Happy hour begins now: Supreme Court rules states can tax industrial alcohol

In its 8:1 majority ruling, a nine-judge bench rejected the Centre's stand that any liquid containing alcohol not fit for human consumption but meant for industrial use will fall within the exclusive regulation regime of the Union.

In Short

• 8:1 majority decision by nine-judge Supreme Court bench
• Court rejects Centre's claim on exclusive regulation
• Justice Hrishikesh Roy makes light-hearted remark post-verdict

The Supreme Court on Wednesday ruled that states have regulatory power over the production, manufacture and supply of industrial alcohol.

In its 8:1 majority ruling, a nine-judge bench rejected the Centre's stand that any liquid containing alcohol not fit for human consumption but meant for industrial use will fall within the exclusive regulation regime of the Union.

"I would suggest to the winning side that happy hour begins now since this case dealt with alcohol, but do not lose control anyway," Justice Hrishikesh Roy said.

A seven-judge Supreme Court bench ruled in 1997 that the Centre had regulatory power over the production of industrial alcohol. The case was referred to the nine-judge bench in 2010.

Chief Justice DY Chandrachud, who wrote the latest judgement, said the Centre lacks regulatory power, adding that the term "intoxicating" can also be understood as poisonous.

"Alcoholic liquor and intoxicating liquor are used for consumption but the entry of intoxicating liquor stretches to its manufacturing. Alcoholic liquor is defined by the ingredient and intoxicating is defined by effect... Thus, alcoholic liquor can be covered by the latter if it causes intoxication," he said.

"The meaning of the phrase intoxicating liquor cannot be limited to potable liquor, and it signifies all alcohol which can be used to harm public health."

However, Justice BV Nagarathna, on the nine-judge bench, dissented with the majority verdict and said, "Alcohol is a panacea for everyone. For both winning and losing."

She also held that industrial alcohol is not meant for human consumption.

"Industrial alcohol is important in the Indian economy as it is blended with petrol and also a key element in manufacturing chemicals like agrocare products... My opinion favours parliamentary supremacy subject to what has been kept for the states," Justice Nagarathna added.

While both parliament and state legislatures can enact laws on the subjects mentioned in the Concurrent List, a central law will have primacy over the state law.

(With inputs from PTI)