Tasmac ‘scam’: What next after Supreme Court’s interim stay?

The Supreme Court’s interim stay on the Enforcement Directorate’s (ED) investigation into the alleged Rs 1,000 crore Tamil Nadu State Marketing Corporation (Tasmac) liquor scam has sparked a fierce political clash between the ruling DMK and the BJP, which has just allied with AIADMK, the main Opposition party in the state.

Also read | ‘ED crossing all limits’: SC stays Tasmac probe

The court’s decision, which criticised the ED for “crossing all limits” and violating federal principles, has provided temporary relief to the DMK-led Tamil Nadu government but leaves the future of the high-profile case uncertain.

What Supreme Court said

On Thursday (May 22), a Supreme Court Bench led by Chief Justice of India BR Gavai and Justice AG Masih halted the ED’s investigation, questioning how a corporation like Tasmac could be criminally liable.

“Your ED is crossing all limits. You are violating the federal structure of the country,” CJI Gavai remarked, directing the ED to file a detailed response within two weeks.

The court’s intervention has paused the probe, but senior advocate KM Vijayan said that the stay is interim and could be vacated post-summer vacation if the ED presents compelling evidence. He told The Federal, "There is nothing to celebrate, the Supreme Court might come back with something after verifying more facts from ED."

Also read | ED probes secret ‘party fund’, who handled it in TN Tasmac ‘scam’

ED officials, speaking on condition of anonymity, emphasised that their Enforcement Case Information Report (ECIR) currently names only Tasmac, as it is akin to an FIR filed at the investigation’s outset. They plan to include additional names in forthcoming chargesheets, incorporating evidence from recent raids, including WhatsApp chats allegedly linking Tasmac officials to influential figures.

The ED remains confident that the Supreme Court will lift the stay once it reviews the evidence, which they claim points to a sophisticated nexus involving officials and politicians.

Political clash: DMK vs BJP

The Tasmac ‘scam’ has become a flashpoint ahead of the 2026 Tamil Nadu Assembly elections, intensifying the rivalry between the DMK and the BJP, alongside its ally, the AIADMK. The BJP’s Tamil Nadu unit leaders have been aggressively targeting the DMK, claiming the corruption exceeds Rs 1,000 crore, and have accused the DMK of using unaccounted funds to bolster its electoral war chest.

Also read | TASMAC 'scam': AIADMK questions role of Udhayanidhi’s 'friend' Ratheesh

The DMK has countered these allegations, accusing the BJP-led central government of weaponising the ED to tarnish its image. Senior DMK leader RS Bharathi hailed the Supreme Court’s stay as a “big blow” to the BJP’s “political vendetta,” calling the ED a “blackmailing organisation.” The DMK argues that the state has already taken action by filing 41 FIRs against liquor outlet operators for corruption between 2014 and 2021, many of which occurred under the AIADMK’s rule, not the DMK’s.

The DMK also pointed out that the ED’s failure to specify FIR details or a “predicate offence” undermines its case. The AIADMK, led by Edappadi K Palaniswami (EPS), has joined the BJP in criticising the DMK, with EPS alleging potential corruption worth Rs 40,000 crore in Tasmac operations. However, the DMK highlighted that 34 of the 41 FIRs were filed during the AIADMK’s tenure, questioning their credibility in raising the issue.

What lies ahead

The Supreme Court’s interim stay has provided the DMK with temporary respite, but the case’s direction remains uncertain. The ED’s forthcoming counter, expected to detail evidence from raids, could sway the court to lift the stay.

Also read | ED raids linked to TASMAC case only to tarnish TN govt’s image: DMK

Political analysts suggest that the alleged scam’s fallout could significantly impact the 2026 elections, with the BJP and AIADMK leveraging the allegations to challenge the DMK’s dominance. Speculation that including claims of links between the scam and DMK’s “first family” has further fuelled the controversy, though such assertions remain unverified.

For now, the DMK remains defiant, framing the ED’s actions as a politically motivated attack by the BJP-led Centre. The Opposition, however, sees the ‘scam’ as a potent weapon to erode the DMK’s electoral stronghold.

Lacking authority?

DMK spokesperson Saravanan Annadurai claimed that the ED lacks the authority to probe TASMAC-related irregularities, as these involve minor sums. He alleged the ED consolidates multiple FIRs into a single case to meet a financial threshold for investigation.

In response, ED officials clarified that their jurisdiction covers money laundering and proceeds of crime, irrespective of the amount, and is not restricted to cases exceeding Rs 1 lakh.

Union Minister of State for Information and Broadcasting L Murugan reiterated that the ED functions independently of the Union government and stated that the agency will proceed legally in the TASMAC corruption case, despite the Supreme Court's interim stay.

“There is no setback for the ED in the Tasmac probe. The case is ongoing, and the final verdict is yet to come. Those who have committed wrong must face punishment under the law,” he said.

What's the ‘scam’?

Tasmac, Tamil Nadu’s state-run monopoly controlling wholesale and retail liquor sales, is a significant revenue source, generating approximately Rs 44,000 crore annually. Established in 1983 to regulate liquor sales and curb illicit trade, Tasmac operates around 4,500 retail outlets across the state.

It has long been accused of corruption, including bribery, tender manipulation, and inflated pricing, allegedly involving politically connected distillery owners.

Also read | TN police awaiting state govt nod to appoint nodal officer to assist ED

The current controversy erupted in March when the ED conducted raids on Tasmac's headquarters and other premises, alleging financial irregularities worth over Rs 1,000 crore. The agency claimed to have uncovered evidence of kickbacks, fraudulent pricing (surcharges of Rs 10-30 per bottle), and manipulated tenders favouring certain distilleries.

Further raids in May targeted key figures, including Tasmac Managing Director S Visakan and film producer Akash Baskaran, with allegations of links to the DMK’s leadership.

ED action challenged

The ED’s probe is based on over 40 FIRs filed by the state’s Directorate of Vigilance and Anti-Corruption (DVAC) between 2014 and 2021, though Tasmac itself is not named as an accused in these cases.

The Tamil Nadu government and Tasmac challenged the ED’s actions, arguing that the agency lacked jurisdiction without a clear “predicate offence” under the Prevention of Money Laundering Act (PMLA).

They accused the ED of conducting “roving and fishing inquiries” and violating privacy by seizing officials’ phones and devices. The Madras High Court’s April 23 ruling, which permitted the ED to continue its probe, prompted the state to appeal to the Supreme Court.