The High Court of Karnataka has declared that the Karnataka Excise Act, 1965, does not permit online sale or home delivery of liquor either for oneself or as an agent.
“It is not possible to carry out business of online order processing and delivery of liquor to the consumers in Karnataka in the absence of enabling provision available under the Karnataka Excise (KE) Act to grant such licence,” the court said.
Justice S. Sujatha delivered the verdict while dismissing a petition filed by HipBar Pvt. Ltd., which had questioned the withdrawal of the Letter of Authority (LoA) granted to it on August 1, 2017, by the State government for online order processing and delivery of Indian and foreign liquor including beer, wine and LAB (Low Alcoholic Beverages).
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Contending that the LoA was withdrawn on November 3, 2018, without any issuing any notice after a television telecast a news report, the company had sought a declaration from the court that online order processing and delivery of liquor to the consumers does not require licence under the KE Act as the company is not engaged in sale of liquor. The company had claimed that it is only acting as a facilitator for the sale of liquor by the merchant (licensee) to the consumer (purchaser) through a digital wallet acting on order placed by the customers on its digital platform.
However, the court said that “any” transfer otherwise than by way of gift being ‘sale’, the transaction of the petitioner certainly comes under the term ‘sale’, as such the provisions of the Act, 1965 are applicable, and the possessing and transporting of liquor by the petitioner-company to various end customers is not saved under the KE Act or the KE Rules. “There are various types of licences one needs to have to store/manufacture/sell/possess/transport. Hence, it is illegal if any sale or purchase is made through any other mode than prescribed under the Act, 1965, in Karnataka. It is only the licence holders who are entitled to sell the liquor,” the court said, while pointing out that e-commerce trade with other goods cannot be compared with the sale of liquor online.
“Indisputably, liquor is deleterious to the health of mankind. The social stigma attached to it as far as the family and society is concerned cannot be lost sight of. Younger generation including children below the permissible age succumbing to this temptation of liquor consumption may not be stringently regulated through online orders. The eligibility of age and sound mind to receive and consume liquor is difficult to monitor with the trade carried out by the petitioner-company,” observed Justice Sujatha, while pointing out that there is a prescribed timings for sale of liquor, but it could lead to 24x7 delivery through online sale.
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Noting that the State had issued LOA on trial-and-experimental basis, the court said State authorities had no power to issue LOA under the provisions of KE Act, and on realising the mistake it was withdrawn in the interest of stakeholders and the public.