Supreme Court raps ED over Tasmac raids: What were the probe agency’s allegations against Tamil Nadu’s liquor retailer

Tasmac, established in 1983 is the sole authority responsible for liquor sales in Tamil Nadu.

Pulling up the Enforcement Directorate for "crossing all limits" and violating the concept of federal governance, the Supreme Court on Thursday stayed all ongoing investigation into alleged irregularities at Tamil Nadu’s state-run liquor distribution arm, the Tamil Nadu State Marketing Corporation (TASMAC).

The top court on Thursday stayed the Enforcement Directorate's money laundering probe and raids against Tasmac.

A two-judge Bench of Chief Justice of India (CJI) B R Gavai and Justice A G Masih was hearing  the Tamil Nadu government’s plea challenging the ED searches at the TASMAC headquarters.

“How can [there be] an offence against [the] corporation? … You may register against individuals. How do we cooperate in criminal matters?” CJI Gavai asked Additional Solicitor General S V Raju, who appeared for the ED.

 What is Tasmac?

Tasmac was established in 1983. It is the sole authority responsible for liquor sales in Tamil Nadu. The state government holds a complete monopoly over both wholesale and retail liquor distribution, making Tasmac one of its largest revenue sources. It operates about 7,000 liquor outlets in Tamil Nadu.

 What are ED’s allegations against Tasmac?

The Chennai unit began an investigation based on 41 FIRs registered by the Tamil Nadu Vigilance Department under sections of the Prevention of Corruption Act, 1988 from 2014 onward.

Raju told the top court that there had been a fraud of Rs 1,000 crore involving politicians. Between March 6 and 8, the ED carried out searches at 20 locations, including the TASMAC headquarters in Chennai.

According to ED, there were "multiple irregularities" in the operations of Tasmac, including "manipulation" in the tender processes and "unaccounted" cash transactions worth Rs 1,000 crore through distillery companies. The probe agency reportedly unearthed a nexus involving then state minister V Senthil Balaji and other senior politicians of the ruling DMK.

The probe agency alleged that distilleries across Tamil Nadu systematically inflated expenses and created fake purchases, primarily through bottle-making companies, diverting around Rs 1,000 crore into unaccounted funds and shell companies. These illicit proceeds were channelled into kickbacks to secure inflated supply orders from Tasmac.

According to Indian Express, rhe searches in March, carried out under the provisions of the Prevention of Money Laundering Act, 2002 (PMLA), “led to the seizure of incriminating data related to transfers and postings, transport tender, bar licence tender, indent orders favouring a few distillery companies, excess charge of Rs 10 to Rs 30 per bottle by the TASMAC outlets involving the officials of Tasmac etc.,”.

The ED also said it has "evidence"of fraudulent pricing, i.e., surcharges of Rs 10 to Rs 30 per bottle sold by Tasmac outlets.

DMK hails order

DMK leader R S Bharathi said that SC staying the probe is a "big blow" to the BJP's efforts to malign the party-led government in the state and the central probe agency was a "blackmailing organisation.

"In Tamil Nadu, the M K Stalin-led DMK government that assumed office in 2021 has been gaining popularity ever since and the Chief Minister's stature has been rising. Unable to digest this and the DMK alliance's electoral triumph after 2021, the ED was used to malign the DMK and the BJP leaders used to make all kinds of charges," he told reporters.

BJP’s protest

In March, Chennai police arrested Tamil Nadu leader  K Annamalai, just hours before he was scheduled to lead a protest against alleged financial irregularities at Tasmac.

The arrests extended beyond Annamalai. According to The Indian Express, other senior BJP figures, including former Telangana Governor Tamilisai Soundararajan, Mahila Morcha head and Coimbatore South MLA Vanathi Srinivasan, and BJP MLA Saraswathi, were also picked up at various locations across the city.