SC Grants States Authority to Regulate Industrial Alcohol

SC Grants States Authority to Regulate Industrial Alcohol

The Supreme Court's nine-judge Constitution bench recently ruled 8-1 that states can regulate industrial alcohol, overturning the 1990 Synthetics & Chemicals Ltd. case which favored central control. The majority opinion expands the definition of "intoxicating liquor" to include industrial alcohol, thus granting states authority to tax and regulate it. The ruling aims to enhance state autonomy and address public health concerns related to alcohol misuse.

Constitution Bench Function
A Constitution Bench, formed for matters of significant constitutional importance, comprises five or more judges. It resolves major legal issues arising from conflicting judgments and cases that involve substantial constitutional questions, as per Article 145(3) of the Constitution.

Understanding Industrial Alcohol
Industrial alcohol is denatured ethanol mixed with chemicals like benzene, making it unsuitable for human consumption. Used in pharmaceuticals, cosmetics, and cleaning products, it sometimes contributes to the production of illicit liquor. The Court’s ruling allows states to regulate industrial alcohol to curb misuse and generate revenue.

Court’s Ruling on Industrial Alcohol
The Court clarified that the term "intoxicating liquor" includes all forms of alcohol with harmful effects, not just alcoholic beverages. This broadens the scope to include industrial alcohol, which can pose health risks if misused. The ruling empowers states to regulate and tax industrial alcohol, overruling previous judgments that restricted state powers.

State vs. Centre: Arguments on Regulation
The Centre argued that industrial alcohol falls under the Union List, citing its importance to industries and public interest. It contended that central regulation via the Industries (Development and Regulation) Act, 1951 should govern alcohol production. Conversely, states sought control under the State List, citing the need for taxation and regulation to address public health issues and combat illicit alcohol production.

 Impact of the Ruling
This decision strengthens states’ authority over industrial alcohol, allowing for local taxation and stricter regulation. It provides financial benefits to states, especially post-GST, by enabling them to impose levies on industrial alcohol, a crucial source of revenue. The ruling also addresses the need for better control over the misuse of industrial alcohol and supports states in managing local public health.

Related Cases and Precedents
The 1989 Synthetics & Chemicals Ltd. case limited states' regulatory powers to potable alcohol, a stance now overturned. The earlier Ch Tika Ramji v. State of UP case in 1956 set a precedent by affirming states' rights to legislate on industries, even in the presence of central laws.

Conclusion
The Supreme Court’s recent judgment redefines the scope of state powers over industrial alcohol, allowing for stricter regulation and taxation. This ruling boosts states' fiscal autonomy and ensures better control over public health risks posed by industrial alcohol misuse.

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