Excise policy: Delhi government sources refute chief secy report flagging violations, procedural lapses

On the issue of opening of liquor vends in non-conforming areas, the government sources said it was in practice since long in their point-by-point rebuttal.
Delhi Chief Minister Arvind Kejriwal (Photo | PTI)
Delhi Chief Minister Arvind Kejriwal (Photo | PTI)

NEW DELHI: AAP government sources on Monday issued a point-by-point rebuttal to the Delhi chief secretary's report flagging "violation of rules and procedural lapses" in the implementation of the Excise Policy 2021-22, amid a CBI probe into the matter.

The CBI probe was recommended by Lieutenant Governor V K Saxena last month based on the Delhi chief secretary's report that had listed various instances of "violations of rules and procedural lapses" and "undue favour" to licensees in the implementation of the policy from November 2021.

The CBI has filed an FIR against 13 persons and two companies, including Deputy Chief Minister and Excise Minister Manish Sisodia, in the matter.

The policy was withdrawn by the government after Saxena recommended a CBI probe into it.

The report had raised seven specific violations and lapses, including waiver of license fee worth Rs 144.36 crore of licensees due to the Covid pandemic, refund of Rs 30 crore earnest money deposit of a bidder for airport zone, reducing the number of dry days, and lack of coercive action on payment default.

The Delhi government waived the licence fee as the licensees had approached court although there was no such specific provision for compensation in the tendered document, government sources said.

The licensees had approached the government requesting waiver in the licence fee for the days of the lockdown that came soon after liquor shops opened from November 17.

The government "initially ignored their requests", sources claimed.

The licensees then approached the high court, which in its order on January 6, 2022 directed the government to dispose of the matter within a week.

The Excise department had submitted to the Excise minister not to consider the waiver as there was no such provision for it in the tender document.

The minister had asked the department to submit report if the licensees effected any sale on the days of COVID-19-induced restrictions, sources said.

"On the basis of Excise department calculations, pro-rata licence fee waiver to each licensee was given separately. Further, actual waiver granted to the licensees as a whole was actually 24.02 per cent (not 49.54 per cent) with individual relief varying from 9.94 per cent to 41.01 per cent, totalling Rs 144.35 crore," a source said.

In the matter of refund of earnest money deposit (EMD) in the airport zone, the government sources said "it is absolutely wrong to say that there was a loss of revenue because it obtained what was due."

The EMD of the H1 bidder who failed to obtain the no objection certificate (NOC) from airport authorities was returned as per the policy approved by the government, they claimed.

The issue was placed before the Excise minister who directed "in all fairness, EMD should be refunded if the applicant fails to obtain NOC from Airport Authorities within 30 days, since no licence is given by the department by that time," the sources said.

The chief secretary in his report had cited that the Excise department revised the formula for calculation of rates of foreign liquor and that both beer and foreign liquor were made cheaper for retail licensees which tantamount to extending "undue favour" to retail licensees.

The sources said the Excise department had after approval of the Group of Ministers (GoM) and Cabinet changed import pass fees on beer and profit margin per unit for manufacturer of foreign liquor.

The GoM had recommended changing prevailing import fee of Rs 5 per bulk litre to Rs 50 per case for IMFL and Rs 50 per bottle of foreign liquor.

In earlier Excise regime, beer was exempted from levy of import pass fee.

Levy of import pass fee of Rs 50 per case, as recommended by the GoM, would have led to a substantial hike in the wholesale price of beer segment, the sources said.

The profit margin in case of foreign liquor was added twice "inadvertently" as a result of this "double counting", the price of foreign liquor was causing an increase by a margin of 80-95 per cent of the wholesale price in 2019-20, they said.

The Delhi government sources also denied that there was any "undue relaxation" in coercive action against licensees for payment default, as was pointed in the chief secretary's report.

The relaxation from coercive action was given to retail licensees following high court orders, they said.

As per the tender conditions, the last date for depositing the licence fees was November 30, 2021.

However, the licensees moved court seeking relief in licence fees on various grounds.

"The actions could not be enforced as it would have led to large scale cancellation of L-7Z licences, besides contempt of court."

The sources also defended reduction of the number of dry days from 21 in old regime to three in the new policy without prior approval of the lieutenant governor.

Records show the number of dry days for each year was approved by the minister in charge since 2019, after a Supreme Court order regarding powers of the Delhi government.

On the issue of opening of liquor vends in non-conforming areas, the government sources said it was in practice since long.

"Under old policy also, liquor vends were allowed in non-conforming areas. If the new Excise Policy also considered it as a possibility, then it would be wrong to allege that this proposal was introduced without undertaking any due diligence," they said.

There were also allegations that the Excise Policy 2021-22 was extended twice without prior approval of the Cabinet and the LG.

"The extensions were given to the excise policy to stabilise and ironing out of teething problems. Also, it was necessitated as the Chief Secretary and Law Secretary were taking time in making comments on the Excise Policy 2022-23 that would replace it," a source stated.

The sources also defended rebates allowed in the Excise Policy 2021-22, saying the government had acted and capped discount to 25 per cent, when market distortions were feared due to hefty concessions offered by liquor vends.

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