Holding

Intoxicating liquor in Entry 8 of List II includes alcohol that could be used noxiously to the detriment of public health, such as rectified spirit, ENA, and denatured spirit, but not final products containing alcohol; Parliament does not have legislative competence to take control of the industry of intoxicating liquor under Entry 52 of List I; Item 26 of the First Schedule to the IDRA must be read as excluding the industry of intoxicating liquor; the judgment in Synthetics (7J) is overruled.

Summary

The Supreme Court of India, in a 9-judge bench reference, addressed the scope of Entry 8 of List II of the Seventh Schedule (intoxicating liquors) and its interplay with Entry 52 of List I (industries controlled by the Union). The case arose from a challenge by the State of Uttar Pradesh against a High Court decision that struck down a vend fee on denatured spirit, relying on the earlier 7-judge bench decision in Synthetics and Chemicals Ltd. v. State of UP (Synthetics (7J)), which had limited 'intoxicating liquor' to potable alcohol. The majority, led by Chief Justice Chandrachud, overruled Synthetics (7J), holding that Entry 8 is both an industry-based and product-based entry and includes alcohol that can be noxiously used to the detriment of public health, such as rectified spirit, ENA, and denatured spirit, but not final products like hand sanitizer. The Court further held that Parliament cannot take control of the intoxicating liquor industry under Entry 52 of List I, and that Item 26 of the First Schedule to the Industries (Development and Regulation) Act, 1951 (IDRA) must be read as excluding the industry of intoxicating liquor. The issue of whether Section 18G of the IDRA occupies the field under Entry 33 of List III was not adjudicated. Justice Nagarathna dissented, arguing that Synthetics (7J) was correctly decided and that industrial alcohol remains outside Entry 8. The reference was answered accordingly.

Issues considered

Whether Entry 8 of List II of the Seventh Schedule is an industry-based entry or a product-based entry
Whether Parliament can occupy the field of the entire industry merely by issuing a declaration under Entry 52 of List I
Whether Parliament has the legislative competence to enact a law taking control of the industry of intoxicating liquor covered by Entry 8 of List II in exercise of the power under Article 246 read with Entry 52 of List I
Whether the expression 'intoxicating liquor' in Entry 8 of List II includes alcohol other than potable alcohol
Whether the expression 'intoxicating liquor' in Entry 8 has acquired a legislative meaning on an application of the test laid down in Gannon Dunkerley
Whether the judgment in Synthetics (7J) is correct and should be overruled
Whether Item 26 of the First Schedule to the IDRA must be read as excluding the industry of intoxicating liquor
Whether the correctness of the judgment in Tika Ramji on the interpretation of the word 'industry' falls for determination
Whether a notified order under Section 18G of the IDRA is necessary for Parliament to occupy the field under Entry 33 of List III

Legislation cited

Bombay Prohibition Act, 1949s. Section 2(22), s. Section 2(24), s. Section 58-A
Constitution of Indias. Article 246, s. Article 254, s. Article 47, s. Entry 24 of List II, s. Entry 26 of List II, s. Entry 27 of List II, s. Entry 33 of List III, s. Entry 51 of List II, s. Entry 52 of List I, s. Entry 6 of List II, s. Entry 84 of List I, s. Entry 8 of List II
Government of India Act, 1919s. Entry 16 of Provincial List
Government of India Act, 1935s. Entry 31 of List II, s. Entry 40 of List II, s. Entry 45 of List I
Industries (Development and Regulation) Act, 1951s. First Schedule Item 26, s. Section 18G, s. Section 2
U.P. Excise Act, 1910s. Section 24-A, s. Section 3(11), s. Section 3(13)

Headnote

Issue for Consideration The issues which arise for adjudication in this reference pertain to the scope of the power of the State Legislatures under Entry 8 and phrase “intoxicating liquor”. The question is whether “intoxicating liquor” in Entry 8 only includes potable alcohol, such as alcoholic beverages or also includes alcohol which is used in the production of other products; whether Entry 52 of List I of the Seventh Schedule

Subjects

Entry 8 of List IIIntoxicating liquorIndustrial alcoholPotable alcoholNon-potable alcoholEntry 52 of List IEntry 24 of List IIArticle 246Federal balanceHarmonious interpretationSection 18G of IDRAEntry 33 of List IIISynthetics (7J)Item 26 of First ScheduleFermentation IndustriesPublic healthDoctrine of occupied fieldRepugnancy

Judgment

[2024] 10 S.C.R. 1931 : 2024 INSC 812

State of U.P. & Ors.
v.
M/s Lalta Prasad Vaish and sons
(Civil Appeal No. 151 of 2007)
23 October 2024
[Dr Dhananjaya Y Chandrachud,* CJI, Hrishikesh Roy,
Abhay S Oka, B.V. Nagarathna,* J B Pardiwala,
Manoj Misra, Ujjal Bhuyan, Satish Chandra Sharma,
Augustine George Masih, JJ.]

Issue for Consideration
The issues which arise for adjudication in this reference pertain
to the scope of the power of the State Legislatures under Entry 8
and the meaning of the phrase “intoxicating liquor”. The question
is whether “intoxicating liquor” in Entry 8 only includes potable
alcohol, such as alcoholic beverages or also includes alcohol which
is used in the production of other products; whether Entry 52 of
List I of the Seventh Schedule to the Constitution overrides Entry 8
of List II; whether the expression ‘intoxicating liquors’ in Entry 8 of
List II of the Seventh Schedule to the Constitution includes alcohol
other than potable alcohol; and whether a notified order under
Section 18G of the Industries (Development and Regulation) Act
is necessary for Parliament to occupy the field under Entry 33 of
List III of the Seventh Schedule to the Constitution.

Headnotes†
Constitution of India – Entry 8 of List II of the Seventh
Schedule – Whether Entry 8 of List II of the Seventh
Schedule to the Constitution is an industry-based entry or a
product-based entry:
Held: [Per Dr Dhananjaya Y Chandrachud, CJI, for himself
and for Hrishikesh Roy, Abhay S Oka, J B Pardiwala, Manoj
Misra, Ujjal Bhuyan, Satish Chandra Sharma, Augustine George
Masih, JJ.] Entry 8 of List II of the Seventh Schedule to the
Constitution is both an industry-based entry and a product-based
entry – The words that follow the expression “that is to say” in the

* Author
1932 [2024] 10 S.C.R.

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Entry are not exhaustive of its contents – It includes the regulation of
everything from the raw materials to the consumption of ‘intoxicating
liquor”. [Para 140(a)] – [Per B.V. Nagarathna, J. (dissenting)]
Entry 8-List II deals with “intoxicating liquors” – The misuse,
diversion or abuse of “industrial alcohol” as “intoxicating liquors” can
also be controlled and prevented under Entry 8-List II by the State
Legislatures having regard to Article 47 of the Constitution – It is
also made clear that the Industries (Development and Regulation)
Act 1951 which has been enacted by the Parliament by virtue of
Entry 52-List I has taken control of “Fermentation Industries” as a
scheduled industry – Such “Fermentation Industries” would exclude
“intoxicating liquors”. [Para 33(a)]

Constitution of India – Entry 52 of List I, Entry 24 of List II –
Whether Parliament can occupy the field of the entire industry
merely by issuing a declaration under Entry 52 of List I:
Held: [Per Dr Dhananjaya Y Chandrachud, CJI, for himself
and for Hrishikesh Roy, Abhay S Oka, J B Pardiwala, Manoj
Misra, Ujjal Bhuyan, Satish Chandra Sharma, Augustine
George Masih, JJ.] Parliament cannot occupy the field of the
entire industry merely by issuing a declaration under Entry 52
of List I – The State Legislature’s competence under Entry 24 of
List II is denuded only to the extent of the field covered by the law
of Parliament under Entry 52 of List I. [Para 140(b)] – [Per B.V.
Nagarathna, J. (dissenting)] Parliament can occupy the field of
the entire industry by merely issuing a declaration under Entry
52-List I and the State Legislature’s competence under Entry 24-
List II is denuded to the field of the entire industry and specifically
to the extent of the field covered by the law of Parliament under
Entry 52-List I. [Para 33(b)]

Constitution of India – Whether Parliament have the legislative
competence to enact a law taking control of the industry of
intoxicating liquor covered by Entry 8 of List II in exercise of
the power under Article 246 read with Entry 52 of List I:
Held: [Per Dr Dhananjaya Y Chandrachud, CJI, for himself
and for Hrishikesh Roy, Abhay S Oka, J B Pardiwala, Manoj
Misra, Ujjal Bhuyan, Satish Chandra Sharma, Augustine George
Masih, JJ.] Parliament does not have the legislative competence
[2024] 10 S.C.R. 1933

State of U.P. & Ors. v.
M/s Lalta Prasad Vaish and sons

to enact a law taking control of the industry of intoxicating liquor
covered by Entry 8 of List II in exercise of the power under
Article 246 read with Entry 52 of List I. [Para 140(c)] – [Per B.V.
Nagarathna, J. (concurring)]. [Para 33(c)]

Constitution of India – Meaning of the expression ‘intoxicating
liquor’ by judgments of the Bombay High Court in FN Balsara v.
State of Bombay, this Court in FN Balsara and Southern
Pharmaceuticals:
Held: [Per Dr Dhananjaya Y Chandrachud, CJI, for himself and
for Hrishikesh Roy, Abhay S Oka, J B Pardiwala, Manoj Misra,
Ujjal Bhuyan, Satish Chandra Sharma, Augustine George Masih,
JJ.] The judgments of the Bombay High Court in FN Balsara v. State
of Bombay, this Court in FN Balsara and Southern Pharmaceuticals
did not limit the meaning of the expression ‘intoxicating liquor’ to
its popular meaning, that is, alcoholic beverages that produce
intoxication – All the three judgments interpreted the expression
to cover alcohol that could be noxiously used to the detriment of
health. [Para 140(d)] – [Per B.V. Nagarathna, J. (dissenting)]
The context of the controversy must be borne in mind in the said
cases – The aforesaid decisions in substance limited the meaning
of the expression “intoxicating liquors” to its popular meaning i.e.
“alcoholic beverages” that produce intoxication – Therefore, in the
context of prohibition of “intoxicating liquor” as a beverage, there
could not have been prohibition of production of alcohol used for
medicinal and toilet preparation as well as “industrial alcohol” or
non-potable alcohol. [Para 33(d)]

Constitution of India – Expression ‘intoxicating liquor’ in
Entry 8 – Legislative meaning and judicial meaning:
Held: [Per Dr Dhananjaya Y Chandrachud, CJI, for himself
and for Hrishikesh Roy, Abhay S Oka, J B Pardiwala, Manoj
Misra, Ujjal Bhuyan, Satish Chandra Sharma, Augustine George
Masih, JJ.] The expression ‘intoxicating liquor’ in Entry 8 has not
acquired a legislative meaning on an application of the test laid
down in Ganon Dunkerley. [Para 140(e)] – [Per B.V. Nagarathna, J.
(dissenting)] The expression “intoxicating liquor” in Entry 8 has
acquired a legislative and judicial meaning over the decades as
discussed. [Para 33(e)]
1934 [2024] 10 S.C.R.

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Constitution of India – Evolution of Legislative Entries on
Alcohol – Use of expression “intoxicating liquor”:
Held: [Per Dr Dhananjaya Y Chandrachud, CJI, for himself
and for Hrishikesh Roy, Abhay S Oka, J B Pardiwala, Manoj
Misra, Ujjal Bhuyan, Satish Chandra Sharma, Augustine George
Masih, JJ.] The study of the evolution of the legislative entries
on alcohol indicates that the use of the expressions “intoxicating
liquor” and “alcoholic liquor for human consumption” in the Seventh
Schedule was a matter well-thought of – It also indicates that the
members of the Constituent Assembly were aware of use of the
variants of alcohol as a raw material in the production of multiple
products. [Para 140(f)] – [Per B.V. Nagarathna, J. (dissenting)]
The members of the Constituent Assembly were clear in what
they envisaged within the scope and ambit of the expression
“intoxicating liquors” in Entry 8-List II – This is also evident from
Item 26 of the First Schedule of the IDRA – “Intoxicating liquors” is
only a segment of the “Fermentation Industries”, namely, potable
alcohol – There was no intention on the part of the members of the
Constituent Assembly to read within the expression “intoxicating
liquors” non-potable or “industrial alcohol” – Further, in order to
have a consistency between what was envisaged under Entry 84-
List I and Entry 51-List II in the context of alcoholic liquors for
human consumption, the taxing Entry in List II which is within the
legislative competence of the States follows the regulatory Entry
in Entry 8-List II – Therefore, the use of the expression “industrial
alcohol” or non-potable alcohol in Synthetics and Chemicals (7J)
was only to crystallise all variants of alcohol which were non-potable
and to distinguish the same from potable alcohol meant only for
human consumption as a beverage. [Para 33(f)]

Constitution of India – Entry 8 of List II – Scope and ambit:
Held: [Per Dr Dhananjaya Y Chandrachud, CJI, for himself
and for Hrishikesh Roy, Abhay S Oka, J B Pardiwala, Manoj
Misra, Ujjal Bhuyan, Satish Chandra Sharma, Augustine
George Masih, JJ.] Entry 8 of List II is based on public interest – It
seeks to enhance the scope of the entry beyond potable alcohol –
This is inferable from the use of the phrase ‘intoxicating’ and
other accompanying words in the Entry – Alcohol is inherently a
noxious substance that is prone to misuse affecting public health
at large – Entry 8 covers alcohol that could be used noxiously
[2024] 10 S.C.R. 1935

State of U.P. & Ors. v.
M/s Lalta Prasad Vaish and sons

to the detriment of public health – This includes alcohol such as
rectified spirit, ENA and denatured spirit which are used as raw
materials in the production of potable alcohol and other products –
However, it does not include the final product (such as a hand
sanitiser) that contains alcohol since such an interpretation will
substantially diminish the scope of multiple other legislative
entries. [Para 140(g)] – [Per B.V. Nagarathna, J. (dissenting)]
The entire controversy cannot be viewed from the point of view
of alcohol being used as a raw material and final product such
as hand sanitizer containing alcohol – The potential misuse of
alcohol cannot be the basis for interpreting an Entry such as
Entry 8-List II – Ultimately, the “Fermentation Industries” have
to be borne in mind which takes within its canvas only non-
potable /“industrial alcohol” – The aspect of public health having
a corelation to Entry 8-List II dealing with “intoxicating liquor” and
the misuse of alcohol cannot be a guide while interpreting the
content of the said Entry and therefore, its scope and ambit being
amplified beyond what it really envisages as a field of legislation
for the States to legislate upon. [Para 33(g)]

Constitution of India – The judgment in Synthetics (7J) –
Overruled:
Held: [Per Dr Dhananjaya Y Chandrachud, CJI, for himself
and for Hrishikesh Roy, Abhay S Oka, J B Pardiwala, Manoj
Misra, Ujjal Bhuyan, Satish Chandra Sharma, Augustine
George Masih, JJ.] The judgment in Synthetics (7J) is overruled
in terms of this judgment. [Para 140(h)] – [Per B.V. Nagarathna, J.
(dissenting)] The judgment in Synthetics and Chemicals (7J)
need not be overruled in relation to Section 18G of the IDRA and
it continues to be good law in the context of what is comprised in
the expression “industrial alcohol” and “intoxicating liquors” except
what has been clarified above in Entry 8-List II.[Para 33(h)]

Constitution of India – Entry 8 of List II – Industries (Development
and Regulation) Act 1951 – Item 26:
Held: [Per Dr Dhananjaya Y Chandrachud, CJI, for himself
and for Hrishikesh Roy, Abhay S Oka, J B Pardiwala, Manoj
Misra, Ujjal Bhuyan, Satish Chandra Sharma, Augustine
George Masih, JJ.] Item 26 of the First Schedule to the IDRA
must be read as excluding the industry “intoxicating liquor”.
[Para 140(i)] – [Per B.V. Nagarathna, J. (dissenting)] Item 26 of
1936 [2024] 10 S.C.R.

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the First Schedule of the IDRA must be read excluding only what
is contained in the expression “intoxicating liquors” as interpreted
above in Entry 8-List II. [Para 33(i)]

Constitution of India – Correctness of the judgment in Tika
Ramji on the interpretation of word ‘industry’:
Held: [Per Dr Dhananjaya Y Chandrachud, CJI, for himself
and for Hrishikesh Roy, Abhay S Oka, J B Pardiwala, Manoj
Misra, Ujjal Bhuyan, Satish Chandra Sharma, Augustine
George Masih, JJ.] The correctness of the judgment in Tika
Ramji on the interpretation of word ‘industry’ as it occurs in the
Legislative entries does not fall for determination in this reference.
[Para 140(j)] – [Per B.V. Nagarathna, J.] Tika Ramji is held to be
not good law insofar as the requirement of issuance of a notified
order as a condition precedent for the field to be occupied, has
been mandated therein.[Para 33(j)]

Constitution of India – Entry 8 of List II and Entry 33(a) of List III –
Industries (Development and Regulation) Act 1951 – s.18G:
Held: [Per Dr Dhananjaya Y Chandrachud, CJI, for himself
and for Hrishikesh Roy, Abhay S Oka, J B Pardiwala, Manoj
Misra, Ujjal Bhuyan, Satish Chandra Sharma, Augustine George
Masih, JJ.] The issue of whether Section 18G of the IDRA covers
the field under Entry 33(a) of List III does not arise for adjudication
in view of the finding that denatured alcohol is covered by Entry 8
of List II”. [Para 140(k)] – [Per B.V. Nagarathna, J. (dissenting)]
Denatured alcohol belongs to the family of “industrial alcohol”
and therefore, Section 18G of the IDRA has a bearing on the
said product – Section 18G occupies the field under Entry 33(a)-
List III and, thereby, only Parliament is competent to legislate on
all articles or class of articles related to a scheduled industry i.e.
“Fermentation Industries”. [Para 33(k)]

Constitution of India – Article 246 – Federal balance of the
distribution of legislative powers between the Union and the
States:
Held: [Per Dr Dhananjaya Y Chandrachud, CJI, for himself
and for Hrishikesh Roy, Abhay S Oka, J B Pardiwala, Manoj
Misra, Ujjal Bhuyan, Satish Chandra Sharma, Augustine
George Masih, JJ.] The federal balance of the distribution of
[2024] 10 S.C.R. 1937

State of U.P. & Ors. v.
M/s Lalta Prasad Vaish and sons

legislative powers between the Union and the States rests on
the interpretation of the phrase “notwithstanding” in Clause (1) of
Article 246 and “subject to” in Clause (3) of Article 246 – It is more
than clear that the phrases provide predominance to Parliament
over State Legislatures – The federal balance lies not on the
recognition that the Constitution grants Parliament predominant
legislative power but on the identification of the scope of such
predominance – The scope of the non-obstante clause in Article
246(1) and the subjugation clause in Article 246(3) must not be
interpreted in isolation but along with the substantive provisions
of the clauses – Clause (1) of Article 246 grants Parliament the
“exclusive power” to enact laws with respect to matters in List I –
Similarly, Clause (3) of Article 246 grants the Legislature of States,
the “exclusive power” to enact laws with respect to matters in
List II – On a holistic interpretation of the provisions, it is clear
that the non-obstante clause in Article 246(1) and the subjugation
clause in Article 246(3) do not permit Parliament to enact laws with
respect to the entries in List II – Each of the legislative bodies are
sovereign and supreme within the sphere that is allocated to them
in the Seventh Schedule – It is crucial to note that Clause (1) of
Article 246 stipulates that the power of Parliament to make laws with
respect to entries in List I is ‘notwithstanding’ not just the power to
make laws with respect to matters in the Concurrent list but also
the power to make laws with respect to matters in the State List – A
combined reading of the non-obstante clause and the subjugation
clause along with the use of the phrase “exclusive power” means
only one thing, that when there is a conflict between the entries
in List I and List II, the power of Parliament supersedes. [Para 44]

Constitution of India – Legislative entries – Interpretation –
Overlap between two entries:
Held: [Per Dr Dhananjaya Y Chandrachud, CJI, for himself
and for Hrishikesh Roy, Abhay S Oka, J B Pardiwala, Manoj
Misra, Ujjal Bhuyan, Satish Chandra Sharma, Augustine
George Masih, JJ.] The legislative entries must be given a wide
meaning – All incidental and ancillary matters which can be fairly
and reasonably comprehended must be brought within them –
However, if there is an overlap between two entries the Court
must endeavour to interpret the entries harmoniously – While
interpreting the entries harmoniously, it must be ensured that no
entry is rendered redundant – This principle of construction applies
1938 [2024] 10 S.C.R.

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equally to entries within the same List and entries within different
lists – The principle of parliamentary supremacy must be applied
only when the attempted reconciliation by the above methods of
interpretation fails. [Para 51]

Constitution of India – Entry 8 of List II – Usage of phrase
“that is to say”:
Held: [Per Dr Dhananjaya Y Chandrachud, CJI, for himself
and for Hrishikesh Roy, Abhay S Oka, J B Pardiwala, Manoj
Misra, Ujjal Bhuyan, Satish Chandra Sharma, Augustine George
Masih, JJ.] The expression ‘that is to say’ in Entry 8 of List II
cannot be interpreted to circumscribe the scope of the entry – The
words that follow ‘that is to say’ are illustrative and explanatory
of the scope of the provision – The expression does not limit the
scope of the entry – Thus, the scope of Entry 8 of List II cannot
be limited to the ‘production, manufacture, possession, transport,
purchase and sale’ of Intoxicating Liquor. [Para 55]

Constitution of India – Entry 52 of List I – Whether an implied
limitation can be read into Entry 52 of List I in the absence of
the expression “to the extent to which”:
Held: [Per Dr Dhananjaya Y Chandrachud, CJI, for himself
and for Hrishikesh Roy, Abhay S Oka, J B Pardiwala, Manoj
Misra, Ujjal Bhuyan, Satish Chandra Sharma, Augustine George
Masih, JJ.] If an implied limitation is not read into the Entry,
Parliament by a simple declaration may take over the complete
industry and subject the power of the State Legislature to make any
provision with respect to that industry to the power of Parliament –
This interpretation diminishes the scope of competence of the
State Legislature under Entry 24 of List II – Such an interpretation
completely tilts the federal balance that entries 52 of List I and 24
of List II seek to maintain – The power of Parliament in Entry 52 of
List I is defined by the phrase ‘control’ – The Entry does not read
as “industries, declared by Parliament by law to be expedient in the
public interest” – The Entry states “Industries, the control of which
by the Union is declared by Parliament by law to be expedient in
the public interest” – The law enacted by Parliament must not be
an abstract declaration but must specify the extent of control that
is necessary to be taken in public interest – The State Legislature
will have the competence to legislate with respect to the field which
is not the subject matter of control – The legislative competence of
[2024] 10 S.C.R. 1939

State of U.P. & Ors. v.
M/s Lalta Prasad Vaish and sons

the State Legislature is only denuded to the extent of the ‘control’
by the Union declared by the law of Parliament to be expedient
in the public interest. [Para 65]

Constitution of India – Whether Parliament under Entry 52 of
List I takes over the industry of intoxicating liquor covered
by Entry 8 of List II:
Held: [Per Dr Dhananjaya Y Chandrachud, CJI, for himself
and for Hrishikesh Roy, Abhay S Oka, J B Pardiwala, Manoj
Misra, Ujjal Bhuyan, Satish Chandra Sharma, Augustine George
Masih, JJ.] No – Entry 52 of List I is a general entry dealing with
industry – Entry 8 of List II is a special entry dealing with one
particular industry – The consequence of interpreting Entry 52
to cover the industry of ‘intoxicating liquor’ is two-fold: first, it
would amount to deleting the words ‘production, manufacture’ in
Entry 8; and second, the State Legislature also loses its exclusive
competence to legislate upon the product of the industry, rendering
Entry 8 fully redundant – This is because the legislative competence
on products of industries covered by Entry 52 of List I is placed
in Entry 33 of List III – As a consequence, Parliament does not
have the legislative competence to enact a law taking control
of the industry of intoxicating liquor under Entry 52 of List I.
[Paras 71(e), 72]

Constitution of India – Entry 8 of List II – Intoxicating Liquor:
Held: [Per Dr Dhananjaya Y Chandrachud, CJI, for himself
and for Hrishikesh Roy, Abhay S Oka, J B Pardiwala, Manoj
Misra, Ujjal Bhuyan, Satish Chandra Sharma, Augustine George
Masih, JJ.] It is clear from the analysis of various judgments that
the meaning of the phrase ‘intoxicating liquor’ in Entry 8 of List II
has been expanded beyond the narrow definition of alcoholic
beverages that produce an ‘intoxicating effect’ upon consumption –
Liquids which contain alcohol and which can possibly be used
(or misused) as intoxicating liquor have been included within the
meaning of the phrase. [Para 82]

Words and Phrases – Intoxicating Liquor – Interpretation:
Held: [Per Dr Dhananjaya Y Chandrachud, CJI, for himself
and for Hrishikesh Roy, Abhay S Oka, J B Pardiwala, Manoj
Misra, Ujjal Bhuyan, Satish Chandra Sharma, Augustine
1940 [2024] 10 S.C.R.

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George Masih, JJ.] The expression ‘intoxicating liquor’ can
possibly be interpreted to mean the following: (a) Alcohol which
is used as a beverage for human consumption such as beer or
gin, that is, potable liquor; (b) If liquor means liquid, then Entry 8
of List II includes all liquids which contain alcohol; and (c) Alcohol
which is used as a raw material to prepare other products such as
pharmaceutical products and cosmetic drugs – This could include
denatured alcohol but also other types of alcohol that are used in
the production of products without denaturing it. [Para 107]

Words and Phrases – Alcoholic Liquor – Meaning:
Held: [Per Dr Dhananjaya Y Chandrachud, CJI, for himself
and for Hrishikesh Roy, Abhay S Oka, J B Pardiwala, Manoj
Misra, Ujjal Bhuyan, Satish Chandra Sharma, Augustine George
Masih, JJ.] ‘Alcoholic liquor’ defines the scope of the provision
based on the ingredient, that is, ‘alcohol’ – In contrast, ‘intoxicating
liquor’ defines the scope of the provision based on the effect, that
is, intoxication – Thus, even liquor which colloquially or traditionally
is not considered as alcoholic liquor may be covered by the
phrase ‘intoxicating liquor’ if it produces the effect of intoxication.
[Para 112(a)]

Words and Phrases – Intoxicate – Meaning:
Held: [Per Dr Dhananjaya Y Chandrachud, CJI, for himself
and for Hrishikesh Roy, Abhay S Oka, J B Pardiwala, Manoj
Misra, Ujjal Bhuyan, Satish Chandra Sharma, Augustine George
Masih, JJ.] “Intoxicate” means the ability of someone to lose
control of their behaviour – It could also mean poison – Thus, the
purpose of substituting the adjective which indicates the ingredient
(alcohol) with the impact (intoxication) seems to be enhance the
scope of the Entry to cover liquor which has an impact on health.
[Para 112(b)]

Constitution of India – Entry 8-List II and Art.47 – Industrial
alcohol – Intoxicating liquor:
Held: [Per B.V. Nagarathna, J.] Merely because “industrial alcohol”
or non-potable alcohol such as rectified spirit can be converted
into “intoxicating liquors” or alcohol fit for human consumption as
a beverage (potable alcohol), that would not empower the State
Legislature to tax or impose any levy on such “industrial alcohol” –
[2024] 10 S.C.R. 1941

State of U.P. & Ors. v.
M/s Lalta Prasad Vaish and sons

However, since the expression “intoxicating liquors” in Entry 8-List II
deals specifically with alcohol used as a beverage and meant for
human consumption, it would be within the scope and ambit of
the said Entry for the State Legislature to regulate any abuse or
conversion of “industrial alcohol” as a beverage, which is, in fact,
harmful when consumed – Therefore, having regard to Article 47 of
the Constitution, a State Legislature can even prohibit manufacture
of “intoxicating liquors” in a State as one of the objects of which
would be to negate the conversion or abuse of “industrial alcohol”
as alcohol fit for human consumption. [Para 11.2]

Constitution of India – Entry 8-List II – Intoxicating liquor –
Intoxicating effect – Direct and indirect human consumption:
Held: [Per B.V. Nagarathna, J.] What prima facie appears is
that the “intoxication” effect is a sine qua non for the legislative
competence of States on any liquors potentially coming within
the scope of Entry 8-List II – In the absence of an “intoxicating”
effect from liquors, a State Legislature cannot legislate on the
subject – However, what is required to be seen is the nature of
the product which leads to such an intoxicating effect upon human
consumption of the same – Here, the expression consumption
must be explained – It is not all kinds of human consumption,
direct or indirect, which is the determining factor – It is only direct
consumption i.e. as an ingestion by the act of drinking as a beverage
or a drink – An indirect consumption by use of alcoholic liquors as
a raw material for any other product, industrial, medicinal or a toilet
item cannot be included as part of Entry 8-List II – Secondly, merely
because there can be a potential misuse of “industrial alcohol”,
for example, by converting rectified spirit (“industrial alcohol”) as
a beverage which has an intoxicating effect, Entry 8-List II cannot
be stretched to include such “industrial alcohol” – The prevention
of abuse of “industrial alcohol” as a beverage is also covered
under Entry 8-List II – Thus, what is carved out of “Fermentation
Industries” in Entry 24-List II is only “intoxicating liquors” used
as beverage and thus, for direct human consumption the said
subject is placed in Entry 8-List II – This would imply that the
rest of “Fermentation Industries” would be within the scope and
ambit of Entry 24-List II which is subject to Entry 52-List I and is
a scheduled industry as per Section 2 read with Item 26 of First
Schedule of IDRA. [Para 12.14]
1942 [2024] 10 S.C.R.

Digital Supreme Court Reports

Constitution of India – Entry 8-List II – Intoxicating liquor –
Contours of interpretation:
Held: [Per B.V. Nagarathna, J.] In deciding on “intoxicating liquors”,
the contours of interpretation must be concerned only with the very
nature of the product of “intoxicating liquors” rather than the entire
industry concerning alcohol – Entry 8-List II provides the legislative
competence to States to regulate production, manufacture,
possession, transport, purchase and sale of only “intoxicating
liquors” – It must follow from this that what is being produced or
manufactured or possessed or transported or purchased or sold
must actually be “intoxicating liquors” and not any other alcoholic
product. [Para 12.16]

Constitution of India – Entry 52-List I – Industries (Development
and Regulation) Act – Item 26 of the First Schedule – s.18G:
Held: [Per B.V. Nagarathna, J.] The IDRA is enacted by
Parliament under Entry 52-List I taking control of, inter alia,
“Fermentation Industries” as noted in Item 26 of the First Schedule
to the said Act – Section 18G deals with any article or class of
articles relatable to any scheduled industry i.e. “Fermentation
Industries” in the instant cases – The Explanation to Section 18G
states that the expression “article or class of articles” relatable
to any scheduled industry i.e. “Fermentation Industries” herein
includes any article or class of articles imported into India which
is of the same nature or description as the article or class of
articles, manufactured or produced in the scheduled industry –
The explanation is inclusive and not an exhaustive one – For
immediate reference Item 26 of the First Schedule of the IDRA
pursuant to the 2016 amendment is “The fermentation industries
(other than potable alcohol): (i) Alcohol; (ii) other products of
fermentation industries” – The Item 26 w.e.f. 14.05.2016, has
been amended to clarify that “Fermentation Industries” refers to
industries others than potable alcohol – This is for the reason
that “intoxicating liquors” in Entry 8-List II is equated to only
potable alcohol and rest of the industry of the “Fermentation
Industries” other than potable alcohol is a scheduled industry –
Once an industry is a scheduled industry under the provisions
of IDRA, in the context of Section 18G the Central Government
may notwithstanding anything contained in any other provision
[2024] 10 S.C.R. 1943

State of U.P. & Ors. v.
M/s Lalta Prasad Vaish and sons

of IDRA by a notified order provide for regulating the supply and
distribution thereof and trade and commerce therein of a product
of scheduled industry. [Paras 15.7, 15.8]

Constitution of India – Art.254 – Doctrine of repugnancy in
the context of the legislative subjects which are enumerated
in List III or the Concurrent List:
Held: [Per B.V. Nagarathna, J.] Article 254 of the Constitution
applies the doctrine of repugnancy in the context of the legislative
subjects which are enumerated in List III or the Concurrent List –
While applying the principles of repugnancy under Article 254, a
sine qua non is to identify the conflict between the laws made by
the Parliament and the laws made by the State Legislature – The
conflict between the said laws is the basis for the application of
Article 254 – The conflict could be direct when both the laws
cannot operate together or it could be indirect when the State
law entrenches upon a Parliamentary or Central law – But when
laws made by the Parliament or the State Legislature can be
implemented without there being any conflict, the principle of
repugnancy would not apply inasmuch as there would be no
contrary results owing to the applicability of both sets of laws – In
other words, there cannot be a situation where obeying the State
laws would result in disobeying the Parliamentary laws – Thus,
when laws are made under an Entry in List III or the Concurrent
List by both the Parliament as well as by the State Legislature,
the Court must first ascertain whether the two sets of laws can
operate harmoniously, if not, whether harmonious interpretation
could be given to the said laws so as to avoid a conflict between
the two – It is only when there is a conflict between the two
sets of laws inasmuch as the State laws would be abridging the
Parliamentary law, in such a case, the doctrine of Parliamentary
supremacy would apply i.e. when a harmonious interpretation is not
possible – Even if the two laws overlap, if they are complimentary
to each other, in such a case, there would be no application of
the principle of Parliamentary supremacy – Thus, when there is
absolute inconsistency between the two sets of laws, and they are
not reconcilable then, the principle of Parliamentary supremacy
would apply in the context of repugnancy. [Para 16.2]
1944 [2024] 10 S.C.R.

