The decision of the Conrad Sangma government to set up a central bonded warehouse for impost and supply of various liquors has now been challenged in the Meghalaya High Court.
It may be noted that the government has allowed Umpohliew Central Warehouse located at 9th Mile, Baridua in Ri-Bhoi district to function as a central bonded warehouse to import and supply different types of Indian made foreign liquor (IMFL), beer and wine to all bonded warehouses in the State.
The International Spirits and Wines Association of India (ISWAI) which represents large foreign liquor companies in India has moved a writ petition in the Meghalaya High Court challenging the legality of setting up of the central bonded warehouse by the State government.
During hearing of the case today, the division bench of the High Court has directed the State government to file a report in the form of an affidavit on or before the next date responding specifically to the allegations made in the writ petition filed by ISWAI.
The High Court also directed the owners of Umpohliew Central Bonded Warehouse to appear before the court on the next date. The matter will again be taken up by the court three weeks from today.
Umpohliew Central Warehouse has started functioning since July 26 as the sole wholesaler for supply of IMFL, beer and wine to all the 44 bonded warehouses in the State.
The setting up of the central bonded warehouse has been strongly opposed by Confederation of Indian Alcoholic Beverage Companies (CIABC), the apex body of the alcoholic beverage industry in India.
CIABC had in May this year written to the Meghalaya government seeking an immediate end to creation of the central bonded warehouse.
Pointing out that the central bonded warehouse was created in an arbitrary manner, CIABC said creation of the single point wholesaling entity for the entire State would lead to creation of a privately held monopoly.
CIABC stated that the Meghalaya government has neither consulted stakeholders including the CIABC before introducing the central bonded warehouse nor has it given reasons that warrant the introduction of this central bonded warehouse in the supply chain. It also said that a central bonded warehouse is an additional layer added in the distribution chain which will add to the cost of operation in the State.
“It is a commonly held principle that an additional cost must deliver additional benefit and the additional cost must be borne by the party which gets additional benefits. Therefore, if the CBW is being created by the Government for its own benefit, then its margin should come out of government revenues. Alternatively, if it is being introduced for a benefit to the consumers, then this cost should be passed on to the consumers,” the CIABC had said in its letter to the Meghalaya government.
CIABC has also urged the State government that the margin to the CBW if any should be paid either from the government revenues or through proportionate increase in end consumer price.
It may be recalled that in October last year the State cabinet decided to introduce a central bonded warehouse in the State and added a new Rule 44& Rule 4(1) of the Meghalaya Bonded Warehouses Rules.
Justifying the decision, Chief Minister Conrad Sangma had stated that the central bonded warehouse will ensure revenue collection from one source.
He had also said that bonded warehouses in the State will be given a minimum profit margin eligibility of 8 per cent and even the ad valorem tax will be paid by the central bonded warehouse.
Sangma had also claimed that revenue collection from one source would reduce chances of leakages.
