By Our Reporter
SHILLONG, March 26: The High Court of Meghalaya has quashed the state government’s attempt to squeeze liquor retailers, ruling that the state cannot fund its new digital tracking system by unfairly slashing the profit margins of local wine dealers from 20% to 15%.
The ruling, delivered by a division bench of Justice HS Thangkhiew and Justice B Bhattacharjee, comes as a major relief for the East Khasi Hills Wine Dealers Welfare Association. The association and its general secretary, Ernest Mawrie, had challenged the government’s decision, arguing it placed an unsustainable financial burden on “mom-and-pop” wine stores across the state.
The case centered on two government actions: the introduction of the Integrated Excise Management System (IEMS)—a digital track-and-trace mechanism using QR-coded holograms—and a notification dated September 12 last year that reduced retailer margins.
While the Court upheld the IEMS as a valid policy to ensure transparency and prevent smuggling, it took issue with how the government tried to pay for it. Implementing the system added costs of roughly 4-5% per bottle. The Court found a direct link between these new costs and the government’s decision to cut retailer profits to 15%.
The bench noted that forcing retailers to bear the entire financial weight of the digital system, while other stakeholders remained unaffected, was “unreasonable, arbitrary, and against the principles of equality.” Addressing the legal technicalities, the Court explained that while the State has the power to make rules regarding excise revenue, it does not have a “blank check” to act unfairly. The judgment clarified that even when the government is given the authority to create specific regulations, those rules must still respect constitutional protections against arbitrary treatment.
The Court concluded that the amendment to the excise rules was a violation of Article 14 of the Constitution. While the IEMS digital system will remain in place, it must be regulated in a “fair and transparent manner” without unfairly penalising local dealers.