Digital Supreme Court Reports

Principles/Doctrines – Doctrine of occupied field:
Held: [Per B.V. Nagarathna, J.] The application of the doctrine of
occupied field is a technique adopted by the constitutional courts
in order to ensure that there is no potential conflict that could arise
between the State laws and the existing Parliamentary law having
regard to the nature of the legislative powers, their importance in
the socio-economic sphere of governance in the country and such
other considerations. [Para 16.6]

Constitution of India – Entry 8-List II and Art.254 – Industries
(Development and Regulation) Act – s.18G, Item 26 of First
Schedule – Whether Item 26 which speaks of “Fermentation
Industries” to include “industrial alcohol” or non-potable
alcohol as a product of such industry which has been taken
control of by the Union under the provisions of IDRA (and
which is excluded from the scope and ambit of Entry 8-List II),
falls within the scope and ambit of a scheduled industry, and
thereby Section 18G would apply on the said aspects:
Held: [Per B.V. Nagarathna, J.] The answer is in the affirmative for
the following reasons: firstly, insofar as the potable or “intoxicating
liquors” is concerned, the legislative field is exclusively with the
State Legislature – However, in respect of the scheduled industry
which is “Fermentation Industries” (which does not take within
its scope and ambit potable alcohol) vide Item 26 of the First
Schedule, all other types of alcohol including “industrial alcohol”
can be regulated only by the Parliamentary law and the Central
Government – Any other interpretation would imply that even in the
face of Section 18G being incorporated into the IDRA and in the
absence of any notified order being issued, the States Legislatures
and the State Governments would have the legislative competence
to make laws on what is the subject matter of Section 18G of IDRA
under Entry 33(a)-List III – Then, each State could make its own
law on the said subject matter covered under Section 18G of IDRA
pertaining to a scheduled industry – If in respect of the products
of a scheduled industry, the States make laws and there are a
variety of laws made by the individual States which are in force
in respect of the subject under Section 18G of IDRA then when a
notified order is issued, the Central Government’s notified order
would apply if there is a direct conflict between the State laws or
[2024] 10 S.C.R. 1945

State of U.P. & Ors. v.
M/s Lalta Prasad Vaish and sons

legal regime in place and the notified order that is issued – This
would result in a legal quagmire vis-à-vis a scheduled industry –
It cannot then be said that it is necessary to ascertain whether
there is a direct conflict between the State law and the notified
order made by the Central Government at every instance such
an order is issued and if there is such a direct conflict then, the
Parliamentary law would apply on the strength of Article 254 of
the Constitution. [Paras 16.7 and 16.8]

Constitution of India – Entry 33(a)-List III – Industries
(Development and Regulation) Act – s.18G, Item 26 of First
Schedule – Whether, under Entry 33(a)-List III, the States
have been denuded of their powers by virtue of insertion of
Section 18G to the IDRA, i.e., Section 18G having occupied
the field to the extent of control as mentioned and the States
would not have the competence to pass any law relating to
Entry 33(a)-List III:
Held: [Per B.V. Nagarathna, J.] Answer is in affirmative – This is
because Section 18G has been inserted by Parliament to the IDRA
which is an enactment made pursuant to Entry 52-List I – Entry 52-
List I speaks of the Union by declaration made by Parliament
by law taking control of such scheduled industry (Section 2 of
the IDRA) such as the “Fermentation Industries” herein – The
industries which are controlled of by the Union are specified in
the First Schedule to the IDRA – “Fermentation Industries” is
a scheduled industry – Therefore, the Union has taken control
of “Fermentation Industries” – For the sake of clarification, in
the year 2016 an amendment was made to expressly exclude
potable alcohol from “Fermentation Industries” and it includes
only non-potable alcohol such as “industrial alcohol” – The
detailed discussion made is in regard to only “industrial alcohol”
being non-potable alcohol – “Intoxicating liquors” being potable
alcohol is not within the scheduled industry – Therefore, the said
products of “Fermentation Industries” which have been taken
control of by the Union by virtue of insertion of the Section 18G
of the IDRA would come within the scope and ambit of the said
Section. [Para 16.10]
Constitution of India – Importance of “Industrial Alcohol” to
the Indian Economy – Discussed. [B.V. Nagarathna, J.]
1946 [2024] 10 S.C.R.

Digital Supreme Court Reports

Case Law Cited

In the Judgment of Dr Dhananjaya Y Chandrachud, CJI.
Synthetics and Chemicals Ltd. v. State of UP [1989] Supp. 1 SCR
623 : (1990) 1 SCC 109 – overruled.
State of Madras v. Gannon Dunkerley [1959] 1 SCR 379 : 1959
SCR 379 – followed.
Tika Ramji v. State of UP [1956] 1 SCR 393 : AIR 1956 SC 676 –
held inapplicable.
Nashirwar v. State of MP [1975] 2 SCR 861 : 1975 AIR 360; Har
Shanker v. Dy. Excise and Taxation Commissioner, AIR 1957 SC
414; Synthetics & Chemicals v. State of UP [1980] 2 SCR 531 :
(1980) 2 SCC 441; State of Bombay v. FN Balsara [1951] 1 SCR
682 : (1951) SCC 860; Indian Mica and Micancite Industries v.
State of Bihar [1971] Supp. 1 SCR 319 : (1971) 2 SCC 236; Shri
Bileshwar Khand Udyog Khedut Sahakari Mandali v. State of Gujarat
[1992] 1 SCR 391 : (1992) 2 SCC 42; Gujchem Distillers India v.
State of Gujarat [1992] 1 SCR 675 : (1992) 2 SCC 399; State of
AP v. McDowell [1996] 3 SCR 721 : (1996) 3 SCC 709; Vam Organic
Chemicals v. State of UP [1997] 1 SCR 403 : (1997) 2 SCC 715;
Bihar Distillery v. Union of India [1997] 1 SCR 680 : (1997) 2 SCC
727; Government of Haryana v. Haryana Brewery (1997) 5 SCC
758; State of UP v. Modi Distillery [1995] Supp. 3 SCR 119 : (1995)
5 SCC 753; Deccan Sugar & Abkari v. Commissioner of Excise,
AP (2004) 1 SCC 243; State of UP v. Vam Organic [2003] Supp.
4 SCR 957 : (2004) 1 SCC 225; RP Sharma v. State of UP 2004
SCC OnLine All 159; State of UP v. Lalta Prasad [2007] 11 SCR
670 : (2007) 13 SCC 463; SIEL Ltd v. Union of India [1998] Supp.
1 SCR 560 : (1998) 7 SCC 26; ITC Ltd v. Agricultural Produce
Market Committee [2002] 1 SCR 441 : (2002) 9 SCC 232; Jindal
Stainless Steel v. State of Haryana [2016] 10 SCR 1 : (2017) 12
SCC 1 [617]; Hoechst Pharmaceuticals v. State of Bihar [1983]
3 SCR 130 : (1983) 4 SCC 45; State of WB v. Committee for
Protection of Democratic Rights [2010] 2 SCR 979 : (2010) 3 SCC
571; Calcutta Gas Co. (Proprietary) Ltd. v. State of W.B. [1962]
Supp. 3 SCR 1 : 1962 SCC OnLine SC 60 : AIR 1962 SC 1044;
Union of India v. HS Dhillon [1972] 2 SCR 33 : (1971) 2 SCC 779;
TMA Pai Foundation v. State of Karnataka [1993] Supp. 3 SCR
[2024] 10 S.C.R. 1947

State of U.P. & Ors. v.
M/s Lalta Prasad Vaish and sons

117 : (2002) 8 SCC 481; State of Karnataka v. State of Meghalaya
[2022] 18 SCR 516 : (2023) 4 SCC 416; MPV Sundararamier
& Co. v. State of Andhra Pradesh [1958] 1 SCR 1422 : (1958)
9 STC 298; R Abdul Quader & Co. v. STO [1964] 6 SCR 867;
United Province v. Atiqa Begum (1940) FCR 110; Godfrey Phillips
India Ltd. v. State of UP [2005] 1 SCR 732 : (2005) 2 SCC 515;
Harakchand Ratanchand Banthia v. Union of India [1970] 1 SCR
479 : (1969) 2 SCC 166; Bhola Prasad v. The King Emperor (1942)
4 FCR 17; Bansal Wire Industries v. State of UP [2011] 7 SCR
416 : (2011) 6 SCC 545; Sait Rikaji Furtarnal v. State of AP (1991)
Supp (1) SCC 202; CST v. Popular Trading Company [2000] 2
SCR 983 : (2000) 5 SCC 511; State of Punjab v. Devans Modern
Brewaries [2003] Supp. 5 SCR 930 : (2004) 11 SCC 26; State of
Bombay v. Bombay Education Society [1955] 1 SCR 568 : (1954)
2 SCC 152; Indian Aluminium Co. Ltd. v. Assistant Commissioner
of Commercial Taxes (Appeals) [2001] 1 SCR 407 : (2001) 2 SCC
201; State of Bombay v. Bombay Education Society [1955] 1 SCR
568 : (1954) 2 SCC 152; Mineral Area Development Authority v.
M/s Steel Authority of India [2024] 8 SCR 540 : 2024 INSC 554;
Ishwari Khetan Sugar Mills v. State of UP [1980] 3 SCR 331 : (1980)
4 SCC 136; Baijnath Kedia v. State of Bihar [1970] 2 SCR 100;
State of Haryana v. Chanan Mal [1976] 3 SCR 688; Hingir-Rampur
Coal Co. Ltd. v. State of Orissa [1961] 2 SCR 537 : AIR 1961 SC
459; State of Orissa v. M.A. Tulloch and Co. [1964] 4 SCR 461 :
AIR 1964 SC 1284; Baijnath Kadio v. State of Bihar [1970] 2 SCR
100 : (1969) 3 SCC 838, 847-848 : AIR 1970 SC 1436; State of
Haryana v. Chanan Mal [1976] 3 SCR 688 : (1977) 1 SCC 340,
351 : AIR 1976 SC 1654; Wavery Jute Mills Co. Ltd. v. Raymon &
Co (2018) 4 SCC 743; FN Balsara v. State of Bombay 1950 SCC
OnLine Bom 57; Southern Pharmaceuticals and Chemical v. State
of Kerala [1982] 1 SCR 519 : (1981) 4 SCC 391; Kone Elevator
India (P) Ltd. v. State of T.N. [2014] 5 SCR 912 : (2014) 7 SCC 1;
Ahmedabad Municipal Corporation v. GTL Infrastructure Limited
[2016] 11 SCR 172 : (2017) 3 SCC 545; Rainbow Steels v. Sales
Tax Commissioner, UP [1981] 2 SCR 727 : AIR 1981 SC 2010;
State of Bombay v. Hospital Mazdoor Sabha AIR 1960 SC 610;
Rohit Pulp and Paper Mills Ltd v. Collector of Central Excise [1990]
2 SCR 797 : AIR 1991 SC 754; Kannan Devan Hills Produce v.
State of Kerala [1973] 1 SCR 356 : (1972) 2 SCC 218; Ganga
Sugar Corporation v. State of UP [1980] 1 SCR 769 : (1980) 1
1948 [2024] 10 S.C.R.

Digital Supreme Court Reports

SCC 223; Viswanathiah & Co. v. State of Karnataka [1991] 1 SCR
305 : (1991) 3 SCC 258 – referred to.

In the Judgment of B.V. Nagarathna, J.
Khoday Distilleries Ltd. v. State of Karnataka [1995] Supp. 6 SCR
759 : (1995) 1 SCC 574 – followed.
State of Assam v. Sristikar Dowerah AIR 1957 SC 414;
Nashirwar v. State of MP [1975] 2 SCR 861 : 1975 AIR 360;
Deep Chand v. State of UP [1959] Supp. 2 SCR 8 : AIR 1959
SC 648 – relied on.
Tika Ramji v. State of Uttar Pradesh [1956] 1 SCR 393 : AIR 1956
SC 676 – held not good law (insofar as the requirement of
issuance of a notified order as a condition precedent).
Synthetics and Chemicals Ltd. v. State of Uttar Pradesh [1989]
Supp. 1 SCR 623 : AIR 1990 SC 1927 – need not be overruled.
State of Bombay v. FN Balsara [1951] 1 SCR 682 : 1951 SCC 860 :
AIR 1951 SC 318; Calcutta Gas Co. (Proprietary) Ltd. v. State of
W.B. [1962] Supp. 3 SCR 1 : 1962 SCC OnLine SC 60 : AIR 1962
SC 1044; Indian Mica and Micancite Industries v. State of Bihar
[1971] Supp. 1 SCR 319 : (1971) 2 SCC 236; Ishwari Khetan Sugar
Mills v. State of UP [1980] 3 SCR 331 : AIR 1980 SC 1955 : (1980)
4 SCC 136; State of AP v. McDowell [1996] 3 SCR 721 : (1996)
3 SCC 709; Bihar Distillery v. Union of India [1997] 1 SCR 680 :
(1997) 2 SCC 727; Vam Organic Chemicals v. State of UP [1997] 1
SCR 403 : (1997) 2 SCC 715; State of UP v. Vam Organic [2003]
Supp. 4 SCR 957 : (2004) 1 SCC 225; State of Karnataka v. State
of Meghalaya [2022] 18 SCR 516 : (2023) 4 SCC 416; RMDC v.
Union of India, AIR 1957 SC 628; MPV Sundararamier & Co. v.
State of Andhra Pradesh [1958] 1 SCR 1422 : (1958) 9 STC 298 :
AIR 1958 SC 468; Cooverjee B. Bharucha v. Excise Commissioner
and the Chief Commissioner, Ajmer [1954] 1 SCR 873 : AIR 1954
SC 220; Nagendra Nath v. Commissioner of Hills Division [1958]
1 SCR 1240 : AIR 1958 SC 398; Amar Chandra Chakraborty v.
Collector of Excise, Government of Tripura [1973] 1 SCR 533 :
AIR 1972 SC 1863; State of Orissa v. Harinarayan Jaiswal [1972]
3 SCR 784 : AIR 1972 SC 1816; Har Shanker v. Dy. Excise and
Taxation Commissioner [1975] 3 SCR 254 : AIR 1975 SC 1121;
[2024] 10 S.C.R. 1949

State of U.P. & Ors. v.
M/s Lalta Prasad Vaish and sons

State of U.P. v. Synthetics and Chemicals Ltd. [1991] 3 SCR 64 :
(1991) 4 SCC 139; Shri Bileshwar Khand Udyog Khedut Sahakari
Mandali v. State of Gujarat [1992] 1 SCR 391 : (1992) 2 SCC 42;
Gujchem Distillers India v. State of Gujarat [1992] 1 SCR 675 :
(1992) 2 SCC 399; State of UP v. Modi Distillery [1995] Supp. 3
SCR 119 : (1995) 5 SCC 753; Shree Krishna Gyanoday Sugar
Ltd. v. State of Bihar [1996] Supp. 4 SCR 680 : (1996) 10 SCC
11; Deccan Sugar and Abkari Co. Ltd. v. Commissioner of Excise
(1998) 3 SCC 272; Government of Haryana v. Haryana Brewery
Ltd [2002] 1 SCR 942 : (2002) 4 SCC 547; State of Bihar v.
Industrial Corporation (P) Ltd [2003] Supp. 3 SCR 362 : (2003)
11 SCC 465; ITC Ltd. v. Agricultural Produce Market Committee
[2002] 1 SCR 441 : (2002) 9 SCC 232; Southern Pharmaceuticals
and Chemicals v. State of Kerala [1982] 1 SCR 519 : AIR 1981
SC 1863; Baijnath Kedia v. State of Bihar [1970] 2 SCR 100 :
AIR 1970 SC 1436; Hingir-Rampur Coal Co., Ltd. v. The State of
Orissa [1961] 2 SCR 537 : AIR 1961 SC 459; State of Orissa v.
M.A. Tulloch and Co. [1964] 7 SCR 816 : AIR 1964 SC 1284;
State of Haryana. v. Chanan Mal [1976] 3 SCR 688 : AIR 1976
SC 1654; Gujarat University v. Shri Krishna Ranganath Mudholkar
[1963] Supp. 1 SCR 112 : AIR 1963 SC 703; Baharul Islam v. The
Indian Medical Association [2023] 9 SCR 917 : 2023 SCC OnLine
SC 79; Modern Dental College & Research Centre v. State of
Madhya Pradesh (2016) 7 SCC 353; The South India Corporation
(P) Ltd. v. The Secretary, Board of Revenue Trivandrum [1964]
4 SCR 280 : AIR 1964 SC 207; Ashok Leyland Ltd. v. State of
Tamil Nadu [2004] 1 SCR 306 : (2004) 3 SCC 1; M/s. Hoechst
Pharmaceuticals Ltd. v. State of Bihar [1983] 3 SCR 130 : AIR
1983 SC 1019; Mineral Area Development Authority Etc. v. M/s.
Steel Authority of India & Others (Civil Appeal Nos. 4056-4064 of
1999); Indian Aluminium company Limited v. Karnataka Electricity
Board [1992] 3 SCR 213 : (1992) 3 SCC 580; Shree Krishna
Gyanoday Sugar Ltd.; Belsund Sugar Co. Ltd. v. State of Bihar
[1999] Supp. 1 SCR 146 : (1999) 9 SCC 620; SIEL Ltd. v. Union
of India [1998] Supp. 1 SCR 560 : (1998) 7 SCC 26; State of
Kerala v. Mar Appraem Kuri Company Limited [2012] 4 SCR 448 :
(2012) 7 SCC 106; Deep Chand v. State of UP [1959] Supp. 2
SCR 8 : AIR 1959 SC 648; State of W.B. v. Union of India [1964]
1 SCR 371 : AIR 1963 SC 1241 – referred to.
1950 [2024] 10 S.C.R.

Digital Supreme Court Reports

Crowley v. Christensen (1890) 34 Law Ed. 620; South Carolina v.
United States (1905) 199 US 437; Prafulla Kumar Mukherjee v. Bank
of Commerce Limited, Khulna AIR 1947 P.C. 60; United Province v.
Atiqa Begum (1940) FCR 110: AIR 1941 FC 16 – referred to.

Books and Periodicals Cited

In the Judgment of Dr Dhananjaya Y Chandrachud, CJI.:
F.B. Wright, Distillation of Alcohol and De-Naturing (2nd ed.
1907); Stuart Walton, Norma Miller, An Encyclopedia of Spirits
& Liqueurs and How to Cook with Them (2000); KA Jacques,
TP Lyons, DR Kelsall (ed), The Alcohol Textbook: A reference
for the beverage, fuel and industrial alcohol industries (4th ed.
Nottingham University Press); Alcohol Denaturants-Specification
(Second Revision), ICS 71.100.80; Constitutional Law of India,
Volume 3 (4th edn.) [25.57] 2340-2341; Constitution of India,
Article 13; Shiva Rao (Vol II) pg. 666; Committee on Indian
Constitutional Reform (Volume 1 Part I) 369; Joint Committee
on Indian Constitutional Reform (Volume 1 Part I) 148-149; 18th
Amendment of US Constitution; Report of the Joint Committee
on Indian Constitutional Reform; Constituent Assembly Debates
(2 September 1949) Volume IX.

In the Judgment of B.V. Nagarathna, J.:
Cooley’s “Constitutional Limitations” [2nd ed. Boston : Little, Brown
& Company, p.58]; Halsbury’s Laws of England (Fourth Edition),
Volume 26; Black’s Law Dictionary, 5th Edition, Pg.1278; Nicholas
in his Australian Constitution, 2nd Edition, page 303; Sugarcane
(Control) Order, 1955; XIIth five-year plan (2012-2017) of the
Planning Commission.

List of Acts

In the Judgment of Dr Dhananjaya Y Chandrachud, CJI.:
Constitution of India; Constitution (One Hundred and First
Amendment) Act 2016; Industries (Development and Regulation)
Act, 1951; Industries (Development and Regulation) Amendment
Act 2016; U.P Excise (Amendment) (Re-enactment and Validation)
Act 1976; Bombay Abkari Act 1878; Madras Abkari Act 1886;
Bengal Excise Act 1909; Bihar Excise Act 1915; MP Excise Act
[2024] 10 S.C.R. 1951

State of U.P. & Ors. v.
M/s Lalta Prasad Vaish and sons

1915; Punjab Excise Act 1914; Chhattisgarh Excise Act 1915; UP
Excise Act 1910; Government of India Act 1919; Central Provinces
and Berar Act 14 of 1938, AIR 1939 FC 1; C.P & Berar Taxation
Act, AIR 1939 FC 1; Bombay Prohibition Act, 1949; Abkari Act
1077; Bengal Excise Act 1909; MP Excise Act 1916; Punjab
Excise Act 1914; Chhattisgarh Excise Act 1915; United Province
Excise Act 1910; Licensing (Consolidating Act) 1872; Spirits Act
1880; Government of India Act 1935; UP Sugarcane Act; U.P
Excise (Amendment) (Re-enactment and Validation) Act 1976;
License Consolidation Act 1910; Indian Power Alcohol Act 1948;
Ethyl Alcohol (Price Control) Order 1966; Mines and Minerals
(Development and Regulation) Act 1957; UP Sugar Undertakings
(Acquisition) Act 1971; Oriental Gas Company Act 1960; Andhra
Pradesh Prohibition Act 1995; Bombay Prohibition Act 1949;
National Prohibition Act 1919.

In the Judgment of B.V. Nagarathna, J.:
Constitution of India; Industries (Development and Regulation) Act,
1951; Punjab Brewery Rules, 1956; Specially Denatured Spirit
Rules, 1976; Kerala Rectified Spirit Rules, 1972; Government of
India Act, 1919; Government of India Act, 1935; Bombay Abkari
Act, 1878; Punjab Excise Act, 1914; UP Excise Act, 1910; Madras
Abkari Act, 1886; Bengal Excise Act, 1909; Bihar & Orissa Excise
Rules, 1990; Bihar and Orissa Excise Act, 1915; Andhra Pradesh
Prohibition Act, 1995; Bihar Molasses (Control) Act, 1947; Customs
and Excise Act, 1952; Licensing Act, 1964; U.P. Sugar Undertaking
(Acquisition) Ordinance, 1971; Companies Act, 1956; Uttar Pradesh
Sugarcane (Regulation of Supply and Purchase) Act, 1953;
Essential Commodities Act, 1955 (Act 10 of 1955); Sugarcane
(Control) Order, 1955; Kerala Chitties Act 23 of 1975; (Central)
Chit Funds Act, 1982; Kerala Finance Act 7 of 2002; Food Safety
and Standards Act, 2006.

List of Keywords

In the Judgment of Dr Dhananjaya Y Chandrachud, CJI.
Entry 8 of List II; Industry based entry; Product based entry;
Expression “that is to say”; Intoxicating liquor; Entry 52 of List I;
Entry 24 of List II; Article 246 of Constitution; Alcoholic liquor;
Potable alcohol; Non-potable alcohol; Rectified spirit; Denatured
1952 [2024] 10 S.C.R.

Digital Supreme Court Reports

spirit; Judgment in Synthetics (7J); Item 26 of First Schedule
to IDRA; Industry; Section 18G of IDRA; Entry 33(a) of List III;
Distribution of Legislative Power; Scheme of Legislative Entries;
Harmonious interpretation; Federal Balance; Overlap of two
Entries; Expression “to the extent to which”; Intoxicate; State
Legislature.

In the Judgment of B.V. Nagarathna, J.:
Entry 8-List II; Intoxicating liquor; Industrial alcohol; State
Legislature; Article 47 of Constitution; Fermentation Industries;
Alcoholic beverages; Item 26 of First Schedule of IDRA; Potable
alcohol; Non-Potable alcohol; Judgment in Synthetics and
Chemical (7J); Human consumption; Misuse of alcohol; Public
health; Section 18G of IDRA; Entry 33(a)-List III; Intoxicating
effect; Direct and indirect human consumption; Article 254 of the
Constitution; Doctrine of repugnancy; Doctrine of Parliamentary
supremacy; Harmonious interpretation; Doctrine of occupied field;
Scheduled industries.

Case Arising From
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 151 of 2007
From the Judgment and Order dated 16.12.2004 of the High Court
of Judicature at Allahabad in CMWP No. 421 of 1997
With
Special Leave Petition (C)….(Cc) No. 7999 of 2017, Special
Leave Petition (C) No. 27241 of 2019, Special Leave Petition
(C) No. 18582 of 2023, Special Leave Petition (C) Nos. 19275,
16505, 26110 and 26111 of 2004, Civil Appeal No. 580 of 2008,
Civil Appeal Nos. 152 and 153 of 2007, Civil Appeal No. 610 of
2008, Special Leave Petition (C) No. 20204 of 2012, Civil Appeal
Nos. 6768 of 2014, Special Leave Petition (C) Nos. 20519 and
25447 of 2014, Special Leave Petition (C) Nos. 3160 and 4057
of 2015, Civil Appeal No. 2084 of 2020, Civil Appeal No. 4987 of
2021, Diary No. 41507 of 2019, Special Leave Petition (C) No.
18686 of 2022, Diary No. 7447 of 2023, Civil Appeal No. 154 of
2007, Civil Appeal Nos. 671, 672, 688 and 750 of 2008 and Civil
Appeal No. 5093 of 2011
[2024] 10 S.C.R. 1953

State of U.P. & Ors. v.
M/s Lalta Prasad Vaish and sons

Appearances for Parties
R. Venkataramani, AG, Tushar Mehta, SG, Nalin Kohli, Lokesh
Sinhal, Sr. A.A.Gs., Shadan Farasat, Saurabh Mishra, AAGs,
K.N. Balgopal, Adv.Gen., Amit Kumar, Adv. Gen./Sr. Adv., Kuldeep
Parihar, DAG, Dinesh Dwivedi, Arvind P Datar, V. Giri, Dhruv
Agarwal, Dhruv Agrawal, Rajiv Dutta, J.S. Attri, S. Nandakumar,
Balbir Singh, Jaideep Gupta, Arvind Datar, Sr. Advs., Samar
Vijay Singh, Bhakti Vardhan Singh, Rahul Unnikrishnan, Prateek
Dwivedi, Vikas Singh Jangra, Manish Kumar, Amit Kumar Pathak,
Patiraj Yadav, Krishnam Mishra, Pawan Kishore Singh, Nishant
Singh, Keshav Mittal, Amit Ojha, Azeem A Dost, Ms. Sabarni Som,
Prashant Sharma, Akshat Kumar, Pankaj Bhagat, C.K. Sasi, Meena
K Poulose, Harsher Sunder, Nihar Dharmadhikari, Rao Vishwaja,
Rahul Narang, Raj Bahadur Yadav, Ms. Sonali Jain, Mukesh Kumar
Singh, Raman Yadav, Kartikay Aggarwal, Abhishek Kumar Pandey,
Chitvan Singhal, Mrs. Ameyvikrama Thanvi, Mukesh Kumar Maroria,
Pratyush Shrivastava, Ms. Sansriti Pathak, Navanjay Mahapatra,
Ms. Ameyavikrama Thanvi, Vatsal Joshi, Bhuvan Kapoor, Varun
Chugh, Mrinal Elkar Mazumdar, Ms. Indira Bhakar, Mukesh Kumar
Verma, Shashwat Parihar, Harish Pandey, Rajesh Singh Chauhan,
Apoorv Kurup, Piyush Beriwal, Mukul Singh, Omar Ahmad, Ms.
Tahira Karanjawala, Ishan Gaur, Ms. Simran Jeet, Vikram Shah,
Pratibhanu Kharola, Tuhin Dey, Shreyas Maheswari, Ms. Astha
Singh, Aditya Shankar Dixit, Abhimanyu Bhandari, Ejaz Maqbool,
Raghavendra M. Bajaj, Mrs. Garima Bajaj, Ms. Akriti Chaubey, S.
Mahesh Sahasranaman, Ms. Rooh-e-hina Dua, Saif Zia, Harshit
Khanduja, Sahib Kochar, Ms. Ritika Kohli, Md Faisal Masood,
Ambhoj Kumar Sinha, Praveen Kumar, Ms. Sunaina Kumar,
Pradeep Kumar Dubey, Abhigya Kushwah, Mrs. Sunita Yadav,
Vineeth S., Ravindra Kumar Gupta, Siddharth Rajkumar Murarka,
Rohan Rohatgi, Akhilesh Kumar Shrivastava, Mrs. Shubhangini
Rohatgi, Anirudh Bakhru, Harshit Anand, Harshit Khaduja, Ankit
Khera, Ms. Hrishika Jain, M.P. Vinod, Sanjeev Kumar Singh, Kumar
Dushyant Singh, Shighra Kumar, Bhishm Pratap Singh, Devansh
Shekhar, Ms. Pooja Singh, Ms. Subasri Jaganathan, Ms. Neha
Singh, Mrs. Vanita Bhargava, Sanjeev Kumar Kapoor, Aakash
Bajaj, Ajay Bhargava, Ms. Prerona Banerjee, Ms. Nandita Chauhan,
Ms. Tijil Thakur, Ms. Aarushi Yadav, Narinder Kumar Verma, M/s.
Khaitan & Co., Ajit Sharma, Krishnamohan K., Ms. Dania Nayyar,
Yamini Sharma, Praveen Chaturvedi, Vikas Kumar Singh, D.S.
Mishra, Pradeep Kumar Mathur, Rameshwar Prasad Goyal, Ms.
1954 [2024] 10 S.C.R.

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Deepika Nandakumar, Niraj Gupta, Naresh Kumar, Mrs. Nanita
Sharma, Vivek Sharma, Shailendra Singh, Mahesh Tiwari, Nishit
Agrawal, Ms. Kanishka Mittal, Ms. Vanya Agrawal, Ms. Upasna
Agrawal, Shrey Kapoor, Vikash Kumar Jha, Vinay Garg, Upendra
Mishra, Ms. Neetu Rawat, Ankit Shah, Manan Verma, Milind Kumar,
B.S. Rajesh Agrajit, Vishal Meghwal, Ms. Priya Nagar, Aravindh
S., Akshay Gupta, Ms. Devina Sehgal, D.L. Chidananda, Ms.
Pallavi Langar, Shivam Singh, Ms. Bahuli Sharma, Sahil Bhatiya,
Ishwar Singh, Ms. Shaswati Parhi, Suyash Vyas, Divyansh Mishra,
Pashupathi Nath Razdan, Mirza Kayesh Begg, Ms. Maitreyee
Jagat Joshi, Astik Gupta, Ms. Akanksha Tomar, Argha Roy, Ms.
Ojaswini Gupta, Ms. Ruby, Ms. Mamta Bharwaj, Dhananjaya
Mishra, Aaditya Aniruddha Pande, Siddharth Dharmadhikari,
Bharat Bagla, Naman Tandon, Ms. Monica Benjamin, Karan
Sachdev, Shyam Gopal, Ranjeev Khatana, Rajnjeev Khatana,
Sourav Singh, Adarsh Dubey, Ms. Preet S. Phanse, Ankit Roy,
Anshul Malik, Sarthak Sharma, Ms. Shruti Agrawal, Ms. Nimisha
Menon, Ayushman Arora, Sravan Kumar Karanam, Ms. Shireesh
Tyagi, Ms. Tayade Pranali Gowardhan, Ms. Jayashree PK, Aniket
Singh, Mrs. B. Renuka Devi, Ms. Mamatha Ralla, P. Santhosh
Kumar, Abhimanyu Tewari, Ms. Eliza Bar, Jatinder Kumar Bhatia,
Pawanshree Agrawal, Ms. Astha Sharma, Srisatya Mohanty, Ms.
Anju Thomas, Sanjeev Kaushik, Ms. Mantika Haryani, Shreyas
Awasthi, Himanshu Chakravarty, Ridhi Bose, Ms. Ripul Swati
Kumari, Bhanu Mishra, Ms. Muskan Surana, Ms. Lihzu Shiney
Konyak, Ms. Anvita Dwivedi, Divyanshu Srivastava, Ms. Himanshi
Shakya, Nikunj Gupta, Dr. Monika Gusain, Mahfooz Ahsan Nazki,
Sahil Bhalaik, Polanki Gowtham, KV Girish Chowdary, T Vijaya
Bhaskar Reddy, Ms. Rajeswari Mukherjee, Meeran Maqbool,
Ms. Archita Nigam, Tushar Giri, Siddharth Khanna, Rajiv Kumar
Choudhry, Ajay K. Jain, Ms. Swati Ghildiyal, Ms. Devyani Bhatt,
Ms. Srujana Suman Mund, Sabarish Subramanian, C. Kranthi
Kumar, Vishnu Unnikrishnan, Naman Dwivedi, B. Sarathraj, Danish
Saifi, Raghvendra Kumar, Anand Kumar Dubey, Devvrat Singh,
Varun Singh, Nishant Verma, Pukhrambam Ramesh Kumar, Karun
Sharma, Ms. Anupama Ngangom, Ms. Rajkumari Divyasana, Tushar
Jarwal, Ms. Anuradha Dutt, Rahul Sateeja, Pranav Bansal, Sanyam
Agarwal, B.R. Menon, Ms. B. Vijayalakshmi Menon, Ms. Mrinal
Gopal Elker, Saurabh Singh, Ms. K. Enatoli Sema, Ms. Limayinla
Jamir, Amit Kumar Singh, Ms. Chubalemla Chang, Prang Newmai,
Avijit Mani Tripathi, Advs. for the appearing parties.
[2024] 10 S.C.R. 1955

State of U.P. & Ors. v.
M/s Lalta Prasad Vaish and sons

Judgment / Order of the Supreme Court

Judgment

Dr Dhananjaya Y Chandrachud, CJI

Table of Contents*

A. Background ............................................................................. 5
i. Relevant constitutional provisions ................................ 5
ii. The judgment in Synthetics (7J) .................................... 8
iii. The aftermath of Synthetics (7J) .................................... 16
iv. The Reference Order(s) ................................................... 22
B. Submissions ............................................................................ 26
i. Appellants’ submissions ................................................. 26
ii. Respondent’s submissions ............................................. 35
C. The distinction between potable and non-potable
alcohol ..................................................................................... 42
D. Issues ...................................................................................... 45
E. Analysis .................................................................................... 45
i. The constitutional distribution of legislative power .... 45
ii. Scheme of legislative entries ......................................... 48
iii. The field covered by Entry 52 of List I and Entry 8 of
List II .................................................................................. 51
a. The scope of Entry 8 ................................................ 52
I. The meaning of ‘that is to say’ ........................ 52
II. Product or industry based entry ....................... 55
b. Scope of Entry 52 of List I: the absence of “to the
extent to which” ......................................................... 57
c. Reconciling the potential overlap between Entry 52
of List I and Entry 8 of List II ..................................... 63
iv. Scope of Entry 8: Meaning of ‘intoxicating liquor’ ...... 70
a. Precedent on the interpretation of ‘intoxicating
liquor ’: exploring FN Balsara and Southern
Pharmaceuticals ...................................................... 71

* Ed. Note: Pagination as per the original Judgment.
1956 [2024] 10 S.C.R.

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b. The legal import of ‘intoxicating liquor’ ..................... 79
c. Evolution of the legislative lists on ‘intoxicating
liquor’ ......................................................................... 85
d. The harmonious interpretation .................................. 96
v. The correctness of the decision in Synthetics
(7J) ..................................................................................... 102
vi. The impact of the decision on Item 26 of the First
Schedule of IDRA ............................................................. 113
vii. The (ir)relevance of the decision in Tika Ramji to the
dispute .............................................................................. 115
viii. Section 18G of IDRA and Entry 33 of List III ................ 119
F. Conclusion .............................................................................. 120

A. Background
1. “Intoxicating liquor” falls within the legislative domain of the State
Legislatures under Entry 8 of the State list, List II, of the Seventh
Schedule to the Constitution. The issues which arise for adjudication
in this reference pertain to the scope of the power of the State
Legislatures under Entry 8 and the meaning of the phrase “intoxicating
liquor”. The question is whether “intoxicating liquor” in Entry 8 only
includes potable alcohol, such as alcoholic beverages or also
includes alcohol which is used in the production of other products.
In Synthetics and Chemicals Ltd. v. State of UP,1 (“Synthetics
[7J]), a seven-Judge Bench delineated the scope of the regulatory
powers of State Legislatures on “intoxicating liquor”. The correctness
of Synthetics [7J] (supra) has been referred to a larger bench. We
answer the reference in this judgment.

i. Constitutional provisions
2. The State has the legislative competence under Entry 24 of List II
over ‘industries’ but this is subject to entries 7 and 52 of List I.2
Under Entry 52 of List I, Parliament has legislative competence over
such industries, the control of which by the Union is declared by

1 [1989] Supp. 1 SCR 623 : (1990) 1 SCC 109
2 “24. Industries subject to the provisions of Entries 7 and 52 of List I”
[2024] 10 S.C.R. 1957

State of U.P. & Ors. v.
M/s Lalta Prasad Vaish and sons

Parliament by law to be expedient in the public interest.3 Entry 7 of
List I deals with industries which are declared by Parliament by law
to be necessary for the purpose of defence or for the prosecution of
war.4 Under Entry 33 of List III, the State Legislatures and Parliament
can legislate on trade and commerce in, and the production,
supply and distribution of the products of industries controlled by
Parliament under Entry 52 of List I.5 Entry 8 of List II deals with
‘intoxicating liquors’.6 These words are followed by the expression
“that is to say, the production, manufacture, possession, transport,
purchase and sale of intoxicating liquors”. The Seventh Schedule
also demarcates taxing powers related to alcohol separately.
Entry 84 of List I (before it was amended by the Constitution (One
Hundred and First Amendment) Act 2016) enabled Parliament to
levy duties of excise on tobacco and other goods manufactured or
produced in India except alcoholic liquors for human consumption
but including medicinal and toilet preparations containing alcohol.7
Entry 51 of List II confers the State Legislature the competence
to levy duties of excise, inter alia, on alcoholic liquors for human
consumption but not including medicinal and toilet preparations
containing alcohol.8

3 “52. Industries, the control of which by the Union is declared by Parliament by law to be expedient in the
public interest.”
4 “7. Industries declared by Parliament by law to be necessary for the purpose of defence or for the
prosecution of war.”
5 “33. Trade and commerce in, and the production, supply and distribution of –
(a) The products of any industry where the control of such industry by the Union is declared by Parliament
by law to be expedient in the public interest, and imported goods of the same kind as such products;
(b) Foodstuffs, including edible oilseeds and oils;
(c) Cattle fodder, including oilcakes and other concentrates;
(d) Raw cotton, whether grinned or ungrinned, and cotton seed; and
(e) Raw jute.”
6 “8. Intoxicating liquors, that is to say, the production, manufacture, possession, transport, purchase and
sale of intoxicating liquors”
7 “84. Duties of excise on tobacco and other goods manufactured or produced in India except-
(a) Alcoholic liquors for human consumption;
(b) Opium, Indian hemp and other narcotic drugs and narcotics,
But including medicinal and toilet preparations containing alcohol or any substance included in
sub-paragraph (b) of this entry.
But including medicinal and toilet preparations containing alcohol or any substance included in
sub-paragraph (b) of this entry.”
8 “51. Duties of excise on the following goods manufactured or produced in the State and counterveiling
duties at the same or lower rates on similar goods manufactured or produced elsewhere in India:-
(a) Alcoholic liquors for human consumption;
(b) Opium, Indian hemp and other narcotic drugs and narcotics,
But not including medicinal and toilet preparations containing alcohol or any substance included in
sub-paragraph (b) of this entry.
1958 [2024] 10 S.C.R.

