'Intoxicating Liquor' Doesn't Include 'Denatured Spirit', But Includes 'Extra Neutral Alcohol' : State Of Kerala To Supreme Court

The Supreme Court on Thursday (April 18) concluded its 9-judge Constitution Bench hearing on the issue whether States have the power to regulate 'industrial alcohol' using their powers over 'intoxicating liquor' or whether it is exclusively reserved for the Union. On the last day of the hearing, the Court conducted a rejoinder session. While the majority of the states contested for a wider interpretation to be given to the term 'intoxicating liquor' to include denatured spirit/industrial alcohol, Senior Advocate Mr V Giri representing the state of Kerala had a slightly divergent point of view. He argued that Entry 8 List II covers 'every kind of alcohol other than denatured spirit'. He explained that Extra Neutral Alcohol (ENA- non-flavoured alcohol of 95%) cannot be regarded as industrial alcohol. It is the 'denatured spirit', that is, the denaturation of rectified/ potable spirit that is considered as industrial alcohol.“Denatured spirit is an end product and therefore it can be synonymous to industrial alcohol, it would not come within the purview of Entry 8 List II, because Entry 8 is about intoxicating liquor and we have no material to assume even upon the hypothetical basis that denatured spirit would be a raw material for potable alcohol/ rectified spirit.”Other States like Uttar Pradesh, West Bengal and Maharashtra have taken the stance that 'intoxicating liquor' is wide enough to cover 'industrial alcohol' as well.Mr Giri highlighted that ENA was procedurally constituted as a raw material in the process of making 'intoxicating liquor' or potable alcohol in its final form. Since it forms part of the production process for potable alcohol, ENA is covered under the State's legislation-making powers under Entry 8 List II. “Every aspect of the manufacture of intoxicating liquor is covered by Entry 8 List II, therefore my lords, production of ENA(Extra Neutral Alcohol), which would be considered as a stage prior to the making of the Indian Made Foreign Liquor / potable alcohol (IMFL) or a beverage as the Centre may call it, is also covered by Entry 8 List II. Starting from Molasses, then to rectified spirit, then to ENA and then finally to IMFL, which is what is done in the case of consumable alcohol/ intoxicating liquor is covered by Entry 8 List II.”Entry 8 List II gives State legislatures the power to regulate everything about creating and handling intoxicating liquor. This means from the very start of making the liquor to whatever comes after, it's all under this rule. This includes companies that make Extra Neutral Alcohol (ENA) but don't turn it into Indian Made Foreign Liquor (IMFL). This would also mean that businesses that start with raw materials like molasses or malt, make them into rectified spirits, and then sell them to others who make ENA, are covered. Every step leading up to the final IMFL product falls under Entry 8 List II, he argued.“The legislative competence of the State Legislature in so far as Entry 8 List II is concerned would therefore deal with every stage related to the manufacture of an intoxicating liquor and even the stages thereafter. There are industries which manufacture only ENA but do not take it to the next stage of IMFL, they can sell to any other unit, that is also covered under Entry 8 List II. There are industries which procure molasses or malt, come to the stage of rectified spirit and then sell it to another unit which manufactures ENA….but every aspect of it would be covered by Entry 8 List II…..Every aspect of the process by which ultimately we get into the stage of IMFL would be covered by Entry 8 List II.” The CJI then observed that the said argument of Mr Giri to include a raw material like ENA under the meaning of the production process of 'intoxicating liquor' would run contrary to the definition of 'industry' as laid down in the case of Tika Ramji. As per Mr Giri, the meaning of 'intoxicating liquor' would not just be limited to the production stage but also incorporate the raw materials used in the production. “ Your argument on Entry 8 List II that production would cover every anterior including ENA (is a raw material in that sense of the matter), would then run contrary to the logic of Tika Ramji” In Tikaramji, there existed a clash of law-making powers over the subject matter. The question over the validity of the 1953 UP Sugarcane (Regulation of Supply and Purchase) Act, which serves as the basis for the 1954 UP Sugarcane Supply and Purchase Order, was brought to the fore. The challenge to the Act's legitimacy hinged on the viewpoint that it encompasses the 'industry' field, an area the Union is considered to occupy in oversight for the want of public interest, under the Parliament's directive in Entry 52 of List I (Unions powers over 'controlled industries' declared in public interest) . In response, the Industries (Development and Regulation) Act was enacted by Parliament in 1951. This legislation underscored the Union's crucial role in regulating ...

'Intoxicating Liquor' Doesn't Include 'Denatured Spirit', But Includes 'Extra Neutral Alcohol' : State Of Kerala To Supreme Court

Anmol Kaur Bawa

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