No new liquor licence since 1992, but business booming

Excise Commissioner V Yeshwantha said that it is a policy decision to not issue CL2 and CL9 licences.
Representational Image.
Representational Image.

BENGALURU: There are liquor stores in practically every nook and corner of the city and there are as many bars and restaurants doing bustling business that have earned Bengaluru the epithet of the pub city of India.

What is surprising however, is that though the government has not being issuing new licences for retail liquor shops (CL2) and bars and restaurants (CL9) since 1992, liquor continues to a booming business in the state and the numbers of watering holes seem to get bigger every year. Just how, one may ask. According to Excise Department there are 3,606 CL9 licencees in Karnataka out of which 1,377 are in Bengaluru. There are 3,940 CL2 licencees in Karnataka out of which 865 are located in the city.

“The liquor licence racket in Karnataka runs into crores of rupees and is reportedly controlled by a close knit group of licencees, who are either politicians or their relatives or friends,” sources on condition of anonymity told TNIE.

“The government had stopped issuing CL2 and CL9 licences 27 years ago with the result that Excise licences have become money spinners, which are driving the black economy. A new licencee applying for CL9 would have otherwise had to pay the government Rs 7.5 lakh as licence fee and an Additional Excise duty of Rs 1,12,500 for setting up a bar and restaurant in Bengaluru as per the current licence fees structure. But in the absence of availability of licences in the two categories by the government he has to approach a broker, who will fix the deal for him at a commission.

He has to cough up between Rs two crore and Rs 2.5 crore in cash to buy the licence from the original licencee, who may have got the licence before the 1992 freeze. And as per rules, he will also have to pay double the licence fee (Rs 15 lakh for CL9) as transfer fee to the Excise Department. Licences are not just sold; they are also leased out. Some licencees get into an agreement with the new lessee, who agrees to pay the lessor two per cent of the ‘sale’ value of the licence per month in cash throughout the period of the lease,” added the sources.

Excise Commissioner V Yeshwantha said that it is a policy decision to not issue CL2 and CL9 licences. “There are however, provisions in the Excise Act regarding the transfer of the licence to the legal heir and to others under Section 17 (a) and 17 (b) of the licence rules. Many licencees have made use of these provisions. The applicant has to get the sanction of the Excise Commissioner and the licence is issued by the Deputy Commissioner, Revenue. For transfer of licence to others, the applicant has to pay double the Excise fee,” said the Excise Commissioner. He refused to comment on the illegal payoffs to get a licence.
Excise licences in Karnataka can also be inherited by the legal heir of the deceased licencee. “Unlike any other trade licence, which is non-transferrable and is annulled in the case of the death of the licencee, closing down of his business or non-renewal of licencse,

State Excise licences in Karnataka are not only transferrable; they can even be inherited by the legal heir of the licencee under Rule 17(a) of the Excise Act at no cost. “He has to submit ‘no objection certificates’ from the other legal heirs of the deceased licencee and pay the renewal fee,” said Deputy Commissioner, Excise, Legal, Roopshree. 

Related Stories

No stories found.
The New Indian Express
www.newindianexpress.com