Karnataka Govt wakes up from 14 year hangover, asks bar owners to cough up penalties

Excise department demands old penalties from a now-repealed rule, which mandated a target for liquor sales in pubs.
Karnataka Govt wakes up from 14 year hangover, asks bar owners to cough up penalties
Karnataka Govt wakes up from 14 year hangover, asks bar owners to cough up penalties
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The bar owners in Karnataka are now facing an unpleasant reality as the Excise Department has decided to cash in on penalties under a now-defunct law. Rule 14(2) of the Karnataka Excise Act, 1965, mandated that bar owners sell a minimum of 468 bulk litres of liquor per month, failing which, bar owners had to cough up Rs 100 as the penalty for every litre that was not sold.

The rule was put in place in 2003 and was repealed in August 2014 on grounds that it was unfair to implement such a law. But the department has now issued reminder notices to bars to collect the penalty for the period between February 2003 and August 2014. The penalty amount runs into lakhs of rupees and the department has threatened to not renew the licences of those bars that fail to pay the penalty.

“The bar owners were opposed to the rule since the very beginning. We had petitioned the High Court in 2003 and since then, this rule has been disputed. Finally, the government repealed the rule in 2014. The period in between had seen a rejected petition to the Karnataka High Court and the government also did not bother to collect the so-called penalty. Now, they want us to pay the entire amount in one go,” said Ashok Sadhwani of the Bengaluru Pub Owners’ Association.

"It's shocking that the excise department is insisting that bars sell more liquor. One cannot force customers to consume more alcohol as it leads to menace, what with the city hitting headlines for incidents of molestation. And to collect penalty under an abolished rule just to make up for the losses suffered by the department is unfair," said K V Dhananjaya, a Supreme Court lawyer who appeared for 31 pub owners in a case related to the abolished rule.

Dhananjaya said that if this continues, thousands of bars across the state face the threat of losing their licences. Over 70% of pub owners of around 1000 pubs in Bruhat Benagluru Mahanagara Palike limits have complained about excise officials paying them a visit.

“The first notice was issued in 2015 but the government never followed up on collecting the fine. Everything was in a limbo. In November 2016, they began issuing the reminder notices. I wrote to the Chief Minister on November 17 and he said that the excise department would look into the matter,” he added.

According to a report by the Times of India, Excise Commissioner Manjunath Naik said that the department was following the procedure to collect the pending penalty.

"We are only asking pub owners to pay whatever penalty they have to pay to the government. Rule 14(2) was in place till August 2014 and we are enforcing it for that period, which is applicable. It is the duty of the excise officials to check lifting performance of bars and if there is a fall, they have to investigate," Naik was quoted by TOI.

Bringing this to the notice of chief minister Siddaramaiah, Dhananjay has written to him. The Chief Minister in his reply said he would look into the issue, and promised to call a meeting with excise officials.

Thirty-one bar owners have now filed a petition with the Karnataka High Court seeking to quash the excise department’s notice.

“The excise department has issued the notice only because the state’s coffers are running low on finances. The bar owners will run into huge losses and the excise department is not going to gain anything if the owners don’t pay up and their licences are cancelled. We will wait for the high court to decide on the matter,” said Ashish Kothare of the Bengaluru Bar Owners’ Association.

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