A 9 Judge bench headed by Chief Justice DY Chandrachud held 8:1 in favour of states to regulate Industrial Alcohol. The specially constituted benchreversed a 1990 judgement Synthetics & Chemicals vs State of Uttar Pradesh, which introduced limitations to the definition of "intoxicating liquor" to potable alcohol and states were barred to tax industrial alcohol. Since 1956 State and centre have been in a tussle over who has the power to regulate industrial alcohol.
The main issue before the court was the overlapping jurisdictions under Union and State lists. Entry 52 of the union list gives power to the centre to make laws on industries that parliament considered to be of public interest. On the other hand, Entry 8 of the state list allows states to regulate “production, manufacture, possession, transport, purchase and sale of intoxicating liquors.” It is also pertinent to mention the entry 33 of the concurrent list which reads “the state and centre both can make laws on products of any industry where the control of such industry by the Union is declared by Parliament by law to be expedient in the public interest, and imported goods of the same kind as such products”
Justice Nagrathna alone delivered the dissenting judgement. She observed that if states were to regulate industrial alcohol then it would be a misinterpretation of the legislative intent behind alcohol regulation. This ruling has also allowed states to tax industrial alcohol thereby increasing revenue and enhancing local control over production and distribution. The bench clarified that intoxicating liquor includes more than just potable alcohol and beverages. The bench also observed that drugs, opium and other harmful substances fall under the state’s purview as mentioned under Entry 8 thereby states have the power to regulate it.
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