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3. In exercise of the power under Article 2469 read with Entry 52 of List I,
Parliament enacted the Industries (Development and Regulation)
Act 1951.10 Section 2 of IDRA stipulates that it is expedient in public
interest that the Union should take control of the industries specified
in the First Schedule to the enactment. Item 26 of the First Schedule
read as follows:
“26. Fermentation industries:
(1) Alcohol
(2) Other products of fermentation industries”
4. In 2016, Item 26 of the First Schedule to the IDRA was amended to
exclude potable alcohol from the ambit of the Item.11 Item 26 reads
as follows after the amendment:
“26. Fermentation industries (other than potable alcohol):
(1) Alcohol
(2) Other products of fermentation industries”
5. Section 18-G of IDRA12 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.

9 “246. Subject matter of laws made by Parliament and by the Legislatures of States.”
10 “IDRA”
11 The Industries (Development and Regulation) Amendment Act 2016
12 “18G. Power to control supply, distribution, price, etc., of certain articles.—
(1) The Central Government, so far as it appears to it to be necessary or expedient for securing the
equitable distribution and availability at fair prices of any article or class of articles relatable to any
scheduled industry, may, notwithstanding anything contained in any other provision of this Act, by notified
order, provide for regulating the supply and distribution thereof and trade and commerce therein.
(2) Without prejudice to the generality of the powers conferred by sub-section (1), a notified order made
thereunder may provide—
(a) for controlling the prices at which any such article or class thereof may be bought or sold;
(b) for regulating by licences, permits or otherwise the distribution, transport, disposal, acquisition,
possession, use or consumption of any such article or class thereof;
(c) for prohibiting the withholding from sale of any such article or class thereof ordinarily kept for
sale;
(d) for requiring any person manufacturing, producing or holding in stock such article or class
thereof to sell the whole or the part of the articles so manufactured or produced during a specified
period or to sell the whole or a part of the article so held in stock to such person or class of persons
and in such circumstances as may be specified in the order;
(e) for regulating or prohibiting any class of commercial or financial transactions relating to such
article or class thereof which in the opinion of the authority making the order are, or if unregulated
are likely to be, detrimental to public interest;
[2024] 10 S.C.R. 1959

State of U.P. & Ors. v.
M/s Lalta Prasad Vaish and sons

ii. The judgment in Synthetics (7J)
6. The United Provinces Excise Act 191013 was enacted to “consolidate
and amend the law in force in the United Provinces relating to
the import, export, transport, manufacture, sale and possession
of intoxicating liquor and of intoxicating drugs”. In exercise of the
powers under the UP Excise Act, the Government of the United
Provinces levied vend fee14 on ‘denatured spirit’ from the wholesale
dealer of denatured spirit. The UP Excise Act was amended
to include Section 24-A. Section 24-A provided that the Excise
Commissioner may grant licence for the manufacture or sale of
any ‘foreign liquor’. ‘Foreign Liquor’ was defined in the subordinate
Rules to include “all rectified, perfumed, medicated and denatured
spirit.”15 The constitutional validity of the amendment including
Section 24-A was challenged before the Allahabad High Court. The
High Court upheld the challenge. The UP State Legislature enacted
the U.P Excise (Amendment) (Re-enactment and Validation) Act
1976 including Section 24-A relying on the decisions of this Court

(f) for requiring persons engaged in the distribution and trade and commerce in any such article
or class thereof to mark the articles exposed or intended for sale with the sale price or to exhibit
at some easily accessible place on the premises the price-lists of articles held for sale and also
to similarly exhibit on the first day of every month, at such other time as may be prescribed, a
statement of the total quantities of any such articles in stock;
(g) for collecting any information or statistics with a view to regulating or prohibiting any of the
aforesaid matters; and
(h) for any incidental or supplementary matters, including, in particular, the grant of issue of
licences, permits, or other documents and charging of fees therefor.
(3) Where in pursuance of any order made with reference to clause (d) of sub-section (2), any person
sells any article, there shall be paid to him the price therefor—
(a) where the price can consistently with the controlled price, if any, be fixed by agreement, the
price so agreed upon;
(b) where no such agreement can be reached, the price calculated with reference to the controlled
price, if any, fixed under this section;
(c) where neither clause (a) nor clause (b) applies, the price calculated at the market-rate prevailing
in the locality at the date of sale.
(4) No order made in exercise of any power conferred by this section shall be called in question in any
Court.
(5) Where an order purports to have been made and signed by an authority in exercise of any power
conferred by this section, a Court shall, within the meaning of the Indian Evidence Act, 1872 (1 of 1872),
presume that such order was so made by that authority.
Explanation.—In this section, the expression “article or class of articles” relatable to any scheduled
industry includes any article or class of articles imported into India which is of the same nature or
description as the article or class of articles manufactured or produced in the scheduled industry.”
13 “UP Excise Act”
14 Vend fee means the fee that is paid by a licenses dealer to sell the products in retain.
15 Section 4(2) of the UP Act provides that the State may declare what shall be deemed to be foreign liquor
or country liquor
1960 [2024] 10 S.C.R.

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in Nashirwar v. State of MP16 and Har Shanker v. Dy. Excise
and Taxation Commissioner.17 The Allahabad High Court upheld
the validity of the U.P Excise (Amendment) (Re-enactment and
Validation) Act 1976.18
7. The appellants in Synthetics & Chemicals v. State of UP 19
(“Synthetics [2J]”), held licenses for wholesale vend of ‘denatured
spirit’. They instituted proceedings under Article 226 of the Constitution
before the Allahabad High Court for seeking a direction to quash the
notification by which vend fee was levied from a wholesale licence
dealer of ‘denatured spirit’. The High Court dismissed the petitions.
It held that the phrase ‘intoxicating liquors’ in Entry 8 of List II of
the Seventh Schedule to the Constitution includes denatured spirit
and that the State was, therefore, competent to levy the vend fee
on denatured spirit.
8. Proceedings under Article 136 were instituted for challenging the
decision of the High Court. Proceedings were also initiated under
Article 32 challenging the constitutional validity of the levy of vend
fee. A two-Judge Bench of this Court in Synthetics (2J) (supra)
heard the writ petition and the appeals against the judgments of
the Allahabad High Court together. Three issues arose before the
Bench. On the issue of the meaning of the phrase ‘intoxicating
liquor’ in Entry 8, the two-Judge Bench referred to the decisions of
this Court in State of Bombay v. FN Balsara,20 Nashirwar (supra)
and Har Shanker (supra) and held that the decisions indicate that
the phrase ‘intoxicating liquor’ in Entry 8 of List II comprises of
liquor which contains alcohol, both potable and non-potable.21 The
second issue was whether in view of IDRA, the power of the State
to regulate alcohol (both potable and non-potable) was denuded.
In particular, reference was made to the notification issued by the
Union under Section 18-G of the IDRA prescribing the price of
various types of alcohol and rectified spirit. The two-Judge Bench
referred to the decision of a three-Judge Bench of this Court in Tika

16 [1975] 2 SCR 861 : 1975 AIR 360
17 AIR 1957 SC 414
18 1976 ALJ 436 (FB)
19 [1980] 2 SCR 531 : (1980) 2 SCC 441
20 [1951] 1 SCR 682 : (1951) SCC 860
21 (1980) 2 SCC 441 [18]
[2024] 10 S.C.R. 1961

State of U.P. & Ors. v.
M/s Lalta Prasad Vaish and sons

Ramji v. State of UP22 and entry 33 of List III to hold that the State
Legislature had the power to legislate regarding the production,
supply and distribution of the products of the industries notified by
Parliament under Entry 52 of List I.23 The two-Judge Bench further
held that the Ethyl Alcohol (Price Control) Order issued by the Central
Government in exercise of the power under Section 18G of IDRA did
not take away the exclusive rights of the State Government relating to
intoxicating liquor.24 The third issue was whether the phrase ‘foreign
liquor’ in Section 24-A includes denatured spirit or only alcohol for
human consumption. The Bench held that the meaning of the phrase
cannot be restricted to alcohol for human consumption since “when
liquor is put to any use such as manufacture of other articles, the
liquor is all the same consumed.”25
9. Review petitions were filed against the decision of this Court in
Synthetics (2J) (supra). Writ petitions were also filed for challenging the
rules by which vend fees were levied in Uttar Pradesh, and provisions
of various laws enacted by the then State of Bombay, and the States
of Tamil Nadu and Andhra Pradesh by which exclusive privilege of
dealing with any intoxicant was vested in the State. The matters were
heard by a seven-Judge Bench in Synthetics (7J) (supra).
10. Justice Sabyasachi Mukharji, writing for himself and five other judges
framed the following issues for consideration:
“2. The main question that falls for consideration in these
matters is whether the vend fee in respect of the industrial
alcohol under different legislations and rules in different
States is valid. […] The questions with which we are mainly
concerned are the following:
Whether the power to levy excise duty in case of industrial
alcohol was with the State legislature or the Central
legislature;
What is the scope and ambit of Entry 8 of List II of the
Seventh Schedule of the Constitution?

22 [1956] 1 SCR 393 : AIR 1956 SC 676
23 (1980) 2 SCC 441 [25-28]
24 (1980) 2 SCC 441 [28]
25 (1980) 2 SCC 441 [34]
1962 [2024] 10 S.C.R.

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Whether, the State Government has exclusive right or
privilege of manufacturing, selling, distributing etc. of
alcohols including industrial alcohol. In this connection,
the extent, scope and ambit of such right or privilege has
also to be examined.”
11. The decision, first, laid down the meaning of the terms, ‘rectified
spirit’, ‘industrial alcohol’, and ‘ethyl alcohol’. The decision noted
that the petitioners and appellants were manufacturers of ‘ethyl
alcohol’ and that ‘ethyl alcohol’, which is also known as rectified
spirit is an industrial alcohol. The judgement, used the three phases
interchangeably:
“74. It has to be borne in mind that by common standards
ethyl alcohol (which has 95 per cent) is an industrial alcohol
and is not fit for human consumption. The petitioners and
the appellants were manufacturing ethyl alcohol(95 per
cent) (also known as rectified spirit) which is an industrial
alcohol. ISI specification has divided ethyl alcohol (as
known in the trade) into several kinds of alcohol. Beverage
and industrial alcohols are clearly and differently treated.
Rectified spirit for industrial purposes is defined as “spirit
purified by distillation having a strength not less than 95 per
cent of volume by ethyl alcohol”. Dictionaries and technical
books would show that rectified spirit (95 per cent) is an
industrial alcohol and is not potable as such. It appears,
therefore, that industrial alcohol which is ethyl alcohol (95
per cent) by itself is not only non-potable but is highly toxic.
The range of spirits of potable alcohol is from country spirit
to whisky and the ethyl alcohol content varies between
19 to about 43 per cent. These standards are according
to the ISI specifications. In other words ethyl alcohol (95
per cent) is not alcoholic liquor for human consumption
but can be used as a raw material input after processing
and substantial dilution in the production of whisky, gin,
country liquor, etc.”
12. This Court allowed the challenge on the following grounds:
a. The phrase ‘intoxicating liquor’ in Entry 8 means ‘liquor which
is consumable by human being as it is” for the following
reasons: (i) In FN Balsara (supra), this Court was not aware
[2024] 10 S.C.R. 1963

State of U.P. & Ors. v.
M/s Lalta Prasad Vaish and sons

of the full use of alcohol as industrial alcohol;26 and (ii) Only
two decisions of this Court have dealt with industrial alcohol.
One was the decision in Synthetics (2J) (supra) and the other
was the decision in Indian Mica and Micancite Industries v.
State of Bihar27 in which this Court held that Parliament had
the legislative competence to levy tax on alcoholic liquor not
fit for human consumption;28
b. The provisions that are challenged are not regulatory but seek
to levy a tax.29 List II does not confer the State Legislature the
power to levy of tax on industrial alcohol;30
c. In view of Item 26 of the First Schedule to IDRA, the control
of alcohol industries vests exclusively in the Union. Thus, the
power to issue licenses to manufacture both potable and non-
potable alcohol vests in the Central Government;31
d. The State can also not regulate industrial alcohol as a ‘product’
of the controlled industry in terms of Entry 33 of List III because
the Union occupies the whole field on industrial alcohol as
evinced by Section 18G of the IDRA;32
e. Even otherwise, the impugned provisions do not regulate a
product of the scheduled industry. Rather, they deal with the
manufacture and sale of industrial alcohol;33
f. The power of the States to legislate on the subject of alcohol
is restricted to laws which (paragraph 86 of Synthetics (7J)
(supra)):
i. Prohibit potable alcohol in terms of Entry 6 of List II which
concerns public health;
ii. Lay down regulations to ensure that non-potable alcohol is
not diverted and misused as a substitute for potable alcohol;

26 (1990) 1 SCC 109 [74]
27 [1971] Supp. 1 SCR 319 : (1971) 2 SCC 236
28 (1990) 1 SCC 109 [75]
29 On the distinction between tax and fee (see (1990) 1 SCC 109 [69-73]
30 (1990) 1 SCC 109 [83]
31 (1990) 1 SCC 109 [85]
32 (1990) 1 SCC 109 [85]
33 (1990) 1 SCC 109 [85]
1964 [2024] 10 S.C.R.

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iii. Charge excise duty on potable alcohol and sales tax under
Entry 52 of List II. However, sales tax cannot be charged
on industrial alcohol; and
iv. Charge fees on a quid pro quo basis, in return for some
service rendered by the state, as distinct from fees for
grant of a privilege in terms of Indian Mica (supra).
13. However, the judgment in paragraph 88 makes the following
observations:
“On an analysis of the aforesaid decisions and practice,
we are clearly of the opinion that in respect of industrial
alcohol the States are not authorised to impose the impost
they have purported to do. In that view of the matter, the
contentions of the petitioners must succeed and such
impositions and imposts must go as being invalid in law
so far as industrial alcohol is concerned. We make it
clear that this will not affect any impost so far as potable
alcohol as commonly understood is concerned. It will also
not affect any imposition of levy on industrial alcohol fee
where there are circumstances to establish that there was
quid pro quo for the fee sought to be imposed. This will
not affect any regulating measure as such.”
14. Paragraph 88 lays down the following three principles:
a. States do not have the competence to levy tax on industrial
alcohol;
b. States have the competence to levy tax on potable alcohol; and
c. States have the competence to levy fee on industrial alcohol.
15. Justice Oza in his concurring opinion held:
a. The legislative entries in List I and List II clearly demarcate the
taxing powers of Parliament and State Legislature. Entry 84 of
List I covers levy of excise duty on alcoholic liquor for other
than human consumption and Entry 51 of List II covers levy of
excise duty on alcoholic liquor for human consumption;34

34 (1990) 1 SCC 109 [97]
[2024] 10 S.C.R. 1965

State of U.P. & Ors. v.
M/s Lalta Prasad Vaish and sons

b. Parliament controls the alcohol industry since Item 26 of IDRA
deals with industry based on fermentation and alcohol. The
competence of the State Legislature under Entry 8 can only
be subject to IDRA;35 and
c. The regulation of the State under Entry 8 of List II can only be
limited to prevent the conversion of alcoholic liquors for industrial
use for human consumption. Regulatory fee can be levied by
the State for this limited purpose.

iii. The aftermath of Synthetics (7J)
16. Subsequently, the interpretation of the decision in Synthetics (7J)
(supra) came up before this Court in numerous occasions. In Shri
Bileshwar Khand Udyog Khedut Sahakari Mandali v. State of
Gujarat,36 the constitutional validity of Section 58-A of the Bombay
Prohibition Act 1949 was challenged. Section 58-A enabled the
State Government to direct that “the manufacture, import, export,
transport, storage, sale, purchase, use, collection or cultivation of any
intoxicant, denatured spiritous preparations, hemp, mhowra flowers
or molasses” would be in the supervision of persons appointed by
them and the costs of such staff were required to be borne by the
person engaged in the activity. This Court rejected the challenge.
Relying on Synthetics (7J) (supra), the two-Judge Bench observed
that though industrial alcohol is not covered by the regulatory powers
under Entry 8 or the taxing power under Entry 51 of List II, the State
has powers to ensure that industrial alcohol is not diverted to be
used as potable alcohol and this is covered by Entry 33 of List III.37

35 (1990) 1 SCC 109 [100]
36 [1992] 1 SCR 391 : (1992) 2 SCC 42
37 “4. […] Levy as a fee under Entry 8 of List II of Seventh Schedule or excise duty under Entry 51 are
different than cost of supervision charged under Section 58-A. The former has to stand the test of a levy
being in accordance with law on power derived from one of the constitutional entries. Since Synthetics
and Chemicals case [Synthetics and Chemicals Ltd. v. State of U.P. (1990) 1 SCC 109] finally brought
down the curtain in respect of industrial alcohol by taking it out of the purview of either Entry 8 or 51
of List II of Seventh Schedule the competency of the State to frame any legislation to levy any tax or
duty is excluded. But by that a provision enacted by the State for supervision which is squarely covered
under Entry 33 of the Concurrent List which deals with production, supply and distribution which includes
regulation cannot be assailed. The bench in Synthetics and Chemicals case [Synthetics and Chemicals
Ltd. v. State of U.P. (1990) 1 SCC 109] made it clear that even though the power to levy tax or duty
on industrial alcohol vested in the Central Government the State was still left with power to lay down
regulations to ensure that non-potable alcohol, that is, industrial alcohol, was not diverted and misused
as substitute for potable alcohol. This is enough to justify a provision like Section 58-A.”
1966 [2024] 10 S.C.R.

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This decision was followed by another two-Judge Bench in Gujchem
Distillers India v. State of Gujarat.38
17. In State of AP v. McDowell,39 the prohibition of sale and consumption
of intoxicating liquor in the State of Andhra Pradesh was challenged.
The petitioners submitted that the State did not have the competence
to prohibit consumption. For this purpose, reference was made to the
observations in paragraph 85 of Synthetics (7J) (supra), where the
Court had observed that after the enactment of IDRA, the power to
issue licenses to manufacture both potable and non-potable liquor
vested in Parliament. The three-Judge Bench rejected the argument
by referring to observations in paragraph 86(a) Synthetics (7J)
(supra) that States have the power to enact legislation in the nature
of prohibiting potable liquor.40 In Vam Organic Chemicals v. State
of UP41 [“Vam Organic I”], the rules issued under the UP Excise
Act providing for power to issue licenses for denaturation of spirit
and levy of denaturing fee was challenged. Justice A M Ahmadi
(as the learned Chief Justice then was) writing for the two-Judge
Bench noted that Synthetics (7J) (supra) did not hold that the State
will not have any power over ‘industrial alcohol’.42 Specifically, the
two-Judge Bench referred to the observations in paragraph 86(b)
that the State may lay down regulations to ensure that non-potable
alcohol is not misused as a substitute for potable alcohol. Justice
Ahmadi observed that the process of denaturing was to ensure it
was not misused as potable alcohol which would be covered by the
observations in Synthetics (7J) (supra).43
18. In Bihar Distillery v. Union of India,44 the petitioner challenged
the State’s cancellation of their license for preparing “rectified
spirit” on the ground that the State lacked competence in view of

38 [1992] 1 SCR 675 : (1992) 2 SCC 399
39 [1996] 3 SCR 721 : (1996) 3 SCC 709
40 (1996) 3 SCC 709 [33]
41 [1997] 1 SCR 403 : (1997) 2 SCC 715
42 [1997] 1 SCR 403 : (1997) 2 SCC 715 [13]
43 (1997) 2 SCC 715 [13,14] “14. It is to be noticed that the States under Entries 8 and 51 of List II read with
Entry 84 of List I have exclusive privilege to legislate on intoxicating liquor or alcoholic liquor for human
consumption. Hence, so long as any alcoholic preparation can be diverted to human consumption,
the States shall have the power to legislate as also to impose taxed etc. In this view, denaturation of spirit
is not only an obligation on the States but also within the competence of the States to enforce. [ emphasis
supplied]
44 [1997] 1 SCR 680 : (1997) 2 SCC 727
[2024] 10 S.C.R. 1967

State of U.P. & Ors. v.
M/s Lalta Prasad Vaish and sons

Synthetics (7J) (supra). Justice B P Jeevan Reddy, writing for the
two-Judge Bench held that the observations in paragraph 85 that
Parliament has legislative competence over both potable and non-
potable alcohol in view of the enactment of IDRA was a typographical
error.45 The Bench further observed that Synthetics (7J) (supra)
was mainly concerned with legislative competence over “denatured
rectified spirit” (which was exclusively and wholly industrial alcohol)
and not “rectified spirit” (which could be used directly for industrial
purposes or denatured for industrial purposes or used to prepare
liquor for human consumption.)46 This Court held that the line of
demarcation must be drawn at the stage of clearance of the rectified
spirit since it was used for the preparation of both potable alcohol
(over which the State had competence under Entry 8 of List II) and
non-potable alcohol (over which the State did not have competence
under Entry 8 of List II):
“23. The line of demarcation can and should be drawn at
the stage of clearance/removal of the rectified spirit. Where
the removal/clearance is for industrial purposes (other than
the manufacture of potable liquor), the levy of duties of
excise and all other control shall be of the Union but where
the removal/clearance is for obtaining or manufacturing
potable liquors, the levy of duties of excise and all other
control shall be that of the States. This calls for a joint
control and supervision of the process of manufacture of
rectified spirit and its use and disposal.”
19. The decision further elucidated the realm of competence of the State
and the Union with respect to (a) industries engaged in manufacturing
rectified spirit meant exclusively for supply to industries; (b) industries
engaged exclusively in manufacturing rectified spirit for production of
potable alcohol; and (c) industries engaged in both of the above. This
demarcation will be discussed in detail in the subsequent sections of
the judgment. To understand the manner in which Bihar Distillery
(supra) interpreted the judgment in Synthetics (7J) (supra), it is
sufficient at this stage to know that the demarcation of the competence
was based on the purpose for which the rectified spirit was used.

45 (1997) 2 SCC 727 [12]
46 (1997) 2 SCC 727 [23]
1968 [2024] 10 S.C.R.

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20. In Government of Haryana v. Haryana Brewery,47 a two-Judge
Bench noted the dissonance in multiple decisions interpreting the
judgment in Synthetics (7J) (supra) and directed that the papers may
be placed before the Chief Justice for listing the matters before the
Constitution Bench. In particular, the Bench noted the observations in
(i) McDowell (supra) that the State has competence over production
to sale of “intoxicating liquor”; (ii) Vam Organic I (supra), that State
has competence over “denatured spirit”; and (iii) Bihar Distillery
(supra) that the State’s competence over “rectified spirit” depended
on the purpose for which spirit was going to be used. The Bench
also noted the observations of a three-Judge Bench in State of
UP v. Modi Distillery48 that the State does not have the legislative
competence to levy excise duty on the material or input that is used
in the process of producing alcoholic liquor for human consumption
by relying on Synthetics (7J) (supra).49 However, it must be noted
that the Bench in Modi Distillery (supra), specifically recorded
that it does not “express any opinion in regard to the power of the
State to regulate the manufacture of alcoholic liquors for human
consumption.”50
21. Meanwhile, another two-Judge Bench51 referred the decision in
Bihar Distillery (supra) to a larger Bench on the ground that it
was prima facie contrary to the scheme of legislative competence
as examined by the Constitution Bench of this Court and the three-
Judge Bench decision of this Court in Modi Distillery (supra). The
three-Judge Bench in Deccan Sugar & Abkari v. Commissioner
of Excise, AP,52 without overruling the decision in Bihar Distillery
(supra) observed that this Court in Synthetics (7J) held that the
State Legislature does not have the competence to levy any excise

47 (1997) 5 SCC 758
48 [1995] Supp. 3 SCR 119 : (1995) 5 SCC 753
49 In this case, the challenge was to the levy of excise duty on wastage in the preparation of Indian Made
Foreign Liquor (IMFL), pipeline wastage and obscuration (which is the process of adding caramel to
spirit for the preparation of rum. The Bench relied on the observations in Synthetics (7J) that the
phrase ‘alcoholic liquor for human consumption’ means the liquor that is consumable “as it is” to hold
that the State does not have the power to levy excise duty on the stages of manufacture or preparation
of the liquor.
50 (1995) 5 SCC 753 [14]
51 Deccan Sugar and Abkari Co. Ltd. v. Commissioner of Excise, AP (1998) 3 SCC 272
52 (2004) 1 SCC 243
[2024] 10 S.C.R. 1969

State of U.P. & Ors. v.
M/s Lalta Prasad Vaish and sons

duty on “rectified spirit”.53 Subsequently, another two-Judge in
State of UP v. Vam Organic54 [“Vam Organic (II)”], dealt with the
challenge to the levy of license fee on ‘denatured industrial alcohol’,
a raw material used in the preparation of Organic compounds. In
that case, the State had submitted that it had the power to levy
the fee because denatured alcohol could be renatured to produce
potable alcohol which is covered by paragraph 86(b) of the decision
in Synthetics (7J). The Bench rejected the submission holding
that the State Government is competent to levy fee to ensure that
industrial alcohol (which the judgment used alternatively for ethyl
alcohol) is not “surreptitiously converted into potable alcohol so that
… the public is protected from consuming illicit liquor”. However,
the Bench relying on Vam Organic I (supra) noted that the power
stops with denaturing and that even if denatured alcohol can be
re-natured, the States would not have the power to regulate it. The
relevant observations are extracted below:
“43. […] We are of the view that the State Government
is competent to levy fee for the purpose of ensuring that
industrial alcohol is not surreptitiously converted into potable
alcohol so that the State is deprived of revenue on the sale
of such potable alcohol and the public is protected from
consuming such illicit liquor. But this power stops with
the denaturation of the industrial alcohol. Denatured
spirit has been held in Vam Organics-I to be outside the
seism of the State Legislature. Assuming that denatured
spirit may by whatever process be renatured (a proposition
which is seriously disputed by the respondents) and then
converted into potable liquor, this would not give the State
the power to regulate it. Even according to the demarcation
of the fields of legislative competence as envisaged in
Bihar Distillery industrial alcohol for industrial purposes
falls within the exclusive control of the Union and according
to Bihar Distillery “denatured rectified spirit, of course, is
wholly and exclusively industrial alcohol.”
(emphasis supplied)

53 (2004) 1 SCC 243 [2]
54 (2004) 1 SCC 225
1970 [2024] 10 S.C.R.

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iv. The Reference Order(s)
22. Separately, the State of UP levied an ad valorem licence fee on the
sale of specially denatured alcohol by a wholesale vendor to those
holding a licence under Form FL 4155 of the UP Excise Act. The fee
was levied under the provisions of the UP Spirit Rules. The petitioner
in RP Sharma v. State of UP56 instituted a writ petition before the
Allahabad High Court, inter alia, for challenging the relevant rule
and for a refund of the fee collected by the state.
23. A Division Bench of the Allahabad High Court allowed the petition,
relying on the decision in Vam Organic-II (supra) since the fee was
levied on the sale of denatured spirit and not to ensure that rectified
spirit was not diverted for human consumption. The State of UP
preferred an appeal against the decision before this Court, resulting
in the present proceedings. The Court issued notice on the matter
and granted an interim stay of the judgment of the High Court on
27 August 2004. By its order dated 25 October 2007, a three-Judge
Bench of this Court in State of UP v. Lalta Prasad57 agreed with the
submissions advanced by counsel for the appellants on the need for
reconsideration by a larger bench. Numerous decisions were relied
on to argue that Section 18G of the IDRA would not deprive the
States of the power to enact laws with respect to Entry 33 of List III.
The appellants argued that a notification ought to be issued under
Section 18G for the field under Entry 33 to be occupied. Justice
Altmas Kabir, writing for the three-Judge Bench observed that that
the question of whether Section 18G occupies the field of Entry 33
on the alcohol industry needs to be referred to a Constitution Bench:
“26. … The 7 Judge Bench did not also have the benefit
of the reasoning in Ch. Tikaramji’s case (supra) which had
held that in the absence of any notified order under Section
18-G of the 1951 Act no question of repugnancy could
arise, which Mr. Dwivedi urged, recognised the State’s
power to legislate with regard to matters under Entry 33
of List III notwithstanding the provisions and existence of
Section 18-G in the 1951 Act.

55 Form FL 41 is meant for those industries where alcohol is used as a solvent but some alcohol continues
to remain in final products such as lacquers, varnish, polishes, adhesives, anti-freezers and brake fluids.
56 2004 SCC OnLine All 159.
57 [2007] 11 SCR 670 : (2007) 13 SCC 463
[2024] 10 S.C.R. 1971

State of U.P. & Ors. v.
M/s Lalta Prasad Vaish and sons

27. Mr. Dwivedi then went on to refer to the judgment
of this Court in SIEL Limited v. Union of India (1998)
7 SCC 26 wherein the learned Judges relying on the
policy decision in Ch. Tikaramji’s case (supra) explained
and distinguished the decision of the 7 Judge Bench in
Synthetics and Chemicals case (supra). […]
28. Yet another case referred to by Mr. Dwivedi was the
decision of a Constitution Bench of 5 Judges of this Court
in Belsund Sugar v. State of Bihar (1999) 9 SCC 620 […].
In the said case also it was observed by the Constitution
Bench that in the absence of promulgation of any statutory
order covering the filed under Section 18-G it could not
be said that mere existence of a statutory provision for
entrustment of such power would result in regulation of
purchase and sale of flour even if it is a scheduled industry.
It may be noted that even while noting the decision of the
7 Judge Bench in Synthetics and Chemicals case (supra)
the Court placed reliance on the decision rendered in the
SIEL Ltd. Case (supra).
…
35. On consideration of the aforesaid submissions made
on behalf of the respective parties, we are of the view
that Mr. Dwivedi’s submissions have a good deal of force,
since by virtue of the interpretation of Section 18-G in
the Synthetics and Chemicals case (supra) the power
of the State to legislate with matters relating to Entry
33 of List III have been ousted, except to the extent
as explained in the Synthetics and Chemicals case in
paragraphs 63-64 of the judgment, where the State’s power
to regulate, as far as regulating the use of alcohol, which
would include the power to make provisions to prevent and/
or check industrial alcohol being used as intoxicant liquor,
had been accepted. … As submitted by Mr. Dwivedi, the
7 Judge Bench did not have the benefit of the views
expressed by this Court earlier in Ch. Tikaramji case
(supra) where the State’s power to legislate under the
Concurrent List stood ousted by legislation by the
Central Government under Entry 52 of List I and also
1972 [2024] 10 S.C.R.

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in view of Section 18-G of the Industries (Development
and Regulation) Act, 1951.
36. In our view, if the decision in the Synthetics and
Chemicals case (supra) with regard to the interpretation of
Section 18-G of the 1951 Act is allowed to stand, it would
render the provisions of Entry 33 (a) of List III nugatory
or otiose.
37. We are, therefore, also of the view that this aspect of
the matter requires reconsideration by a larger Bench of this
Court, particularly, when the views expressed by 7 Judge
Bench on the aforesaid question have been distinguished
in several subsequent decisions of this Court, including
the two decisions rendered by Constitution Benches of
five Judges.”
(emphasis supplied)

24. This Court formulated six questions for adjudication by a larger
Bench. They are reproduced below:
a. Does Section 2 of the IDRA have any impact on the field
covered by Section 18G of the same or Entry 33 of List III of
the Seventh Schedule?
b. Does Section 18G of the aforesaid Act fall under Entry 52 of List
I of the Seventh Schedule of the Constitution, or is it covered
by Entry 33 of List III thereof?
c. In the absence of any notified order by the Central government
under Section 18G of the above Act, is the power of the State
to legislate in respect of matters enumerated in Entry 33 of
List III ousted?
d. Does the mere enactment of Section 18G of the IDRA, give
rise to a presumption that it was the intention of the Central
government to cover the entire field in respect of Entry 33 of List
III so as to oust the States’ competence to legislate in respect
of matters relating thereto?
e. Does the mere presence of Section 18G of the IDRA, oust
the State’s power to legislate in regard to matters falling under
Entry 33(a) of List III?
[2024] 10 S.C.R. 1973

State of U.P. & Ors. v.
M/s Lalta Prasad Vaish and sons

f. Does the interpretation given in Synthetics (supra), in respect
of Section 18G of the IDRA correctly state the law regarding
the States’ power to regulate industrial alcohol as a product
of the Scheduled industry under Entry 33 of List III in view of
clause (a) thereof?
25. The batch was placed before a Constitution Bench pursuant to the
above order. By an order dated 8 December 2010, the Constitution
Bench observed that the decision in Synthetics (7J) (supra) requires
to be considered by a Bench of nine Judges and directed the matter
be placed before a larger Bench:
“Having meticulously examined the judgment of the
Constitution Bench of seven learned Judges in the case
of Synthetics and Chemical Limited & Ors. vs. State of
Uttar Pradesh & Ors., reported in 1990 (1) SCC 109, we
are of the view that the matter requires consideration by
a Bench of nine Judges.”
26. Though the three-Judge Bench by an order 25 October 2007 only
referred the issue of the interplay between Section 18-G of the
IDRA and Entry 33 of List III to the Constitution Bench, the order
of the Constitution Bench categorically noted that the correctness
of the decision in Synthetics (7J) ought to be reconsidered by a
nine Judge Bench. Thus, this Bench is not limited to the questions
framed by the three-Judge Bench.

B. Submissions

i. Appellants’ submissions
27. This Court held in Synthetics (7J) (supra) that denatured spirit is
industrial alcohol and is outside the jurisdiction of States under Entry
8, List II of the Seventh Schedule to the Constitution. It held that
Entry 8, List II deals only with potable alcohol. Mr Dinesh Dwivedi,
learned senior counsel representing the State of UP assailed the
reasoning in Synthetics (7J) (supra) and argued that the States
have jurisdiction over industrial alcohol. He submitted that:
a. Legislative entries are fields of legislation and must be read
widely and construed liberally to maintain the federal balance.
The exclusive jurisdiction of the States cannot be ousted by
a Parliamentary enactment. Article 245 of the Constitution is
1974 [2024] 10 S.C.R.

