Excise Department struggles with auction process amid legal tussle
Chandigarh, April 9, 2025
Just eight days into the new Excise Policy for 2025-26, the Chandigarh Excise and Taxation Department has sealed 42 liquor shops. These shops were shut down because their owners failed to submit the required bank guarantees totaling Rs 33 crore — a mandatory step under the new policy.
On March 21, 96 liquor shops were auctioned, bringing in a total of Rs 606 crore in licence fees — well above the reserve price of Rs 439 crore. However, nearly half of the contractors have not followed through with the compliance requirements.
According to the policy, each winning bidder must provide a bank guarantee equal to 15% of their licence fee within seven working days of allotment. Failure to do so leads to cancellation and loss of the security deposit.
Darshan Singh Kler, President of the Chandigarh Wine Contractors Association, criticized the department, alleging unfair practices. He said allowing late submissions of bank guarantees goes against the rules and creates an uneven playing field. He also demanded transparency, asking the department to release the list of successful bidders along with the dates and times of their bank guarantee submissions.
Meanwhile, legal troubles are mounting. Several petitions have been filed in the Punjab and Haryana High Court, accusing the department of manipulating the auction process. The petitioners claim that a single family and its associates secured 87 out of 96 liquor shops, raising concerns of cartelization.
On March 26, the High Court ordered a status quo, halting the allocation process. But the UT Administration challenged this in the Supreme Court, which overturned the order, allowing the shops to open on April 3. The next hearing is set for April 24.
Due to stiff competition from Punjab’s excise policy, Chandigarh failed to meet its Rs 1,000 crore revenue target in 2024-25, managing only Rs 800 crore. Twelve shops went unsold that year. For 2025-26, the target has been revised downward to Rs 800 crore. A similar revenue shortfall occurred in 2023-24 as well, with collections reaching just Rs 600 crore against a target of Rs 830 crore.
