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Nine-judge bench hears if states can regulate industrial alcohol

By, New Delhi
Apr 03, 2024 06:00 AM IST

A nine-judge constitution bench on Tuesday began hearing a batch of appeals on whether states have the legislative power to regulate sale and manufacture of industrial alcohol

A nine-judge constitution bench led by Chief Justice of India Dhananjaya Y Chandrachud on Tuesday began hearing a batch of appeals on whether states have the legislative power to regulate sale and manufacture of industrial alcohol after a seven-judge constitution bench held against them in 1990.

Opposing the state’s power to impose fees, the distilleries are also before the top court. (HT Archive)
Opposing the state’s power to impose fees, the distilleries are also before the top court. (HT Archive)

The bench, also comprising justices Hrishikesh Roy, AS Oka, BV Nagarathna, JB Pardiwala, Manoj Misra, Ujjal Bhuyan, Satish Chandra Sharma and Augustine George Masih, heard arguments of Uttar Pradesh, which is the lead petitioner in a batch of 30 appeals being heard by the nine-judge bench.

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Senior advocate Dinesh Dwivedi, appearing for the Uttar Pradesh government along with advocate Samar Vijay Singh, began arguments by highlighting the errors in the 1990 decision of Synthetics & Chemicals Ltd vs State of UP that took away the state’s power in relation to industrial alcohol even under Entry 33 of the Concurrent List. This entry provides for trade and commerce in production, supply and distribution of certain industrial products.

The 1990 judgment held that “denatured spirit” is industrial alcohol and its regulation will fall outside the legislative jurisdiction of the states to regulate sale of “intoxicating liquor” under Entry 8 of List II of the Seventh Schedule to the Constitution, he said.

The issue to be considered by the bench falls broadly within the scope whether states have legislative jurisdiction to deal with and regulate industrial alcohol, Dwivedi said. “Excise, liquor and spirit have always been part of state jurisdiction, including industrial alcohol, and the Centre did not have any jurisdiction in this regard,” the lawyer said.

To this extent, he said that the 1990 judgment was wrongly decided. His arguments will continue on Wednesday. The matter was referred to the nine-judge bench in December 2010 after a five-judge bench doubted the correctness of the 1990 judgment.

In the appeal argued by Dwivedi, the state had challenged a decision of the Allahabad high court of 2004, which directed it to refund all fees collected under “industrial alcohol” from distillery units along with a 10% annual interest payable to the business units.

Opposing the state’s power to impose fees, the distilleries are also before the top court. They have argued that the subject matter of regulating industrial alcohol falls exclusively within the domain of the Centre under Section 18G of the Industries (Development and Regulation) Act, 1951. The Centre is yet to file an affidavit in these proceedings and will be led by attorney general R Venkataramani.

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