East Khasi Hills Wine Dealers’ Welfare Association claims move benefits Hyderabad-based firm
By Our Reporter
SHILLONG, Sep 22: The East Khasi Hills Wine Dealers’ Welfare Association has filed a writ petition in the High Court of Meghalaya, challenging several actions by the government related to the liquor trade, specifically concerning the introduction of the Integrated Excise Management System (IEMS) and a reduction in the maximum profit margin for retailers, while alleging that the government’s moves are aimed at benefitting C-TEL Infosystems, Hyderabad, which is implementing the system.
According to the complainant, the Meghalaya government is implementing the IEMS, which requires holograms with QR codes on all liquor bottles to monitor their sale and movement from manufacturers/central bonded warehouses to retail suppliers. All stakeholders in the supply chain must register with this system.
The Deputy Commissioner of Excise, Shillong, fixed the cost of the IEMS application at ₹2.40 plus GST per bottle, the hologram with QR code at ₹1.50 per bottle, and an additional revenue component of ₹0.50 per bottle, as per a letter dated August 13, 2025.
These initial costs are borne by manufacturers/bottling units/central bonded warehouses and recovered through sales to bonded warehouses, which then recover the cost from retailers, the petition said.
“A significant point of contention is the reduction of the maximum percentage of profit margin for retailers from 20% to 15%, as stated in Notification No. ERTS (E) 22/2025/29 dated September 12, 2025,” the petitioner said, arguing that this decision was made without considering the increased cost of living and operational expenses for retailers, such as rent, salaries, license fees, electricity, and transportation, which have risen since the 20% margin was established in 2017.
They contend that this reduction forces retailers to absorb the entire increase in costs, threatening their businesses with closure.
The Association views the additional costs imposed by the IEMS and the reduced profit margin as an indirect tax on their income, which they argue is not permissible under excise duty laws, as excise duty is typically levied on production.
They claim that the government’s actions are unreasonable, arbitrary, and an unfair exercise of power, violating their fundamental rights under Articles 14, 19(1)(g), and 21 of the Constitution of India, the petition stated.
The petitioner also argued that Section 36 of the Meghalaya Excise Act, which grants rule-making power to the state, suffers from excessive delegation, allowing the authorities to act arbitrarily without clear policy or principles for fixing profit margins.
It highlighted that other stakeholders in the supply chain, such as central bonded warehouses (6% commission) and bonded warehouses (8% commission), have not been made to absorb these additional costs.
The Association had previously submitted a representation on July 23, 2021, expressing concerns that the introduction of a central bonded warehouse would decrease retailers’ profit margins. Another representation was made on September 2, 2025, fearing that the IEMS application’s cost would lead to a unilateral reduction in retail profit.
The petitioners assert that the current profit margin of 15% is not feasible given the rising costs and that the decision to reduce it was made without due consideration of relevant economic factors.
