A Constitution Bench of nine judges, in an 8:1 majority judgment, upheld the States’ right to regulate industrial alcohol.
Background
- The Supreme court’s majority judgment overturned its 1990 seven-Judge judgment in Synthetics & Chemicals Ltd vs State of Uttar Pradesh, which held that States cannot tax industrial alcohol.
- Several state governments had challenged this judgment. The matter was referred to the nine-judge bench in 2010.
- The Centre had traced its power to Entry 52 of the Union List, which said “industries, the control of which by the Union is declared by Parliament by law to be expedient in public interest”.
- The crux of the case was the tussle between the Union and States over power to levy tax, manufacture and produce alcohol.
- The Centre had claimed that industrial alcohol was an ‘industry’ controlled by the Union government in public interest under a parliamentary law, Industries (Development and Regulation) Act of 1951.
- Such an industry was covered by Entry 52 of the Union List in the Seventh Schedule of the Constitution.
Supreme Court’s recent judgement
- The apex court held that the phrase ‘intoxicating liquor’ in Entry 8 of the State List in the Seventh Schedule of the Constitution would include industrial alcohol within its ambit , and States have the power to regulate and tax it..
- Entry 8 gives States the power to regulate the production, manufacture, possession, transport, purchase and sale of intoxicating liquor.
- The Supreme Court held that Entry 8 was both an industry-based as well as a product-based entry in the State List. It covered the regulation of everything from the raw materials to the consumption of ‘intoxicating liquor’.
