Have you been wanting to start a liquor business? Liquor business is one of the most thriving businesses in India however, it is a heavily regulated sector as liquor as an intoxicant comes under the domain of State List mentioned under Schedule VII of the Constitution of India, therefore, there is no uniformity in the laws and each State has its own set of rules and regulations governing the liquor business in India. To sell and market liquor or alcoholic beverages, the liquor stores, restaurants, hotels, clubs, and other such entities are required to procure a liquor license which is granted by the respective State Excise Department of each State otherwise, the same will be construed as an illegal activity under the applicable laws of India.
In this article, since respective State Government has the power to enact laws governing the liquor business wherein, some States have enforced prohibition up to a certain age limit while others have completely banned it for example Bihar, Gujarat, Nagaland, etc. We are briefly discussing and listing out the different types of liquor licenses that are typically granted in the State of Delhi along with the necessary documents and the applicable laws that are to be kept in mind while running an alcohol-based business. Feel free to reach out to us for any legal assistance regarding setting up a business in India.
Laws you need to know when starting a liquor business
We have broadly captured the laws that are applicable in the State of Delhi:
1. The Constitution of India
Under Part IV of the Directive Principles of State Policy, Article 47 of the Constitution of India directs the State Government to raise the level of nutrition and the standard of living and to improve public health. It clearly states that, “the State shall endeavour to bring about prohibition of the consumption except for medicinal purposes of intoxicating drinks and of drugs which are injurious to health”. Since the consumption and/or purchase of liquor is governed by the laws enacted by the respective State Government, the State Government of Delhi has enacted laws for regulation and collection of the excise revenue on liquor such as the Delhi Excise Act, 2009, Delhi Excise Rules, 2010, Delhi Excise Policy, etc.
2. The Delhi Excise Act, 2009 (“Act”)
The Act primarily focuses on excise laws relating to manufacture, import, export, transport, possession, purchase, sale, etc., of liquor and other intoxicants, in the State of Delhi. As per Section 23 of the Act, “No person or licensed vendor or his employee or agent shall sell or deliver any liquor to any person apparently under the age of twenty-five years, whether for consumption by self or others”. Furthermore, as per Section 33 of the Act, “anyone who unlawfully import, export, transport, manufacture, possession, sale, etc. shall be punished with imprisonment for a term of not less than 6 (six) months but which may extend to 3 (three) years and with fine which shall not be less than INR 50,000 (Indian Rupees Fifty Thousand), but which may extend to INR 1lakh (Indian Rupees One Lakh)”.
3. The Delhi Excise Rules, 2010
By the powers conferred under Section 81 of the Act, the Government of Delhi has formulated rules governing the import, export, transport, possession, permits and passes of intoxicants. Further, it also governs the sale and license of intoxicants including the maximum limit for retail sale and individual possession of liquor, class of licenses. Moreover, authorities such as the Deputy Commissioner and the Assistant Commissioner are empowered to grant and renew licenses, establishment of warehouses for liquor, etc.
Documents required to start a liquor business
There are various entities that can apply for liquor licenses in order to start a liquor business such as a company, partnership firms, co-operative societies, sole proprietors, hotels, restaurants, clubs, and other such entities. Depending upon the kind of license being applied for, the supporting documents and the costs associated with such licenses may vary from license to license. We have outlined the list of documents that are required by a restaurant for procuring a liquor license in the State of Delhi:
- Application in the prescribed format.
- List of partners/ directors (if the applicant is other than a proprietorship firm)
- Partnership deed/ Memorandum of Association
- Registered sale deed/ lease deed of the proposed premises
- Health Trade License issued by the MCD/ NDMC/Local body
- Eating House License issued by the DCP (Licensing)
- Affidavit regarding Fire Safety Measures (if the seating capacity is below 50 (fifty) seat covers)
- NOC from Fire Department (if the seating capacity is more than 50 (fifty) seat covers)
- Approval of Department of Tourism, Govt. of NCT of Delhi/ Govt. of India
- DVAT registration
- PAN card
- Seating plan
- Affidavit regarding seating capacity under or as provided under Section 13(1) Chapter III of the Delhi Excise Act, 2009
- Declaration of Authorized Representative by the Proprietor/ Partner/ Directors
- Resolution of Board of Directors
- List of employees along with their names, address, and age
- Copy of the insurance of the premises against Fire and Natural hazards.
