Does 'Intoxicating Liquor' Include 'Industrial Alcohol'? Supreme Court 9-Judge Bench Analyses Overlapping Powers Of Union & States [Day 1]

The Supreme Court on Tuesday (April 2) commenced the hearing of the 9-judge Constitution Bench on the issue of overlapping powers between the Centre and the State in production, manufacturing, supply and regulation of 'Industrial Alcohol'. The bench led by CJI DY Chandrachud comprises Justices Hrishikesh Roy, Abhay S. Oka, B.V. Nagarathna, J.B. Pardiwala, Manoj Misra, Ujjal Bhuyan, Satish Chandra Sharma And Augustine George Masih. The 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. 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 of regulating 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) with regard to 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” Appearing on behalf of the State of U.P (appellants), Senior Advocate Mr Dinesh Dwivedi made 4 key formulations before the bench : Entry 8 List II confers exclusive jurisdiction on the states to regulate industrial alcohol because Industrial alcohol is a part of intoxicating liquor. Mr Dwivedi further added that “ Intoxicating liquor is a general term, unlimited, it has not been restricted by any phrases before or after….unrestricted by any other entry unlike Entry 24 List II ( Industries subject to the provisions of [entries 7 and 52] of List I)” Entry 8 List II could be considered a special entry under the State List when compared to Entry 24 List II. Entry 24 List II is a general entry pertaining to industries apart from those specified under Entry 7 (Industries declared by Parliament necessary for the purpose of defence/ prosecution of war) and Entry 52 ( Industries controlled by the Union in Public Interest) of List I. Entry 51(Duties of excise on alcoholic liquors for human consumption) and 54 of List II (taxes on sale and purchase of goods apart from newspapers) use the expression “Alcoholic Liquor for human consumption” , Entry 8 of List II could have used the same phrase had the framers intended, but Entry 8 uses a wider phrase “Intoxicating liquors”. If intoxicating liquor falls under Entry 8 of List II, it does not fall under Entry 24 of List II and is therefore not subject to Entry 52 of List II (taxes on entry of goods into local area for consumption/use/sale). In his alternative argument, Mr Dwivedi contended that the word “industry” includes industrial alcohol. Even if 'industry' in Entry 24 List II or Entry 52 List I includes 'industrial alcohol' then powers go to the Union under List I regarding the manufacturing of the industrial alcohol. Mr Dwivedi explained that once the industrial alcohol is brought up to be as notified Industry emerges, it goes to Entry 33 List III (trade, commerce in, production, supply and distribution of products of an industry controlled by the Union in public interest). The product is not included in Entry 24 List II or 52 List I.The second limb of his alternative argument, as contended was that S. 18G of the Industries (Development and Regulation) Act, (IDR Act) 1951 confers an enabling power on the Union to regulate the products of the notified industries. Mr Dwivedi added that for securing equitable distribution and availability at fair price, the Union can regulate such products. Such regulation has to be through a notification order issued by the Central Government. Legislative History & The Essence Of 'Intoxicating Liquor'When Mr Dwivedi reminded the bench that the present issue on the law was first decided in 1951 and has been continued ever since the CJI interjected to point out that the cause for pendency is not because there existed multiple complexities in the issue at hand but because, with the changing times, the judicial perspectives have also evolved, considering the constant developments in the realm ...

Does 'Intoxicating Liquor' Include 'Industrial Alcohol'? Supreme Court 9-Judge Bench Analyses Overlapping Powers Of Union & States [Day 1]

Anmol Kaur Bawa

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