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subject to Article 246 and therefore the division of legislative
powers must be given their full effect;
b. The term ‘intoxicating liquors’ appearing in Entry 8 of List II of
the Seventh Schedule to the Constitution has a rich history and
legislative practice accompanying it;
c. The term ‘intoxicating liquors’ in Entry 8 of List II is borrowed
from Entry 31, List II of the 1935 Act. The 1935 Act was enacted
by the British Parliament when the term ‘intoxicating liquors’ had
attained a specific meaning. This meaning can be discerned
from Section 110 of the License Consolidation Act 1910 and
Sections 3, 4, 5, 116 of the Spirit Act 1880;
d. In British legislations, the words ‘intoxicating liquors’ were defined
to include spirit of all kinds including fermented and distilled
spirits. The terms ‘intoxicating liquors’ and ‘spirit’ or ‘liquor of all
kinds’ were used interchangeably in laws in England;
e. Various provincial statutes defined the words ‘liquor’ and ‘sprit’
to include all liquids containing alcohol.58 These legislations were
enacted with the knowledge that alcohol is used for industrial
purposes. ‘Intoxicating liquors’ in Entry 8 of List II of the Seventh
Schedule to the Constitution is a comprehensive phrase which
connotes all liquids containing alcohol. Therefore, liquor and
spirit including industrial alcohol have always been under the
jurisdiction of States;
f. The 1935 Act used different phrases in Entries 31 and 40 of
List II of its Seventh Schedule. These entries are relatable
to Entries 8 and 51 of List II of the Seventh Schedule to the
Constitution respectively. Whereas the phrase ‘alcoholic liquor
for human consumption’ is used in Entry 51 List II for taxation
purposes, Entry 8 of List II uses the word ‘intoxicating liquors’.
Similarly, Entry 84 of List I uses the phrase ‘alcoholic liquor
not for human consumption’ and Article 47 uses the phrase
‘intoxicating drinks’. It would be irrational to presume that the
framers of the Constitution used different phrases to mean the
same thing;

58 Bombay Abkari Act 1878, Madras Abkari Act 1886, Bengal Excise Act 1909, Bihar Excise Act 1915, MP
Excise Act 1915, Punjab Excise Act 1914, Chhattisgarh Excise Act 1915 and UP Excise Act 1910.
[2024] 10 S.C.R. 1975

State of U.P. & Ors. v.
M/s Lalta Prasad Vaish and sons

g. The term ‘liquors’ used in a legislation under Entry 31 of List II
of the Seventh Schedule to the 1935 Act was accepted to mean
all alcoholic liquids by this Court in FN Balsara (supra). The
language of Entry 8 of List II of the Seventh Schedule to the
Constitution is borrowed from Entry 31 of List II of the Seventh
Schedule to the 1935 Act and must be deemed to have the
same meaning;
h. Entry 84 of List I of the Seventh Schedule to the Constitution
uses the phrase ‘alcoholic liquor not for human consumption’.
Usage of widely different terms in the Constitution would appear
irrational if ‘intoxicating liquors’ was understood to exclude
alcohols used in industries;
i. Entry 8 of List II includes alcohols used in industries. Since it
is a specific entry in List II, alcohols used in industries will be
excluded from the general entry on industries in Entry 24 of
List II. The Union cannot take over any industry in pursuance
of Entry 52 of List I unless the industry falls under Entry 24 of
List II. Therefore Parliament cannot takeover industrial alcohol
by making a declaration under the IDRA, which relates to Entry
52 of List I;
j. Entry 8 of List II is not subject to any other entry in the Seventh
Schedule. The Constitution makes specific mention where it
intends a legislative field to be subject to other entries in the
Seventh Schedule; and
k. Synthetics (7J) (supra) fell into error by not considering the
traditional meaning of ‘intoxicating liquors’. It also failed to
notice all previous decisions, like Ch Tika Ramji v. State of
UP,59 which defined ‘industry’ for the purpose of Entry 24 of
List II and Entry of 52 List I and delineated its scope. It held
that the product of an industry notified under the IDRA falls
under Entry 33 of List III.
28. Mr Dwivedi submitted that Entry 8 of List II governs the production,
manufacture, possession, transport, purchase and sale of intoxicating
liquors. Since alcohols used in industries fall within the remit of
‘intoxicating liquors’ the State legislature has exclusive and inalienable

59 [1956] 1 SCR 393 : 1956 SCC OnLine SC 9
1976 [2024] 10 S.C.R.

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jurisdiction in this field. However, in the alternative, the industry i.e.
the production and manufacture of alcohols used in industries, would
be governed by the general entry, Entry 24 of List II, which can be
taken over by the Union upon a declaration under Entry 52, List I.
The product of the industry would be governed by Entries 26 and
27 of List II and would require a declaration under Entry 33 of List III
for the Union to occupy the field. He argued that only the production
and manufacture of industrial alcohol would be governed by the
Union List even if the requirement of a declaration under Entry 52
of List I is met by Section 2 of the IDRA read with Entry 26 of the
First Schedule to the IDRA. However, no corresponding declaration
is made under Section 18G of the IDRA to satisfy the requirements
of Entry 33, List III. The Central government would be required to
issue a notified order under Section 18G of the IDRA to claim control
over the product. No such order has been issued and therefore the
product remains in the exclusive domain of the State. Therefore, the
Union has not occupied the field under Entry 33, List III.
29. Mr Arvind Datar, learned senior counsel took us through the process
of making denatured alcohol and potable liquor from molasses
or grains. He argued that a license is required to make ENA and
another license is required to make denatured spirit out of ENA. The
process of denaturation is done before a State Excise Officer and the
excise or duty payable against ENA and denatured spirit changes
drastically. He argued that States can regulate potable alcohol as
well as denatured spirits because the process of denaturing takes
place within the same premises.
30. Mr Datar argued that the Synthetics (7J) (supra) must be overruled
because:
a. In para 74 of the judgment, this Court erred in assuming that
industrial alcohol and rectified spirit are the same substance.
Rectified spirit or ethyl alcohol, which is per se for human
consumption, cannot be used interchangeably with industrial
alcohol which has undergone denaturation. Ethyl alcohol or
rectified spirit usually undergoes denaturation for the purpose
of their use in industries. This would involve payment of fees
and obtaining of licenses for the process;
b. The expression ‘alcoholic liquor for human consumption’ in
Entry 51 of List II was mistakenly read as ‘alcoholic liquor
[2024] 10 S.C.R. 1977

State of U.P. & Ors. v.
M/s Lalta Prasad Vaish and sons

fit for human consumption’ which has a widely different
meaning.60 For example, molasses despite not being capable
of final consumption, as it is, would be alcohol for human
consumption. It would undergo a process for making it fit for
human consumption. However, that does not take away from
the fact that molasses is intended for human consumption and
is susceptible to excise. Alcoholic liquor for human consumption
means that the alcoholic liquor is capable of being consumed
by humans. It would fall under Entry 51, List II while denatured
alcohol would fall under Entry 84, List I;
c. Everything except denatured spirit is alcohol for human
consumption because it has the potential to be consumed by
humans. The process of denaturation is carried out only to make
the alcohol sufficiently disagreeable for human consumption to
avoid its misuse. ENA and rectified spirit may therefore be for
human consumption and cease to be such upon undergoing
denaturation. Mr Datar emphasized that the State does not have
the power to levy tax on ENA in terms of Synthetics (7J) (supra)
despite being for human consumption. Such an interpretation
has drastically reduced the ability of States to levy tax under
Entry 51 of List II;
d. Unlike what was held in Synthetics (7J) (supra), there are
no licenses to manufacture industrial alcohol because what is
manufactured is only the ENA. ENA can be denatured for the
purpose of alcohol used in industries. However, it does not
require separate manufacturing units;
e. The 158th Report of the Law Commission of India sought to
address the practical problems which arose from the judgment
of this Court in Synthetics (7J) (supra). It noted that the excise
laws in force across different States in the country made no
distinction between liquors used for human consumption or for
other purposes. These pre-Constitution laws closely regulated
and controlled the manufacture, possession, sale and transport
of all alcohol and the Union government had no say in the matter.
The Report clarified that there is no such thing as ‘industrial
alcohol’ and that rectified spirit which has 95% alcohol may be

60 Paras 52, 54, Synthetics (supra).
1978 [2024] 10 S.C.R.

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used for industrial and non-industrial purposes. Accordingly,
the report opined that litigation on the issue be avoided by
bringing an amendment to the IDRA, namely, the substitution
of item 26 in the First Schedule to the IDRA with the phrase
“Fermentation Industries but not including alcohol.” This was to
enable the States to levy excise duties on alcohol which had
been the case for over a century prior to the judgment of this
Court in Synthetics (supra). Parliament did not amend the
IDRA as suggested by the Law Commission but instead only
excluded potable alcohol from the purview of the Union with
retrospective effect from the commencement of the IDRA; and
f. Synthetics (7J) (supra) must be overruled because it suffers
from inconsistency in holding that the States have nothing to do
with alcohol as well as holding that they can levy a regulatory
fee.61
31. Mr Datar submitted that the phrase ‘that is to say’ featuring in
Entry 8 of List II of the Seventh Schedule connotes that the entry
is exhaustive. Such a reading would mean that the entire journey
of intoxicating liquor – from production to purchase and sale will
fall within the remit of Entry 8 of List II. Since Entry 8 of List II is
exhaustive and is not subject to any other entry in List I or List III, it
cannot be transgressed by a law made by Parliament.
32. Relying on the State of Madras v. Gannon Dunkerley,62 Mr Datar
argued that to understand the meaning of ‘intoxicating liquors’, which
has not been defined in the Constitution, the Court may identify if the
expression is nomen juris and adopt the meaning which the word
has obtained over a passage of time. The British law i.e. the Spirits
Act 1880 includes denatured alcohol. Similarly, this Court in India
Mica (supra) and FN Balsara (supra) held that intoxicating liquor
includes denatured spirits. Mr Datar also presented a list of legislation
enacted at around the same time which included denatured alcohol
in the same category as liquor. Mr Datar relied on the judgment of
this Court in SIEL Ltd v. Union of India63 to argue that the subjects
enumerated in Entry 33, List III are excluded from Entry 52, List I.

61 Para 86. Synthetics (supra)
62 [1959] SCR 379
63 [1998] Supp. 1 SCR 560 : (1998) 7 SCC 26
[2024] 10 S.C.R. 1979

State of U.P. & Ors. v.
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Lastly, he urged that since Section 18G of the IDRA does not specify
that it extends to ‘production’, even the issuance of a notified order
would not result in the occupation of the field by the Union with
respect to production.
33. Mr Jaideep Gupta, learned senior counsel, supplemented the case
of the appellants. He submitted that if this Court were not inclined
to hold that all alcohol falls under Entry 8 of List II then, in the
alternative, the judgment of this Court in Synthetics (7J) (supra)
must be overruled on the ground that the three-fold classification
of Tika Ramji (supra) has not been followed. This Court in Tika
Ramji (supra) devised a threefold classification as pre-production,
production and post-production. It held that only the second
category i.e. production would be covered by the word ‘industry’.
He submitted that the State therefore has the power to regulate
the manufacture of ENA which would fall under the pre-production
category. The State would also have the power to regulate the
distribution of denatured alcohol. Buttressing this point, Mr Jaideep
Gupta argued that it becomes imperative for the State to regulate
the distribution of denatured alcohol because it may be renatured
and distributed as potable alcohol which will lead to tragedies. He
argued that it becomes imperative for the State to regulate such
instances under Entry 8 of List II as well as Entry 6 of List II which
deals with public health.
34. Mr V Giri, learned senior counsel, differed from other counsel for the
appellants and submitted that denatured alcohol would be excluded
from the ambit of the term ‘intoxicating liquors’ and would therefore
fall under Entry 24 of List II. However, he supported the arguments
of the other counsel on a notified order under Section 18G of the
IDRA being a prerequisite for Parliament to occupy the field under
Entry 33 of List III.
35. Mr Balbir Singh, learned senior counsel, and Mr Shadan Farasat
and Dr. Vivek Sharma, learned counsel, have supported the above
arguments on behalf of the appellants.

ii. Respondent’s submissions
36. Mr R Venkataramani, learned Attorney General for India appearing
for the Union of India submitted that:
1980 [2024] 10 S.C.R.

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a. The production, manufacture, trade and commerce, supply
and distribution constitute a chain of economic activity and
may not be looked at separately. Therefore, the process of
production necessarily includes the series of actions of trade,
commerce, supply and distribution. This implies that there is a
symbiotic relationship between Entry 52 of List I and Entry of
33 List III and they may not be looked at separately. Entry 52
of List I and Entry 33 of List III are a family of entries which are
interconnected. Entry 52 of List I can also include and touch
upon all matters relating to an industry that is brought under the
control of the Union. These matters can be production, trade,
commerce, supply and distribution, etc.;
b. Entry 52 of List I is a special entry uncontrolled by any other
entry including Entry 8 of List II. It envisages the possibility of
uniform control at the federal level of any declared industry by
removing it from the individual jurisdiction of the States. Such
uniform control serves the purpose of subserving the common
good, equitable distribution, fair prices, utility of the products
of an industry for serving the interests of all the States, etc.;
c. To the extent that Parliament legislates with respect to an
industry, the powers of the States under Entries 26 and 27 of List
II are denuded. Similarly, the powers of the States under Entry
33 of List III are denuded if Parliament has occupied the field.
Merely because a notified order is not issued would not leave
the subject to be legislated upon by the States. This is because
the lack of regulation or notification may be to serve the interest
of the industry. The principle elucidated in Tika Ramji (supra)
is not a principle of universal application i.e., in the absence
of a notified order under Section 18G, the IDRA will not be a
dormant law and the States will not derive their competence to
deal with all or any matters otherwise exhaustively dealt with
by Section 18G;
d. The observations in SIEL (supra) and Tika Ramji (supra) are
incorrect in completely separating Entry 52 of List I from Entry
33 of List III. It is open to Parliament to enact laws in respect
of trade and commerce, production, supply, distribution. The
fact that the IDRA touches upon a certain field is enough to
oust the jurisdiction of the State completely;
[2024] 10 S.C.R. 1981

State of U.P. & Ors. v.
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e. All uses of liquids containing alcohol, other than those meant
for human consumption, would fall under one category which
is non-potable alcohol. Non-potable alcohol must fall outside
Entry 8 of List II. Accordingly, the 2016 amendment to Entry 26
of Schedule I of the IDRA must be taken to have validly taken
over non-potable alcohol;
f. The focus of the framers while drafting the provisions concerning
alcohol in the Constitution was temperance, regulation of trade
and commerce in consumable alcohol preparations and to
raise revenue;
g. Entry 8 of List II cannot be interpreted to carve anything out
of Entry 52, List I and Entry 33, List III. The judgment of this
Court in ITC Ltd v. Agricultural Produce Market Committee,64
is inapplicable to the present case because ITC (supra)
was determined in the context of overlapping entries. The
‘fermentation industry’ has been dealt with under the IDRA,
which is a self-contained legislation;
h. The term ‘intoxicating liquors’ in Entry 8 of List II does not
include all classes of alcoholic liquids. The use of the phrase
‘that is to say’ occurring in Entry 8 of List II only refers to the
range of activities concerning one class of alcohol, namely
potable alcohol, and is not referable to other classes of liquor;
i. The framers of the Constitution may not have been aware of
many industrial uses of alcohol and that all alcohol is neither
consumable by humans nor intoxicating in nature; and
j. The Report of the Industrial Alcohol Committee in 1920 observed
that it was difficult to define ‘intoxicating liquors’ since there was
no intrinsic difference between alcohol intended for potable and
non-potable purposes.
37. Mr Tushar Mehta, learned Solicitor General of India, argued that
the adjudication on the interplay of Sections 2 and 18G of the IDRA
with Entry 52 of List I and Entry 33 of List III will have a bearing
on other legislation and therefore the ruling in this case may not
be restricted to the industry of alcohol. The division of legislative

64 [2002] 1 SCR 441 : (2002) 9 SCC 232
1982 [2024] 10 S.C.R.

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powers has undergone four stages: (a) the devolution of powers
to the Federal legislature and the Provincial legislatures under the
Devolution Rules, Government of India Act 1919;65 (b) the division of
subjects between the Centre and the Provinces under the 1935 Act;
(c) the draft Constitution which was placed before the Constituent
Assembly; and (d) the entries as they were finally adopted in the
Constitution. The Solicitor General submitted that:
a. Some industries have always been considered as necessarily
under Union control. This may be because it is in national
interest, requires uniform regulation throughout the country, or
when the industry or its products are sought to be equitably
distributed. Entry 52 of List I is in furtherance of the federal
principle;
b. Entry 20 of the Central Subject List in the Devolution Rules
framed under the 1919 Act which corresponds to Entry 52 of
List I of the Seventh Schedule to the Constitution used the term
‘development’. A similar provision was inserted as Entry 34, List I
of the Seventh Schedule to the 1935 Act which also used the
term ‘development’. This entry was further retained as Entry 64 of
List I of the Seventh Schedule to the draft Constitution. However,
after debates in the Constituent Assembly the entry gained the
form in which it appears today in Entry 52 of List I. The word
‘development’ was dropped from the entry but the word ‘control’
was retained. Therefore, the term ‘control’ must have been
intended to connote a wider meaning than its earlier versions;
c. This is borne out by the Constituent Assembly debates where
Dr BR Ambedkar responded to amendments which sought to
introduce the term ‘development and control’ in draft Entry 64,
List I. He stated that the intention of the Drafting Committee
was not merely to allow the Union to take over the development
of an industry but also other aspects;
d. Tika Ramji (supra) must be overruled because:
i. It did not consider the Constituent Assembly debates and
wrongly restricted the meaning of industry to manufacturing
and production only;

65 “1919 Act”
[2024] 10 S.C.R. 1983

State of U.P. & Ors. v.
M/s Lalta Prasad Vaish and sons

ii. All aspects from the sourcing of raw materials to the
distribution of products must fall within the powers of the
Union to take control of an industry under Entry 52 of List I;
iii. Article 366(12) did not define the term ‘goods’ to include
raw materials in particular;
iv. Entry 27 of List II is subject to Entry 33 of List III. The
implication of this aspect was not sufficiently dealt with by
the Court in Tika Ramji (supra); and
v. It is expedient in public interest that alcohol is regulated
by a Central legislation. Currently, the IDRA occupies the
field, and any State law on alcohol, other than potable
alcohol, will be repugnant to the IDRA. The holding in
Tika Ramji (supra), that there must be a notified order in
force pursuant to Section 18G for there to be repugnancy
is not correct. Further, it was obiter dicta;
e. Synthetics (7J) (supra) rightly did not consider the observations
in Tika Ramji (supra) regarding the absence of a notified order
by the Union government;
f. The debates in the Constituent Assembly would show that the
framers of the Constitution intended the Union to have some
control over the trade and commerce, production, supply and
distribution which led to the introduction of a concurrent list
entry which is identifiable as Entry 33 of List III;
g. The power of taxation over potable alcohol has always been
with the States and the power of taxation over non-potable
alcohol has always been with the Union. This is borne out by
the evolution of Entry 84 of List I and Entry 52 of List II of the
Seventh Schedule to the Constitution. The control and the
taxing power were cumulatively given to the provinces under
Entry 16 of the provincial subject list of the Devolution Rules
under the 1919 Act. Under the 1935 Act, Entry 45 of List I
specifically excluded ‘alcoholic liquor for human consumption’
from the domain of the Union and correspondingly included it
under the State list as Entry 40 of List II;
h. The term ‘intoxicating liquors’ in Entry 8 of List II means a
beverage which has the effect of intoxication upon consumption.
1984 [2024] 10 S.C.R.

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The term is not used elsewhere in the Seventh Schedule and
instead the term ‘alcoholic liquor for human consumption’ is
used in taxing entries. The terminological variation is because
the incidence of tax is relevant in a taxing entry. Accordingly,
since intoxication is not the incidence of taxation but the effect
of consuming alcoholic liquor, it is not used in the taxing entries;
i. Similarly, in Article 47, the term ‘intoxicating drinks’ is used to
connote all drinks which have the effect of intoxication regardless
of its alcoholic content, for example, Indian hemp;
j. This Court, in Synthetics (7J) (supra), held that ‘intoxicating
liquors’ is limited to ‘alcoholic liquor fit for human consumption’.
FN Balsara (supra) defined liquor in a different context and did
not deal with legislative competence; and
k. Industrial alcohol is a subject which affects the entire nation
and requires a uniform approach. This is evidenced by national
laws and policies such as the Indian Power Alcohol Act 1948,
Ethyl Alcohol (Price Control) Order 1966 and the National
Biofuel Policy 2018.
38. Mr Dhruv Agrawal, learned senior counsel; Mr Abhimanyu Bhandari;
Mr Omar Ahmad; Ms Tahira Karanjawala; Ms Sansriti Pathak; Mr
Pawan Shree Agarwal; Mr S Nandakumar; and Mr Akash Bajaj,
learned counsel, have supported the above arguments on behalf
of the respondent.

C. The distinction between potable and non-potable alcohol
39. Before delineating the issues that fall for the consideration of this
Court, certain preliminary remarks on the process of preparation of
potable alcohol, that is, alcohol that is used as a beverage must be
made. The raw material for potable alcohol is generally molasses
and grain,66 which is fermented and distilled to produce rectified
spirit. Rectified spirit, also known as ethyl alcohol, contains about
95% alcohol and some impurities which can affect flavour and
aroma. Rectified spirit is used as a solvent in pharmaceutical and
cosmetic products. Though rectified spirit is not generally used in

66 See FB Wright, Distillation of Alcohol and De-Naturing (2nd ed. 1907)
[2024] 10 S.C.R. 1985

State of U.P. & Ors. v.
M/s Lalta Prasad Vaish and sons

the preparation of alcoholic beverages, it may be used to produce
home-made liqueurs.67 Extra Neutral Alcohol is a highly purified form
of ethanol which contains more than 96% alcohol. ENA has a neutral
taste and smell and is mostly used as a base for the preparation of
premium beverages. Additionally, it is also used in the production of
products like perfumes and mouthwashes. Absolute alcohol is ethanol
that contains less than 1% water and more than 99% alcohol. 68
The high purity of the alcohol makes it ideal for the preparation of
pharmaceutical products, cosmetics and chemical manufacturing
that require a water-free solvent.69
40. ‘Industrial alcohol’ is a common term that is used to denote the
alcohol that is used in industries. As indicated above, all the above
three variants of ethanol are used in various industrial preparations.
While ENA is usually used for the preparation of alcoholic beverages,
rectified spirit is also used to prepare certain alcoholic beverages.
Denaturation is a process by which ethanol is deliberately made
undrinkable by adding chemicals known as ‘denaturants’ to make
it poisonous or foul smelling and unsuited for ingestion by humans.
Denaturants can be added to any of the three forms of ethanol
(ENA, rectified spirit and absolute alcohol). Denatured alcohol is also
further classified into ‘Completely Denatured Alcohol’ and ‘Specially
Denatured Alcohol’. Both these formulations contain denaturants
making it unconsumable. However, in completely denatured alcohol,
the denaturants cannot be easily removed while in ‘specially denatured
alcohol’, they can be easily removed.70 In view of this complexity,
where the materials for the preparation of potable alcohol are also
used for the preparation of other products, a simplistic classification of
‘potable’ and ‘non-potable’ alcohol cannot be made for the purposes
of this judgment.
41. This is also evident from the submissions by counsel on the scope
of Entry 8 of List II. The counsel made the following submissions:

67 Stuart Walton, Norma Miller, An Encyclopedia of Spirits & Liqueurs and How to Cook with Them (2000)
68 See FB Wright, Distillation of Alcohol and De-Naturing (2nd ed. 1907)
69 See KA Jacques, TP Lyons, DR Kelsall (ed), The Alcohol Textbook: A reference for the beverage, fuel
and industrial alcohol industries (4th ed. Nottingham University Press)
70 See Alcohol Denaturants-Specification (Second Revision), ICS 71.100.80
1986 [2024] 10 S.C.R.

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a. Entry 8 only includes the final product of potable alcohol, that
is alcoholic beverages for human consumption. Entry 8 does
not include ENA which is a raw material for the preparation of
beverage;71
b. Entry 8 includes ENA and potable alcohol;72
c. Entry 8 includes ENA, potable alcohol and the process of
‘denaturing’ ENA;73 and
d. Entry 8 includes ENA, potable alcohol and denatured alcohol.74

D. Issues
42. With the above preliminary observations, we have formulated the
following issues:
a. Whether Entry 52 of List I of the Seventh Schedule to the
Constitution overrides Entry 8 of List II;
b. Whether the expression ‘intoxicating liquors’ in Entry 8 of List II
of the Seventh Schedule to the Constitution includes alcohol
other than potable alcohol; and
c. Whether a notified order under Section 18G of the IDRA is
necessary for Parliament to occupy the field under Entry 33 of
List III of the Seventh Schedule to the Constitution.

E. Analysis

i. The constitutional distribution of legislative power
43. One of the prominent features of a federal Constitution is the
distribution of legislative powers between the Union and the States.
Article 246 provides for the distribution of legislative powers between
Parliament and the State Legislatures. Clause (1) of Article 246
stipulates that Parliament has exclusive power to make laws with
respect to any matter enumerated in the Union List (List I to the
Seventh Schedule) notwithstanding anything in the State or the

71 See submissions of Mr Tushar Mehta, learned SG.
72 See submissions of V Giri, counsel for petitioner
73 See Vam Organic (II)
74 See submissions of Mr Dwivedi and Mr Datar senior counsel
[2024] 10 S.C.R. 1987

State of U.P. & Ors. v.
M/s Lalta Prasad Vaish and sons

Concurrent Lists. Clause (2) stipulates that Parliament and the State
Legislatures have the power to legislate on any matter enumerated
in the Concurrent List (List III of the Seventh Schedule) subject to
the power of Parliament under Clause (1) but notwithstanding the
power of the State Legislatures under Clause (3). Clause (3) provides
that subject to clauses (1) and (2), the State Legislatures have
the power to legislate on any matter enumerated in the State List
(List II of the Seventh Schedule) of the Seventh Schedule. Further,
Clause (4) provides for the power of Parliament to enact laws for
Union Territories. It states that Parliament may enact laws for any
part of the territory of India which is not included in a State. This
power includes the power of Parliament to make laws with respect
to entries enumerated in the State list, for Union Territories.
44. The federal balance of the distribution of legislative powers between
the Union and the States rests on the interpretation of the phrase
“notwithstanding” in Clause (1) of Article 246 and “subject to” in
Clause (3) of Article 246. It is more than clear that the phrases
provide predominance to Parliament over State Legislatures. The
federal balance lies not on the recognition that the Constitution grants
Parliament predominant legislative power but on the identification
of the scope of such predominance. The scope of the non-obstante
clause in Article 246(1) and the subjugation clause in Article 246(3)
must not be interpreted in isolation but along with the substantive
provisions of the clauses. Clause (1) of Article 246 grants Parliament
the “exclusive power” to enact laws with respect to matters in List I.
Similarly, Clause (3) of Article 246 grants the Legislature of States,
the “exclusive power” to enact laws with respect to matters in List II.
On a holistic interpretation of the provisions, it is clear that the non-
obstante clause in Article 246(1) and the subjugation clause in Article
246(3) do not permit Parliament to enact laws with respect to the
entries in List II. Each of the legislative bodies are sovereign and
supreme within the sphere that is allocated to them in the Seventh
Schedule.75 What then is the purpose of the non-obstante and
subjugation clause? It is crucial to note that Clause (1) of Article 246
stipulates that the power of Parliament to make laws with respect to
entries in List I is ‘notwithstanding’ not just the power to make laws
with respect to matters in the Concurrent list but also the power to

75 Jindal Stainless Steel v. State of Haryana (2017) 12 SCC 1 [617]
1988 [2024] 10 S.C.R.

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make laws with respect to matters in the State List. A combined
reading of the non-obstante clause and the subjugation clause along
with the use of the phrase “exclusive power” means only one thing,
that when there is a conflict between the entries in List I and List II,
the power of Parliament supersedes.
45. The judgment of this Court in Hoechst Pharmaceuticals v. State
of Bihar76 is the locus classicus on the constitutional scheme of
legislative distribution. The decision holds that when there is a conflict
between an entry in List I and entry in List II which is not ‘capable
of reconciliation’,77 the power of Parliament to legislate with respect
to a field covered by List I must supersede the exercise of power by
the State legislature to that extent.78 The judgment also proceeded
to lay down the manner in which the entries in List I and List II must
be reconciled79:
a. In case of a seeming conflict between the entries in the two
lists, the entries must be read together without giving a narrow
and restricted meaning to either of the entries in the Lists; and
b. If the entries cannot be reconciled by giving a wide meaning,
it must be determined if they can be reconciled by giving the
entries a narrower meaning.
46. In State of WB v. Committee for Protection of Democratic Rights,80
a Constitution Bench held that the principle of federal supremacy in
Article 246 can be resorted to only when there is an ‘irreconcilable
direct conflict’ between the entries in List I and List II.81

ii. Scheme of legislative entries
47. The lists in the Seventh Schedule demarcate the legislative fields
between Parliament and the State Legislatures. They do not
confer power but stipulate broad fields of legislation.82 The source

76 [1983] 3 SCR 130 : (1983) 4 SCC 45
77 Also see In re Central Provinces and Berar Act 14 of 1938, AIR 1939 FC 1
78 (1983) 4 SCC 45 [38]
79 AIR 1939 FC 1 [41]
80 [2010] 2 SCR 979 : (2010) 3 SCC 571
81 (2010) 3 SCC 571 [27]; Also see In re C.P & Berar Taxation Act, AIR 1939 FC 1
82 See Calcutta Gas Co. (Proprietary) Ltd. v. State of W.B., 1962 SCC OnLine SC 60; Union of India v. HS
Dhillon (1971) 2 SCC 779; TMA Pai Foundation v. State of Karnataka (2002) 8 SCC 481.
[2024] 10 S.C.R. 1989

State of U.P. & Ors. v.
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of the power of Parliament and State Legislatures emanates from
Articles 245 and 246 of the Constitution. These provisions in the
Constitution have been borrowed from Sections 99 and 100 of
the Government of India Act 193583 with necessary modifications.
The demarcation of legislative fields is based on a deliberate
design as well as on the principles of federalism. Matters requiring
coordination between different regions of the country or of national
importance have been placed in the field of Parliament. Matters
requiring localized focus and limited or no coordination between
States have been placed in the State List. Fields of legislation
which may require either uniform legislation for the entire nation
or context and region-specific accommodation, depending on the
circumstance, are placed in the Concurrent List. Moreover, the
three lists make a clear distinction between general entries and
taxation entries. The power of taxation cannot be derived from a
general entry.84 The entries in the legislative lists do not cast an
obligation to legislate or to legislate in a particular manner. Within
the confines of an entry, the legislature exercises plenary power
subject to the provisions of the Constitution.85
48. Numerous language devices are used in the Seventh Schedule to
prevent the conflict of entries and ensure a clear demarcation of
the fields of entry. The entries in List II use the following language
devices:
a. ‘Subject to’ a specific provision of List I or List III: Entries 2,17,22,
24,26,27,33 and 57;
b. ‘Subject to’ provisions of an entire list with regard to the subject
matter: Entry 13;
c. ‘Not specified in’ or ‘other than those specified in’ List I: Entries
13, 32 and 63; and
d. ‘Subject to’ law made by Parliament or ‘subject to’ any limitations
imposed by Parliament by law: Entries 37 and 50.

83 “1935 Act”
84 State of Karnataka v. State of Meghalaya (2023) 4 SCC 416; Union of India v. HS Dhillon (1971) 2 SCC
779; MPV Sundararamier & Co. v. State of Andhra Pradesh (1958) 9 STC 298; R Abdul Quader & Co. v.
STO (1964) 6 SCR 867; HM Seervai, Constitutional Law of India, Volume 3 (4th edn.) [25.57] 2340-2341.
85 United Province v. Atiqa Begum (1940) FCR 110; Constitution of India, Article 13
1990 [2024] 10 S.C.R.

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49. With respect to category (a) above, where an Entry in List II is subject
to an entry or entries in List I or List III, the extent of the legislative
field covered by the entry in List II is circumscribed by the domain
covered by the entries in Lists I or III to which the entry in List II is
subject. For example, Entry 22 of the State List deals with “courts
of wards subject to the provisions of Entry 34 of List I”. Entry 34
of List I provides for “Courts of wards for the estates of Rulers of
Indian States”. The legislative field in Entry 22 of List II is wider
than the field of Entry 34 of List I. Hence the subjection of Entry 22
of List II to Entry 34 of List I indicates that that the field assigned
to the States is circumscribed to the extent of the field assigned
to Parliament in Entry 34 of List I. Barring the express legislative
device of subordination, the States have complete power to enact
laws over the fields specified in List II of the Seventh Schedule to
the Constitution. The authority of the State Legislature to enact laws
on those entries of List II which are not expressly made subject to
other entries has maintained the federal balance of legislatures
under the Constitution.86
50. The devices of language used in the Seventh Schedule prevent the
overlap between entries in various Lists. Now, what of the instances
where there is an overlap between provisions in different entries
but the Constitution does not use a device to resolve it? It must
be recalled that the federal supremacy of Parliament on legislative
competence can only be resorted to when there is an ‘irreconcilable
direct conflict’ between entries in different lists. It is crucial to note
the difference between ‘overlap’ and ‘conflict’. An overlap occurs
when two or more things or fields partially intersect. However, a
conflict occurs when two or more entries operate in the exactly same
field. Courts while dealing with an overlap of legislative entries must
endeavour to diminish the overlap and not enhance it by including it
in the field of conflict. The federal supremacy accorded to Parliament
ticks in at the stage of ‘conflict’.
51. The legislative entries must be given a wide meaning. All incidental and
ancillary matters which can be fairly and reasonably comprehended
must be brought within them.87 However, if there is an overlap

86 ibid
87 United Provinces v. Atiqa Begum (1940) FCR 110; Western India Theatres Ltd. V. Cantonment Board, Elel
Hotels & Investments Ltd. V. Union of India; Godfrey Phillips India Ltd. V. State of UP (2005) 2 SCC 515
[2024] 10 S.C.R. 1991

State of U.P. & Ors. v.
M/s Lalta Prasad Vaish and sons

between two entries the Court must endeavour to interpret the
entries harmoniously. While interpreting the entries harmoniously, it
must be ensured that no entry is rendered redundant. This principle
of construction applies equally to entries within the same List and
entries within different lists.88 The principle of parliamentary supremacy
must be applied only when the attempted reconciliation by the above
methods of interpretation fails.

iii. The field covered by Entry 52 of List I and Entry 8 of List II
52. Entry 8 of List II reads as follows:
“Intoxicating liquors, that is to say, the production,
manufacture, possession, transport, purchase and sale
of intoxicating liquors”.
(emphasis supplied)

a. The scope of Entry 8

I. The meaning of ‘that is to say’
53. Entry 8 of List II deals with ‘intoxicating liquor’. The Entry specifies
the scope of the provision by the usage of the phrase ‘that is to say’.
The Entry stipulates that it includes everything from the production
to the sale of intoxicating liquor, with the use of the expressions
‘production, manufacture, possession, transport, purchase and sale’.
The Entry specifies the breadth of the provision by couching it in
over broad terms. There are a few entries which provide such a
specification, by the use of the words “that is to say”.89 Otherwise, the
general language of the Seventh Schedule is to merely mention the
field such as ‘gas and gas-works’,90 or ‘fisheries’,91 or ‘census’,92 or
‘public health and sanitation; hospitals and dispensaries’.93 Entry 25
of List II specifies ‘gas and gas-works’ without clarifying the scope of
the provision. Similarly, Entry 21 of List II specifies ‘fisheries’. Even

88 See Harakchand Ratanchand Banthia v. Union of India (1969) 2 SCC 166
89 Seventh Schedule to the Constitution of India; Entry 71 to List I, Entry 5 to List II, Entry 13 of List II, Entry
17 of List II, Entry 18 of List II, Entry 42 of List II
90 Seventh Schedule to the Constitution of India; Entry 25 of List II
91 Seventh Schedule to the Constitution of India; Entry 21 of List II
92 Seventh Schedule to the Constitution of India; Entry 69 of List I
93 Seventh Schedule to the Constitution of India; Entry 6 of List II
1992 [2024] 10 S.C.R.

