SC overturns 1997 judgment which granted power to Centre for regulating industrial alcohol

The Supreme Court of India on Wednesday overturned a 1997 order of a seven-judge bench, which granted powers to the Centre for regulation of industrial alcohol, noting that states have power to do so along side other kinds of liquor and raw materials.

The case, first raised in a 1990 ruling, has seen conflicting interpretations, leading to this nine-judge bench's involvement.

The bench led by CJI DY Chandrachud, passed the order with a majority of 8-1, with Justice Nagarathna dissenting.


The CJI said that Entry 8 List II - includes both industrial and product of intoxicating liquor. The industrial alcohol under Entry 8 List II cannot be taken over by the Parliament under Entry 52 List I. "State's power cannot be taken away for making laws on intoxicating liquor."

While Entry 8 in the State List under the 7th Schedule of the Constitution gives the states the power to legislate on the manufacture, possession, transport, purchase and sale of "intoxicating liquors", Entry 52 of the Union List and Entry 33 of the Concurrent List mention industries whose control was "declared by Parliament by law to be expedient in public interest".

Industrial alcohol is not meant for human consumption.

The CJI also made it clear that industrial liquor can be regulated under the term 'intoxicating liquor', whose meaning as per decision in BN Balsara, has been expanded beyond the alcoholic beverages.

"The term 'intoxicating liquor' includes the production, manufacture and distribution of liquor, an alcohol which doesn't traditionally cause intoxication will also be considered as intoxicating liquor," he said adding that the common thread between alcohol, opium and drugs is that they obnoxious substances and can be used as raw material too.

Meanwhile, Justice Nagarathna in her 'separate' judgment noted that there is lack of competence for the state legislature to regulate industrial alcohol.

In Synthetics & Chemicals Ltd. v State of Uttar Pradesh (1990) the Supreme Court had held that “intoxicating liquors” only referred to potable (drinkable) alcohol, and that industrial alcohol (also called rectified or denatured spirit) was outside of the scope of a state government’s powers. Interpreting Entry 33 of the Concurrent List, the Court said that Parliament can, by declaration, permit the Union government to “cover the field” of industrial alcohol regulation.

While both Parliament and state legislatures can enact laws on the subjects mentioned in the Concurrent List, a central law will have primacy over the state law.

In 1990, the seven-judge bench observed through the Industries (Development and Regulation) Act, 1951, the Centre had "evinced a clear intention to occupy" the legislative competence on the subject and, therefore, Entry 33 could not empower a state government.