Many elite bars in Tamil Nadu may be operating in a legal grey area as the Prohibition and Excise Commissionerate delays renewing licences, despite them paying the required annual fee. 

Speaking to TNM, Sundar Singaram, Director Operations of South India Hotels and Restaurants Association, said that there is an inordinate delay on part of the Excise department to issue renewed licences, but many hotels have been allowed to continue operating their bars. 

“When we pay to renew they have to give the licence but they delay it for one or two years. Many hotels in Tamil Nadu operate bars without licence because of this. It has now become a standard practice. We use the fee-paid receipt and buy liquor from TASMAC shops. Some hotels have not received liquor licences for four years despite applying for it and paying renewal fee,” he said. 

In Tamil Nadu, the sale of liquor is controlled by the state government through Tamil Nadu State Marketing Corporation Limited (TASMAC). Five star hotels, night clubs, bars and restaurants after obtaining the required liquor licences purchase liquor from TASMAC outlets. FL2 licences are issued to non-proprietary clubs for its members and FL3 licences are issued to five star hotels. In practice, most of the hotels purchase liquor from TASMAC outlets by showing a copy of the renewal fee receipt and not a valid FL3 licence. 

A memorandum submitted by the South India Hotels and Restaurants Association Secretary T Natraajan to Chief Secretary of Tamil Nadu Shiv Das Meena reveals shocking details of lapses and delays on part of the Prohibition and Excise department in renewing the liquor licences of five star hotels.

All bars, hotels, night clubs and canteens that deal in liquor have to obtain a licence from the Commissioner of Prohibition and Excise, which remains valid for a year. The current cost of securing a FL3 licence for five star hotels (to serve liquor 24x7) is Rs 40,32 lakh while it is Rs 20.32 lakh for a normal licence.

As per Tamil Nadu Businesses facilitation Rules, grant and renewal of licences should be completed in 90 days. Once an application is made for licence renewal, the department has to scrutinise documents and conduct field inspections, based on which a report has to be generated.  

On August 3, 2024, officers of the Excise department had carried out inspections at five top hotels that house popular bars in Chennai and had temporarily suspended their liquor licences for ‘violating norms’. But this decision was revoked in 48 hours, raising eyebrows.

The decision suspending FL3 liquor licences of five star hotels like Taj Club House, Somerset, Radisson Blu, Hyatt Regency and The Park was widely publicised in the media, through a government press release. 

Hotel industry sources said the decision to temporarily suspend the FL3 liquor licences was based on two grounds. One, for serving liquor to people who are not hotel guests and two, when the bars did not have valid licences to operate. A 2013 circular had however given exemption for FL3 licence holders to serve liquor to non-guests.

These licences are valid from April to March of the financial year, and the fee is to be paid on or before the end of February of every year. 

The South India Hotels and Restaurants Association attributed the inordinate delay in receiving renewed licences to departmental inspections and other processes. “In some cities, this delay extends to years. However, the excise department allows the hotel to operate the bar and buy stock from TASMAC using the fee-paid receipt,” read the letter. 

Though fresh licences were not issued officially, the bars were allowed to operate their business and buy supplies from government-owned TASMAC liquor shops using the ‘fee-paid receipt’ treating it as a permit. 

Another hotelier TNM spoke to, too confirmed the ‘standard practice’ followed by the Excise department. “No renewed licence is issued by the department. Once we pay the fee for renewal, the fee-paid receipt becomes the key document to purchase liquor from TASMAC. The officials do not visit for site inspection and even if they do, they would point out lapses to delay the process and make money,” he said. 

Dr Benze Saravanan, president of Tamil Nadu Hotel Bar and Club Owners Association, acknowledged the delay in getting the licence renewed. “But they are allowing us to continue our business and the reason for the delay in issuing renewed licences is that they are expecting something more.” 

The Union Ministry of Tourism too has flagged the ‘standard practice’ followed by TN Excise department, which allows hotels to operate bars on the basis of old licence and fee receipt. 

A letter written by D Venkatesan, Regional Director (South) of Ministry of Tourism to the President of South India Hotels and Restaurants Association on the issue of renewal of bar licences said: “As per the guidelines of the Ministry of Tourism, a valid bar licence is a mandatory document for classification of hotels, wherever there is a bar. These hotels continue to operate the bars on the basis of old licence and fee receipt. Non-availability of valid bar licence has resulted in raising non-conformance in many cases, which eventually delays the classification process.” read the letter. 

TNM has also seen a letter written by Commissioner for Prohibition and Excise SP Karthikaa, to the Greater Chennai city Commissioner of Police A Arun with a request to instruct the field level police officials to allow bars and clubs to operate considering renewal applications and the fees paid. The Commissioner also admits that there has been delay in issuing renewed licences due to administrative reasons.

The letter says, “I also wish to add that required documents such as Fire NOC, building licence in form D, structural stability certification, boarding and lodging certificate, FSSAI Certification, property tax, etc., have to be submitted by the licensees for renewal of licence and for obtaining the above said certificates from the authorities concerned, some administrative delay is occured. Due to this, the renewal of licence is getting delayed. I therefore request you to kindly instruct the field level police officials, who are visiting the FL2/ FL3 licenced premises for inspection, to consider renewal application along with fee within the stipulated time and allow the to run their business, since the renewal of licence is pending due to administrative reasons,” read the letter.  

Anti-corruption NGO Arappor Iyakkam’s convener Jayaram Venkatesh told TNM that the sudden action by the Excise department has opened up a can of worms. “This entire issue has raised the question of legality of bar operations? Because if they don’t have a licence and if they are showing application fees receipt, it means they are not legal. There is absolutely no transparency when it comes to TASMAC and liquor business. If someone does not even have a valid licence, how can they be allowed to run their business? This means illegal liquor is being sold in the state in full public view,” he added. 

Jayaram said the FL2/FL3 liquor licences granted for clubs and five star hotels are valid for one year only and it cannot be extended. “If a person has the licence for one year which has expired and they have applied for renewal, it is considered as expired. Once the licence has expired and your renewal application is pending, it means that operation of the bar is illegal. They can’t claim that they have paid the fee and they are waiting for the renewed licence. It is surprising that the Excise Commissioner is using this as a reason to allow the functioning of bars. This could be misused by bar owners, the excise department and police to seek favours. This is completely illegal in the first place.”