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within the entries that provide some specification, there are two
kinds. First, entries where the meaning of the field is clarified. For
example, Entry 71 of List I deals with the field of ‘Union Pensions’.
The phrase ‘that is to say’ is then used to specify the meaning of the
phrase ‘Union Pensions’ as pensions payable by the Government of
India or out of the Consolidated Fund of India.94 This specification
operates more or less as a definition clause. Second, the phrase is
used to specify the scope of the provision. For example, Entry 5 of
List II reads as “local government, that is to say, the constitution and
powers of municipal corporations, improvement trusts…”95 Entry 8
falls in the latter category.
54. The next question is whether the phrase ‘that is to say’ used in
Entry 8 limits or explains the scope of the entry. The interpretation
of the phrase ‘that is to say’ has fallen for the consideration of this
Court earlier in numerous cases.96 This Court has adopted both
views. Benches have interpreted the expression as a limiting as well
as an explanatory device. In Bhola Prasad v. The King Emperor,97
the Federal Court dealt with the meaning of the phrase ‘that is to
say’ in Entry 31 of the Provincial List in the 1935 Act. Entry 31 of
the Provincial List read as “Intoxicating liquors and narcotic drugs,
that is to say, the production, manufacture, possession, transport,
purchase and sale of intoxicating liquors, opium and other narcotic
drugs.” The issue was whether the Provincial Government had
the competence to issue a notification prohibiting the possession
of intoxicating liquor. The Federal Court held that the Provincial
Government had the competence to prohibit though Entry 31 does
not expressly grant the power to ‘prohibit’. The Court noted that
the words that follow the phrase ‘that is to say’ were explanatory

94 Other examples include Entry 13 of List II which specifies the meaning of ‘communications’ to mean
roads, bridges, ferries and Entry 42 of List II which specifies State pensions to mean pensions payable
by the State or out of the Consolidated Fund of the State.
95 Other examples include Entry 17 of List II which reads as “water, that is to say, water supplies, irrigation
and canals, drainage and embankments, water storage and water power subject to the provisions of
entry 56 of List I” and Entry 18 of List II which reads as ‘Land, that is to say, rights in or over land, land
tenures including the relation of landlord and tenant, and the collection of rents; transfer and alienation
of agricultural land; land improvement and agricultural loans; and colonization.
96 State of Karnataka v. Balaji Computers; Bansal Wire Industries v. State of UP (2011) 6 SCC 545; Sait
Rikaji Furtarnal v. State of AP (1991) Supp (1) SCC 202; CST v. Popular Trading Company (2000) 5
SCC 511; State of Punjab v. Devans Modern Brewaries (2004) 11 SCC 26; State of Bombay v. Bombay
Education Society (1954) 2 SCC 152
97 (1942) 4 FCR 17
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or illustrative and not words of either amplification or limitation.
However, in other judgments dealing with taxing provisions, this
Court has held that the expression ‘that is to say’ is employed to
exhaustively enumerate.98 While interpreting the expression ‘that is
to say’, it must not be lost that it features in the legislative list which
must be interpreted widely and to include all ancillary items. The
interpretation of taxing statutes (which must be construed strictly)
and legislative entries in the Seventh Schedule(which are required
to be construed widely and liberally) cannot be the same. This was
noticed by the Constitution Bench in State of Bombay v. Bombay
Education Society.99
55. In State of Punjab v. Devans Modern Breweries,100 the levy of tax
on the import of potable liquor manufactured in other States was
challenged. Justice SB Sinha in his dissenting opinion, considered the
scope of the words ‘that is to say’ in Entry 8 of List II. Relying on the
decisions in CST v. Popular Trading101 and Indian Aluminium Co.
Ltd. v. Assistant Commissioner of Commercial Taxes (Appeals),102
the learned Judge held that the expression ‘that is to say’ in Entry 8
of List II is descriptive, enumerative and exhaustive and circumscribes
the scope of the said entry to a great extent.”103 However, the opinion
did not consider the decisions in Bhola Prasad (supra) and State

98 State of Karnataka v. Balaji Computers; Bansal Wire Industries v. State of UP (2011) 6 SCC 545 [20]; Sait
Rikhaji Furtarnal v. State of AP (1991) Supp (1) SCC 202 [4]; CST v. Popular Trading Company (2005) 5
SCC 511
99 (1954) 2 SCC 152; “12. […] He points out that one of the meanings of the word “namely” as given in
Oxford English Dictionary, Vol. VII, p. 16 is “that is to say” and he then refers us to the decision of the
Federal Court in Bhola Prasad v. King Emperor [Bhola Prasad v. King Emperor, 1942 SCC OnLine
FC 3 : (1942) 4 FCR 17 at p. 25] where it was stated that the words “that is to say” were explanatory or
illustrative words and not words either of amplification or limitation. It should, however, be remembered
that those observations were made in connection with one of the legislative heads, namely, Entry 31
of the Provincial Legislative List. The fundamental proposition enunciated in R. v. Burah [R. v. Burah
(1878) LR 3 AC 889 (PC)] was that Indian Legislatures within their own sphere had plenary powers of
legislation as large and of the same nature as those of Parliament itself. In that view of the matter every
entry in the legislative list had to be given the widest connotation and it was in that context that the words
“that is to say”, relied upon by the learned Attorney General, were interpreted in that way by the Federal
Court. To do otherwise would have been to cut down the generality of the legislative head itself.
The same reason cannot apply to the construction of the Government Order in the present case for the
considerations that applied in the case before the Federal Court have no application here.” [emphasis
supplied]
100 (2004) 11 SCC 26
101 [2000] 2 SCR 983 : (2000) 5 SCC 511
102 [2001] 1 SCR 407 : (2001) 2 SCC 201
103 (2001) 2 SCC 201 [158]
1994 [2024] 10 S.C.R.

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of Bombay v. Bombay Education Society104 and instead referred
to the interpretation of the expression in taxing statutes. For the
above reasons, the expression ‘that is to say’ in Entry 8 of List II
cannot be interpreted to circumscribe the scope of the entry. The
words that follow ‘that is to say’ are illustrative and explanatory of
the scope of the provision. The expression does not limit the scope
of the entry. Thus, the scope of Entry 8 of List II cannot be limited to
the ‘production, manufacture, possession, transport, purchase and
sale’ of Intoxicating Liquor.

II. Product or industry based entry
56. The Seventh Schedule differentiates between an industry and the
product of the industry. Entry 24 of List II deals with industries.
Entries 26 and 27 of List II deal with products of industries. Entry
26 deals with “Trade and commerce within the State subject to the
provisions of Entry 33 of List III”. Entry 27 provides for “Production,
supply and distribution of goods subject to the provisions of Entry
33 of List III”. Entry 33 of List III enables both Parliament and the
State Legislature to enact laws with respect to trade and commerce
in, and the production, supply and distribution of, inter alia, the
products of the industry where control by the Union is declared by
Parliament by law to be in the public interest. Thus, if the Union has
control over an industry under Entry 52 of List I, both Parliament and
the State Legislature will have the competence with respect to the
products in terms of Entry 33 of List III. Under Entries 26 and 27 of
List II, the State Legislature has the exclusive power to enact laws
with respect to the products of the industries covered by Entry 24 of
List II. Parliament has the competence to legislate on any ‘industry’
provided that it satisfies the condition stipulated in Entry 52 of List I
(control by the Union being declared by a law of Parliament to be in
the public interest). The necessary corollary of the enactment of the
law under Entry 52 is that the products of the industry are shifted to
the Concurrent list from the State List.
57. The scope of Entry 8 must be interpreted in this background. If
Entry 8 is a product-based Entry, it will only cover the consumable
end-product. However, if it is an industry-based Entry, it would cover

104 [1955] 1 SCR 568 : (1954) 2 SCC 152
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the production of the product as well.105 Entries 24, 26 and 27 of
List II are general entries relating to industry and the products of the
industries. A distinction between industry and product is made in List II
to give effect to the legislative scheme by which certain industries
may be controlled by the Union under Entry 52 of List I but products
of those industries which are placed in the Concurrent list under
Entry 33. To give effect to this unique demarcation, it was necessary
to separate the entries relating to industries and products in List II.
However, Entry 8 is a specific entry dealing only with ‘intoxicating
liquor’. The distinction made between industry and products in the
general entries to give effect to the scheme of legislative distribution
on industries is not adopted in Entry 8. We have in the preceding
sections emphasised that the primary principle of interpreting entries
in the legislative lists is to provide a wide meaning to them. A narrow
interpretation must only be adopted when either (a) the scope of
the Entry is limited by the use of language devices; or (b) a wide
interpretation creates an overlap between entries within the same
list or different lists. For example, Entry 25 of List II provides States
the competence over “gas and gas-works”. This Court in Calcutta
Gas Company (supra) did not interpret the Entry to only include the
product of ‘gas and gas works’ but rather interpreted it to include the
industry. This is the construction which is in consonance with settled
principles of interpretation.
58. Entry 8 in itself indicates that the intent is to ensure that it is read
as broadly as possible. The Entry itself covers the ‘production,
manufacture, possession, transport, purchase and sale’ of intoxicating
liquors. Thus, it is clear that the Entry seeks to regulate everything
from the stage of the raw materials to the consumption of ‘intoxicating
liquor’. Entry 8 of List II includes both the industry and the product
of ‘intoxicating liquor’.

b. Scope of Entry 52 of List I: the absence of “to the extent to which”
59. Entry 24 of List II deals with ‘Industries’. The entry is subject to
entries 7 and 52 of List I. Entry 7 of List I deals with industries
which are declared by Parliament by law to be necessary for the
purpose of defence or for the prosecution of war. Entry 52 of List I

105 See Tika Ramji v. State of UP, AIR 1956 SC 676
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deals with industries, the control of which by the Union is declared
by Parliament to be expedient in the public interest. The State
Legislature will have the competence to enact laws with respect to
‘industries’. However, Parliament has the power to deal with such
industries which are necessary to be in the control of the Union for:
(a) public interest; (b) defence; and (c) prosecution of war. Thus,
the State Legislature will have the competence to enact laws with
respect to all industries, unless Parliament has taken control of the
industry under Entries 52 or 7 of List I.
60. A comparison may be drawn to Entry 54 of List I and Entry 23 of
List II to cull out the scope of Entry 52 of List I. Entry 23 of List II
deals with the “regulation of mines and mineral development subject
to the provisions of List I with respect to regulation and development
under the control of the Union.” Entry 54 of List I deals with the
“regulation of mines and mineral development to the extent to
which such regulation and development under the control of Union
is declared by Parliament by law to be expedient in public interest.”
The expression ‘to the extent to which’ is absent in Entry 52 of List I.
In Mineral Area Development Authority v. M/s Steel Authority
of India,106 a nine-Judge Bench of this Court dealt with the scope
of Entry 52 of List I and in particular, the purport of the expression
“to the extent to which”. One of the contentions before the nine-
Judge Bench was that the State Legislature does not have any
power under Entry 23 of List II because the Mines and Minerals
(Development and Regulation) Act 1957107 is a complete code that
occupies the entire field relating to regulation of mines and mineral
development. Rejecting the argument, the majority held that the
words “to the extent to which” indicates that “besides declaring that
it is taking under its control any subject relating to the regulation
of mines and mineral development, Parliament has to specify the
extent to which the Parliamentary regulation is deemed expedient
in the public interest.”108
61. As opposed to Entry 54, Entry 52 does not use the words “to the
extent to which”. The question is whether the State Legislature is

106 2024 INSC 554
107 “MMDRA”
108 2024 INSC 554 [158-161]
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denuded from legislating on an industry which is controlled under
the IDRA or any other similar legislation enacted under Article 246
read with Entry 52. Section 2 of IDRA provides that the Union
takes control over the industries specified in the First Schedule. In
Ishwari Khetan Sugar Mills v. State of UP,109 a Constitution Bench
of this Court dealt with the constitutional validity of the UP Sugar
Undertakings (Acquisition) Act 1971 which was challenged on the
ground that the State Legislature lacked the legislative competence.
While demarcating the scope of Entry 52 of List I and Entry 24 of
list II, Justice D A Desai (writing for himself and two other Judges),
observed that the degree and extent of control acquired by Parliament
upon a declaration under Entry 52 would depend on the legislation
enacted “spelling out the degree of control assumed”. The relevant
observations are extracted below:
“7. […] Entry 52 List I on its own language does not
contemplate a bald declaration for assuming control over
specified industries, but the declaration has to be by law
to assume control of specified industries in public interest.
The legislation enacted pursuant to the power to legislate
acquired by declaration must be for assuming control over
the industry and the declaration has to be made by law
enacted, of which declaration would be an integral part.
Legislation for assuming control containing the declaration
will spell out the limit of control so assumed by the
declaration. Therefore, the degree and extent of control
that would be acquired by Parliament pursuant to the
declaration would necessarily depend upon the legislation
enacted spelling out the degree of control assumed. A
mere declaration unaccompanied by law is incompatible
with Entry 52 List I. A declaration for assuming control of
specified industries coupled with law assuming control
is a prerequisite for taking legislative action under Entry
52 List I. The declaration and the legislation pursuant
to declaration to that extent denude the power of State
Legislature to legislate under Entry 24 List II.”

109 [1980] 3 SCR 331 : (1980) 4 SCC 136
1998 [2024] 10 S.C.R.

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62. The opinion of Justice D A Desai referred to the judgments of this
Court in Baijnath Kedia v. State of Bihar110 and State of Haryana v.
Chanan Mal111 “on an identical Entry 54, List I.”112 It was also argued
that Section 2 of IDRA,113 unlike Section 2 of MMDRA114 does not
provide that the Union shall take control “to the extent herewith
provided”, and thus, IDRA takes full control over the scheduled
industries. Rejecting the argument, Justice D A Desai noted that the
“words of limitation on the power to make declaration are ‘by law’”.115
Justice R S Pathak, as the learned Chief Justice then was, (writing
for himself and Justice Koshal) observed that he would refrain from
expressing any opinion on this issue and that the challenge to the
validity of the impugned enactment could be disposed of without a
reference to Entries 52 of List I and 24 of List II.116
63. In ITC (supra), another Constitution Bench briefly dealt with this issue.
It was argued that this Court in Ishwari Khetan (supra) equated Entry
52 of List I with Entry 54 of List II. Justice Y K Sabharwal, as the
learned Chief Justice then was, writing for the majority specifically
rejected the argument that Entry 54 was equated with Entry 52 and
observed that the “decision does not adopt the mines and minerals
cases for the purposes of considering the scope of Entry 52 of List I.”117
64. We agree with the opinion of Justice Desai in Ishwari Khetan
(supra). Entries 52 and 54 of List I (and entries 23 and 24 of List II)
are unique. Though entries 23 and 24 stipulate that they are subject

110 [1970] 2 SCR 100
111 [1976] 3 SCR 688
112 (1980) 4 SCC 136 [8]
113 “2. Declaration as to expediency of control by Union: It is hereby declared that it is expedient in the public
interest that the Union should take under its control the industries specified in the First Schedule.”
114 “2. Declaration as to expediency of Union Control.- It is hereby declared that it is expedient in the public
interest that the Union should take under its control the regulation of mines and the development of
minerals to the extent hereinafter provided.” [emphasis supplied]
115 (1980) 4 SCC 136 [11]
116 “44.[…] It seems to us that the observations made by this Court in Hingir-Rampur Coal Co. Ltd. v. State of
Orissa [AIR 1961 SC 459 : (1961) 2 SCR 537] , State of Orissa v. M.A. Tulloch and Co. [AIR 1964 SC 1284 :
(1964) 4 SCR 461] , Baijnath Kadio v. State of Bihar [(1969) 3 SCC 838, 847-848 : AIR 1970 SC 1436 :
(1970) 2 SCR 100, 113] and State of Haryana v. Chanan Mal [(1977) 1 SCC 340, 351 : AIR 1976 SC 1654 :
(1976) 3 SCR 688, 700] cannot be of assistance in this behalf. In each of those cases, the declaration
made by Parliament in the concerned enactment limited the control of the mines and the development of
minerals to the extent provided in the enactment. Whether the terms in which the declaration has been
framed in Section 2 of the Industries (Development and Regulation) Act — a declaration not expressly
limiting control of the specific industries to the extent provided by the Act — can be construed as being so
limited is a matter which, we think, we should deal with in some more appropriate case.”
117 (2002) 9 SCC 232 [31]
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to specific entries in List I, they are actually subject to the law made
by Parliament under the entries. The entries are unique in the sense
that the scope of an entry in the State List is not subjected to another
entry in the Union List but rather by the law made by Parliament. The
consequence of this is that when stretched to the extreme, Parliament
may by law declare that all industries must be in the control of the
Union. This would enable Parliament to render an entry in the State List
otiose. As held in the preceding section of this judgment, the entries
must be interpreted to maintain the federal balance. When there are
two possible interpretations of the entries, the Court must choose the
one that maintains the federal balance. Entries 24 of List I and 52 of
List II maintain the federal balance in a unique way. The members
of the Constituent Assembly thought it fit to include ‘industries’ as a
legislative field in the State List because it requires localized focus.
If the draftspersons thought otherwise, they could have included
the Entry in the Union List or even the Concurrent List. The unique
placement of these entries must be considered and given due effect.
The entries must not be interpreted in a manner that would, in effect
for all purposes, place the entry in the Concurrent List.
65. The question is whether an implied limitation can be read into Entry
52 of List I in the absence of the expression “to the extent to which”. If
an implied limitation is not read into the Entry, Parliament by a simple
declaration may take over the complete industry and subject the power
of the State Legislature to make any provision with respect to that
industry to the power of Parliament. This interpretation diminishes
the scope of competence of the State Legislature under Entry 24 of
List II. Such an interpretation completely tilts the federal balance that
entries 52 of List I and 24 of List II seek to maintain. The power of
Parliament in Entry 52 of List I is defined by the phrase ‘control’. The
Entry does not read as “industries, declared by Parliament by law to
be expedient in the public interest.” The Entry states “Industries, the
control of which by the Union is declared by Parliament by law to
be expedient in the public interest.” The law enacted by Parliament
must not be an abstract declaration but must specify the extent of
control that is necessary to be taken in public interest. The State
Legislature will have the competence to legislate with respect to
the field which is not the subject matter of control. The legislative
competence of the State Legislature is only denuded to the extent
of the ‘control’ by the Union declared by the law of Parliament to be
expedient in the public interest.
2000 [2024] 10 S.C.R.

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c. Reconciling the potential overlap between Entry 52 of List I
and Entry 8 of List II
66. Having discerned the scope of Entry 52 of List I, it next needs to be
considered if Entry 52 of List I and Entry 8 of List II overlap, and if
they overlap, whether they can be reconciled.
67. At this juncture, the decisions of this Court that have dealt with the
interplay of Entry 52 of List I and entries of List II need to be referred to.
In Calcutta Gas Company v. State of West Bengal,118 a Constitution
Bench dealt with the overlap between Entry 52 of List I and Entry 25
of List II. Entry 25 of List II provides for ‘gas and gas works’. The
Legislature of West Bengal enacted the Oriental Gas Company Act
1960. The constitutional validity of the enactment was challenged on
the ground that Entry 24 of List II which deals with industries is subject
to Entry 52 of List I and thus, Entry 25 of List II must be confined to
matters which are not covered by Entry 24. In short, the submission
was that the ‘industry’ of gas and gas works will be covered by Entry
24 of List II and the other matters relating to gas and gas works will
be covered by Entry 25 of List II. Justice Subba Rao writing for the
Constitution Bench held that the ‘industry’ of gas and gas works will
be covered by Entry 25 for the following reasons119:
a. Entry 25 of List II will become redundant if Entry 24 of List II
(read along with Entries 25 and 26 which deal with trade,
commerce, production, supply and distribution of products)
covers the industry of ‘gas and gas works’;
b. The alternative, allows Entries 24 and 25 to operate fully in
their respective fields. Entry 24 must be interpreted to cover
the entire field of industry while Entry 25, the specific industry
of gas and gas works;120 and

118 [1962] Supp. 3 SCR 1 : AIR 1962 SC 1044
119 AIR 1962 SC 1044 [9]
120 “9. […] If industry in Entry 24 is interpreted to include gas and gas works, Entry 25 may become
redundant, and in the context of the succeeding entries, namely Entry 26, dealing with trade and
commerce, and Entry 27, dealing with production, supply and distribution of goods it will be
deprived of all its contents and reduced to “useless lumber”. If industrial, trade, production and supply
aspect are taken out of Entry 25, the substratum of the said entry would disappear: in that event we
would be attributing to the authors of the Constitution ineptitude, want of precision and tautology. On
the other hand, the alternative contention enables Entries 24 and 25 to operate fully in their respective
fields: while Entry 24 covers a very wide field, that is, the field of the entire industry in the State, Entry
25, dealing with gas and gas-works, can be confined wo a specific industry, that is, the gas industry.”
[emphasis supplied]
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c. Parliament cannot enact laws on the gas industry under Entry
52 because the meaning of ‘industry’ in Entry 24 of List II and
Entry 52 of List I is the same. Since Entry 24 does not cover
the gas industry, it cannot be included in Entry 52 as well.121
68. In McDowell (supra), the constitutional validity of the Andhra Pradesh
Prohibition Act 1995 was under challenge. The enactment prohibited
the selling, buying, consumption and manufacture of liquor. It was
submitted that the State did not have the competence to enact the
statute because the manufacture and production of intoxicating liquors
is an industrial activity covered by Item 26 of the Schedule to IDRA.
It may be recalled that Item 26 before the 2016 amendment included
alcohol and other products of fermentation industry. The three-Judge
Bench of this Court rejected the submission. Justice Jeevan Reddy,
writing for the Bench, observed that:
a. Entry 8 expressly refers to ‘production and manufacture’ of
intoxicating liquor. Including the production and manufacture
of liquor in Entry 24 of List II (and as a consequence in Entry
52 of List I), would amount deleting the words “production and
manufacture” in Entry 8;
b. Entry 24 is a general entry and Entry 8 is a specific entry. On
the application of the principle of generalia specialibus non
derogant (general things do not derogate from specific things),
the industry of intoxicating liquor will not fall under the general
entry (Entry 24) but the special entry (Entry 8); and
c. Entry 52 only governs Entry 24 and not Entry 8. Thus, the
industry of intoxicating liquor cannot be taking over by Parliament
under Entry 52.122

121 “11. […] As we have indicated earlier, the expression “industry” in Entry 52 of List I bears the same
meaning as that in Entry 24 of List II, with the result that the said expression in Entry 52 of List I also does
not take in a gas industry.”
122 “26. […] Entry 24 is a general entry relating to industries whereas Entry 8 is a specific and special entry
relating inter alia to industries engaged in production and manufacture of intoxicating liquors. Applying
the well-known rule of interpretation applicable to such a situation (special excludes the general), we
must hold that the industries engaged in production and manufacture of intoxicating liquors do not have
within Entry 24 but do fall within Entry 8. This was the position at the commencement of the Constitution
and this is the position today as well. Once this is so, the making of a declaration by Parliament as
contemplated by Entry 52 of List I does not have the effect of transferring or transplanting, as it may be
called, the industries engaged in production and manufacture of intoxicating liquors from the State list
to Union List. As a matter of fact, Parliament cannot take over the control of industries engaged in the
production and manufacture of intoxicating liquors by making a declaration under Entry 52 of List I, since
the said entry governs only Entry 24 in List II but not Entry 9 in List II.”
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Referring to the decision in Calcutta Gas Company (supra), the
three-Judge Bench observed that Entry 8 is more specific as compared
to Entry 24 because the former expressly refers to ‘production and
manufacture’, and thus, it is all the more clear that the production
of liquor cannot be covered by Entry 52.123
69. In Calcutta Gas Company (supra) and McDowell (supra), this Court
adopted the following established principles of interpretation to resolve
the overlap between legislative entries: (a) generalia specialibus
non derogant; (b) an interpretation which does not render an entry
redundant must be adopted; and (c) parliamentary supremacy in
Article 246 will only operate if the entries in the State List and the
Union List cannot be reconciled. The approach in Calcutta Gas
Company (supra) and McDowell (supra) on the issue of reconciling
the conflict between the entries varies on one aspect. In Calcutta
Gas Company (supra), the Constitution Bench adopted a three-
step analysis:
a. On an application of the principle of generalia specialibus non
derogant, the industry of the specific entry (in this case, the
gas industry) was traced to Entry 25 and not Entry 24 (which
is a general entry);
b. Entry 52 is co-extensive with Entry 24. Thus, the scope of Entry
54 is circumscribed by the scope of Entry 24; and
c. The gas industry is included in Entry 25 (and not Entry 24)
which is not subject to Entry 52. Thus, Entry 52 cannot cover
the gas industry.
70. In McDowell (supra), the three-Judge Bench applied the principle
that the State Legislature has full competence to enact laws with
respect to those entries which are not expressly subject to an entry
in List I or List III.
71. The question is whether Parliament under Entry 52 of List I takes over
the industry of intoxicating liquor covered by Entry 8. The answer is in
the negative. Irrespective of whether the term ‘industry’ is interpreted

123 “28. […] Article 246 cannot be invoked to deprive the State Legislatures of the powers inhering in them
by virtue of entries in List II. To wit, once an enactment, in pith and substance, is relatable to Entry 8 in
List II or for that matter any other entry in List II, Article 246 cannot be brought into yet hold that State
Legislature is not competent to enact that law.”
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in a narrow or a wide manner (a point that is vehemently contested
by both sides), the industry of intoxicating liquor cannot be taken
over by Parliament under Entry 52 of List I for the following reasons:
a. The general principle is that legislative lists must be interpreted
widely. The question that the Court must pose is whether the two
entries would overlap when interpreted widely. If they overlap,
the Court must reconcile them. But the method of reconciliation
must maintain the federal balance. The courts must not apply
the principle of legislative supremacy of Parliament at the stage
of reconciliation. As explained above, such an exercise would
tilt the federal balance towards the Union;
b. The only limitation in Entry 52 is that the control of the industry
by the Union must be necessary for public interest. Parliament
can legislate on any industry, provided that it satisfies the
condition prescribed in the Entry. Thus, Entry 52 when read
independent of any other entry of List I, List II and List III does
not preclude the inclusion of the industry of intoxicating liquor
(provided that the Union is able to prove that its control is
necessary in public interest). Similarly, Entry 8 of List II, when
read independently also includes, inter alia, the production and
manufacture of intoxicating liquor which is included within the
meaning of industry. Thus, Entry 52 of List I and Entry 8 of
List II overlap on the aspect of ‘industry’ of intoxicating liquor;
c. Entry 8 of List II is not subject to Entry 52 of List I. Thus, the
State Legislature has the exclusive competence to enact a law
on the field in Entry 8. The Court must distinguish between
entries that are expressly subject to entries in the Union List
and entries that are not. When one entry is not subject to the
other, the Court must harmonise the overlap of the entries;
d. The only way to reconcile the entries is either to exclude the
industry of intoxicating entry from Entry 52 of List I or Entry 8 of
List II. The Court while reconciling the provisions, must ensure
that neither of the entries is rendered redundant. The principle of
generalia specialibus non derogant is used by courts to ensure
that the harmonisation of the entries does not render an entry
redundant. In Wavery Jute Mills Co. Ltd. v. Raymon & Co,124

124 [1963] 3 SCR 209
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the issue was whether Parliament or the State Legislature
had the competence to enact laws with respect to ‘forward
markets’. Applying the principles of generalia specialibus non
derogant, this Court held that the Union will have competence
over ‘forward contracts’ in terms of Entry 48 of List I (stock
exchanges and future markets) and that if it is brought within
Entry 26 of List II (trade and commerce), Entry 48 will become
redundant. Similarly, in Jayant Verma v. Union of India,125
this Court applied the principle to resolve the overlap between
Entry 30 of List II and Entry 45 of List I. A special entry must
prevail over a general entry, otherwise, the special entry may
become redundant; and
e. Entry 52 of List I is a general entry dealing with industry. Entry 8
of List II is a special entry dealing with one particular industry.126
The consequence of interpreting Entry 52 to cover the industry
of ‘intoxicating liquor’ is two-fold: first, it would amount to deleting
the words ‘production, manufacture’ in Entry 8; and second,
the State Legislature also loses its exclusive competence to
legislate upon the product of the industry, rendering Entry 8
fully redundant. This is because the legislative competence on
products of industries covered by Entry 52 of List I is placed
in Entry 33 of List III.
72. As a consequence, Parliament does not have the legislative
competence to enact a law taking control of the industry of intoxicating
liquor under Entry 52 of List I.

iv. Scope of Entry 8: Meaning of ‘intoxicating liquor’
73. Entry 8 of List II is a general entry and not a taxing entry. However,
it is a special entry in the sense that it specifically enumerates
‘intoxicating liquors’ as a legislative field to the exclusion of all other
general entries under which it may have otherwise been subsumed.
The Entry stipulates that intoxicating liquors would fall within the
legislative domain of States. The arguments of the counsel on either
side on the scope of Entry 8 of List II rest on the interpretation of
the expression “intoxicating liquor”.

125 (2018) 4 SCC 743
126 Calcutta Gas company (supra) and McDowell (supra)
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74. The appellants rely on the meaning of ‘liquor’ in statutes which predate
the Constitution to argue that the framers of the Constitution were
aware of the sense in which the phrase was used at the time and,
that it included denatured alcohol. In response, the Union argues
that the word ‘intoxicating’ occurring in the expression ‘intoxicating
liquors’ must not be rendered redundant by adopting the interpretation
accorded to Entry 8 of List II by the appellants. It argues that
‘intoxicating liquors’ means beverages which are per se meant for
human consumption for the purpose of intoxication without dilution
or modification by any process. The Union also relies on the legal
history of the division of legislative fields between the Union and the
States in support of its argument that only Parliament is competent
to legislate with regard to denatured alcohol.

a. Precedent on the interpretation of ‘intoxicating liquor’: exploring
FN Balsara and Southern Pharmaceuticals
75. The respondents have relied on the interpretation of the phrase
‘intoxicating liquor’ in the judgment of the Bombay High Court in FN
Balsara v. State of Bombay.127 The petitioners have strongly relied
on the decision of this Court in FN Balsara (supra) which overturned
the judgment of the Bombay High Court.
76. The petitioner in Balsara (supra) had one bottle of whisky, one
bottle of brandy, one bottle of wine, two bottles of beer, one bottle of
medicated wine, one bottle of eau-de-cologne, one bottle of lavender
water and some bottles of medicinal preparations. The petitioner
invoked the writ jurisdiction of the High Court to challenge the validity
of the Bombay Prohibition Act 1949.128 As the name suggests, the
statute sought to put in place and enforce the policy of prohibition
of alcohol. It was enacted with reference to Entry 31 of List II of
the Seventh Schedule to the 1935 Act, which was similar to Entry
8 of List II of the Seventh Schedule to the Constitution, in respect
of intoxicating liquors. The Act defined ‘intoxicant’ as “any liquor,
intoxicating drug, opium or any other substance which the Provincial
Government may, by notification in the Official Gazette declare to
be an intoxicant…”129 ‘Liquor’ was defined to include “all liquids

127 1950 SCC OnLine Bom 57
128 “Bombay Prohibition Act”
129 Bombay Prohibition Act 1949; Section 2(22)
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containing alcohol”.130 The definition clause was challenged on the
ground that it was beyond the competence of the State Legislature
under the entries in List II and List III of the 1935 Act. Chief Justice
M C Chagla, writing for the Bench, held that the State Legislature
did not have the competence to enact laws with respect to the
“legitimate use of alcoholic preparations which are not beverages”
and “the use of medicinal and toilet preparations containing alcohol”.131
In short, the High Court held that ‘intoxicating liquor’ in Entry 31 of
List II of the 1935 Act did not include all liquids with alcohol, and
thus, the definition was beyond the scope of the State Legislature.
The reasons for the interpretation were thus:
a. Liquor ordinarily means a strong drink as opposed to a soft drink.
In any event, it must be a beverage which is ordinarily drunk;
b. The difference in the words qualifying ‘liquor’ in entries 31132 and
40(a)133 of List II in the 1935 Act (the Entry corresponding to
Entry 51 of List II of the Seventh Schedule to the Constitution)
is very significant. In Entry 31, the word used is ‘intoxicating’. In
Entry 40(a), the word used is ‘alcoholic’. In the Whitepaper of
1933, the entry dealt with ‘alcoholic liquor’ which was substituted
with the expression intoxicating liquor. With the substitution,
non-intoxicating liquor was excluded from the scope of the
Entry; and
c. Medicinal and toilet preparations containing alcohol are neither
liquor nor intoxicating. Thus, they are excluded from the scope
of the Entry.
The 18th amendment to the US Constitution prohibits the sale,
manufacture and transportation of ‘intoxicating liquor’.134 The

130 Bombay Prohibition Act 1949; Section 2(24)
131 1950 SCC OnLine Bom 57 [36]
132 “31. Intoxicating liquors and narcotic drugs, that is to say, the production, manufacture, possession,
transport, purchase and sale of intoxicating liquors, opium and other narcotic drugs, but subject,
as respects opium, to the provisions of List I and, as respects poisons and dangerous drugs, to the
provisions of List III.”
133 “40. Duties of excise on the following goods manufactures or produced in the Province and countervailing
duties at the same or lower rates on similar goods manufactured or produced elsewhere in India- (a)
alcoholic liquors for human consumption…”
134 18th Amendment to the US Constitution; Section 1: “After one year from the ratification of this article
the manufacture, sale or transportation of intoxicating liquors within, the importation thereof into, or the
exportation thereof from the United States and all territory subject to the jurisdiction thereof for beverage
purposes is hereby prohibited.”
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petitioners relied on judgments of the US Supreme Court to
substantiate the submission that the State Legislature can legislate
on all liquids containing alcohol. The High Court, upon an analysis
of judgments noted that they only hold that ‘intoxicating liquor’ could
cover drinks that contain a small percentage of alcohol, even if it
does not produce an intoxicating effect. The Court further noted
that the judgments of the US Courts hold that the State cannot
regulate the legitimate use of non-beverage, and medicinal and
toilet preparations containing alcohol, but only regulate their use
for noxious purposes. Upon the analysis of the decisions, the High
Court held that the State: (a) has the competence to legislate on
alcoholic liquids which are not normally consumed as drinks; (b)
cannot legislate on the “legitimate” use of alcoholic preparations
which are not beverages; and (c) cannot legislate on the use of
medicinal and toilet preparations containing alcohol.
77. The appeals against the judgment of the High Court were allowed
by a Constitution Bench of this Court in FN Balsara (supra). This
Court noticed the meaning of the word ‘liquor’ by referring to its
dictionary meaning and also assessed the meaning assigned to it
in various enactments including the National Prohibition Act 1919 in
the USA, the Licensing (Consolidating) Act 1910 and the Spirits Act
1880 in England. It also referred to the Indian enactments, namely,
the Bombay Abkari Act 1878, the Bengal Excise Act 1909, the
Punjab Excise Act 1914 and the UP Excise Act 1910. The judgment,
authored by Justice Fazl Ali, was careful to clarify that the Court was
not suggesting that the definition of ‘liquor’ in the Bombay Prohibition
Act was borrowed from the statutes in the USA or England but that
they were referred to show that the term was “capable of being used
in a wide sense”.135 Based on its analysis, this Court observed that:
a. While ‘liquor’ was commonly understood to mean a drink or
beverage produced by fermentation or distillation, the various
enactments referred to indicated that the phrase extended to
liquids which were not, strictly speaking, beverages;136
b. The definitions of ‘liquor’ and ‘intoxicating liquor’ in the provincial
statutes consistently included liquids containing alcohol. The

