In exercise of the powers conferred by Article 240 of the Constitution of India, the Hon’ble President of India, Smt. Droupadi Murmu, has enacted the Lakshadweep Excise Regulation, 2026 (Regulation No. 7 of 2026), published in the Gazette of India Extraordinary vide Notification No. CG-DL-E-05062026-273174 dated 5th June, 2026. The Regulation has been promulgated in the Seventy-seventh Year of the Republic of India. It extends to the whole of the Union territory of Lakshadweep and shall come into force on such date as the Administrator may, by notification in the Official Gazette, appoint.
Repeal of the Lakshadweep Prohibition Regulation, 1979
The Lakshadweep Excise Regulation, 2026 hereby repeals the Lakshadweep Prohibition Regulation, 1979 (Reg. 5 of 1979). This marks a landmark policy transition — from an era of total prohibition that had been in force for over four decades — to a comprehensive, regulated excise framework. The rights, privileges, obligations, and liabilities accrued under the repealed Regulation are duly preserved and saved. All pending proceedings, inquiries, and appeals immediately before the commencement of the new Regulation shall continue to be governed by the provisions of the repealed Regulation.
Scope and Object of the Regulation
The Regulation provides a comprehensive statutory framework to regulate the manufacture, possession, import, export, transport, purchase, sale, and consumption of liquor and to levy excise duty on alcoholic beverages in the Union territory of Lakshadweep. The Regulation covers all categories of liquor including Indian Made Foreign Liquor (IMFL), foreign liquor, country liquor/traditional liquor, beer, wine, and other alcoholic beverages as may be declared by the Administrator from time to time.
Excise Administration and Institutional Framework (Sections 3–9)
The Regulation establishes a robust administrative structure headed by an Excise Commissioner, who shall be the chief controlling authority appointed or designated by the Administrator under Section 3. The Excise Commissioner is vested with comprehensive powers including regulation and monitoring of the liquor trade, curbing illicit distillation, protection of excise revenues, promotion of responsible drinking, introduction of e-governance in excise administration, and submission of annual reports. The Administrator may appoint or designate Deputy Commissioners and District Excise Officers as supporting officers under Section 5. A provision for granting rewards to officers, staff, and informers for exemplary work is incorporated under Section 9.
Licencing and Permit Framework (Sections 10–21)
The Regulation establishes a mandatory licencing regime. Under Section 10, no person shall manufacture, possess, sell, import, export, transport, or purchase any liquor without a valid licence or permit. Every licence or permit shall be granted upon payment of prescribed fees for a specified period and subject to such terms and conditions as may be prescribed (Section 11). Eligibility conditions for grant of a licence include Indian citizenship, a minimum age of 18 years, a clean legal record, no criminal background, solvency, and a premises located more than 50 metres from any medical, educational, religious, or social welfare institution (Section 12). Provisions for security deposit, counterpart agreements, transfer, suspension, cancellation, and withdrawal of licences are detailed in Sections 13 to 19. The Excise Commissioner is also empowered under Section 20 to grant exclusive privileges for manufacture, wholesale supply, or retail sale of liquor within any local area.
Consumer Protection Provisions (Sections 22–24)
The Regulation incorporates strict consumer protection provisions. Section 22 prohibits the sale or delivery of liquor to any person under the age of twenty-one years. Section 23 prohibits licensees from employing persons below the age of eighteen years or persons suffering from any contagious disease. Section 24 empowers the District Magistrate to order closure of liquor shops for preservation of public peace, subject to a limit of seven days per licensing year (not exceeding three days continuously at any given time).
Excise Revenue — Duty Structure (Sections 25–31)
Excise revenue under the Regulation shall be levied and recovered under four heads: (a) duty; (b) licence fee; (c) label registration fee; and (d) import or export fee. Under Section 26, the Administrator may, by notification, specify rates of excise duty, countervailing duty, or special duty on all notified liquor categories, not exceeding the maximum rates prescribed in the Schedule to the Regulation. The Schedule provides for the following maximum excise duty rates:
- Indian Made Foreign Liquor (IMFL) and Foreign Liquor: 400% of the last selling price
- Wine: 80% of the last selling price
- Beer: 200% of the last selling price
Interest at the rate of 12 per cent. per annum shall be levied on delayed payment of excise duty (Section 28). The Excise Commissioner may, with the approval of the Administrator, reduce or waive interest in genuine hardship cases (Section 29). Every licensee is required to maintain prescribed accounts and submit periodic returns (Section 31).
