Liquor makers put up spirited opposition to central oversight

Posted: 26 Jul 2012 10:25 AM PDT

New Delhi: At a time of widening Centre-state strifes over turf — from the power to levy taxes to the design and implementation of welfare programmes — the liquor industry has joined the issue out of compulsion. 

Facing the prospect of having to apply for licences afresh from the Centre under a new food safety and standards law and be regulated by the central foods regulator, the industry that counts among its members top companies like United Spirits, Radico Khaitan and Diageo India has dragged the central government and the regulator to court. 

While the liquor industry argues that alcoholic beverages form part of the state list under the Constitution and are regulated for purposes of taxation and standards by state excise laws, the central government has submitted to the court that it derives its power to regulate alcohol from the concurrent list which allows it to legislate on matters related to ‘adulteration of food stuff’. 

In a petition filed before the Bombay High Court, the alcohol industry claimed that the central government has committed a fundamental error in defining liquor as food under the new Food Safety and Standards Act (FSSA). This, the industry pleads, was the very reason the now-repealed Prevention of Food Adulteration Act (PFA) never applied to liquor industry. PFA was overridden by FSSA in 2011, which regulates the country’s food sector. 

The industry’s claim is being vehemently opposed by the central foods regulator, the Food Safety and Standards Authority of India, which argues that the liquor industry all along fully fell under the scope of PFA. The Centre also has strongly protested against any definition of food that excludes alcohol. “Barring drugs and water, our stand is that all that is consumed is food,” an official said.

The only exemption in the category of liquor can be made for alcohol which is being produced for use in medicine and toiletries, he added. If the court rules that liquor is indeed food, alcohol companies would have to apply for fresh licences from the Centre.

Liquor companies say regulation of alcoholic beverages – its production, possession, transport, sale and purchase – is strictly and exclusively the domain of state governments, a task they are already implementing effectively. By making an attempt to regulate alcoholic beverages, the Centre is encroaching on states’ jurisdiction, the liquor industry claims in its plea to courts, calling the move ‘illegal, arbitrary and unconstitutional’.
Alcohol companies feel multiple regulations will stifle the industry. “Even the quality of alcoholic beverages, which the food regulator is trying to now regulate is currently being governed under State Excise Act and Rules framed by different states. It is almost impossible for the industry to conform to multiple overlapping laws being implemented by multiple authorities. We are juggling between at least three different sets of legislation –State Excise Act and Rules, Food Safety and Standards Act and Legal Metrology (Packaged Commodities) Rules now which is creating a lot of confusion in the industry,” said Lalit Khaitan, chairman and managing director, Radico Khitan. 

This issue of whether or not alcohol should be excluded from the definition of food was deliberated before the legislation (FSSA) was enforced and the central government took a studied decision to include it in the definition of food to ensure that quality and safety of alcoholic beverages can be maintained, a health ministry official said.