135 (1951) SCC 860 [43]
136 (1951) SCC 860 [41]
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framers of the 1935 Act were aware of the ‘accepted sense’
of the meaning assigned to the term in the various provincial
laws;137 and
c. Therefore, the term ‘intoxicating liquors’ in Entry 31 of List II
of the Seventh Schedule to the 1935 Act included not only
beverages which intoxicate but also all liquids containing
alcohol. While this may not have been the meaning attributed
to ‘intoxicating liquors’ in common parlance, the numerous
statutory definitions made it clear that the expression in Entry 31
of List II of the 1935 Act was broad and included all liquids
containing alcohol.138
78. The Constitution Bench also approached the question from the
perspective of the entries on ‘public health’ and ‘public order’, and
Article 47139 of the Constitution. The Bench noted that the word ‘liquor’
must be given a wide meaning to include “all alcoholic liquids which
may be used as substitutes for intoxicating drinks, to the detriment of
health.” 140 On the consideration of the meaning of the phrase, both
from the perspective of legislative meaning and the constitutional
directive of prohibiting intoxicating drinks which are injurious to health,
this Court reversed the finding of the High Court.141
79. Though the High Court held that the definition of ‘liquor’ in the Bombay
Prohibition Act is ultra vires and this Court reversed the finding,
there is one commonality between both the decisions. Neither of the
decisions limited the scope of the phrase to the common parlance
meaning of ‘intoxicating beverages’. Both the decisions held that
the entry covered liquor which may not produce ‘intoxication’ but
which may be used for noxious purposes. The difference is one of

137 (1951) SCC 860 [44]
138 (1951) SCC 860 [44]
139 “47. Duty of the State to raise the level of nutrition and the standard of living and to improve
public health.- The State shall regard the raising of the level of nutrition and the standard of living
of its people and the improvement of public health as among its primary duties and, in particular, the
State shall endeavor to being about prohibition of the consumption, except for medicinal purposes of
intoxicating drinks and of drugs which are injurious to health.”
140 (1951) SCC 860 [45]
141 See Paragraph 48: “… the idea of prohibition is connected with public health, and to enforce prohibition
effectively the wider definition of the word “liquor” would have to be adopted so as to include all alcoholic
liquids which may be substitutes for intoxicating drinks, to the detriment of health. On the whole, I
am unable to agree with the High Court’s finding, and hold that the definition of ‘liquor’ in the Bombay
prohibition Act is not ultra vires.” [emphasis supplied]
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degree. While the High Court held that all liquids containing alcohol
will not be covered by Entry 31 of List II, this Court held otherwise.
However, the conclusion of this Court on the scope of the phrase
cannot be read detached from observations that a wider definition of
intoxicating liquor is necessary to cover other products which ‘may
be used as substitutes for intoxicating drinks’.
80. In Southern Pharmaceuticals and Chemical v. State of Kerala,142
the appellants challenged the constitutional validity of the provisions
of the Abkari Act, as amended by the Abkari (Amendment) Act 1967
and Kerala Rectified Spirit Rules 1972 which regulated the use of
alcohol for the preparation of medicines. Item 22 of the Schedule
to IDRA specifies the “drugs and pharmaceuticals” industry. The
contention was that the State Legislature did not have the competence
to enact laws because the field was covered by Parliament through
IDRA. The issue before the three-Judge Bench of this Court was
whether the State Legislature had the competence to enact a law
related to medicinal and toilet preparations containing alcohol under
Entry 8 of List II of the Seventh Schedule to the Constitution. This
Court held that the State had the competence to enact the impugned
laws under Entry 8 of List II because the legislations are confined to
ensuring the proper utilisation of rectified spirit in the manufacture of
medicinal and toilet preparations.143 After referring to the decision of
this Court in FN Balsara (supra), the Bench held that only medicinal
preparations which are capable of being misused for “noxious”
purpose can be considered ‘intoxicating liquor’.144 This Court held
that the test to determine if it can be misused is whether the article
in question can be used as a beverage:
“19. The general test for determining what medicinal
preparations containing alcohol are capable of
being misused and, therefore, must be considered
intoxicating within the meaning of the term “intoxicating

142 (1981) 4 SCC 391
143 (1981) 4 SCC 391 [14]
144 “18. … The power to legislate with regard to intoxicating liquor carries with it the power to regulate
the manufacture, sale and possession of medicinal and toilet preparations containing alcohol, not for
the purpose of interfering with the right of citizens in the matter of consumption or use for bona fide
medicinal and toilet preparations, but for preventing intoxicating liquors from being passed on
under the guise of medicinal and toilet preparations. It was within the competence of the State
legislature to prevent the noxious use of such preparations, i.e. their use as a substitute for
alcoholic beverages.” [emphasis supplied]
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liquor”, is the capability of the article in question for
use as a beverage. The impugned provisions have been
enacted to ensure that rectified spirit is not misused
under the pretext of being used for medicinal and
toilet preparations containing alcohol. It was argued
that this definition was therefore ultra vires the powers of
the State legislature, which could only make laws related
to alcoholic beverages.”
(emphasis supplied)
81. The observations of this Court in Southern Pharmaceuticals (supra)
follow the precedent in FN Balsara (supra) that preparations which
contain alcohol will be covered by the phrase ‘intoxicating liquor’
in Entry 8 to prevent its ‘noxious use’. In Indian Mica (supra), the
appellant challenged the vires of the rule levying licence fee to possess
denatured spirit. The Rules were framed under the Bihar and Orissa
Excise Act 1915. The State would have the competence to enact
a law levying fee on denatured spirit under Entry 66 of List II145 if
the spirit was covered by the phrase ‘intoxicating liquor’ in Entry 8
of List II. Denatured spirit in this case was used as a raw material
for the preparation of another product (micanite). In this case, the
Constitution Bench held that denatured spirit is ‘intoxicating liquor’
and thus, covered by Entry 8 of List II.146 Further it was held that the
fee charged will be valid if the levy has a reasonable relationship
with the services rendered by the Government.147
82. It is clear from the analysis of the above judgments that the meaning of
the phrase ‘intoxicating liquor’ in Entry 8 of List II has been expanded
beyond the narrow definition of alcoholic beverages that produce an
‘intoxicating effect’ upon consumption. Liquids which contain alcohol
and which can possibly be used (or misused) as intoxicating liquor
have been included within the meaning of the phrase.
83. We will test this proposition in the subsequent sections. In our
opinion, there are four possible approaches that we can adopt to
determine the meaning of the expression ‘intoxicating liquor’. The
first is through the identification of the ‘legislative meaning’ of the

145 “66. Fees in respect of any of the matters in this List, but not including fees taken in any Court.”
146 (1971) 2 SCC 236 [3]
147 (1971) 2 SCC 236 [11]
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phrase intoxicating liquor; the second is through legislative history;
the third, is the common parlance test, and the fourth is the principle
of workability. We will discuss the merits and demerits of each of
the above approaches in turn.

b. The legal import of ‘intoxicating liquor’
84. The petitioners submit that the expression ‘intoxicating liquor’ is a term
of recognised legal import because it has been used in numerous
statutes that pre-date the 1935 Act, where the phrase was first
used in Entry 31 of List II. The principle of ‘legal import’ has been
used by this Court to interpret entries in the Seventh Schedule. In
Gannon Dunkerley (supra), a Constitution Bench dealt with the
interpretation of Entry 48 of List II of the Seventh Schedule to the
1935 Act which specified the field of ‘taxes on the sale of goods’.
This Court was required to interpret the phrase ‘sale of goods’. On
one side it was contended that the term must be given the ‘popular
meaning’ and on the other side, it was contended that it must be
given the ‘legal meaning’. This Court chose the latter. The Bench
laid down the standard to determine when a phrase has obtained
a legal meaning. This Court laid down a two-prong test: first, the
phrase should have acquired a well-recognised, definite and precise
meaning in law;148 and second, the legal import of the word must be
practically unanimous.149 It is also crucial to note that in this case,
the popular meaning of the phrase was not widely different from the
legal meaning150.151

148 “The ratio of the rule of interpretation that words of legal import occurring in a statute should be construed
in their legal sense is that those words have, in law acquired a definite and precise sense, and that,
accordingly, the legislature must be taken to have intended that they should be understood in that sense.
In interpreting an expression used in a legal sense, therefore, we have only to ascertain the precise
connotation which it possesses in law.” [emphasis supplied]
149 “It will be seen from the foregoing that there is practical unanimity of opinion as to the import of the word
“sale” in its legal sense
150 “Now, in its popular sense, a sale is said to take place when the bargain is settled between the parties,
though property in the goods may not pass at that stage, as where the contract relates to future or
unascertained goods, and it is that sense that the learned Judge would appear to have had in his mind
when he spoke of a commercial or business sense. But apart from the fact that these observations were
obiter, this Court has consistently held that though the word “sale” in its popular sense is not
restricted to passing of title, and has a wider connotation as meaning the transaction of sale, and that
in that sense an agreement to sell would, as one of the essential ingredients of sale, furnish sufficient
nexus for a State to impose a tax..” [emphasis supplied]
151 The judgement in Gannon Dunkerley’s case (supra) was held to be constitutionally superseded on other
aspects by subsequent cases including Kone Elevator India (P) Ltd. v. State of T.N. (2014) 7 SCC 1.
However, the principle of interpretation referred to in this judgment continues to be good law.
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85. The judgment of this Court in Gannon Dunkerley (supra) must be
read in the context of the settled principle of interpreting legislative
entries, that the entries must be conferred the widest meaning
possible. Interpreting a phrase or words in the Legislative Lists based
on the legal import of the phrase is, thus, in many ways an exception
to the settled principle of interpreting entries. This is for the simple
reason that the legislative entries delimit the scope of competence
of the legislative bodies. If the entries are interpreted based on the
meanings or definitions in a legislation, the purpose of the Seventh
Schedule may become redundant. Further, the statute does not
define phrases based on popular or common parlance meaning but
rather based on the scope of the legislation and the manner in which
the provisions are drafted. A deeming fiction is often used to define
phrases by conferring artificial meanings.152 The interpretation based
on ‘legislative meaning’ elucidated in Gannon Dunkerley (supra),
which narrows the interpretation of entries, thereby creating an
exception to the rule of wide interpretation should only be employed
by Courts when the twin tests highlighted above. The tests are (a)
the phrase should have acquired a well-recognised, definite and
precise meaning in law; and (b) the legal import of the word must
be practically unanimous. Additionally, we also are of the view that
the legislative meaning interpretation should be adopted only when
the deviation from the popular meaning of the phrase is not too
wide. The legislative meaning cannot be used to artificially narrow
legislative entries. We also deem it necessary to note that we must
be cognizant that the standard of ‘legislative meaning’ is employed
to identify the ‘intent’ of the framers of the Constitution and belongs
to the originalist school of thought, which has been consistently
opposed by this Court over the years.153 For these reasons, the
principle of interpretation elucidated in Gannon Dunkerley (supra)
must be used cautiously by Courts.

152 See Ahmedabad Municipal Corporation v. GTL Infrastructure Limited (2017) 3 SCC 545 [13] “13. “…
it would be self-defeating to understand the meaning and scope of Entry 49 of List II by reference to
the definition clauses in the Gujarat Act. Definitions contained in the statute may at times be broad and
expansive; beyond the natural meaning of the words or may even contain deeming provisions. Though
the wide meaning that may be ascribed to a particular expression by the definition in a statute will have
to be given effect to, if the statute is otherwise found to be valid, it will, indeed, be a contradiction in terms
to test the validity of the statute on the touchstone of it being within the legislative entry, by a reference
to the definition contained in the statute”
153 See Gannon Dunkerley (supra) : “… Sales tax was not a subject which came into vogue after the
Government of India Act 1935. It was known to the framers of that statute and they made express
provision for it under Entry 48.”
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86. Let us now proceed to determine if the phrase ‘intoxicating liquor’:
(a) has a definite and precise meaning in law; (b) is unanimous; and
(c) has a legal meaning that is not widely different from its popular
meaning. We must refer to the pre-constitutional statutes for this
purpose because the expression ‘intoxicating liquor’ was first used
in the 1935 Act. The table below indicates the definition of ‘Liquor’,
‘intoxicating liquor’, and ‘spirits’ in numerous pre-constitutional
statutes:

Bombay Abkari Act Liquor is defined in an inclusive manner. It
1878 includes “all liquid consisting of or containing
alcohol…denatured or not.”154
Madras Abkari Act Liquor includes ….all liquid consisting of or
1886 containing alcohol.155
Spirits means any liquor containing alcohol
and obtained by distillation, whether it is
denatured or not.156
Abkari Act 1077 Liquor includes …. all liquid consisting of or
containing alcohol.157
Bengal Excise Act Intoxicant means any liquor.159 Liquor means
1909158 liquid consisting and containing alcohol.160
Spirit means any liquor containing alcohol,
whether denatured or not.161
Madhya Pradesh Liquor means ‘intoxicating liquor’ and includes
Excise Act 1915162 …. all liquid consisting of or containing
alcohol.163

154 Bombay Abkari Act 1978; Section 3(7)
155 Madras Abkari Act 1886; Section 3(9)
156 Madras Abkari Act 1886; Section 3(8)
157 Abkari Act 1077; Section 3(10)
158 Similar definitions in Bihar and Orissa Excise Act 1915; Sections 2(14); 2(19)
159 The Bengal Excise Act 1909; Section 2(12a)
160 The Bengal Excise Act 1909; Section 2(14)
161 The Bengal Excise Act 1909; Section 2(19)
162 Similar definitions in The Punjab ‘article’ Excise Act 1914; Section 2(14); The Chhattisgarh Excise Act
1915; Section 2(13); United Province Excise Act 1910; Section 3(11)
163 MP Excise Act 1916; Section 2(13)
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National Prohibition The word ‘liquor’ or the phrase ‘intoxicating
Act liquor’ shall be construed to include alcohol,
brandy, whisky, rum, gin, beer, ale, porter, and
wine, and in addition thereto any spirituous,
vinous, malt, or fermented liquor, liquids, and
compounds, whether medicating, proprietary,
patented, or not and by whatever name called,
containing one-half of 1 per centum or more
of alcohol by volume which are fit for use for
beverage purposes.
T h e L i c e n s i n g Intoxicating liquor means (unless inconsistent
(Consolidating Act) with the context) spirits, wine, beer, porter,
1872 cider, perry and sweets, and any fermented,
distilled, or spiritous liquor which cannot,
according to any law for the time being in
force, be legally sold without an excise law.164
Spirits Act 1880 Spirits means spirits of any description, and
includes all liquids mixed with spirits, and all
mixtures, compounds, or preparations made
with spirits.165

87. The Abkari Acts have generally defined the phrase ‘liquor’ to mean
liquids containing alcohol including denatured alcohol. However, the
Abkari Acts do not define the phrase ‘intoxicating liquor’. In Excise
Acts, ‘liquor’ was defined to mean ‘intoxicating liquor’ and included
liquids containing alcohol. Thus, none of the pre-constitutional
statutes have defined the phrase ‘intoxicating liquor’ for it to have
acquired a legal meaning. The phrase was defined in the Licensing
(Consolidating Act) 1910 which regulated the United Kingdom. It
cannot be concluded that the phrase used in the Indian Constitution
has acquired a legal meaning based on a definition clause in one
statute which applied to the United Kingdom. The definition of ‘liquor’
in pre-constitutional statutes as liquids containing alcohol cannot be
transposed to interpret the legislative entry. The phrase used in the
legislative entry is ‘intoxicating liquor’. The definition of one part of the
expression in statutes cannot be used to interpret expressions that are

164 The Licensing (Consolidating Act) 1872; Section 74
165 Spirits Act 1880; Section 3
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used to indicate a collective meaning, particularly when the common
parlance definition starkly varies. The common parlance meaning of
‘intoxicating liquor’ means liquor which causes intoxication, that is,
which causes someone to lose control. Thus, the three-prong test
to identify if “Intoxicating Liquor” has acquired legislative meaning
has not been satisfied.

c. Evolution of the legislative lists on ‘intoxicating liquor’
88. We proceed to consider the evolution of the legislative field relating
to ‘intoxicating liquor’ to determine the meaning of the expression.
The evolution of the legislative entries must be traced from the
Devolution Rules formulated under the 1919 Act.166 The Devolution
Rules classified legislative subjects for the purpose of distinguishing
the functions of the local legislatures from those of the federal
legislature. Alcohol was placed in the ‘Provincial List’ of the First
Schedule to the Devolution Rules (equivalent to List II or the State
List in the Seventh Schedule to the Constitution). Entry 16 of the
Provincial List concerned alcohol. It is reproduced below:
“16. Excise, that is to say, the control of production,
manufacture, possession, transport, purchase and sale of
alcoholic liquor and intoxicating drugs, and the levying
of excise duties and licence fees on or in relation to such
articles, but excluding, in the case of opium, control of
cultivation, manufacture and sale for export.”
(emphasis supplied)
89. Instead of two distinct entries, one which covered taxation and the
other which covered regulation, the Devolution Rules contained a
single entry in the Provincial List which extended to both aspects.
The Entry related to (a) levy of excise duties; (b) levy of fee; and
(c) general regulation. That it concerned taxation is evident from
the term ‘excise’ and the ‘levying of excise duties’. The words “the
control of production, manufacture, possession, transport, purchase
and sale” indicate that the Entry extended to regulation as well.
The expression used in Entry 16 was ‘alcoholic liquor’ as opposed

166 The Devolution Rules were made by the Governor General in Council with the sanction of the Secretary
of State in Council in exercise of the powers conferred by Sections 45A and 129A of the Government of
India Act 1919.
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to ‘intoxicating liquor’. However, it must be noted that the provision
deals with both ‘alcoholic liquor’ and ‘intoxicating drugs’.
90. The approach adopted in the 1935 Act differed from the 1919 Act.
Entry 45 of List I of the Seventh Schedule to the 1935 Act stipulated
the federal domain over duties of excise. It is reproduced below:
“45. Duties of excise on tobacco and other goods
manufactured or produced in India except —
(a) alcoholic liquor for human consumption;
(b) opium, Indian hand and other narcotic drugs and
narcotics; non-narcotic drugs;
(c) medicinal and toilet preparations containing alcohol or
any substance included in sub-paragraph (b) of this entry.”
91. Alcoholic liquor for human consumption was among the three
categories which was excluded from the ambit of legislative
competence of the Federal legislature. Entries 31 and 40 of List II
of the Seventh Schedule to the 1935 Act stipulated the Provincial
legislative domain over intoxicating liquors and narcotics, and duties
of excise respectively. They are reproduced below:
“31. Intoxicating liquors and narcotic drugs, that is to
say, the production, manufacture, possession, transport,
purchase and sale of intoxicating liquors, opium and other
narcotic drugs, but subject, as respects opium, to the
provisions of List I and, as respects poisons and dangerous
drugs, to the provisions of List III.
…
40. Duties of excise on the following goods manufactured
or produced in the Province and countervailing duties at
the same or lower rates on similar goods manufactured
or produced elsewhere in India-
(a) alcoholic liquors for human consumption;
(b) opium, Indian hemp and other narcotic drugs and
narcotics; non-narcotic drugs;
(c) medicinal and toilet preparations containing alcohol or
any substance included in sub-paragraph (b) of this entry.”
(emphasis supplied)
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State of U.P. & Ors. v.
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92. The three categories which were excluded from duties of excise
on goods produced or manufactured in India (in Entry 45 of List I)
were incorporated in Entry 40 of List II. Thus, duties of excise on
alcoholic liquors for human consumption was a subject assigned to
the Provinces. The following changes on the legislative scope on
‘alcoholic liquors’ were introduced in the 1935 Act:
a. Taxation and regulation were placed in separate entries. Entry
40 of List II concerned duties of excise, inter alia, on ‘alcoholic
liquors for human consumption.’ On the other hand, Entry 31 of
List II covered the regulation of ‘intoxicating liquors’ and other
substances;
b. The Federal legislature could levy duties of excise on tobacco
and other goods manufactured in India but not on alcoholic
liquor for human consumption, medicinal and toilet preparations
containing alcohol, and other specified goods;
c. The Provincial legislatures could levy duties of excise on
alcoholic liquor for human consumption, medicinal and toilet
preparations containing alcohol, and other specified goods
produced in the province; and
d. Entry 31 of List II was a regulatory entry covering intoxicating
liquors and narcotic drugs and the production, manufacture,
possession, transport, purchase and sale of intoxicating liquors,
opium and other narcotic drugs. Hence, the regulatory power in
relation to intoxicating liquor lay with the Provincial legislatures
and not the Federal legislature. Where Entry 16 of the Provincial
List of the Devolution Rules as well as Entries 45 of List I and
40 of List II of the Seventh Schedule to the 1935 Act used the
term ‘alcoholic liquors’, Entry 31 of List II used the expression
‘intoxicating liquors’. This term was first used in the 1935 Act.
93. The Seventh Schedule to the Constitution also placed the regulatory
powers and the taxing powers relating to alcohol in separate entries.
Entry 8 of List II of the Seventh Schedule to the Constitution deals
with ‘intoxicating liquors’. Entry 8 of List II of the Seventh Schedule
to the Constitution varies from Entry 31 of List II of the 1935 Act in
a significant manner. Entry 8 only deals with ‘intoxicating liquor’. It
does not cover narcotic drugs and opium. Entry 31 conferred the
Provincial Legislature, the competence to legislate with respect to
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narcotic drugs which included opium. It was subject to Entries in
List I and List II which dealt with opium167 and ‘poison and dangerous
drugs’.168 The Seventh Schedule to the Constitution placed opium in
List I169 and List III,170 completely removing it from List II.
94. Entry 84 of List I deals with duties of excise of goods except a few.
The Entry read as follows before the Constitution (One Hundred and
First Amendment) Act 2016:
“84. Duties of excise on tobacco and other goods
manufactured or produced in India except-
(a) Alcoholic liquors for human consumption
(b) Opium, Indian hemp and other narcotic drugs and
narcotics,
But including medicinal and toilet preparations containing
alcohol or any substance included in sub-paragraph (b)
of this entry.”
(emphasis supplied)
95. Entry 51 of List II deals with duties of excise, inter alia, on alcoholic
liquor:
“51. Duties of excise on the following goods manufactured
or produced in the State and countervailing duties at the
same or lower rates on similar goods manufactured or
produced elsewhere in India:-
(a) alcoholic liquors for human consumption;
(b) opium, Indian hemp and other narcotic drugs and
narcotics;
but not including medicinal and toilet preparations
containing alcohol or any substance included in sub-
paragraph (b) of this entry.”
(emphasis supplied)

167 Government of India Act 1935, Entry 31 of List I
168 Government of India Act 1935, Entry 19 of List III
169 Constitution of India 1950, Entry 59 of List I
170 Constitution of India 1950, Entry 19 of List III
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96. The only change with respect to the legislative competence on
duties of excise from the 1935 Act is that Parliament (and not the
State Legislature as it was envisaged under the 1935 Act) has
the competence to enact laws with respect to medicinal and toilet
preparations containing alcohol or narcotic substances, opium and
Indian hemp.171
97. The Constituent Assembly Debates which the Union of India referred
to ascertain the meaning of the phrase ‘intoxicating liquor’ are not of
assistance. The phrases ‘alcoholic liquor for human consumption’ and
‘intoxicating liquor’ were used for the first time in the 1935 Act. Entry
16 of the Provincial List of the Devolution Rules dealt with ‘alcoholic
liquor and intoxicating drugs’. The provision dealt both with regulatory
power and excise power. It is necessary to trace the development
between the 1909 Rules and the 1935 Act to understand the context
of substituting the expression ‘alcoholic liquor’ with ‘intoxicating liquor’
in the regulatory entry but retaining it in the taxing entry.
98. The 1935 Act was based on the White Paper (1931) on the proposals
for Indian Constitutional Reform172 and the Report of the Joint
Select Committee on Indian Constitutional Reform173 which was
constituted to examine and report upon the proposals contained in
the White Paper. The White Paper recommended the demarcation
of regulatory and taxation powers relating to alcohol. However, both
the entries used the words ‘alcoholic liquor’.174 The Report of the
Joint Committee suggested the following two revisions to the entries

171 The reason for providing Parliament the power to enact laws with respect to the excise duty on
medicinal and toilet preparations containing alcohol is reflected in the footnote to Entry 86 of List I in
the Draft Constitution of India 1948 as follows: “The committee is of the opinion that duties of excise on
medicinal and toilet preparation containing alcohol or any substance included in sub-paragraph (b) of
this entry should be included in this entry as duties leviable by the Union, as it thinks that uniform rates
of excise duty should be fixed in respect of these goods in all states for the sake of development of the
pharmaceutical industry. The levy of different rates in different States is likely to lead to discrimination
in favour of goods imported from foreign countries which would be detrimental to the interest of Indian
manufacturers as was pointed out by the Drugs Enquiry Committee in their report in 1931.”; See Shiva
Rao (Vol II) pg. 666
172 “White Paper”; See Command Paper 4268
173 “Joint Committee”; See Report of the Joint Select Committee on Indian Constitutional Reform
174 See Joint Committee on Indian Constitutional Reform (Volume 1 Part I) 369; “26. Control of production,
manufacture, possession, transport, purchase and sale of alcoholic liquors, drugs and narcotics.”;
“27. Imposition and regulation of duties of excise on alcoholic liquors, drugs and narcotics other than
tobacco.”
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related to alcohol: (a) the relevant entry in the Federal List provided
that the Union did not have the competence to levy excise duty on
“potable alcoholic liquor”175 and the Provincial List conferred States
the competence to levy excise duty on “potable alcoholic liquor”;176
and (b) the regulatory provision in List II dealt with the “production,
manufacture, possession, transport, purchase and sale of liquors,
opium and other drugs and narcotics not covered by item 19 of List
III.”177
99. Two revisions were further made to the entries as they appear in the
Government of India Bill 1935 which were subsequently reflected in
the Government of India Act 1935. The phrase ‘potable alcoholic liquor’
was substituted with the phrase ‘alcoholic liquor’ in the taxing entry
and the phrase ‘liquor’ was substituted with the phrase ‘intoxicating
liquor’ in the regulatory entry. The table below reflects the evolution
of the Legislative entries relating to alcohol:

Enactment Taxing Entry Regulatory Entry
Devolution Rules ‘alcoholic liquor’178
White Paper ‘alcoholic liquor’179 ‘alcoholic liquor’180
Joint Select Committee ‘potable alcoholic ‘liquor’182
on Indian Constitutional liquor’181
Reform

175 List I, Entry 49 of the Revised Lists; See Joint Committee on Indian Constitutional Reform (Volume 1 Part
I) 152 “46. Duties of excise on the manufacture and production of tobacco and other articles except-
(i) Potable alcoholic liquors;
(ii) Toilet and medicinal preparations containing alcohol, Indian hemp, opium or other drugs or narcotics;
(iii) Opium, Indian hemp, and other drugs and narcotics.
176 List II, Entry 19 of the Revised Lists; See Joint Committee on Indian Constitutional Reform (Volume 1
Part I) 155 “19. Duties of excise on the manufacture and production of –
(i) Potable alcoholic liquors;
(ii) Toilet and medicinal preparations containing alcohol, Indian hemp, opium or other drugs and narcotics;
(iii) Opium, narcotics, hemp and other drugs.
177 List II, Entry 18 of the Revised Lists; See Joint Committee on Indian Constitutional Reform (Volume 1
Part I) 155 “18. Production, manufacture, possession, transport, purchase and sale of liquors, opium and
other drugs and narcotics not covered by item 19 of List III.”
178 Devolution Rules; Entry 16 of the Provincial List
179 Command paper 4268; Entry 26 of List II: “26. Control of production, manufacture, possession, transport,
purchase and sale of alcoholic liquors, drugs and narcotics.”
180 Command paper 4268; Entry 27 of List II: “27. Imposition and regulation of duties of excise on alcoholic
liquors, drugs and narcotics other than tobacco.”
181 Report of the Joint Committee on Indian Constitutional Reform; Entry 49 of List I
182 Report of the Joint Committee on Indian Constitutional Reform; Entry 19 of List II
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Government of India ‘alcoholic liquor ‘intoxicating
Act 1935 for human liquor’184
consumption’183
Constitution of India ‘alcoholic liquor ‘intoxicating
for human liquor’186
consumption’185
100. Before we proceed to lay down our inferences upon a study of the
evolution of legislative entries, we clarify that the issue before this
Bench is squarely related to the interpretation of the expression
‘intoxicating liquor’. The meaning of the expression ‘alcoholic liquor
for human consumption’ and whether it can be read as ‘alcoholic
liquor fit for human consumption’ is not before this Bench.
101. The Report of the Joint Committee does not explain why the
expression ‘alcoholic liquor’ was substituted with the phrases ‘liquor’
in the regulatory entry and ‘potable alcoholic liquor’ in the taxing entry.
While the Report explains the reasons for a few revisions from the
White Paper, the entries relating to alcohol are not one of them.187
However, the paragraph extracted below provides some clarity:
“241. It would extend this chapter to an unreasonable
length if we were to set out in detail all the changes
which a revision of the three Lists has involved. We
are less willing to do so, because we recognise that
the revised Lists themselves will require further expert
scrutiny before they are finally submitted to Parliament
as part of the legislative proposals of His Majesty’s
Government. We think, however, that if the revised
Lists are compared with the Lists in the White Paper,
such changes as have been made, in addition to those
already mentioned will, for the most part, be found to
speak for themselves.”
(emphasis supplied)

183 Government of India Act 1935; Entry 45 of list I
184 Government of India Act 1935; Entry 31 of list II
185 Constitution of India 1950; Entry 84 of List I
186 Constitution of India 1950; Entry 8 of List II
187 Joint Committee on Indian Constitutional Reform (Volume I Part I) 148-149.
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102. While the revisions are not accompanied by any reasons, it is clear
that the intention of the Joint Committee was to differentiate between
the product covered by the regulatory entry and the taxing entry. It is
also clear that the Committee was aware of the possibility of alcohol
not being understood as just a final ‘consumable product’ but also
as a raw material in the production of other products. The Report of
the Joint Committee specifically conferred the States, competence
over “toilet and medicinal preparations containing alcohol, Indian
help, opium or other drugs and narcotics.”188 While the taxing entry
recognised the distinction between liquor that is used as a beverage
and is a product in itself by using the words ‘potable alcoholic liquors’,
and other products that contain alcohol, the regulatory entry does
not create that distinction. The regulatory entry only refers to ‘liquor’,
which is a much larger all-encompassing phrase.
103. We are unable to trace the discussions that led to a further revision in
the 1935 Act, where the expression ‘potable liquor’ was substituted with
‘alcoholic liquor for human consumption’, and ‘liquor’ was substituted
with the expression ‘intoxicating liquor’. However, it is clear that the
use of the phrases as they appear in the relevant entries of the 1935
Act and the Constitution of India was a matter well-thought of.
104. Another point that needs to be noted based upon a study of
the evolution of legislative entries is that until the 1935 Act, the
regulatory entry covered narcotic drugs and opium along with
‘alcoholic liquor’/‘liquor’/‘intoxicating liquor’. There are two possible
interpretations of the expression “intoxicating liquor”, as it appeared
in the 1935 Act, on an application of the principle of noscitur a
sociss, that is, the principle by which the meaning of an ambiguous
expression may be ascertained by reference to the meaning of the
words associated with it.189 It could be interpreted to mean liquor that
has an intoxicating effect upon consumption since narcotic drugs and
opium also produce intoxication. The expression ‘intoxicating liquor’
could also mean the regulation of alcohol used in the production of
other products since opium and narcotic drugs are also used as
raw materials in the production of other products (like pain relivers)

188 Report of the Joint Committee on Indian Constitutional Reform; Entry 19(ii) of List II
189 See Rainbow Steels v. Sales Tax Commissioner, UP AIR 1981 SC 2010; State of Bombay v. Hospital
Mazdoor Sabha, AIR 1960 SC 610, 613; Rohit Pulp and Paper Mills Ltd v. Collector of Central Excise,
AIR 1991 SC 754
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State of U.P. & Ors. v.
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105. Mr TT Krishnamachari moved an amendment to delete references to
narcotic drugs and opium in Entry 40 of List II of the Draft Constitution
1948 (which correspondes to Entry 31 of List II of the 1935 Act).
The amendment was adopted by the Assembly. Mr Krishnamachari
submitted that it was necessary to delete references to opium and
narcotic drugs because they were covered by other entries in List
I and List III:
“This amendment is necessary because we have shifted
poisons and drugs to the Concurrent List and opium
happens to be in the Central List. This entry, therefore,
will suffice for the purposes of State Governments.”190
106. An analysis of the evolution of the legislative entries relating to
alcohol does not provide an unambiguous interpretation. While the
evolution of the entries does indicate that the drafters were aware
of the distinction between potable alcohol and alcohol used as a
raw material in the production of other products, there is no clear
answer to whether ‘intoxicating liquor’ includes both. The evolution
of the entries provides us with some context and background but not
a conclusive answer. We now proceed to apply the third principle of
interpretation, the workability or harmonious interpretation principle.

d. The harmonious interpretation
107. The expression ‘intoxicating liquor’ can possibly be interpreted to
mean the following:
a. Alcohol which is used as a beverage for human consumption
such as beer or gin, that is, potable liquor;
b. If liquor means liquid, then Entry 8 of List II includes all liquids
which contain alcohol; and
c. Alcohol which is used as a raw material to prepare other products
such as pharmaceutical products and cosmetic drugs. This could
include denatured alcohol but also other types of alcohol that
are used in the production of products without denaturing it.
108. A preliminary observation needs to be made. It may be recalled that
the State does not have the competence to levy excise duty with

190 Constituent Assembly Debates (2 September 1949) Volume IX
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respect to toilet and medical preparations containing alcohol. However,
this cannot influence the interpretation of the phrase ‘intoxicating
liquor’ in Entry 8 of List II. The Seventh Schedule demarcates the
legislative competence on taxes and regulation. It is settled law that the
Legislature cannot derive taxation powers from a general regulatory
entry.191 Thus, the lack of competence to levy tax on products other
than alcoholic beverage cannot influence the interpretation of the
regulatory entry. They operate in separate spheres. We now proceed
to interpret the phrase ‘intoxicating liquor’.
109. The Oxford English Dictionary provides multiple meanings of the
word ‘Liquor’. They include: (a) alcoholic drinks, especially spirits;
(b) water used in brewing; (c) liquid that has been produced in or
used for cooking; and (d) liquid from which a substance has been
crystallized or extracted. Liquor thus broadly takes two meanings,
of an alcoholic beverage or liquid. The word ‘intoxicate’ is defined to
mean: (a) cause someone to lose control of their senses; (b) poison;
and (c) excite or exhilarate.
110. The dictionary meanings of the phrases ‘liquor’ and ‘intoxicate’ are
variable. If liquor is interpreted to mean ‘liquid’ instead of an alcoholic
beverage and intoxication a reference to alcohol, the Entry would
cover all liquids that contain alcohol. However, if liquor is interpreted
to mean alcoholic beverage, the Entry would only cover alcoholic
beverages for human consumption which causes intoxication, that
is, potable alcohol.
111. Entry 51 of List II refers to duties of excise on, inter alia, “alcoholic
liquors for human consumption”. Article 47 which is placed in the
Part on the Directive Principles of State Policy stipulates that the
State shall endeavour to bring prohibition of the consumption
of intoxicating drinks and drugs injurious to health, except for
medicinal purposes. The provision lists this as one of the aspects of
the duty of the State to improve public health. The phrase liquor is
also used in multiple places in the 6th Schedule to the Constitution.
The 6th Schedule stipulates provisions on the administration of Tribal
Areas in the States of Assam, Meghalaya, Tripura and Mizoram.
Paragraphs 12, 12AA and 12B provide for the application of Acts of
Parliament and of the Legislature of the State to the autonomous