Categorization of Liquor Licenses
As tempting as it sounds to start a liquor business in India, given that the State has the power to regulate the procurement of these licenses it might be an intricate task to obtain all the permits and licenses in terms of establishing an alcohol-based business. There are plethora of alcohol licenses to choose from depending upon the class and nature of alcohol business in India. The below mentioned table highlights some of the different types of alcohol licenses an entity can procure in the State of Delhi:
1. Name of License– L1
Role and Grant– Granted to distilleries/bottling plants for the wholesale supply of Indian liquor and beer in Delhi. It is granted only to a company, firm, society, or sole proprietor having manufacturing units (distillery/brewery/winery/bottling plant or so).
Procedure– The applications for the grant of license are invited through the public notice published in some of the leading newspapers and in the official website of the department. An application for the grant of L-1 license is required to be made in response to the public notice in the prescribed format together with its Appendices (‘B’ and ‘C’) to the Deputy Commissioner of Excise, Delhi.
2. Name of License– L6
Role and Grant– Granted for the retail sale of Indian liquor/beer. It is granted only to selected undertakings of the Delhi government namely Delhi Tourism and Transportation Development Corporation Limited (“DTTDC”), Delhi State Industrial and Infrastructure Development Corporation (“DSIIDC”), Department of Delhi State Civil Supplies Corporation Limited (“DSCSC”) and Delhi Consumer’s Cooperative Wholesale Store Ltd (“DCCWS”).
Procedure– Any proposal in respect of premises for opening of a vend would come from these corporations. An individual who wants to give his premises on rent for opening of vend has to approach any of these corporations, which after looking into suitability of the premises approach the office of the Commissioner of Excise for grant of L-6 license in respect of the premises.
3. Name of License– L10
Role and Grant– Granted for the retail sale of various brand of Indian liquor and foreign liquor etc. as approved or registered by the competent authority in the State of Delhi. It is granted to companies, partnership firms, co-operative societies, sole proprietors, and various public sectors.
Procedure– Applications in the prescribed form along with the relevant documents is made to the Deputy Commissioner of Excise, Delhi.
4. Name of License– L12
Role and Grant– Granted for retail sale of Beer and Wine in Departmental Store.
Procedure– The authority empowered to grant L12 license is the Deputy Commissioner of Excise, Delhi. The license is subject to the provisions of the Delhi Excise Act, 2009 and the rules framed thereunder; terms and conditions of license and the instructions issued by licensing authority from time to time.
5. Name of License– L15/L15F
Role and Grant– Granted to hotels which are holding star classification and approval of Department of Tourism, Govt. of India. It empowers the hotel for service of Indian Liquor/foreign liquor to the residents in their rooms.
Procedure– The applicant hotel is required to submit application to the Deputy Commissioner of Excise, Delhi. After scrutiny of the papers submitted and the same having been found to be in accordance with the rules, the hotel premises is inspected by the concerned excise officer from the department who submits report to the license granting authority.
6. Name of License– L28
Role and Grant– Granted to a club registered with the registrar of firms/registrar of cooperative societies, for service of foreign liquor to its members only subject to provisions of Delhi Excise Act, 2009 and the rules framed thereunder, and instructions issued from time to time.
Procedure– Any eligible club can apply for grant of L-28 license in the prescribed proforma with the required documents to the office of the Commissioner of Excise, entt. & luxury tax.
7. Name of License– P10
Role and Grant– It can be obtained for service of liquor in any party, function, marriage etc. at a specific premises anywhere in Delhi excluding public parks subject to the following conditions: –
- The area is screened off from public view;
- Liquor is served to adults above 25 (twenty-five) years of age.
Liquor is procured from authorized source in Delhi. (The license holder must be having the bill in original issued by retail liquor vend in Delhi from where the liquor has been procured).
Procedure– An individual/organization can apply for grant of P-10 license in the prescribed format. This license can be obtained from online or the window at the excise department or from the specified liquor vends.
