​Beyond intoxication: On alcohol regulation, judicial verdict

In holding that the term ‘intoxicating liquors’ in the State List includes alcohol used for industrial purposes, the Supreme Court of India has given a boost to the federal principle behind the distribution of powers between the Centre and the States. A nine-judge Bench has clarified the scope of Entry 8 in the State List under the Seventh Schedule in the Constitution to cover both ‘potable alcohol’ and alcohol that can be used to the detriment of public health. It takes in its fold the entire gamut of activities involving the production, sale and distribution of alcohol products, covering rectified spirit, extra neutral alcohol and denatured alcohol. In other words, the entry is not limited to the popular understanding of intoxicating liquor as alcoholic beverages consumed by people. The bone of contention was whether a central law, the Industries (Development and Regulation) Act (IDRA), 1951, which listed ‘fermentation industries’ as a scheduled subject on which the Union government could exercise control, had the effect of removing ‘industrial alcohol’ from the regulatory purview of State governments. The majority ruling of eight judges has the effect of excluding the industry of ‘intoxicating liquor’, as interpreted in the judgment, from the purview of the IDRA. Parliament, according to the verdict, lacks legislative competence to take control of the entire industry of intoxicating liquor. In his opinion on behalf of the majority, the Chief Justice of India, D.Y. Chandrachud, has noted that any other interpretation would upset the federal balance in the distribution of legislative powers and tilt it towards the Union.

This is the second major verdict by the Supreme Court in recent months that has upheld federal principles. In July, a nine-judge Bench ruled that States can tax mineral rights and mineral-bearing lands, a decision that preserved their legislative domain from interference by Parliament. As in that case involving mineral rights, Justice B.V. Nagarathna has authored a dissenting verdict in the ‘intoxicating liquor’ case too. The Constitution Assembly, she says, was clear that the term only meant potable alcohol and there was no intention on its part to include non-potable or industrial alcohol. In her view, Parliament occupied the field of ‘fermentation industries’, but excluded alcohol for human consumption. To that extent, the States are denuded of their power to regulate industrial alcohol. Justice Nagarathna’s dissent underscores the importance of industrial alcohol to the country’s economy, both as a key feedstock in the chemicals industry and liquid fuel to be blended with petrol. In the light of this understanding, the Centre has made ‘fermentation industries’, excluding potable alcohol, a scheduled industry under the IDRA. Her observation that the constitutional edifice should not be dislodged while trying to dynamically interpret the Constitution strikes a cautionary note.