Offences and Penalties (Sections 32–71)
The Regulation lays down a stringent penal framework to deter illicit trade and violations. Key provisions include:
- Unlawful manufacture, import, export, transport, or removal of liquor: Imprisonment of not less than 1 year, extendable to 5 years, and fine of not less than Rs. 50,000 or five times the value of the liquor, whichever is higher. Where the value of liquor involved exceeds the prescribed threshold, imprisonment may extend to 7 years and fine up to Rs. 1 lakh or five times the value of the liquor (Section 32).
- Adulteration or mixing of noxious substances with liquor causing death: Imprisonment of not less than 10 years, extendable to life imprisonment, and fine up to Rs. 10 lakh (Section 40).
- Rendering denatured spirit fit for human consumption: Imprisonment of not less than 2 years, extendable to 3 years, and fine up to Rs. 2 lakh (Section 39).
- Persons operating without a valid licence or permit shall be liable to twice the fine prescribed for the relevant offence (Section 38).
- Repeat offenders shall be liable to twice the punishment and twice the fine (Section 65).
- Courts are empowered under Section 41 to direct payment of compensation — not less than Rs. 3 lakh to legal representatives of a deceased, Rs. 2 lakh for grievous injury, and Rs. 20,000 for any other consequential injury — arising from consumption of liquor sold at any premises.
- Unlawful advertisement or surrogate advertising of liquor is punishable with imprisonment up to 6 months or fine up to Rs. 10 lakh (Section 48).
All offences under the Regulation are cognizable. Offences punishable with imprisonment of two years and above are non-bailable (Sections 80 and 81).
Detection, Investigation, and Trial of Offences (Sections 76–83)
The Regulation empowers Excise Officers to search premises, seize articles, and arrest persons if there is a reasonable doubt of commission of an offence (Section 78). Offences punishable with imprisonment up to three years shall be tried by a Court of ordinary jurisdiction, while offences punishable with imprisonment exceeding three years shall be referred to a Special Court. In the absence of a Special Court, such cases shall be tried by a Court of ordinary jurisdiction (Section 68). Certain minor offences under Sections 44, 45, 54, 56, and 61 are compoundable on payment of a compounding fee of not less than five times, but not more than ten times, the duty involved or the value of the liquor, apparatus, and vehicle, whichever is higher (Section 70).
Appeal and Revision Mechanism (Sections 84–91)
A three-tier appellate mechanism is established under Chapter VII. Any person aggrieved by an order of an Excise Officer may appeal to the Deputy Commissioner, and thereafter to the Excise Commissioner (Section 84). Appeals must be filed within 30 days of the date of the order, with a further grace period of 30 days in justified cases. Appeals must be heard and decided within six months; failing which, the relief prayed for shall be deemed to have been granted (Section 85). Government Corporations and autonomous bodies aggrieved by orders of the Administrator, and any party aggrieved by orders of the Excise Commissioner on substantial questions of law, may appeal to the High Court (Section 90). The Excise Commissioner also holds suo motu revisional powers to review orders of subordinate officers within six months of the date of the order (Section 88).
Prohibition of Advertisements and Responsible Drinking
Section 96 prohibits all direct or surrogate advertisements promoting liquor consumption. However, the Excise Commissioner may at his discretion permit advertisements that are educative in nature and promote responsible drinking. The Excise Commissioner is also mandated under Section 4(e) to ensure social well-being through education for responsible drinking.
Overriding Effect and Miscellaneous Provisions
The Regulation has overriding effect over any repugnant or inconsistent law, regulation, rule, custom, or usage (Sections 103 and 104). The Administrator is empowered under Section 94 to regulate drinking of liquor or enforce prohibition in the whole or any part of the Union territory, if warranted. The Administrator may also make rules for regulating movement and possession of molasses, black jaggery, and mahua flower to prevent their misuse for illicit distillation (Section 95). All rules, notifications, and orders issued under the Regulation shall be laid before each House of Parliament as per Section 100.
The Lakshadweep Excise Regulation, 2026 can be accessed at: https://a2ztaxcorp.net/wp-content/uploads/2026/06/THE-LAKSHADWEEP-EXCISE-REGULATION-2026.pdf
