Budweiser Beer Banned In Delhi For 3 Years; Parent Company Accused Of Tax Fraud
In a news that will directly affect your lives, especially if you’re in Delhi, is that the national capital city has banned the world’s largest brewery Anheuser-Busch InBev, from selling its products and beers in the Delhi market for a period of three years, allegedly for tax evasion.
InBev Acquired SABMiller Duplicates Barcodes
Not only has the Belgian company, AB InBev been indulged in the activities of evading local taxes but also the beer maker SABMiller, acquired by Anheuser-Busch InBev in 2016 for around $100 billion, was found to have duplicated barcodes on its beer bottles barcodes, which automatically led to them paying lower excise duties.
Even though AB InBev declines any such allegation to be true against it, the Delhi government strongly backs up its case by presenting a 19-page order, dated July 16 with details of the findings. They have been investigating the case since the past three years.
Lawyer Sandeep Chilana specializing in excise law, says that rules mandate each beer bottle sold in the city has to have a unique barcode for track and trace purposes, and to ensure there is no duty evasion. In a random inspection at BarShala, on Aug. 16, 2016 in Delhi, city officials found 12 beer bottles of SABMiller brands at the bar that barcode records showed should have been in the company warehouse at the time.
They also found out that some beer bottles sent to the bar in November had same barcodes as those found in the inspection in August. The bar said it had nothing to do with this and the brewer argued that it could be a result of technical or clerical errors in the barcoding system. Unfortunate for SABMiller, the same barcodes were supplied twice at the same restaurant and hence the discrepancy could be noticed. Had the same been supplied to a different retail outlet the discrepancy could not have been noticed easily.
How Will This Affect AB InBev?
New Delhi remains an extremely critical market for any beer company, as it is the social capital of the country, along with Mumbai. A young and affluent population and a growing pub culture, especially in the big cities, have spurred beer consumption in India. That is despite the fact that the industry is tightly regulated, with most states individually regulating pricing and imposing taxes, which form a vital source of their revenues.
The Delhi City authority asked for sealing of two of AB InBev’s warehouses in the city, which means the company will be debarred from the capital market in all forms, unless it appeals against it. AB InBev is the second biggest player in India’s $7 billion beer market, making up 17.5% market share alone.