Legality of ‘Special Corona Fee’ imposed by the Delhi Government on sale of Liquor

Levy of ‘Special Corona Fee’ on the sale of liquor by the Delhi Government

The Office of the Commissioner of Excise, Entertainment and Luxury Tax (“Department”), Government of the National Capital Territory of Delhi, vide notification dated May 4, 2020 has levied a special corona fee at the rate of 70% of the maximum retail price on all types of liquor from the consumer at the point of sale by the retail licensee, reimbursable to the government with effect from May 5, 2020. Such fee has been levied in accordance with Rule 154 of the Delhi Excise Rules, 2010 under the scope of powers conferred to the government of the national capital territory of Delhi under sub-section (1) of section 81 of the Delhi Excise Act, 2009. The order has been titled Delhi Excise (Amendment) Rules, 2020.

Further, the liquor vendors have to submit a consolidated statement to the Department on a daily basis. The collected fee shall be reimbursed to the Government on a weekly basis.

Reasons for the levy of ‘Special Corona Fee’

The Delhi government is looking to harvest more revenue from liquor sales as the lockdown has affected businesses and tax collection. The move to charge the 70 per cent tax on liquor was first considered at a cabinet meeting chaired by Chief Minister Mr. Arvind Kejriwal on Monday morning itself, just after the extended lockdown kicked in with some rules eased.

Another reason for the levy of such an exorbitant fee is to dissuade the purchasers from crowding near liquor shops and violating social distancing norms in the times of the coronavirus lockdown.

Constitutional validity of the ‘Special Corona Fees’ on sale of Liquor

Article 246(3) of the Constitution of India provides that State Government has exclusive powers to make laws for State with respect to any matter enumerated in List II of Seventh Schedule to Constitution (i.e. State List). Since the sale of liquor falls in the State List, states have authority to make laws on the same. Hence, the Delhi Government is well within its powers to impose such a fee.

However, it may be argued with some merit that the fee imposed is arbitrary and exorbitant. This argument, however, will have to be tested by the courts of law, and if the fee is found to be exorbitant by the courts, the notification levying the same may be set aside.

To access the notification, click here.


Sakshee Kumar | Abhay Nevagi & Associates