. Retail licence holders who have acquired licence under FL-II, FL-BR-II, CL/FL/TOD-III is exempted from tax on sale of liquor purchased from registered dealers within the state. 
3. Country liquor bar which is holding a CL-Ill licence is also exempted from tax under the same condition.

Further, the above two exemptions are applicable only if the liquor has been taxed at an earlier stage in the state.

1. Wholesaler licence holders who have acquired a licence in FL-i or CL-II and retailers holding licence in FL-II, FL-CL-TOD-III have to pay a tax rate which is equal to 25/125 x MRP when the liquor hasn’t been taxed at a prior stage.
2. In case of Bars, Restaurants and Clubs holding a liquor licence:

With grading 3 Star and below

5% tax rate on actual price of liquor is applicable on liquor which is purchased from within state from registered dealers. Further, tax should have been paid or become payable at an earlier stage.

With grading 4 Star and above

20% tax rate on actual sale price is applicable on liquor which is purchased from within state from registered dealers. Further, tax should have been paid or become payable at an earlier stage.

In cases of import of liquor from other states or countries, then a tax at scheduled rate limited to MRP x 25/125 of such liquor sold will be applicable additional to the 20% tax rate mentioned above.

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