The Supreme Court of India revisited the legislative competence concerning the regulation of alcohol under the Constitution. The court examined whether the term "intoxicating liquor" under Entry 8 of List II (State List) includes industrial alcohol, which is primarily used for industrial purposes rather than human consumption. The court also explored the constitutional power of the Union to regulate industrial alcohol through the Industries (Development and Regulation) Act, 1951 (IDRA), under Entry 52 of List I (Union List).

The Court concluded that "intoxicating liquor" refers to alcohol meant for human consumption, leaving industrial alcohol primarily within the purview of the Union, reinforcing the demarcation between State and Union control over different kinds of alcohol.

The judgment settles that:

• "Intoxicating liquor" under Entry 8 of List II applies only to potable alcohol.
• Industrial alcohol falls under the Union's jurisdiction via Entry 52 of List I.
• States retain regulatory powers to ensure industrial alcohol is not diverted for human consumption, but their taxing powers are limited to potable alcohol.

Ratio Decidendi:

The court reaffirmed that the term "intoxicating liquor" is limited to alcohol fit for human consumption. For non-potable alcohol, the Union retains exclusive control, especially in light of the legislative intent and the IDRA's framework. The court held that while the States can regulate industrial alcohol to prevent misuse, they cannot levy excise duties on it.

1. Background (Paras 1-5):
The case revolves around the distinction between potable and industrial alcohol under the Constitution. The core question was whether the States, under Entry 8 of List II, can regulate and tax industrial alcohol.

2. Constitutional Framework (Paras 6-11):
The legislative distribution of powers is examined through relevant entries in the Seventh Schedule, including Entries 8, 24, and 33 of List II and Entry 52 of List I. The significance of the IDRA in defining the Union's power over industries like alcohol is discussed.

3. The Synthetics Case (Paras 12-19):
The court revisited Synthetics & Chemicals Ltd. v. State of UP (1990), where a seven-judge bench ruled that industrial alcohol does not fall under the State’s jurisdiction. This judgment had a profound influence on the legal interpretation of legislative competence over alcohol regulation.

4. Legislative Entries Interpretation (Paras 20-25):
The judgment clarifies the scope of Entry 8 (State List) and Entry 52 (Union List). It emphasizes that industrial alcohol is subject to Union control as a "product of fermentation industries" under the IDRA, reaffirming that States cannot impose taxes on it.

5. Court's Analysis (Paras 26-34):
The Court carefully analyzed the competing claims from the States and the Union regarding regulatory and fiscal powers over alcohol. It upheld the Union's exclusive jurisdiction over industrial alcohol, reaffirming the limitations on States under Entry 8.

6. Conclusion (Paras 35-40):
The Court ruled in favor of limiting the States’ powers to regulate and tax industrial alcohol, reinforcing the Union's authority under the IDRA.

Acts and Sections Discussed:

• Article 246 of the Constitution: Division of legislative powers between the Union and States.
• Entry 8, List II: Regulation of intoxicating liquors by States.
• Entry 52, List I: Union control over industries, including alcohol under the IDRA.
• Section 18G of the IDRA: Central Government’s power to regulate industrial alcohol.
• Entry 33, List III: Concurrent powers of the State and Union in trade and commerce.

Subjects:

Alcohol Regulation, Constitutional Law, Legislative Competence, Union vs. State Powers

Industrial Alcohol, Potable Alcohol, Legislative Powers, Constitutional Law, IDRA