SHILLONG, India, April 26 -- Meghalaya High Court issued the following judgment/order on March 26:
1. The petitioner No. 1, a registered Association of Wine Dealers represented by the petitioner No. 2 are before this Court challenging the notification dated 12-09-2025 framed under the Meghalaya Excise (Amendment) Rules, 2024 to introduce the implementation of the Integrated Excise Management System (IEMS) cum track and trace solution for the Excise Department. This system involves the affixing of holograms on all liquor bottles and these bottles will carry a QR Code to monitor the sale and movement of these bottles through the supply chain i.e. from manufacturer to Central Bonded Warehouse to Bonded Warehouse and finally the retail supplier. In this system, all the stake holders are required to register themselves in the system developed by the respondent authorities, with the software being provided by the Excise Department, Government of Meghalaya.
2. For the implementation of the system, the respondent No. 5 vide letter dated 13-08-2025, had fixed the cost of IEMS at Rs. 2.40 + GST and the cost of the hologram with the QR Code fixed at Rs. 1.50 together with an imposition of additional revenue component at Rs. 0.50. The prices are as per bottle and the initial cost is incurred by the manufacturer/bottling units/ Central Bonded Warehouse which is recovered while selling them to the Bonded warehouse, who in turn recovers the same from the retailers. At the same time, vide a notification dated 12-09-2025, the maximum percentage of profit margin for retailers which was originally 20% has been reduced to 15%, even though the introduction of IEMS, has resulted in the increase in price by 4.40% or approximately 5% per bottle. The grievance of the petitioners is that though these costs are initially borne by the manufacturers, Bonded Warehouses etc., the same is ultimately passed on to the retailers and it has been contended that the said charges lacked proper statutory backing under sections 21 and 36 of the Meghalaya Excise Act, and were imposed by an authority not competent to levy such levies. Another grievance is with the reduction in the maximum percentage of profit margin from 20% to 15%, which they contend will seriously affect their business.
3. The issues that arise for consideration therefore, is firstly, whether the amendment reducing the retailer profit margin constitutes a valid exercise of its regulatory power, or whether it crosses the line into the realm of manifest arbitrariness, or unreasonableness. Secondly, the most crucial issue is whether, a substantive link exists between the implementation of the new tracking system and the decision to reduce the retailer margin, inasmuch as, if there be such a link, the same could be considered a disguised, or indirect method of funding a third-party contract which, transgresses the limits of legitimate relations. Thirdly, is the issue as to whether the directive for retailers to sell at new maximum retail price is reasonable or rational, considering the fact that necessary hardware and software, were yet to be put in place to make the system functionally operational at the retail point of sale.
*Rest of the document can be viewed at: (https://hcservices.ecourts.gov.in/ecourtindiaHC/cases/display_pdf.php?filename=A9S7c5LDIsB6RXaCf816x%2BRFEE1hoOsCmp%2FyDst2JJPq8sMajfsjmO0VByn4w6WQ&caseno=WP(C)/406/2025&cCode=1&cino=MLHC010013182025&state_code=21&appFlag=)
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