Ban on sale of Absolute Vodka-Chivas Regal in Delhi continues:French liquor giant Pernod Ricard faces ₹3,000 crore tax dues

The ban on the sale of liquor like Absolut Vodka and Chivas Regal in Delhi remains in place. The Delhi High Court has dismissed the petition of French liquor giant Pernod Ricard, in which the company had sought permission to sell its products in Delhi. The company has been out of the Delhi market since 2023 due to being an accused in the Delhi Liquor Policy (excise policy) investigation of 2021. Serious allegations by ED; case of collusion with retailers Delhi authorities have rejected Pernod Ricard’s liquor license application. The reason is the serious allegations leveled by the Enforcement Directorate (ED), which stated that the company illegally colluded with retailers (liquor vendors) in 2021 to increase its market share. Now the entire dispute hinges on whether this company, which has come under the scope of investigation, can be allowed to do business in Delhi again or not. So far, there has been no reaction from Pernod Ricard on this court decision. ₹2,996 Crore Worth Of Tax Dues Apart from the liquor policy controversy, Pernod Ricard is also embroiled in a major legal dispute with Indian tax authorities. According to a Reuters report, Indian investigators have concluded that the company deliberately concealed the actual age and composition (blend information) of its Scotch whisky imports. This was done to understate the real value of imported goods and pay lower custom duty (tariff). Following this revelation, the French company has been asked to pay back taxes of $314 million, approximately ₹2,996 crore. Used Codenames to Confuse Customs Officials Court documents and investigation reports have revealed that Pernod deliberately obfuscated its information during the investigation that concluded in September last year. The company introduced new codenames for internal malt, making it extremely difficult for customs officials to compare these imports with goods from competitor companies. According to the investigators’ report, the company did not provide accurate details of imported malt (exact composition and age), with the intention of evading taxes and concealing the real value. However, Pernod India has categorically rejected all these allegations, stating that it has complied with all regulations and is responding through legal channels. Value shown 67.49% lower to avoid 150% tariff Pernod will have to pay ₹5,725 crore penalty if it loses the case In terms of volume (sales quantity), India is the world’s largest market for Pernod. Before this dispute, approximately 5% of the company’s total Indian sales came from Delhi alone. Currently, according to court records, the company has a tax liability of around ₹3,000 crore. But if the company loses this legal battle, then according to regulations, the total payment including penalty (fine) could be more than $600 million which is approximately ₹5,725 crore. This hefty amount is one-fifth of the company’s Indian revenue from last year (2.9 billion dollars or approximately ₹27,676 crore) and three times its total profit. How is whisky made? Companies like Pernod Ricard import ‘bulk Scotch concentrate’ into India from abroad. After this, by mixing this concentrated material with fixed quantities of water, neutral spirit, and other ingredients like caramel, popular brands like ‘Royal Stag’ are prepared in India. A heavy custom tariff of up to 150% is applicable on the import of this concentrate in India.