States can't regulate industrial alcohol: Justice BV Nagarathna in dissenting judgment

The object of ensuring uniform development of certain industries would be defeated if both State and Union governments are allowed to regulate them, Supreme Court judge Justice BV Nagarathna said in her dissenting judgment on Wednesday in the case concerning industrial alcohol. [State of Uttar Pradesh and ors v Lalta Prasad Vaish].Justice Nagarathna held that States are not empowered to legislate on industrial alcohol by resorting to Entry 8 of List II (the State List) of the Constitution, and only the Union government can do the same under Entry 52 of the Union list. .The question before the nine-judge Bench was whether States could regulate industrial alcohol/denatured spirits by way of Entry 8 of State list of the Constitution, which confers powers on the State to deal with intoxicating liquors.On the other hand, Entry 52 of the Union List empowers the Central government to regulate those industries that have been declared by Parliament to be of public interest.Justice Nagarathna noted that industrial alcohol falls under item 26 (fermentation industries) of the First Schedule of the Industries (Development and Regulation) Act (IDRA), and held that it cannot be allowed to be legislated upon by States.The Industries (Development and Regulation) Act was enacted by the parliament pursuant to the powers under power under Article 246 read with Entry 52 of Union List.Further, denatured alcohol belongs to the family of “industrial alcohol” and therefore, Section 18G of the IDRA has a bearing on the said product, the judge said.Section 18G grants the Central government the power to regulate the supply and distribution “of any article or class of articles relatable to a scheduled industry” for securing equitable distribution and availability at fair prices.Justice Nagarathna held that Section 18G occupies the field under Entry 33(a) of list III and, therefore, only Parliament is competent to legislate on all articles or class of articles related to a scheduled industry i.e. fermentation industries.Justice Nagarathna held the following in her dissenting judgment:-The whole object of taking control of such industries by the Union for ensuring uniformity in their development and for ensuring the object and purpose of the IDRA would defeated. This would result in a haphazard development of such scheduled industries in the country ... Such a state of affairs would not be conducive to the economy ...-The interpretation of the constitutional Entries and the provisions of the Constitution must be so made bearing in mind the intentions of the framers of the Constitution and the nature and structure of the Indian economy and the need for a uniform development throughout the country of certain industries which have been taken control of by the Union. -State legislatures only have legislative competence over what is “intoxicating liquors” as a beverage ... So long as an industry is a scheduled industry under the IDRA and Section 18G of the said Act remains on the statute book, the State Legislatures are denuded of their powers to pass a legislation or to take any (regulatory) action.-Any interference with the said legal position would have a cascading effect on other scheduled industries. The critical importance of scheduled industries in the Indian economy must not be lost sight of..However, the majority of eight judges held that 'industrial alcohol' can be regulated by State governments.The majority ruled that the meaning of intoxicating liquor under Entry 8 of the State List is beyond the narrow definition of alcoholic beverages or potable alcohol and includes all kinds of alcohol which can adversely affect public health.Hence, 'industrial alcohol' comes within the meaning of 'intoxicating liquor' under Entry 8 of List II and can be regulated by States.The majority comprised Chief Justice of India (CJI) DY Chandrachud with Justices Hrishikesh Roy, Abhay S Oka, JB Pardiwala, Manoj Misra, Ujjal Bhuyan, Satish Chandra Sharma and Augustine George Masih.The case came to be referred to a nine-judge Constitution Bench on December 8, 2010.This was after conflicting decisions on the issue by earlier Benches.In October 2007, the Supreme Court in State of UP v Lalta Prasad Vaish noted that the 1990 decision in the Synthetics & Chemicals Ltd. v. State of Uttar Pradesh had ignored a 1956 five-judge Bench decision in Ch. Tika Ramji v State of Uttar Pradesh.The majority judges today overruled the Synthetics & Chemicals judgment.Attorney General R Venkataramani, Solicitor General Tushar Mehta with advocate Kanu Agrawal appeared for the Union government.Senior Advocates Dinesh Dwivedi for the State of Uttar Pradesh and Senior Advocates Arvind Datar, V Giri, Jaideep Gupta, Balbir Singh and Shadan Farasat argued in favour of States' power to regulate industrial alcohol..Justice Nagarathna's reasoning today appeared to mirror her recent dissent in another nine-judge Constitution Bench judgment, delivered on July 26, regarding States' taxation powers on mining and mineral-use activities.In that case, she had held that only the Union government can levy taxes on minerals and mineral-bearing lands, and agreed with the Centre's stance that allowing States to do so would lead to double, non-uniform taxation that would go against mineral development in the country..[Read Judgment]