8. Name of License– P13
Role and Grant– Granted to licensed hotels, restaurants, and clubs for service of foreign liquor inside/outside their licensed premises on temporary basis for hosting a function on a specific day.
Procedure– Any eligible hotel, restaurant and club can apply for grant of P-13 permit in the prescribed proforma after depositing the requisite fees.
Frequently Asked Questions (FAQs)
1. What are the qualifications required for grant of license?
The following are the qualifications required for an applicant making an application for grant of license or permit:
(a) is a citizen of India;
(b) is not a defaulter, or black-listed or debarred from holding an excise license;
(c) possesses good moral character and has no criminal background or has not been convicted of any offence punishable under this or other relevant Acts:
(d) is not in arrears of any Government or public dues; and
(e) is solvent and has the necessary funds or has made arrangements for it, for conducting the business
(f) possesses or has an arrangement for taking on rent suitable premises for the license and such premises have not been constructed in violation of any law;
(g) shall not employ any salesman or representative who has criminal background or suffers from any infectious and contagious disease or is below 21 (twenty-one) years of age.
2. How can one obtain license for service of liquor in restaurant?
L-17/L-18 license is granted to an independent restaurant approved by Department of Tourism, Govt. of India. Such restaurants can apply in the office of the Commissioner of Excise in prescribed form and submit documents as indicated in the application form. The restaurant should be situated in commercial area with adequate parking space. The restaurant has to meet the requirement of Rule 51 of Delhi Excise Rules 2010 which states that, “No retail vend of Indian Liquor, Foreign Liquor or Country Liquor shall be located within 100 meters (one hundred meters) from the following, namely. – (a) major educational institutions; (b) religious places.; (c) hospitals with fifty beds and above”.
3. What is the penalty for consumption of liquor in public place?
The following are the penalties prescribed for consumption of liquor in public place:
- consumes liquor in public place- fine which may extend to INR 5000 (Indian Rupees Five Thousand);
- consumes liquor in public place and creates nuisance- imprisonment for a term which may extend to 3 (three) months and fine which may extend to INR 10,000 (Indian Rupees Ten Thousand);
- Permits drunkenness or allows assembly of unsocial elements on the premises of liquor establishment shall be punishable with imprisonment for a term which may extend to 6 (six) months and fine up to INR 50,000 (Indian Rupees Fifty Thousand).
4. Is there a transport permit required for transfer of liquor within New Delhi?
Yes, a transport permit is required for transfer of liquor from one licensed premises to the other for possession and sale within the State of Delhi. The transport permit can be obtained under permit no. P-15 and the authority empowered to grant P-15 permit is the Assistant Commissioner of Delhi. The transport passes are to be prepared in duplicate and one copy is to be retained by the licensee. Further, the permit is subject to observance of the provisions of the Act and the rules framed there under; terms and conditions of license and the instructions issued by the licensing authority from time to time.
5. What is the maximum limit prescribed for retail sale and individual possession of liquor?
The maximum quantities of intoxicants specified that may be sold by retail and possessed exclusively, by an individual not below the age of 25 (twenty-five) years in New Delhi, are as follows:
- Indian Liquor and Foreign Liquor (Whisky rum, gin, vodka, and brandy), except wine liqueur, beer, cider, and alcopop- 9 (nine) litres
- wine, beer, liqueur, cider, and alcopop- 18 (eighteen) litres
- Indian Liquor or Foreign Liquor- 1 (one) litre while entering into New Delhi from other States
- Foreign Liquor- 2 (two) litres while entering into New Delhi from other countries
Further, for permission of possessing liquor in excess of individual possession limit one has to apply for L-30 license.
The liquor industry in India is growing at an exponential rate however, opening a liquor store and obtaining a liquor license in India may appear like a herculean task given that it is followed by a range of permits, licenses, documents, etc. Nonetheless, the State Government of Delhi has ease out the procedure by allowing the entities to submit the application online on the Excise Supply Chain Information Management System (“ESCIMS”) portal and has further uploaded user manuals for the entities explaining the application procedure for obtaining the liquor license. In light of the stringent penalties being imposed, it is imperative on part of the entities seeking to start a liquor business, to procure a valid liquor license to avoid any kind of penalties and strictly comply with the applicable laws governing the liquor business in the respective States.