Power Of States To Regulate Industrial Alcohol Under Term 'Intoxicating Liquor'-Supreme Court

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A nine-judge Constitution Bench of the Supreme Court on Wednesday (October 23), held by 8:1 majority, held that the States have the power to regulate 'denatured spirit or industrial alcohol'.

The majority concluded so by holding that the term "intoxicating liquor" in Entry 8 of List II (State List) of the Seventh Schedule of the Constitution will include industrial alcohol.

The majority held that the term "intoxicating liquor" cannot be interpreted narrowly to include only alcohol which is fit for human consumption. It was held that liquids which contain alcohol which can be used or misused for human consumption can be included within the term "intoxicating liquor".

The present matter was referred to a nine-judge bench in 2007 and pertains to the interpretation of Section 18G of the Industries (Development and Regulation) Act, 1951(IDR Act). Section 18G allows the Central Government to ensure that certain products related to scheduled industries are distributed fairly and are available at reasonable prices. They can do this by issuing an official notification to control the supply, distribution, and trade of these products. However, as per Entry 33 of List III of the Seventh Schedule to the Constitution, the State legislature has the power to regulate trade, production, and distribution of products from industries under Union control and similar imported goods. It was argued that in Synthetics and Chemical Ltd. vs. State of U.P., a seven-judge bench had failed to address Section 18G's interference with the concurrent powers of the State. Accordingly, the Supreme Court held–

"If the decision in the Synthetics and Chemicals case (supra) concerning the interpretation of Section 18-G of the 1951 Act is allowed to stand, it would render the provisions of Entry 33 (a) of List III nugatory or otiose."

The matter was then referred to a nine-judge bench. It may be noted that apart from Entry 33 List III, Entry 8 List II also provides regulation powers to the state with regards to 'Intoxicating Liquor'. As per Entry 8 List II, the state has law-making powers over - “ Intoxicating liquors, that is to say, the production, manufacture, possession, transport, purchase and sale of intoxicating liquors”