SC ruling on alcohol regulation

Context : The recent Supreme Court ruling on the term ‘intoxicating liquors’ in the State List has significant implications for the federal structure of India.

1. Federal Principle and Distribution of Powers:
   • The Supreme Court upheld the federal structure of India by interpreting the term ‘intoxicating liquors’ in the State List to include both potable and industrial alcohol.
   • This ruling strengthens the federal principle outlined in the Seventh Schedule of the Indian Constitution by defining clear boundaries between Centre and State legislative powers.

2. Scope of Entry 8 in the State List:
   • Entry 8 in the State List under the Seventh Schedule includes production, sale, and distribution of alcohol products, covering a wide range such as rectified spirit, extra neutral alcohol, and denatured alcohol.
   • The Supreme Court’s interpretation clarifies that ‘intoxicating liquors’ is not limited to alcoholic beverages for human consumption but also includes industrial alcohol.

3. Conflict with Central Legislation (IDRA, 1951):
   • The Industries (Development and Regulation) Act (IDRA), 1951 lists 'fermentation industries' under the Union’s control.
   • The Court ruled that the IDRA does not override State powers over intoxicating liquors (including industrial alcohol), upholding States' regulatory role over these sectors.

4. Majority Ruling and Federal Balance:
   • An eight-judge majority, led by Chief Justice of India, D.Y. Chandrachud, ruled that giving full control of intoxicating liquor to the Centre would disrupt the federal balance and tilt powers excessively towards the Union.
   • This verdict affirms that Parliament lacks legislative competence to take over the entire industry of intoxicating liquor from States.

5. Second Landmark Verdict in Recent Months:
   • This verdict aligns with the July 2023 Supreme Court ruling that upheld States’ rights to tax mineral rights and mineral-bearing lands, preserving their legislative powers against Parliament’s intervention.

6. Dissenting Opinion – Justice B.V. Nagarathna:
   • Justice B.V. Nagarathna provided a dissenting view, stating that ‘intoxicating liquors’ in the State List should only cover potable alcohol and not industrial alcohol.
   • She argued that industrial alcohol is essential for economic sectors like the chemicals industry and fuel blending and should remain under Central regulation as per IDRA.

7. Constitutional Assembly Intent:
   • Justice Nagarathna emphasized that the Constitution Assembly intended ‘intoxicating liquors’ to mean only potable alcohol, and expanding this term could unsettle the constitutional framework.
   • Her caution against a dynamic interpretation of the Constitution highlights the need to respect the original constitutional design.