191 MPV Sundararamier & Co. v. State of Andhra Pradesh (1958) 9 STC 298
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districts and regions in the States of Assam, Tripura and Mizoram.
The provisions stipulate that the enactments of the Legislature of
the State “prohibiting or restricting the consumption of any non-
distilled alcoholic liquor” would not apply to the autonomous Districts
or autonomous regions.192 The expressions in the 6th Schedule will
not be of aid to interpret Entry 8 because it refers to a legislation
enacted by the State Legislature under Entry 8.
112. Thus, the Constitution uses three distinct expressions relating to
alcohol: “intoxicating liquor”, “alcoholic liquor for human consumption”
and “intoxicating drinks”. The evolution of the entries in the legislative
Lists indicate that it was a conscious decision to substitute ‘alcoholic
liquor’ with ‘intoxicating liquor’ in the regulatory provision. It was also
a conscious decision to use different phrases in the taxing entry and
the regulatory entry. We do not think that it is necessary for us to lay
down the contours of the different phrases used in the Constitution.
That is a decision for another day and in another case. However,
it is still possible to draw some inferences from the different uses.
The expressions “alcoholic liquor for human consumption” and
‘intoxicating drink’ are used in the context of ‘consumption’. However,
the provision relating to “intoxicating liquor” is not limited to its
consumption. It stretches to its ‘production, manufacture, possession,
transport, purchase and sale of intoxicating liquors’ and beyond. The
second difference is the use of the expression ‘intoxicating’ instead
of ‘alcoholic’ as the adjective to liquor. The following inferences can
be drawn from the above differences:
a. ‘Alcoholic liquor’ defines the scope of the provision based on
the ingredient, that is, ‘alcohol’. In contrast, ‘intoxicating liquor’
defines the scope of the provision based on the effect, that is,
intoxication. Thus, even liquor which colloquially or traditionally
is not considered as alcoholic liquor may be covered by the
phrase ‘intoxicating liquor’ if it produces the effect of intoxication;
b. “Intoxicate” means the ability of someone to lose control of their
behaviour. It could also mean poison. Thus, the purpose of
substituting the adjective which indicates the ingredient (alcohol)

192 Unless the District Council by a public notification directs to give effect to the Act. The District Council
may also direct that the Act shall have effect subject to ‘exceptions or modifications’; See Paragraphs 12,
12AA and 12B of the 6th Schedule.
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with the impact (intoxication) seems to be enhance the scope
of the Entry to cover liquor which has an impact on health; and
c. The public interest purpose of the provision is evident from
the accompanying words in the provision which includes every
stage from its production to consumption within the scope of
the Entry. The public interest purpose of the provision is also
evident from the evolution of the Entry. The relevant entry in
the 1935 Act also regulated narcotic drugs and opium along
with intoxicating liquor. References to narcotic drugs and opium
were deleted to prevent its overlap with entries in the Concurrent
list. As highlighted in the previous section, a common thread
that runs through alcohol, narcotic drugs and opium is that they
are products which can be noxiously used because they are
also used as raw materials in the production of other products.
It is clear from the above analysis that the meaning of the phrase
‘intoxicating liquor’ cannot be restricted to potable alcoholic liquor,
that is, alcohol that is sold as a beverage.
113. At this juncture, it is relevant to recall that all entries in the Seventh
Schedule must be given a wide interpretation and Entry 8 of List II
when interpreted widely covers everything from the raw materials
required for the production to the consumption of ‘intoxicating liquor’.
It must also be recalled that a few of the materials that are used to
prepare potable alcohol (such as rectified spirit and ENA) are also
used to prepare other pharmaceutical and cosmetic products. For
example, ENA and rectified spirit are also used to prepare products
such as varnish and hand sanitizer. Hand sanitizer is a pharmaceutical
product which is covered by Entry 19 of List III of the Concurrent
List which deals with “drugs”. Since all entries must be interpreted
widely, Entry 19 will also include the production and manufacture of
drugs and will thus cover the materials (ENA or rectified spirit) used
for the preparation. Usually the entries cover the materials used for
the purpose of producing the product covered by that Entry. However,
alcohol is an inherently noxious substance that is prone to misuse
affecting public health at large. The purpose of Entry 8 is to cover
alcohol that could be used noxiously to the detriment of public health.
The Entry covers all alcohol that could be ‘prone’ to noxious use. It
also covers variants of alcohol that are not used for the preparation
of potable alcohol but which could be misused to harm public health.
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State of U.P. & Ors. v.
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This interpretation is in consonance with the mischief sought to be
covered by the Entry. Thus, while the entry covers ENA and rectified
spirit which are used in the preparation of potable alcohol, it also covers
variants of alcohol such as denatured alcohol which though are not
used in the preparation of potable alcohol, are prone to be misused.
114. It is not disputed that denatured alcohol is prepared by adding
substances which are called denaturants to give the alcohol a foul
smell and taste. The very purpose of denaturing ethanol to prepare
denatured alcohol is to make it undrinkable. This Court in VAM
Organic (II) (supra) held that the State can regulate the process of
preparing denatured alcohol because it is done to ensure that the
public is protected from consuming illicit liquor but not the product of
denatured spirit even if it can be renatured and converted to potable
liquor.193 The petitioners further sought to make a classification
between Specially Denatured Alcohol and Completely Denatured
Alcohol. It was argued that though Specially Denatured Alcohol is
not fit for human consumption, it can be made potable by certain
recovery processes while there is no such possibility in Completely
Denatured Alcohol.194 It was argued that Entry 8 must at the least
cover Specially Denatured Alcohol. The issue of whether denatured
alcohol can be renatured to produce potable alcohol is immaterial
for the purposes of delineating the field of Entry 8 of List II. As held
above, Entry 8 does not only cover potable alcohol but alcohol which
may be used noxiously also. Thus, the test to be adopted is not
whether the alcohol could be converted and used for the preparation
of alcoholic beverages but whether it could be mischievously used
for its preparation or as a substitute.
115. It was also argued by the petitioners that the phrase ‘intoxicating
liquor’ must be interpreted to mean liquid containing alcohol. The
consequence of this interpretation would be that it would include
liquid products which may be covered by other entries, thereby,
causing an overlap of the entries. For example, if interpreted in the
above manner, the product of ‘hand sanitizer’ will be covered by both

193 “43. […] But this power stops with the denaturation of the industrial alcohol. Denatured spirit has been
held in Vam Organic-I to be outside the seism of the State Legislature. Assuming that denatured spirit
may by whatever process be renatured (a proposition which is seriously disputed by the respondents)
and then converted into potable liquor, this would not give the State the power to regulate it.[…]”
194 See Alcohol Denaturants-Specification (Second Revision), ICS 71.100.80
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Entry 8 of List II (‘intoxicating liquor’) and Entry 19 of List III (‘drugs’).
Since the Entry must be read widely, it will then cover everything
relating to the production of the drug, substantially reducing the
scope of Entry 19 because other products of the pharmaceutical and
cosmetic industry will be covered by Entry 8. This interpretation will
not be in consonance with the settled principle of interpretation that
an interpretation that promotes the workability of provisions must
be adopted. This interpretation of the phrase is also in consonance
with the precedents that we have analysed in section E(iv)(a) of
this judgment.

v. The correctness of the decision in Synthetics (7J)
116. Having interpreted Entry 8 of List II, we now turn to the decision in
Synthetics (7J) (supra). This Court in Synthetics (7J) (supra) did
not undertake an independent analysis of the meaning of the phrase
‘intoxicating liquor’. Without any discussion, the seven-Judge Bench
readily concluded that the interpretation of the Bombay High Court
and not this Court in FN Balsara (supra) is the correct approach. The
only reasoning that this Court offered was that when the Constitution
Bench in FN Balsara (supra) interpreted the phrase, it was not aware
of the full potentiality of industrial alcohol:
“74. […] It appears that in the light of the new experience
and development, it is necessary to state that “intoxicating
liquor” must mean liquor which is consumable by human
being as it is and as such when the word “liquor” was used
by Fazl Ali J., they did not have the awareness of full use of
alcohol as industrial alcohol. It is true that alcohol was used
for industrial purposes then also, but the full potentiality
of that user was not comprehended or understood. With
the passage of time, meanings do not change but new
experiences give new color to the meaning.”
117. These observations are erroneous for the following reasons:
a. The High Court in FN Balsara v. State of Bombay (supra)
did not limit the meaning of ‘intoxicating liquor’ to its common
parlance meaning, that is, potable alcoholic liquor. It also
included alcoholic liquids which are not normally consumed
as drinks. On appeal, the Constitution Bench held that a wider
definition of intoxicating liquor is necessary to cover other
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products which may be used as substitutes for intoxicating
drinks. [See section E (iv)(a) of this judgment]. This Court held
that the expression must be given a wide meaning precisely
because it recognised the potentiality of the wide use of alcohol
for industrial purposes and its consequent misuse; and
b. The Constitution itself recognises the industrial use of alcohol.
Entries 84 of List I (before the amendment in 2016) and 51
of List II specifically refer to medicinal and toilet preparations
containing alcohol.
Thus, the use of alcohol for industrial preparations was well within
the knowledge of this Court in FN Balsara (supra).
118. This Court in Synthetics (7J) (supra) did not determine the meaning
of the expressions ‘intoxicating’ or ‘liquors’ or ‘intoxicating liquors’
independently. It did not compare the difference in the language used
to describe alcohol or liquor in different provisions of the Constitution
to understand the significance of the difference. Only Article 47 was
referred to in the following terms:
“77. Article 47 of the Constitution imposes upon the State
the duty to endeavour to bring about prohibition of the
consumption except for medicinal purpose of intoxicating
drinks and products which are injurious to health. If the
meaning of the expression “intoxicating liquor” is taken in
the wide sense adopted in Balsara case, it would lead to an
anomalous result. Does Article 47 oblige the State to prohibit
even such industries as are licensed under the IDR Act
but which manufacture industrial alcohol? This was never
intended by the above judgements or the Constitution.”
119. Although Article 47 was mentioned, the distinction between the
purpose of a constitutional provision in Part IV and a legislative entry
was not appreciated. This leads to an incorrect inference, namely,
that holding Entry 8 of List II includes non-potable alcohol would
amount to placing an obligation on the state to prohibit non-potable
alcohol in terms of Article 47. There is no doubt that Article 47 refers
only to intoxicating drinks which means potable alcohol. However, an
analysis of the differences in the terminologies without appreciating
that the reference in Article 47 is made in the context of consumption
leads to an erroneous conclusion.
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120. Further, in Synthetics (7J) (supra), this Court concluded that the
impugned fees are in the nature of a tax. In that case, the only
entries that this Court ought to have dealt with are Entries 84 of List
I and Entry 51 of List II. Entry 8 deals with regulatory power and is
not a taxing entry. It is a settled principle that a tax cannot be levied
under a general entry.195
121. In spite of holding that the fee charged was a tax and that the State
Legislature does not have the competence to levy tax on industrial
alcohol, the Bench proceeded to analyse the relationship between
Entry 52 of List I196 and Entry 8 of List II in paragraph 84 of the
judgment. The Bench noted that the “levy of impost” is not possible
in view of the occupation of the field by IDRA and that in view of
IDRA, the power to issue licences to manufacture both potable and
non-potable alcohol is vested in the Central Government.197 These
observations are erroneous for the following reasons:
a. Under Entry 52 of List I, Parliament has the competence to enact
laws with respect to certain industries, the control of which by
the Union is necessary in public interest. It is a general entry. It
does not confer any taxing power. Thus, Entry 52 of List I may
only impact the entries in List II that deal with the regulatory
aspect of industries as we have explained in the previous
section of this judgment. It does not have any impact on taxing
entries. Thus, the observation in paragraph 84 of Synthetics
(7J) (supra) is overruled; and
b. We have also held that Parliament in exercise of the power
under Article 246 read with Entry 52 of List I cannot legislate with
respect to the field covered by Entry 8 of List II. The observations
in paragraph 85 of Synthetics (7J) (supra) that after the
amendment to IDRA in 1956 bringing fermentation industries
within the scope of the enactment, the Union has competence
over both potable and non-potable alcohol is overruled. The law
enacted in terms of Entry 52 of List I cannot render any entry
of List II (including Entry 8) otiose. Thus, Parliament cannot
take over the field covered by Entry 8.

195 See MPV Sundararamier & Co. v. State of AP, AIR 1958 SC 468
196 See Synthetics (7J) [84]
197 See Synthetics (7J) [85]
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State of U.P. & Ors. v.
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122. In paragraph 86 of the judgment, this Court in Synthetics (7J)
(supra) held that after the inclusion of the fermentation industry in
the schedule to IDRA, the State only had legislative competence to:
a. enact any legislation in the nature of prohibition of potable
liquor referable to Entry 6 of List II and regulating powers;
b. lay down regulation to ensure that non-potable alcohol is not
diverted and misused as a substitute for potable alcohol;
c. levy excise duty and sales tax on potable alcohol under
Entry 52 of List II. However, the State cannot levy sales tax
on industrial alcohol because “under the Ethyl Alcohol (Price
Control) Orders, sales tax cannot be charged by the State on
industrial alcohol”; and
d. in case the State is rendering any service, it may charge fees
based on quid pro quo. Reliance was placed on observations
in Indian Mica (supra).
123. Since this Court in Synthetics (7J) (supra) held that the State lost
the competence to enact a legislation on potable alcohol because
IDRA occupies the field and that it did not have the competence to
enact a law on non-potable alcohol, it traced regulations relating to
alcohol to Entry 6 of List II which deals with “public health”. Viewing
the consumption of potable alcohol as a public health concern on
a reading of Article 47 along with Entry 6 of List II, this Court held
that the State has the competence to deal with (a) and (b) above.
In view of our holding that : (a) the expression ‘intoxicating liquor’
in Entry 8 is not limited to alcoholic beverages; and (b) Entry 52
of List II cannot occupy the field covered by Entry 8 of List II, the
observations in Synthetics (7J) (supra) by which alcohol was only
traced to the entry on public health is erroneous. It cannot be denied
that there is a degree of overlap between Entry 8 and Entry 6 of List
II. However, Entry 8 of List II cannot be rendered redundant for all
purposes by a declaration by parliamentary law under Entry 52 of
List I. Such as interpretation, as held above, would completely tilt
the federal balance in the favour of Parliament.
124. Paragraph 86(d) must be read along with paragraph 88 extracted
in the earlier part of the judgment. The Bench only placed reliance
on the decision in Indian Mica (supra) to arrive at this conclusion.
In paragraph 3 of Indian Mica (supra), the Constitution Bench held
as follows:
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“Denatured spirit though an alcoholic liquor is not fit for
human consumption. The power to levy duty on the same
was and is given to the Central Legislature. But the same
being intoxicating liquor, the Provincial Legislature under
the 1935 Act and at present the State Legislature has
power to levy fee. The power of any Legislature to levy
fee is conditioned by the fact that it must be by and large
a quid pro quo for the services rendered.”
(emphasis supplied)
125. The conclusion in Indian Mica (supra) that the State Legislature
has the competence to levy fees on denatured alcohol (which
this Court in Synthetics (7J) (supra) interchangeably uses with
industrial alcohol) is premised on the wide interpretation of the
phrase intoxicating liquor in Entry 8 of List II to include denatured
alcohol. However, this Court in Synthetics (7J) (supra) expressly
rejected this interpretation. The State Legislature would have the
competence to levy fees in terms of Entry 66 of List II in respect
of any of the matters in the List. Thus, the conclusion in paragraph
86(d) creates an inherent inconsistency within the judgment. We
have overruled the interpretation in Synthetics (7J) (supra) on the
scope of Entry 8 and the interaction between Entry 8 and Entry 52
of List. The phrase ‘intoxicating liquor’ in Entry 8 includes denatured
alcohol. Thus, the State will have the competence to levy fees with
respect to denatured alcohol, but for the reasons in this judgment.
126. Reference may be made to judgments of this Court interpreting
Synthetics (7J) which are summarised in Section A(iii) of this
judgment. This Court interpreted Synthetics (7J) (supra) in the
following manner:
a. The State has the competence to legislate upon industrial
alcohol as a product of the controlled industry under Entry 33
of List III;198
b. The State has the competence to legislate upon the process
of producing denatured spirit but not the product of denatured
spirit because the process is related to preventing the diversion
of non-potable liquor to potable liquor;199

198 Shri Bileshwar Khand Udyog Khedut Sahakari Mandali (supra)
199 See VAM Organic(I) (supra) and VAM Organic (II) (supra)
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c. The State does not have the competence to legislate upon
rectified spirit;200 and
d. The State has the competence to legislate upon rectified spirit
that is used for the purpose of preparing potable alcohol.201
127. Before we proceed to analyse the correctness of these observations
based on the law that we have laid down in this judgment, it is
necessary to expound upon how this Court in Bihar Distillery (supra)
drew a purpose based demarcation of the legislative fields. The heart
of the reasoning of the Court is reproduced below:
“23. … Take a case where two industries ‘A’ and ‘B’ come
forward with proposals to manufacture rectified spirit; ‘A’
says that it proposes to manufacture rectified spirit and then
denature it immediately and sell it as industrial alcohol while
‘B’ says that it will manufacture rectified spirit and utilise it
entirely for obtaining country liquor (arrack or by whatever
other name, it may be called) or for manufacturing IMFLs
from out of it or to supply it to others for the said purpose.
According to Synthetics [(1990) 1 SCC 109 : 1989 Supp
(1) SCR 623] , ‘A’ is under the exclusive control of the
Union and the only powers of the State are those as are
enumerated in para 86 quoted above. But what about ‘B’?
The rectified spirit manufactured by it is avowedly meant
only for potable purposes. Can it yet be called “industrial
alcohol”? Can it still be said that the State concerned has
no power or authority to control and regulate industry ‘B’
and that the Union alone will control and regulate it until the
potable liquors are manufactured? The Union is certainly not
interested in or concerned with manufacture or process of
manufacture of country liquor or IMFLs. Does this situation
not leave a large enough room for abuse and misuse of
rectified spirit? It should be remembered that according to
many States before us, bulk of the rectified spirit produced
in their respective States is meant for and is utilised for
obtaining or manufacturing potable liquors. Can it be said

200 Deccan Sugar (supra)
201 Bihar Distillery (supra)
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even in such a situation that the State should fold its hands
and wait and watch till the potable stage is reached. … It is
these and many other situations which have to be taken into
consideration and provided for in the interests of law, public
health, public revenue and also in the interests of proper
delineation of the spheres of the Union and the States. The
line of demarcation can and should be drawn at the
stage of clearance/removal of the rectified spirit. Where
the removal/clearance is for industrial purposes (other than
the manufacture of potable liquor), the levy of duties of excise
and all other control shall be of the Union but where the
removal/clearance is for obtaining or manufacturing potable
liquors, the levy of duties of excise and all other control
shall be that of the States. This calls for a joint control and
supervision of the process of manufacture of rectified spirit
and its use and disposal.”
(emphasis supplied)
128. This Court in Bihar Distillery (supra) held that where rectified spirit
is manufactured only for the purpose of converting it into potable
alcohol, it cannot be termed ‘industrial alcohol’. It was of the opinion
that it was ill-conceived to allow for a legal structure where the States
would step in only after alcohol was made potable as this would either
result in a lacuna in regulation or permit the Union to regulate a field
which it was not empowered to in terms of the Seventh Schedule.
The three-Judge Bench held that the line of demarcation should be
drawn at the stage of clearance or removal of rectified spirit. Put
differently, the Bench held that the purpose for which the rectified
spirit was manufactured would determine whether the Union or the
States would tax and control it. It elaborated that:
a. Industries which manufactured rectified spirit exclusively for
supply to industries other than those which manufactured
potable liquor would be under the total and exclusive control
of the Union including for the purpose of levying excise duty.
This extended to denatured alcohol as well. The power of the
States with respect to this category was limited to ensuring that
such alcohol was not illegally diverted to create potable alcohol.
The States could levy regulatory fees to defray the costs of the
staff deployed for this purpose;
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b. Industries which manufactured rectified spirit exclusively for the
purpose of manufacturing potable alcohol would be under the
total and exclusive control of the States in all respects and at
all stages including levying excise duty; and
c. The power to permit the establishment of industries which
manufactured rectified spirit for both the purposes delineated
above as well as the regulation of such industries would be
exclusively with the Union. The Union could levy excise duty
on rectified spirit which was cleared or removed for supply to
industries and the States could levy excise duty on rectified
spirit which was cleared or removed for manufacturing potable
alcohol. The removal or clearance of alcohol would be under
the joint supervision of the Union and the States to ensure that
excise duty was not evaded.
129. In Bihar Distillery (supra), the issue before this Court was whether
the State has the competence to regulate raw material (“rectified
spirit”) for the preparation of “intoxicating liquor” which was interpreted
to only mean potable liquor. Justice Jeevan Reddy, writing for the
three-Judge Bench, saw it fit to draw a purpose based delineation
because rectified spirit could be used to prepare both potable alcohol
and other products. The shortcoming of this reasoning is evident in
the manner in which the Bench deals with composite industries, that
is, industries which manufacture both rectified spirit for the purpose of
potable alcohol and the production of other products. The regulation
of such composite industries was held to be with the Union though
there was no constitutional basis for such a division. This Bench,
having expounded on the meaning of “intoxicating liquor” to include
variants of alcohol which are prone to be misused, the interpretations
of Synthetics (7J) summarised in paragraph 126 of this judgment are
overruled. The classification of alcohol into potable and non-potable (or
industrial alcohol) is oversimplistic. Alcohol (such as ENA or rectified
spirit) which is used to prepare potable alcohol is also used to prepare
other products of the pharmaceutical industry. An interpretation that
ENA or rectified spirit which is used in the preparation of potable
liquor is ‘industrial alcohol’ and is thus outside the scope of Entry
8 limits the field covered by the Entry even if ‘intoxicating liquor’
is interpreted to only mean potable liquor. Further, we also see no
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merit in the classification between the process of making denatured
spirit and the product of denatured spirit since we have held that the
expression intoxicating liquor includes denatured spirit.

vi. The impact of the decision on Item 26 of the First Schedule
of IDRA
130. The Law Commission of India in its 158th Report on the amendment
of the IDRA, released in 1998 noted that the decision in Synthetics
(7J) (supra) created “several practical problems” and that “there is no
such thing as industrial alcohol ”. The Law Commission recommended
that Item 26 of the IDRA which read “Fermentation industries” be
substituted to read “Fermentation industries but not including alcohol”.
Item 26 was substituted in 2016 to read “Fermentation industries (other
than potable alcohol)”.202 While the Law Commission recommended
removing alcohol as a whole from the scope of the IDRA, Parliament
by the 2016 amendment only removed potable alcohol from the scope
of the enactment. The Statement of Objects and Reasons indicates
that the amendment to the IDRA was to harmonise the Act with the
decision of this Court in Bihar Distillery (supra). The relevant portion
of the Statement of Objects and Reasons is reproduced below:
“The Supreme Court of India, in the case of Bihar Distillery
v. Union of India (AIR 1997 SC 1208), has held that in the
interest of proper delineation of the spheres of the Union
and the States, the line of demarcation should be drawn
at the stage of clearance or removal of the rectified spirit.
Where the removal or clearance is for industrial purposes
(other than the manufacture of potable liquor), the levy of
duties of excise and all other control shall be with the Union
and where the removal or clearance is for obtaining or
manufacturing potable liquors, the levy of duties of excise
and all other control shall be with the States.
In the backdrop of the above judgment of the Supreme
Court, the Law Commission of India had recommended in
its 158th Report that the Heading 26 of the First Schedule
to the Act be substituted as “Fermentation Industries but
not including Alcohol”.

202 See the Industries (Development and Regulation) Amendment Act 2016.
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The recommendation of the Law Commission of India was
examined in depth by the Government. If the subject
“Alcohol” is taken out of the First Schedule to the
Act, both industrial alcohol and potable alcohol would
come under the purview of the State Government
which is not in consonance with the judgment of the
Supreme Court. Moreover, the effect of implementation of
the recommendation of the Law Commission would be that
the subject “Alcohol” which covers both industrial alcohol
and potable alcohol would no longer be a Central subject.”
(emphasis supplied)
131. The Statement of Objects and Reasons indicates that the
recommendation of the Law Commission was not accepted because
the effect of accepting the recommendation would be that both
‘industrial alcohol’ and potable alcohol would be in the domain of the
States, and that this would be contrary to Bihar Distillery (supra).
Hence, the IDRA was amended to remove only potable alcohol from
Item 26 of IDRA.
132. We have held above that Parliament under Entry 52 of List I does
not have the legislative competence to enact a law taking control of
the industry of intoxicating liquor. The State Legislatures will have
control over the industry of ‘intoxicating liquor’. Parliament could not
have taken control of the field covered by Entry 8 since we have
interpreted intoxicating liquor to include alcohol other than potable
alcohol as well. Therefore, Item 26 of the First Schedule to the IDRA
must be read as excluding the industry of “intoxicating liquor”, as
interpreted in this judgment.

vii. The (ir)relevance of the decision in Tika Ramji to the dispute
133. In Tika Ramji (supra), sugarcane farmers instituted proceedings
under Article 32 of the Constitution challenging the constitutional
validity of the Uttar Pradesh Sugarcane (Regulation of Supply
and Purchase) Act 1953203 and two notifications issued by the
State government under the Act. The constitutional validity of the
UP Sugarcane Act was challenged on the ground that the State
Legislature did not have the competence because Item 8 of the

203 “UP Sugarcane Act”.
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Schedule to the IDRA notified ‘sugar’ as one of the controlled
industries, and that the legislation regulating sugarcane was in pith
and substance related to ‘sugar’. The Constitution Bench, inter alia,
held that:
a. Industry in the wide sense of the term comprises of three
different aspects: (i) raw materials which are an integral part
of the industrial process; (ii) the process of manufacture or
production; and (iii) the distribution of the products of the
entries;204
b. The Seventh Schedule creates a demarcation based on the
above three stages. Entry 27 of List II deals with the production,
supply and distribution of goods subject to the provisions of Entry
33 of List III. The term ‘goods’ is defined by Article 366(12) of the
Constitution and includes materials, commodities and articles.
‘Materials’ includes raw materials. Thus, the raw materials for
industries would be covered by Entry 27 of List II. The products
would also fall under Entry 27 of List II, except in the case of
a controlled industry in which case they would be covered by
Entry 33 of List III. Entry 24 of List II would deal with the process
of manufacture or production, unless it is a controlled industry
under Entry 52 of List I.205 Thus, the phrase ‘industry’ in Entry
24 of List II and Entry 52 of List I takes the narrow meaning of
process of production and manufacture;
c. Section 18G of the IDRA enables the Union Government to
regulate supply and distribution, and trade and commerce of
certain ‘articles’. It does not extend to the production of articles.
Raw materials are essential ingredients for manufacture or
production but they are not of the same nature or description
as the articles produced by the process of manufacture. The
articles or class of articles relatable to the scheduled industry
could only comprise of finished products of a cognate character.
Raw materials, not being finished products, are not articles
which are relatable to the scheduled industry covered by
Section 18G;206

204 Tika Ramji (supra) [24]
205 ibid
206 Tika Ramji (supra) 32
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d. Sugarcane is a raw material for the production of sugar.
Consequently, it is not an article relatable to the sugar industry
and does not fall within the scope of Section 18G. The IDRA
did not affect the legislative powers of the State Legislature
with respect to sugarcane. Therefore, the UP Sugarcane Act
was not repugnant to the IDRA;207 and
e. Even if it were assumed that sugarcane was relatable to the
sugar industry under Section 18G, the Central Government had
not issued a notified order, as required by the provision. The
mere possibility that a notified order may be issued could not
lead to repugnancy. Such an order was an essential prerequisite
for repugnancy to arise.208
134. The decision in Tika Ramji (supra) was relied upon by this Court
in Calcutta Gas (supra), Kannan Devan Hills Produce v. State
of Kerala, 209 Ganga Sugar Corporation v. State of UP, 210 B
Viswanathiah & Co. v. State of Karnataka211 and the majority in
ITC (supra) on the aspect of the meaning of industry covered by
Entry 24 of List II. The dissenting opinion of Justice Pattanaik for
himself and Justice Bharucha in ITC (supra) doubted the correctness
of Tika Ramji (supra) on that aspect.
135. The Union of India submitted that the inclusion of ‘raw materials’
in Entry 27 of List II (and their consequential exclusion from the
definition of ‘industry’ in Entry 24 of List II and Entry 52 of List I)
in Tika Ramji (supra) must be overruled. It was submitted that
‘industry’ as it features in the legislative lists includes raw materials
as well. The learned Solicitor General submitted that if the restrictive
meaning in Tika Ramji (supra) is overruled, then the State will not
have competence to legislate on ENA used for the preparation of
potable alcohol under Entry 8.
136. We have in the preceding section held that the industry of intoxicating
liquor is covered by Entry 8 and not Entry 52. Thus, even if a broad

207 id
208 id
209 [1973] 1 SCR 356 : (1972) 2 SCC 218
210 [1980] 1 SCR 769 : (1980) 1 SCC 223
211 [1991] 1 SCR 305 : (1991) 3 SCC 258
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meaning is given to the word ‘industry’ in Entry 52, it will not impact
the decision in this case because Entry 8 is the specific entry which
applies to the industry of intoxicating liquor.
137. The meaning of the phrase ‘industry’ in Entry 52 will only impact
this decision if (a) Entry 52 of List I includes raw materials
necessary for the industry; and (b) Entry 8 of List II includes the
process of manufacture but does not include the stage anterior to
it (that is, raw materials). If an expansive meaning is given to the
word ‘industry’, the raw materials to an industry will be covered
by Entry 24 of List II and Entry 52 of List I (if it is a controlled
industry). It will not be covered by Entry 27 of List II. If Entry 8
of List II does not include raw material but only the process to
manufacture and final product, it is only then that the competence
to enact laws on the raw material for the industry (in this case,
ENA) will lie with Parliament.
138. We are of the opinion that the holding in Tika Ramji (supra) is not
relevant to the dispute for the following reasons:
a. We have interpreted the phrase ‘intoxicating liquor’ in Entry 8
to include ENA since it could be noxiously used; and
b. Notwithstanding the above, if the ground for overruling the
holding in Tika Ramji (supra) is that manufacture/production
cannot be disconnected from raw materials, it would equally
apply to the industry of intoxicating liquor covered by Entry 8
of List II. In Section C (iii)(a) of this judgment, we have
concluded that the words ‘that is to say’ are illustrative. They
are not exhaustive of the contents of the Entry. Thus, Entry 8
cannot be interpreted to exclude raw materials used for the
production of intoxicating liquor merely because the Entry
does not expressly provide for them. On an application of the
principle that entries ought to be interpreted widely, the raw
materials for the production and manufacture of intoxicating
liquor, as interpreted in this judgment will be covered by
Entry 8.

viii. Section 18G of IDRA and Entry 33 of List III
139. To recall, this Court in Synthetics (7J) (supra) held that the State
cannot regulate ‘industrial alcohol’ as a product of the controlled
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industry because the Union has occupied the field by Section 18G of
IDRA.212 The questions referred by the three-Judge Bench in Lalta
Prasad (supra) all relate to the issue of whether Section 18G of the
IDRA occupies the field in Entry 33 of List III or whether the field is
occupied only when an order is notified under Section 18G. There is
no necessity to determine the correctness of this observation in this
reference since the Legislature of the State will have the competence
to regulate denatured alcohol in view of our interpretation of the
expression ‘intoxicating liquor’ in Entry 8 of List II.

F. Conclusion
140. In view of the discussion above, the following conclusions emerge:
a. Entry 8 of List II of the Seventh Schedule to the Constitution is
both an industry-based entry and a product-based entry. The
words that follow the expression “that is to say” in the Entry
are not exhaustive of its contents. It includes the regulation
of everything from the raw materials to the consumption of
‘intoxicating liquor’;
b. Parliament cannot occupy the field of the entire industry merely
by issuing a declaration under Entry 52 of List I. The State
Legislature’s competence under Entry 24 of List II is denuded
only to the extent of the field covered by the law of Parliament
under Entry 52 of List I;
c. Parliament does not have the legislative competence to enact a
law taking control of the industry of intoxicating liquor covered
by Entry 8 of List II in exercise of the power under Article 246
read with Entry 52 of List I;
d. The judgments of the Bombay High Court in FN Balsara v.
State of Bombay (supra), this Court in FN Balsara (supra) and
Southern Pharmaceuticals (supra) did not limit the meaning
of the expression ‘intoxicating liquor’ to its popular meaning,
that is, alcoholic beverages that produce intoxication. All the
three judgments interpreted the expression to cover alcohol that
could be noxiously used to the detriment of health;

212 Synthetics (7J) [85]
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e. The expression ‘intoxicating liquor’ in Entry 8 has not acquired
a legislative meaning on an application of the test laid down in
Ganon Dunkerley (supra);
f. The study of the evolution of the legislative entries on alcohol
indicates that the use of the expressions “intoxicating liquor”
and “alcoholic liquor for human consumption” in the Seventh
Schedule to the Constitution was a matter well-thought of. It
also indicates that the members of the Constituent Assembly
were aware of use of the variants of alcohol as a raw material
in the production of multiple products;
g. Entry 8 of List II is based on public interest. It seeks to enhance
the scope of the entry beyond potable alcohol. This is inferable
from the use of the phrase ‘intoxicating’ and other accompanying
words in the Entry. Alcohol is inherently a noxious substance
that is prone to misuse affecting public health at large. Entry 8
covers alcohol that could be used noxiously to the detriment of
public health. This includes alcohol such as rectified spirit, ENA
and denatured spirit which are used as raw materials in the
production of potable alcohol and other products. However, it
does not include the final product (such as a hand sanitiser) that
contains alcohol since such an interpretation will substantially
diminish the scope of other legislative entries;
h. The judgment in Synthetics (7J) (supra) is overruled in terms
of this judgment;
i. Item 26 of the First Schedule to the IDRA must be read as
excluding the industry of “intoxicating liquor”, as interpreted in
this judgment;
j. The correctness of the judgment in Tika Ramji (supra) on the
interpretation of word ‘industry’ as it occurs in the legislative
entries does not fall for determination in this reference; and
k. The issue of whether Section 18G of the IDRA covers the field
under Entry 33 of List III does not arise for adjudication in view
of the finding that denatured alcohol is covered by Entry 8 of
List II.
141. The reference is answered in the above terms.
142. The Registry is directed to obtain administrative instructions from the
Chief Justice for placing the matters before an appropriate Bench.
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ORDER ON REFERENCE

Nagarathna, J.

