States have the power to regulate ‘industrial alcohol’ under the term ‘Intoxicating liquor’: Supreme Court

On October 23, 2024, the Supreme Court (SC) of India held that the States have the power to regulate ‘industrial alcohol’ by an 8:1 majority. The nine-judge Constitution bench of the SC said that the term ‘intoxicating liquor’ in Entry 8 of List II of the Seventh Schedule of the Indian Constitution will include industrial alcohol. The nine-judge bench of Chief Justice of India DY Chandrachud, Justice Hrishiskesh Roy, Justice Abhay S Oka, Justice JB Pardiwala, Justice Manoj Misra, Justice Ujjal Bhuyan, Justice BV Nagarathna, Justice Augustine George Masih, and Justice Satish Chandra Sharma heard the matter. Justice BV Nagarathna delivered the dissenting opinion. The majority decision in the case is mentioned as follows:

• “Entry 8 of List II of the Seventh Schedule to the Constitution is both an industry-based entry and a product-based entry. The words that follow the expression “that is to say” in the Entry are not exhaustive of its contents. It includes the regulation of everything from the raw materials to the consumption of ‘intoxicating liquor’; 
• Parliament cannot occupy the field of the entire industry merely by issuing a declaration under Entry 52 of List I. The State Legislature’s competence under Entry 24 of List II is denuded only to the extent of the field covered by the law of Parliament under Entry 52 of List I; 
• Parliament does not have the legislative competence to enact a law taking control of the industry of intoxicating liquor covered by Entry 8 of List II in exercise of the power under Article 246 read with Entry 52 of List I…
• 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, and denatured spirit which are used as raw materials in the production of potable alcohol and other products. However, it does not include the final product (such as a hand sanitizer) that contains alcohol since such an interpretation will substantially diminish the scope of other legislative entries…”

Moreover, the majority decision overruled the Supreme Court’s decision in the Synthetics (7J) case. Justice Nagarathna, in her dissenting opinion, said, “The subject ‘intoxicating liquors’ falls exclusively within the domain of the state legislatures, which also have the obligation to prevent ‘industrial alcohol’ from being converted into ‘intoxicating liquors’ as an abuse. Therefore, they must pass legislation or take state action in this regard, considering Article 47 of the Constitution of India.” She added, “The expression ‘intoxicating liquor’ in Entry 8 has acquired a legislative and judicial meaning over the decades.” Justice Nagarathna also held, “The judgment in Synthetics and Chemicals (7J) need not be overruled in relation to Section 18G of the IDRA and it continues to be good law in the context of what is comprised in the expression ‘industrial alcohol’ and ‘intoxicating liquors’ except what has been clarified…in Entry 8 – List II.”