'Why should we talk to Dunzo?' State regulators fume at liquor delivery

The blog post by Aroon Deep was published in Medianama on September 7, 2018

“We do not sell liquor. On your request, we procure liquor from a government authorized vendor on your behalf and deliver it to you,” getTalli explained on its website, according to a Hindustan Times report. The police weren’t exactly interested in consuming that liquor. The order was a trap. They arrested both Pratham Gupta and Anurag Awasthi, who founded the site. The two were charged with criminal conspiracy, fraud, and a state law prohibiting “unlawful import, export, transport, manufacture, possession, etc”. The site was shut down.

Excise is a state subject, so each state has varying levels of strictness in regulating services like Dunzo, which allow users to buy alcohol (among several other things) through them. Karnataka is among the stricter jurisdictions. Dunzo stopped delivering alcohol in the state when regulators made noise about online alcohol delivery not being a recognized mode of sale. “Why should we talk to [Dunzo]?” Rajendra Prasad, an excise official in Bangalore told MediaNama. Dunzo doesn’t seem to have government relations managers, so the company has chosen simply to shut down alcohol delivery rather than engage with regulators. Alcohol deliveries previously accounted for around one in thirty orders for Dunzo in Bangalore, an employee told The News Minute.

Alcohol delivery and the law

On the face of it, alcohol delivery — at least the kind used by Dunzo — doesn’t seem to be cause for regulatory concern. Third party delivery services can’t have their own inventory, so they must simply buy liquor from authorized retailers and deliver them to customers. This doesn’t seem to have any downsides, since the delivery is separately charged and taxed; and the tax on the alcohol is also paid. But regulators have continued to cry foul.

Aayush Rathi, a policy officer at the Centre for Internet and Society, pointed out that the Karnataka Excise Act — and possibly other states’ excise regimes — gives states a lot of control on regulating the movement of alcohol. “A ‘sale’ in the Karnataka Excise Act is defined as ‘any transfer otherwise than by way of gift’,” Rathi told MediaNama. This definition essentially makes online ordering and delivery of liquor illegal — even if the service doing it doesn’t maintain inventory. Since there is no license for online delivery of alcohol, there is little by way of legal standing services like Dunzo have when faced with regulatory scrutiny.

But that is assuming that the regulatory scrutiny comes in the first place. While Punjab and Karnataka have chosen to use the vast regulatory powers the law grants them, other states haven’t done the same. In Gurgaon and Pune, though, alcohol deliveries continue unabated. HipBar, which delivers alcohol across India, told The News Minute, “HipBar is engaging with multiple states and their respective regulators to move the needle on last mile deliveries of alcoholic beverages with reasonable restrictions and safeguards in place, such that the letter and spirit of the excise policy is not vitiated.” That brings the question of whether the current model of last-mile delivery by services like Dunzo and HipBar violate the spirit of excise law in the first place.