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The report from the Comptroller and Auditor General of India (CAG) said that the policy, introduced by the Arvind Kejriwal-led Aam Aadmi Party (AAP) government in 2020, had incorrect collection of security deposits from zonal licensees that led to a loss of revenue of around…Read More
(From left) AAP’s Manish Sisodia, Arvind Kejriwal and Rekha Gupta. (AP/PTI File)
The now-scrapped Delhi liquor policy has resulted in a revenue loss of about Rs 2,002 crore to the government, including around Rs 890 crore due to not retendering the surrendered retail licences and an additional Rs 941 crore due to exemptions that had to be given to the zonal licensees, claims a new report presented in the Delhi assembly on Tuesday.
The report from the Comptroller and Auditor General of India (CAG) said that the policy, introduced by the Aam Aadmi Party (AAP) government in 2020, had incorrect collection of security deposits from zonal licensees that led to a loss of revenue of around Rs 27 crore.
“Therefore, these implementation issues of the new policy led to a loss of revenue of approximately Rs 2,002 crore,” the report reads.
The 166-page report, which was tabled by Chief Minister Rekha Gupta, listed four categories while discussing the loss faced by the government.
The CAG report said the policy aimed to eradicate the sale of spurious liquor and check bootlegging. However, important measures which were planned in the policy like setting up liquor testing laboratories, batch testing for rigorous quality assurance, and monitoring and regulation through the creation of a dedicated post were not ensured.
It was for this policy that then CM Arvind Kejriwal and his then deputy Manish Sisodia went to jail and had to resign from the post later.
‘NO TIMELY PERMISSIONS LED TO LOSS OF REVENUE OF Rs 941.53 CRORE’
The report said only four government corporations were allowed to open 116 retail vends in non-conforming areas over the years, until the Master Plan Delhi (MPD)-2021 was implemented.
The MPD-2021 prohibited the opening of liquor shops in mixed land use/non-conforming areas.
“Since then, no new retail vendors were allowed in non-conforming areas. Only these 116 retail vends were renewed till 2016-17 which was further reduced to 51 and their licences were renewed up to 31 March 2021,” the report added.
Under the now-scrapped liquor policy, the initial tender was floated on June 28, 2021 without taking comments from the Delhi Development Authority (DDA) or Municipal Corporation of Delhi (MCD) and licences were allotted in August 2021 even before this issue was sorted out.
“Vends were scheduled to start operations from 17 November 2021. However, DDA vide letter dated 16 November 2021 disallowed the opening of liquor shops in non-conforming wards as it would be against the spirit of the Delhi Master Plan.”
The licensees approached the High Court which granted them exemption in December 2021 from paying any licence fee in respect of mandatory vends in 67 non-conforming wards.
“This resulted in the exemption of licence fee of Rs 114.50 crore per month. Not sorting out the issue of vends in non-conforming before NIT, resulted in this exemption and a cumulative loss of nearly Rs 941.5350 crore,” the report added.
‘NO RETENDERING OF SURRENDERED ZONES RESULTED IN LOSS OF RS 890.15 CRORE’
Another big share of the loss was in the form of no excise revenue accrued as licence fee from several zones could not be collected after they surrendered their licence.
The report observed that 19 zonal licensees had surrendered their licences before the policy expired in August 2022, four in March 2022, five in May 2022 and 10 zones in July 2022.
“No retendering process was initiated by the Excise Department to operationalise the retail vends in these zones. Consequently, no excise revenue accrued as licence fee from these zones in the months after surrender. Notably, no other contingent arrangement was put in place to continue liquor retail in these zones,” the report said, adding that the Excise Department suffered a loss of Rs 890.15 crore on account of this.
The report also explained that the loss of excise revenue has been calculated on the basis of the actual licence fee for the months for which surrendered zones were non-operational and after accounting for the waiver offered on account of non-conforming wards.
“This issue is reflective of mismanagement of the Department in its inability to timely introduce a new policy, its inability to re-tender after discontinuation of a retail licence at the term end and failing to put an enabling clause in the terms and conditions of the licence to accommodate such eventuality,” it added.
The government faced a loss of Rs 144 crore owing to the irregular grant of waiver on account of COVID to zonal licensees and an additional Rs 27 crore due to the incorrect collection of security deposits from zonal licensees.
The excise department is a major contributor (around 14 per cent) to Delhi’s tax revenue.
Apart from fulfilling its primary responsibility of revenue collection, the department controls and regulates the liquor and narcotics trade and discharges the responsibility of making available the same to the consumers, with requisite quality assurance.
With effect from July 1, 2017, excise duty on various goods and services was subsumed under Goods and Services Tax (GST) except on “liquor for human consumption”, thus the revenue collection for the excise department is mainly from liquor sales.
