Supreme Court upholds States’ power to regulate industrial alcohol

The majority opinion by CJI held that ‘intoxicating liquor’ in Entry 8 of State List should be interpreted as broadly as possible

A Constitution Bench of nine judges, in a 8:1 majority judgment, upheld the States’ right to regulate industrial alcohol.

The majority opinion authored by Chief Justice of India D.Y. Chandrachud held that the phrase ‘intoxicating liquor’ in Entry 8 of the State List in the Seventh Schedule of the Constitution would include industrial alcohol within its ambit.

Entry 8 gives States power to regulate the production, manufacture, possession, transport, purchase and sale of intoxicating liquor.

Multiple States had challenged the Centre’s position that it had exclusive control over industrial alcohol.

The Centre had traced its power to Entry 52 of the Union List, which said “industries, the control of which by the Union is declared by Parliament by law to be expedient in public interest”.

“There is a strong possibility of denatured spirit or industrial alcohol being misused for the purpose of human consumption. The State is the guardian of public health. States are concerned about liquor tragedies happening within their jurisdictions. You [Centre], on the other hand, are a disconnected entity. A national entity. You are not going to be concerned with what happens in a district or a collectorate… Why can’t the State make regulations to prevent the misuse of industrial alcohol and its conversion into intoxicating liquor?” Chief Justice Chandrachud had asked Solicitor General Tushar Mehta, appearing for the Centre, during a hearing in April 2024.

At the crux of the case is the tussle between the Union and States over power to levy tax, manufacture, produce alcohol.

The Centre had claimed that industrial alcohol was an ‘industry’ controlled by the Union government in public interest under a parliamentary law, Industries (Development and Regulation) Act of 1951.

Such an industry was covered by Entry 52 of the Union List in the Seventh Schedule of the Constitution.

The Union government had argued that though trade and commerce, supply, distribution and production of the products of such industries were included as Entry 33(a) of the Concurrent List, this had to be read in consonance with and as an extension of the Centre’s power under Entry 52. In short, the Centre said it was in complete control of every aspect of such industries.

Mr. Mehta had argued that the States’ power extended to only ‘intoxicating liquors’ fit for human consumption. This was covered under Entry 8 of the State List along with Entry 6 (public health).

However, States like Kerala, Maharashtra, Punjab and even a petition from Uttar Pradesh raised alarm about the use of industrial alcohol to make intoxicating liquor. In such cases, they had argued that States cannot remain mute spectators and wait for tragedy to strike.

In the majority opinion, Chief Justice Chandrachud said the intent of Entry 8 had to be read “as broadly as possible” to include industrial alcohol within the definition of ‘intoxicating liquor’.

The CJI said Entry 8 sought to regulate “everything from raw materials to production of intoxicating liquor”.

The court said the phrase ‘intoxicating liquor’ in Entry 8 included all alcoholic liquids which could harm public health, and not just potable alcohol.

Justice B.V. Nagarathna however held that ‘industrial alcohol’ cannot be brought within the ambit of ‘intoxicating liquor’ in Entry 8. The Judge said the States did not have legislative competence to regulate industrial alcohol or denatured spirit.

Published - October 23, 2024 11:09 am IST