In a significant legal development, the High Court of Meghalaya has stepped in to protect the interests of liquor retailers, ruling that the state government acted improperly by slashing their profit margins. The court found that the reduction lacked a fair basis and violated constitutional guarantees of equality. A division bench comprising Justice HS Thangkhiew and Justice B Bhattacharjee has struck down the state government’s decision to reduce the profit margin of liquor retailers from 20% to 15%. The ruling comes in response to a writ petition filed by the East Khasi Hills Wine Dealers Welfare Association, which challenged the financial impact of the newly introduced Integrated Excise Management System, or IEMS.
The IEMS was designed as a digital track-and-trace mechanism using QR-coded holograms to prevent pilferage and ensure transparency. However, the implementation of this system introduced additional costs—roughly 4% to 5% per bottle—covering charges for holograms and system management.
The petitioners argued that while these costs were initially paid by manufacturers and warehouses, the burden was ultimately passed down to retailers. This, combined with the state’s decision to lower the maximum profit margin, resulted in a double blow to their livelihoods. They further contended that these charges lacked proper statutory backing under the Meghalaya Excise Act.
In its defense, the state government, represented by the Advocate General, argued that trade in liquor is a “privilege” rather than a fundamental right and is subject to strict regulation. They maintained that the IEMS was a necessary policy decision to safeguard revenue.
However, the High Court was not convinced. The bench noted that the state had failed to show a similar reduction in profit margins for other stakeholders in the supply chain. The judgment clarified that while the state has the power to make rules and implement systems like the IEMS, those powers must be exercised in a fair and transparent manner. Consequently, the court upheld the validity of the IEMS technology itself but invalidated the specific reduction in profit margins. This ruling serves as a reminder that even in highly regulated industries like the excise sector, government policy must remain anchored to the principles of fairness and non-discrimination.