SC upholds States’ power to regulate industrial alcohol

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

The majority opinion authored by Chief Justice of India DY 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 the power to regulate the production, manufacture, possession, transport, purchase and sale of “intoxicating liquor”.

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“Entry 8 of List II is based on public interest. It seeks to enhance the scope of the entry beyond potable alcohol. This is inferable from the use of the phrase ‘intoxicating’ and other accompanying words in the Entry. Alcohol is inherently a noxious substance that is prone to misuse affecting public health at large. Entry 8 covers alcohol that could be used noxiously to the detriment of public health. This includes alcohol such as rectified spirit, ENA (extra neutral alcohol) and denatured spirit which are used as raw materials in the production of potable alcohol and other products,” Chief Justice Chandrachud held in the majority opinion.

Justice BV Nagarathna, in her lone dissent, 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.

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”.

The primary questions referred to the nine-judge Bench included whether Entry 52 in the Union List overrode Entry 8 of the State List and if the expression ‘intoxicating liquors’ in Entry 8 of List II included alcohol other than potable alcohol.

The crux of the case was the tussle between the Union and States over power to levy tax, manufacture and 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.

‘Intoxicating liquor’

The Supreme Court held that Entry 8 was both an industry-based as well as a product-based entry in the State List. It covered the regulation of everything from the raw materials to the consumption of ‘intoxicating liquor’. “The Parliament cannot occupy the field of the entire industry merely by issuing a declaration under Entry 52 of List I,” Chief Justice Chandrachud held.

The State Legislature’s competence to make laws on industries under Entry 24 of the State List was denuded only to the extent of the field covered specifically by a Parliamentary law under Entry 52 of the Union List, the majority on the Bench agreed.

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The term ‘intoxicating liquor’ in Entry 8 should be given a definition as broad as possible, the CJI wrote. The Chief Justice referred to past decisions of the Supreme Court and the Bombay High Court to note that they had not limited the meaning of the expression ‘intoxicating liquor’ in Entry 8 to its “popular meaning”.

“That is, alcoholic beverages that produce intoxication. All the judgments interpreted the expression to cover alcohol that could be noxiously used to the detriment of health,” the CJI explained.