The EKH Wine Dealers’ Welfare Association approached the apex court in the case of a reduction of profit margin from 20% to 15%
By Our Reporter
SHILLONG, April 27: The Meghalaya government on Monday withdrew the Special Leave Petition (SLP) filed before the Supreme Court, seeking interim relief from the High Court of Meghalaya’s impugned judgment quashing its attempt to squeeze liquor retailers.
The high court had ruled 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 case centred 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 September 12, 2025, notification that reduced retailer margins.
While the high 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%.
After the state government filed an SLP before the high court on the matter, the East Khasi Hills Wine Dealers’ Welfare Association, led by its general secretary, Ernest Mawrie, and his legal counsels—Huzefa Aziz Ahmadi and Raka Bejoy Phookan—contested the case in the apex court.
As the matter came up for hearing in the SC on Monday, Advocate General Amit Kumar initially put forward certain arguments and later sought permission to withdraw the Special Leave Petition.
The SC granted the permission, and the SLP was dismissed as withdrawn.
Those who were present in the court said that the Supreme Court Division Bench observed that not all the stakeholders were affected by the reduction of profit margins of local wine dealers by 5%.
They also say that the court said that the state government can go for a policy review.
On the other hand, the association claimed that the state government lost the case as the Supreme Court was in the mood to uphold the high court’s judgment, but the AG withdrew the case.
The SLP stated that the high court, in its March 26 judgment and order, partially allowed the writ petition by setting aside clause 5 of the notification dated September 12, 2025, which had amended Rule 372 of the Meghalaya Excise Rules to provide for a 15% profit margin instead of a maximum 20% profit margin, which was earlier provided to the retailers.
“The HC, while deciding the writ petition, chose not to interfere with the other notifications which were impugned by the writ petition, i.e., the notification dated September 12, 2025, and the communication dated August 13, 2025,” the SLP read.
According to the SLP, the high court, while setting aside clause 5 of the notification, failed to appreciate that fixation of profit margins is an intricate question of economic policy to be decided by the executive based on various factors, including the impact on the excise revenue.
“The high court also failed to appreciate that the government enjoys wide latitude as far as matters concerning trade of liquor are concerned, inasmuch as the same has been considered to be res extra commercium, i.e., pernicious in nature, and therefore the government has wide regulatory powers in that regard,” the SLP said.
It added that the high court, in its judgment dated September 4, 2025, in WP(C)186/2021 and other matters, had provided that the government has to fix fair margins of the central bonded warehouse, which would automatically mean adjustment and rationalisation of margins across the supply chain. The government had accordingly rationalised the profit margins across the supply chain, including that of the central bonded warehouse, bonded warehouse, and the retailers.
“Such an activity cannot be said to be discriminatory or manifestly arbitrary. Moreover, there is no question of interference with an economic policy of the government merely because there is apprehension of a minor diminution of income in respect of certain individuals. The respondent association also failed to provide any cogent evidence of the significant prejudice caused to them by the reduction of the maximum profit margin available to them. Hence, the instant petition,” the SLP further added.
It also noted that although Kerala has 10 times Meghalaya’s IMFL demand, the latter has two super bonds, several wholesale distributors, a hologram system, an IEMS system, and retail margins.
As all units in the state continue to remain closed, the government has incurred a loss of more than Rs 30 crore in April.