Table of Contents*

S. Particulars Page
No. No.
1. Opening Paragraphs 5
2. Genesis of the controversy 6
3. Conclusions arrived at by the learned Chief Justice 9
4. Submissions 12
5. Relevant Constitutional Framework 18
6. Interpretation of Legislative Entries 22
a. Prafulla Kumar Mukherjee 24
b. FN Balsara 24
c. Atiqa Begum 24
d. Calcutta Gas Company 25
e. RMDC 26
f. MPV Sundararamier 27
7. Scheme of IDRA 30
8. Article 47: Directive Principle of State Policy 37
a. Cooverjee B. Bharucha 38
b. Sristikar Dowerah 39
c. FN Balsara 40
d. Nagendra Nath 43
e. Amar Chandra Chakraborty 43
f. Harinarayan Jaiswal 43
g. Nashirwar 44
h. Har Shankar 44
i. Khoday Distilleries 48
9. Survey of Judicial Precedents 51
a. Synthetics and Chemicals (7J) 51
b. Synthetics and Chemicals (2J) 65

* Ed. Note: Pagination as per the original Judgment.
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c. Bileshwar Khand Udyog 69
d. Gujchem Distillers 70
e. Modi Distillery 71
f. Shree Krishna Gyanoday Sugar Ltd. 73
g. Bihar Distillery 76
h. McDowell 90
i. Vam Organic I 92
j. Haryana Brewery Ltd. 96
k. Industrial Corporation (P) Ltd. 98
l. Vam Organic II 100
10. Analysis of Judicial Dicta 103
a. Indian Mica 103
b. Southern Pharmaceuticals 104
c. Synthetics and Chemicals (7J) 105
d. Synthetics and Chemicals (2J) 107
e. Bileshwar Khand Udyog 109
f. Shree Krishna Gyanoday Sugar Ltd 110
g. Bihar Distillery 111
h. Vam Organic I 113
i. Vam Organic II 114
11. Further Analysis 115
12. Meaning of “intoxicating liquors” 119
13. A Historical Perspective 122
14. Constituent Assembly Debates 124
15. Analysis of relevant Entries in the three Lists 138
a. Ishwari Khetan 139
b. Meaning of “subject to” 147
c. Hingir Rampur 148
d. Shri Krishna 148
e. South India Corporation 149
f. Ashok Leyland Ltd. 150
g. Calcutta Gas Company 152
[2024] 10 S.C.R. 2045

State of U.P. & Ors. v.
M/s Lalta Prasad Vaish and sons

16. Entry 33(a) – List III vs. Entry 52 - List I: Observations 172
in Synthetics and Chemicals (7J)
17. Article 254, Repugnancy and Doctrine of Occupied Field 183
18. Mineral Area and Development Authority 195
19. Mar Appraem Kuri Company 204
20. Importance of “Industrial Alcohol” to the Indian 213
Economy
21. Conclusion on interplay of legislative Entries 221
22. Effect of overruling Synthetics and Chemicals (7J) 224
23. My answers to the questions formulated 231
24. My answers to the conclusions of learned Chief Justice 235

I have perused the comprehensive and erudite opinion authored by
Hon’ble the Chief Justice of India Dr. Dhananjaya Y. Chandrachud
on the questions referred to this nine-Judge Bench. I respectfully
dissent on certain aspects of the said opinion and express my
reasons therefor.
1.1 The sum and substance of all the questions referred to this Bench
could be crystallised on the short point for consideration, namely,
whether the expression “intoxicating liquors” in Entry 8 -List II
of the Seventh Schedule of the Constitution of India includes
within its scope and ambit “industrial alcohol” and consequently,
whether a State Legislature has the competence to legislate
on “industrial alcohol”. My short answer is that there is a lack
of legislative competence in the State Legislature when viewed
from the constitutional framework and statutory framework of
the Industries (Development and Regulation) Act, 1951 (for
short, “IDRA”) passed by the Parliament on the strength of
Entry 52 – List I of the Seventh Schedule of the Constitution of
India and having regard to Section 2 of the said Act read with its
various provisions and the First Schedule thereto, particularly,
Item 26 which deals with “Fermentation Industries” (other
than potable alcohol). However, the discussion on scope and
ambit of Entry 33(a) – List III of the Seventh Schedule of the
Constitution is distinct and shall be discussed later. Therefore,
Synthetics and Chemicals Ltd. vs. State of Uttar Pradesh,
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AIR 1990 SC 1927 (“Synthetics and Chemicals (7J)”), has
been correctly decided by the seven-Judge Bench of this Court.
On the aspect of Section 18G of the IDRA occupying the field
and consequently, whether the State Legislatures are denuded
of their powers on the content of the subject matter of the said
Section in the context of Entry 33(a) – List III as per first part
of Article 254(1) shall be adverted to later. I propose to discuss
the reasons for aforesaid view.
1.2 Since the Entries under discussion are in their respective Lists
of the “Seventh Schedule of the Constitution”, it would be
unnecessary to refer to them as being part of “Seventh Schedule
of the Constitution” in the following discussion.

Genesis of the controversy:
2. The genesis of this present controversy insofar as the reference to
the nine-Judge Bench is concerned, emanates from the judgment of
the seven-Judge Bench of this Court in Synthetics and Chemicals
(7J). The said judgment authored by Sabyasachi Mukharji, J. (as His
Lordship then was) held that the scope of the expression “intoxicating
liquors” in Entry 8 – List II did not extend to “industrial alcohol” and
regulation of the same by State Legislature is impermissible in law
having regard to the constitutional framework, particularly the relevant
Entries of Lists I and II of the Seventh Schedule to the Constitution
of India. The said dictum of the seven-Judge Bench was doubted
by a three-Judge Bench of this Court in State of UP vs. M/s Lalta
Prasad Vaish vide order dated 25.10.2007 and the following questions
were formulated for consideration by a larger Bench:
“Q. 1. Does Section 2 of the Industries (Development and
Regulation) Act, 1951, have any impact on the field covered
by Section 18-G of the said Act or Entry 33 of List III of
the Seventh Schedule of the Constitution?
Q. 2. Does Section 18-G of the aforesaid Act fall under Entry
52 of List I of the Seventh Schedule of the Constitution,
or is it covered by Entry 33 of List III thereof?
Q. 3. In the absence of any notified order by the Central
Government under Section 18-G of the above Act, is
the power of the State to legislate in respect of matters
enumerated in Entry 33 of List III ousted?
[2024] 10 S.C.R. 2047

State of U.P. & Ors. v.
M/s Lalta Prasad Vaish and sons

Q. 4. Does the mere enactment of Section 18-G of the
above Act, give rise to a presumption that it was the
intention of the Central Government to cover the entire
field in respect of Entry 33 of List III so as to oust the
States’ competence to legislate in respect of matters
relating thereto?
Q. 5. Does the mere presence of Section 18-G of the
above Act, oust the State’s power to legislate in regard
to matters falling under Entry 33(a) of List III?
Q. 6. Does the interpretation given in Synthetics and
Chemicals case (1990) 1 SCC 109 in respect of Section
18-G of the Industries (Development and Regulation) Act,
1951, correctly state the law regarding the States’ power
to regulate industrial alcohol as a product of the scheduled
industry under Entry 33 of List III of the Seventh Schedule
of the Constitution in view of Clause (a) thereof?”
2.1 A similar view was expressed by a five-Judge Bench in very
same case wherein this Court was of the view that the matter
has to be considered by a Bench of nine-Judges.
2.2 In view of the nature of questions raised by the three-Judge
Bench as well as the five-Judge Bench of this Court, the
correctness or otherwise of judgment of this Court in Synthetics
and Chemicals (7J) is being considered by this nine-Judge
Bench.

Conclusions arrived at by the learned Chief Justice:
3. His Lordship, the Chief Justice has overruled the judgment in
Synthetics and Chemicals (7J) and has arrived at the following
conclusions:
“In view of the discussion above, the following conclusions
emerge:
a. Entry 8 of list II of the Seventh Schedule to the
Constitution is both an industry-based entry and
a product-based entry. The words that follow the
expression “that is to say” in the Entry are not
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exhaustive of its contents. It includes the regulation of
everything from the raw materials to the consumption
of ‘intoxicating liquor’;
b. Parliament cannot occupy the field of the entire
industry merely by issuing a declaration under Entry
52 of List I. The State Legislature’s competence under
Entry 24 of List II is denuded only to the extent of the
field covered by the law of Parliament under Entry
52 of List I;
c. Parliament does not have the legislative competence
to enact a law taking control of the industry of
intoxicating liquor covered by Entry 8 of List II in
exercise of the power under Article 246 read with
Entry 52 of List I;
d. The judgments of the Bombay High Court in FN
Balsara v. State of Bombay (supra), this Court in
FN Balsara (supra) and Southern Pharmaceuticals
(supra) did not limit the meaning of the expression
‘intoxicating liquor’ to its popular meaning, that is,
alcoholic beverages that produce intoxication. All
the three judgments interpreted the expression to
cover alcohol that could be noxiously used to the
detriment of health;
e. The expression ‘intoxicating liquor’ in Entry 8 has
not acquired a legislative meaning on an application
of the test laid down in Ganon Dunkerley (supra);
f. The study of the evolution of the legislative entries
on alcohol indicates that the use of the expressions
“intoxicating liquor” and “alcoholic liquor for human
consumption” in the Seventh Schedule was a matter
well-thought of. It also indicates that the members of
the Constituent Assembly were aware of use of the
variants of alcohol as a raw material in the production
of multiple products;
g. Entry 8 of List II is based on public interest. It seeks
to enhance the scope of the entry beyond potable
alcohol. This is inferable from the use of the phrase
[2024] 10 S.C.R. 2049

State of U.P. & Ors. v.
M/s Lalta Prasad Vaish and sons

‘intoxicating’ and other accompanying words in the
Entry. Alcohol is inherently a noxious substance that is
prone to misuse affecting public health at large. Entry
8 covers alcohol that could be used noxiously to the
detriment of public health. This includes alcohol such
as rectified spirit, ENA and denatured spirit which are
used as raw materials in the production of potable
alcohol and other products. However, it does not
include the final product (such as a hand sanitiser)
that contains alcohol since such an interpretation
will substantially diminish the scope of multiple other
legislative entries;
h. The judgment in Synthetics (7J) (supra) is overruled
in terms of this judgment;
i. Item 26 of the First Schedule to the IDRA must be
read as excluding the industry “intoxicating liquor”,
as interpreted in this judgement;
j. The correctness of the judgment in Tika Ramji
(supra) on the interpretation of word ‘industry’ as
it occurs in the Legislative entries does not fall for
determination in this reference; and
k. The issue of whether Section 18G of the IDRA covers
the field under Entry 33 of List III does not arise for
adjudication in view of the finding that denatured
alcohol is covered by Entry 8 of List II.”
3.1 While coming to the aforesaid conclusions, His Lordship,
the Chief Justice of India has held that the entire industry of
“intoxicating liquors” including raw materials is covered by
Entry 8 – List II and is completely out of Entry 52 – List I; that
the scope and ambit of Entry 8 – List II covers both potable
and non-potable alcohol and therefore, only State Legislatures
have the power to regulate the subject. I respectfully disagree.
3.2 While coming to the aforesaid conclusions, significant judgments
of this Court in State of Bombay vs. FN Balsara, AIR 1951
SC 318 (“FN Balsara”); Ch. Tika Ramji vs. State of Uttar
Pradesh, AIR 1956 SC 676 (“Tika Ramji”); Calcutta Gas
Company (Proprietary) Ltd. vs. State of West Bengal, AIR
2050 [2024] 10 S.C.R.

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1962 SC 1044 (“Calcutta Gas Company”); Indian Mica
and Micanite Industries vs. State of Bihar (1971) 2 SCC
236 (“Indian Mica”); Ishwari Khetan Sugar Mills (P) Ltd.
vs. State of Uttar Pradesh, AIR 1980 SC 1955 (“Ishwari
Khetan”); State of AP vs. McDowell & Co. (1996) 3 SCC 709
(“McDowell”); Bihar Distillery vs. Union of India (1997) 2
SCC 727 (“Bihar Distillery”); Vam Organic Chemicals Ltd.
vs. State of U.P. (1997) 2 SCC 715, (“Vam Organic I”); and
State of UP vs. Vam Organic Chemicals Ltd. (2004) 1 SCC
225 (“Vam Organic II”), amongst others, have been discussed.

Submissions:
4. As the learned Chief Justice has recorded the submissions of the
respective parties in detail, I need not be repetitive except highlighting
the submissions of the learned senior counsel Sri Rakesh Dwivedi, Sri
Datar and Sri Jaideep Gupta and other counsel for the appellants. The
main contention of the appellants is that the States have jurisdiction
over “industrial alcohol” and therefore the judgment of this Court
in Synthetics and Chemicals (7J) is incorrect. The expression
“intoxicating liquors” in Entry 8 – List II of the Seventh Schedule of
the Constitution cannot be restricted to alcoholic liquors for human
consumption by a deduction from a reading of Entry 84 – List I with
Entry 51 – List II. In other words, “intoxicating liquors” cannot be
equated with only “alcoholic liquors for human consumption”. On the
other hand, it is contended that the expression “intoxicating liquors”
has attained a specific meaning over the passage of time which is
more expansive than “alcoholic liquors for human consumption”.
4.1 The further submission was that only the production and
manufacture of “industrial alcohol” would be governed by the
Union List even if the requirement of a declaration under Section
2 of the IDRA read with Item 26 of the First Schedule thereto
is as per Entry 52 – List I. However, when it comes to Entry
33 – List III, there is need for a notified order to claim exclusive
jurisdiction on a product of a scheduled industry. If no such order
has been issued, the legislative powers of the State would remain
exclusive. It was further submitted that alcoholic liquors for human
consumption means it is capable of being consumed by humans
and it would fall under Entry 51 – List II, while denatured alcohol
such as ethyl alcohol or rectified spirit which usually undergoes
[2024] 10 S.C.R. 2051

State of U.P. & Ors. v.
M/s Lalta Prasad Vaish and sons

denaturation for the purposes of their use in industries would fall
under Entry 84 – List I. That everything, except denatured spirit
is alcohol for human consumption because it has the potential to
be consumed by humans. That Extra Neutral Alcohol (‘ENA’, for
short) and rectified spirit may therefore be understood to be for
human consumption and ceases to be such only upon undergoing
denaturation. But according to the judgment in Synthetics and
Chemicals (7J), the States do not have the power to levy tax
on ENA despite being fit for human consumption. This position
of law in the aforesaid decision has restricted the competence of
the States to levy tax under Entry 51 – List II. That pursuant to
the aforesaid decision, the Law Commission in its 158th Report
suggested an amendment to the IDRA by which Item 26 in the
First Schedule has been amended to mean that “Fermentation
Industries” would not include “potable alcohol” with retrospective
effect. It was contended that this amendment does not in any
way clear the confusion created in the aforesaid case and hence,
Synthetics and Chemicals (7J) may be overruled. It was also
contended that in Tika Ramji, this Court has devised a three-fold
classification as pre-production, production and post-production
and it was only in the second category i.e. production which
would be covered by the word “industry”.
4.2 Taking a different stance, Sri V. Giri submitted that denatured
alcohol is excluded from the scope of the term “intoxicating
liquors” in Entry 8 – List II and is covered under Entry 24 –
List II. Further, unless a notified order under Section 18G of the
IDRA is issued, the Parliament cannot occupy the field under
Entry 33 – List III merely on the strength of the said provision
being brought on the statute book.
4.3 On the other hand, Sri R. Venkataramani, learned Attorney
General, leading the arguments for the Union of India and other
respondents contended that Entry 52 – List I and Entry 33 –
List III are interrelated as they touch upon matters relating to
a scheduled industry under the provisions of the IDRA, whose
control is with the Union. It was contended that Entry 52 – List I
is provided in order to ensure a uniform control and development
of an industry throughout the length and breadth of the country.
This is not only in the interest of the scheduled industry but
also to achieve equitable distribution of the products of such
2052 [2024] 10 S.C.R.

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industry and as an economic measure. As a result, in respect of
a scheduled industry, the powers of the State under Entries 26
and 27 - List II are denuded. Also, if the field is occupied by the
Parliament (Union) and the States are denuded of their powers
under Entry 33 – List III. Therefore, the judgment in Synthetics
and Chemicals (7J) would not call for a reconsideration as it
was correctly decided. It was further contended that all liquids
containing alcohol would fall under two categories, namely,
those meant for human consumption (potable alcohol) and
non-potable alcohol. Entry 8 – List II deals with only potable
alcohol meant for human consumption as a beverage. Thus,
non-potable alcohol is outside the scope of Entry 8 – List II. The
amendment to Item 26 of First Schedule of IDRA has clarified
this position. Further, the use of the expression “that is to say”
in Entry 8 – List II refers to the various activities concerning
potable alcohol and does not refer to any other class of liquor.
4.4 Learned Solicitor General of India submitted that the controversy
in this case must be tread carefully as it would have a bearing
on other legislation. That having regard to national interest,
there is a requirement for a uniform development throughout
the country in respect of the products of an industry that are
sought to be equally distributed, and, therefore, the control of
such industries is taken over by the Union exercising powers
in relation to Entry 52 – List I. That the IDRA is an instance
of such legislation. It was contended that the judgment in
Tika Ramji insofar as it held that there must be a notified
order in force pursuant to Section 18G for the doctrine of
repugnancy to apply is not correct and in Synthetics and
Chemicals (7J), the judgment in Tika Ramji was rightly not
considered. The expression “intoxicating liquors” in Entry 8- List
II means a beverage which has the effect of intoxication upon
consumption. In Synthetics and Chemicals (7J), this Court
held that “intoxicating liquors” is “alcoholic liquors fit for human
consumption”. Other learned counsel for the respondents have
adopted the above arguments.
5. On enumerating the questions for opinion of this nine-Judge Bench,
the following issues have been crystallised for consideration in
paragraph 42 of the judgment of the learned Chief Justice of India
which read as under:
[2024] 10 S.C.R. 2053

State of U.P. & Ors. v.
M/s Lalta Prasad Vaish and sons

“42. With the above preliminary observations, we have
formulated the following issues:
a. Whether Entry 52 of List I of the Seventh Schedule
to the Constitution overrides Entry 8 of List II;
b. Whether the expression ‘intoxicating liquors’ in Entry 8
of List II of the Seventh Schedule to the Constitution
includes alcohol other than potable alcohol; and
c. Whether a notified order under Section 18G of the
IDRA is necessary for Parliament to occupy the field
under Entry 33 of List III of the Seventh Schedule to
the Constitution.”

Relevant Constitutional Framework:
6. Article 265 of the Constitution mandates that no tax shall be levied or
collected except by authority of law. Article 366 is a definition clause
and it states that in the Constitution, unless the context otherwise
requires, the expressions mentioned therein have the meanings
thereby respectively assigned to them. For the purpose of this case,
Article 366(12) and (28) are relevant and the same read as under:
“Article 366. Definitions.- In this Constitution, unless
the context otherwise requires, the following expressions
have the meanings hereby respectively assigned to them,
that is to say –
xxx
(12) “goods” includes all materials, commodities and
articles;
xxx
(28) “taxation” includes the imposition of any tax or impost,
whether general or local or special and “tax” shall be
construed accordingly;”
The aforesaid definition of ‘taxation’ is not exhaustive but inclusive
in nature to include not only any tax in the usual understanding of
the said expression or tax stricto senso but also any levy akin to a
tax. There can be no cavil to the proposition that before any tax or
impost could be levied or collected, it must have the authority of law
vide Article 265 including legislative competence.
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6.1 Article 246 of the Constitution deals with distribution of legislative
powers between the Parliament and State Legislature, while
Article 254 speaks of inconsistency between the laws made
by Parliament and laws made by the Legislatures of States.
They read as under:
“246. Subject-matter of laws made by
Parliament and by the Legislatures of States. —
(1) Notwithstanding anything in clauses (2) and
(3), Parliament has exclusive power to make laws
with respect to any of the matters enumerated in
List 1 in the Seventh Schedule (in this Constitution
referred to as the “Union List”).
(2) Notwithstanding anything in clause (3), Parliament
and subject to clause (1), the Legislature of any State
also, have power to make laws with respect to any
of the matters enumerated in List III in the Seventh
Schedule (in this Constitution referred to as the
“Concurrent List”).
(3) Subject to clauses (1) and (2), the Legislature of
any State has exclusive power to make laws for such
State or any part thereof with respect to any of the
matters enumerated in List II in the Seventh Schedule
(in this Constitution referred to as the ‘State List’).
(4) Parliament has power to make laws with respect
to any matter for any part of the territory of India not
included in a State notwithstanding that such matter
is a matter enumerated in the State List.
xxx
254. Inconsistency between laws made by
Parliament and laws made by the Legislatures of
States.—(1) If any provision of a law made by the
Legislature of a State is repugnant to any provision
of a law made by Parliament which Parliament is
competent to enact, or to any provision of an existing
law with respect to one of the matters enumerated in
the Concurrent List, then, subject to the provisions
of clause (2), the law made by Parliament, whether
passed before or after the law made by the Legislature
[2024] 10 S.C.R. 2055

State of U.P. & Ors. v.
M/s Lalta Prasad Vaish and sons

of such State, or, as the case may be, the existing law,
shall prevail and the law made by the Legislature of the
State shall, to the extent of the repugnancy, be void.
(2) Where a law made by the Legislature of a State
with respect to one of the matters enumerated in the
Concurrent List contains any provision repugnant to
the provisions of an earlier law made by Parliament
or an existing law with respect to that matter, then,
the law so made by the Legislature of such State
shall, if it has been reserved for the consideration of
the President and has received his assent, prevail
in that State:
Provided that nothing in this clause shall prevent
Parliament from enacting at any time any law with
respect to the same matter including a law adding
to, amending, varying or repealing the law so made
by the Legislature of the State.”
6.2 With regard to the allocation of subjects under the three Lists,
namely, List I - Union List; List II - State List and List III - Concurrent
List, it may be useful to refer to the Devolution Rules drawn
under the Government of India Act, 1919 and the Government
of India Act, 1935 which are the precursors to the distribution
of legislative powers between the Union and the States under
the Seventh Schedule of the Constitution of India. Some of the
salient aspects concerning the distribution of the legislative powers
between Parliament and State Legislature as per the three Lists
in the backdrop of the provisions could be alluded to.
6.3 Article 246 of the Constitution deals with the distribution of
legislative powers between the Union and the States. The said
Article has to be read along with the three Lists, namely, the
Union List, the State List and the Concurrent List. The taxing
powers of the Union as well as the States are also demarcated
as separate Entries in the Union List as well as the State List
i.e. List I and List II respectively. The Entries in the Lists are
fields of legislative powers conferred under Article 246 of the
Constitution. In other words, the Entries define the areas of
legislative competence of the Union and the State Legislature.
(vide: State of Karnataka vs. State of Meghalaya (2023) 4
SCC 416 para 56), (“State of Karnataka”).
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Interpretation of Legislative Entries:
6.4 On the aspect of interpretation of legislative Entries in the
three Lists, the following principles are apposite as discussed
in State of Karnataka:
(i) The power to legislate, which is dealt with under Article
246 has to be read in conjunction with the Entries in the
three Lists which define the respective areas of legislative
competence of the Union and State Legislatures. While
interpreting these Entries, they should not be viewed
in a narrow or myopic manner but by giving the widest
scope to their meaning, particularly, when the vires of a
provision of a statute is assailed. In such circumstances, a
liberal construction must be given to the Entry by looking
at the substance of the legislation and not its mere form.
However, while interpreting the Entries in the case of an
apparent conflict, every attempt must be made by the
Court to harmonise or reconcile them. Where there is an
apparent overlapping between two Entries, the doctrine of
pith and substance is applied to find out the true character
of the enactment and the Entry within which it would fall.
The doctrine of pith and substance, in short, means, if an
enactment substantially falls within the powers expressly
conferred by the Constitution upon the Legislature which
enacted it, the same cannot be held to be invalid merely
because it incidentally encroaches on matters assigned
to another Legislature. Also, in a situation where there is
overlapping, the doctrine has to be applied to determine
to which Entry, a piece of legislation could be related to. In
order to examine the true character of an enactment or a
provision thereof, due regard must be had to the enactment
as a whole and to its scope and object. It is said that the
question of invasion into another legislative territory has
to be determined by substance and not by degree.
(ii) In case of any conflict between Entries in List I and List
II, the power of Parliament to legislate under List I will
supersede when, on an interpretation, the two powers
cannot be reconciled. But if a legislation in pith and
substance squarely falls within any of the Entries of List II,
the State Legislature’s competence cannot be questioned
[2024] 10 S.C.R. 2057

State of U.P. & Ors. v.
M/s Lalta Prasad Vaish and sons

on the ground that the field is covered by the Union list or
the Concurrent list vide Prafulla Kumar Mukherjee vs.
Bank of Commerce Limited, Khulna, AIR 1947 P.C. 60
(“Prafulla Kumar Mukherjee”). According to the pith and
substance doctrine, if a law is, in its pith and substance
within the competence of the Legislature which has made
it, it will not be invalid because it incidentally touches
upon the subject lying within the competence of another
Legislature vide FN Balsara.
(iii) Once the legislation is found to be ‘with respect to’ the
legislative Entry in question, unless there are other
constitutional prohibitions, the power would be unfettered.
It would also extend to all ancillary and subsidiary
matters which can fairly and reasonably be said to be
comprehended in that topic or category of legislation vide
United Provinces vs. Atiqa Begum, AIR 1941 FC 16
(“Atiqa Begum”).
(iv) Another important aspect while construing the Entries in the
respective Lists is that every attempt should be made to
harmonise the contents of the Entries so that interpretation
of one Entry should not render the entire content of another
Entry nugatory vide Calcutta Gas Company. This is
especially so when some of the Entries in a different List
or in the same List may overlap or may appear to be in
direct conflict with each other. In such a situation, a duty
is cast on the Court to reconcile the Entries and bring
about a harmonious construction. Thus, an effort must be
made to give effect to both Entries and thereby arrive at
a reconciliation or harmonious construction of the same.
(v) In short, the Entries in the different Lists should be read
together without giving a narrow meaning to any of them.
The powers of the Union and the State Legislature are
expressed in precise and definite terms. Hence, there can
be no broader interpretation given to one Entry than to
the other. Even where an Entry is worded in wide terms, it
cannot be so interpreted as to negate or override another
Entry or make another Entry meaningless. In case of an
apparent conflict between different Entries, it is the duty
of the Court to reconcile them in the first instance.
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(vi) Further, where one Entry is made “subject to” another
Entry, all that it means is that out of the scope of the
former Entry, a field of legislation covered by the latter
Entry has been reserved to be specially dealt with by the
appropriate Legislature.
(vii) Also, when one Entry is general and another is specific,
normally, the latter will exclude the former on a subject
of legislation.
6.5 The sequitur to the aforesaid discussion is that if the Legislature
passes a law which is beyond its legislative competence, it is
a nullity ab-initio. The Legislation is rendered null and void for
want of jurisdiction or legislative competence vide RMDC vs
Union of India, AIR 1957 SC 628 (“RMDC”).
6.6 On a close perusal of the Entries in the three Lists, it is discerned
that the Constitution has divided the topics of legislation into
the following three broad categories:
(i) Entries enabling laws to be made;
(ii) Entries enabling taxes to be imposed; and
(iii) Entries enabling fees and stamp duties to be collected.
6.7 Thus, the Entries on levy of taxes are specifically mentioned.
Therefore, as such, there cannot be a conflict of taxation
power of the Union and the State. In substance, the taxing
power can be derived only from a specific taxing Entry in an
appropriate List. Such a power has to be determined by the
nature of the tax and not the measure or machinery set up by
the statute. In this context, reliance could be placed on MPV
Sundararamier vs. State of Andhra Pradesh, AIR 1958 SC
468 (“MPV Sundararamier”), wherein at paragraph 51 it was
observed as under:
“51. In List I Entries 1 to 81 mention the several
matters over which Parliament has authority to
legislate. Entries 82 to 92 enumerate the taxes
which could be imposed by a law of Parliament. An
examination of these two groups of entries shows
that while the main subject of legislation figures in
the first group, a tax in relation thereto is separately
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mentioned in the second. Thus, Entry 22 in List I is
“Railways”, and Entry 89 is “Terminal taxes on goods
or passengers, carried by railway, sea or air; taxes
on railway fares and freights”. If Entry 22 is to be
construed as involving taxes to be imposed, then
Entry 89 would be superfluous. Entry 41 mentions
“Trade and commerce with foreign countries; import
and export across customs frontiers”. If these
expressions are to be interpreted as including duties
to be levied in respect of that trade and commerce,
then Entry 83 which is “Duties of customs including
export duties” would be wholly redundant. Entries 43
and 44 relate to incorporation, regulation and winding
up of corporations. Entry 85 provides separately for
corporation tax. Turning to List II, Entries 1 to 44
form one group mentioning the subjects on which
the States could legislate. Entries 45 to 63 in that
List form another group, and they deal with taxes.
Entry 18, for example, is “Land” and Entry 45 is
“Land revenue”. Entry 23 is “Regulation of mines”
and Entry 50 is “Taxes on mineral rights”. The above
analysis—and it is not exhaustive of the entries in
the Lists—leads to the inference that taxation is
not intended to be comprised in the main subject
in which it might on an extended construction be
regarded as included, but is treated as a distinct
matter for purposes of legislative competence. And
this distinction is also manifest in the language of
Article 248 clauses (1) and (2) and of Entry 97 in
List I of the Constitution. Construing Entry 42 in the
light of the above scheme, it is difficult to resist the
conclusion that the power of Parliament to legislate
on inter-State trade and commerce under Entry 42
does not include a power to impose a tax on sales
in the course of such trade and commerce.”
6.8 What falls for interpretation in these cases is the content,
interplay and meaning of Entries 52 and 84 – List I, Entries 8,
24, 26, 27, 51 – List II and Entry 33 – List III. The aforesaid
Entries read as under:
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“List – I
52. Industries, the control of which by the Union is
declared by Parliament by law to be expedient in the
public interest.
xxx
84. Duties of excise on tobacco and other goods
manufactured or produced in India except:—
(a) alcoholic liquors for human consumption;
(b) opium, Indian hemp and other narcotic drugs
and narcotics,
but including medicinal and toilet preparations
containing alcohol or any substance included in sub-
paragraph (b) of this entry.
List – II
8. Intoxicating liquors, that is to say, the production,
manufacture, possession, transport, purchase and
sale of intoxicating liquors.
xxx
24. Industries subject to the provisions of Entries 7
and 52 of List I.
xxx
26. Trade and commerce within the State subject to
the provisions of entry 33 of List III.
27. Production, supply and distribution of goods
subject to the provisions of entry 33 of List III.
xxx
51. Duties of excise on the following goods
manufactured or produced in the State and
countervailing duties at the same or lower rates on
similar goods manufactured or produced elsewhere
in India:—
(a) alcoholic liquors for human consumption;
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(b) opium, Indian hemp and other narcotic drugs
and narcotics,
but not including medicinal and toilet preparations
containing alcohol or any substance included in sub-
paragraph (b) of this entry.
List – III
33. Trade and commerce in, and the production,
supply and distribution of,—
(a) the products of any industry where the control
of such industry by the Union is declared by
Parliament by law to be expedient in the public
interest, and imported goods of the same kind
as such products;
(b) foodstuffs, including edible oilseeds and oils;
(c) cattle fodder, including oilcakes and other
concentrates;
(d) raw cotton, whether ginned or unginned, and
cotton seed; and
(e) raw jute.”
For a better understanding of the discussion to follow, it would
be relevant to refer to the scheme of the IDRA.

Scheme of IDRA:
7. The Preamble of the IDRA states that it is an Act to provide for the
development and regulation of certain industries. Section 2 declares
that it is expedient in the public interest that the Union should take
under its control the industries specified in the First Schedule to the
said Act. Hence, the question would be, whether, the Parliament
by law has declared it expedient in public interest that the Union
should take control of certain industries. Section 2 of the IDRA, for
immediate reference, reads as under:
“2. Declaration as to expediency of control by the
Union.- It is hereby declared that it is expedient in the
public interest that the Union should take under its control
the industries specified in the First Schedule.”
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In the First Schedule to the said Act, Item 26 reads as under:
“26. Fermentation Industries:
(1) Alcohol.
(2) Other products of fermentation industries.”
Item 26 of the First Schedule to the Act was amended on
14.05.2016 by Act 27 of 2016 with retrospective effect from
08.05.1952 and it reads as under:
“26. Fermentation Industries (Other than Potable
Alcohol):
(1) Alcohol.
(2) Other products of fermentation industries.”
7.1 Section 3 of the IDRA is the definition clause and the relevant
definitions read as under:
“3. Definitions. – In this Act, unless the context
otherwise requires,-
xxx
(d) “industrial undertaking” means any undertaking
pertaining to a scheduled industry carried on in one
or more factories by any person or authority including
Government;
(dd) “new article”, in relation to an industrial
undertaking which is registered or in respect of which
a licence or permission has been issued under this
Act, means—
(a) any article which falls under an item in the
First Schedule other than the item under which
articles ordinarily manufactured or produced
in the industrial undertaking at the date of
registration or issue of the licence or permission,
as the case may be, fall;
(b) any article which bears a mark as defined
in the Trade Marks Act, 1940 (5 of 1940), or
which is the subject of a patent, if at the date of
registration or issue of the licence or permission,
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as the case may be, the industrial undertaking
was not manufacturing or producing such article
bearing that mark or which is the subject of
that patent;
(e) “notified order” means an order notified in the
Official Gazette;
xxx
(g) “prescribed” means prescribed by rules made
under this Act;
(h) “Schedule” means a Schedule to this Act;
(i) “scheduled industry” means any of the industries
specified in the First Schedule;
xxx
(k) words and expressions used herein but not defined
in this Act and defined in the Companies Act, 1956 (1
of 1956), have the meanings respectively assigned
to them in that Act.”
7.2 Chapter II of the Act deals with the Central Advisory Council and
Development Councils while Chapter III speaks of regulation
of scheduled industries. The headings of Sections 10 to 18
are noted within Chapter III. The said provisions deal with,
inter alia, registration of existing industries, issuance of licence
for producing or manufacturing of new articles, conducting
investigation to be made into scheduled industries. Chapter IIIA
speaks of direct management or control of industrial undertakings
by Central Government in certain cases while Chapter IIIAA
speaks of management or control of industrial undertakings
owned by companies in liquidation. Chapter IIIAB deals with
the power to provide relief to certain industrial undertakings
while Chapter IIIAC speaks of liquidation or reconstruction of
companies. Chapter IIIB deals with control of supply, distribution,
price, etc., of certain articles was inserted by Act 26 of 1953.
7.3 Section 18G which is in the said Chapter is relevant for the
purpose of this case, reads as under:
“18G. Power to control supply, distribution,
price, etc., of certain articles.—(1) The Central
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Government, so far as it appears to it to be necessary
or expedient for securing the equitable distribution
and availability at fair prices or any article or class
of articles relatable to any scheduled industry, may,
notwithstanding anything contained in any other
provisions of this Act, by notified order, provide of
regulating the supply and distribution thereof and
trade and commerce therein.
(2) Without prejudice to the generality of the powers
conferred by sub-section (1), a notified order made
thereunder may provide—
(a) for controlling the prices at which any such
article or class thereof may be bought or sold;
(b) for regulating by licences, permits or otherwise
the distribution, transport, disposal, acquisition,
possession, use or consumption of any such
article or class thereof;
(c) for prohibiting the withholding from sale of any
such article or class thereof ordinarily kept for sale;
(d) for requiring any person manufacturing,
producing or holding in stock any such article
or class thereof to sell the whole or part of the
articles so manufactured or produced during a
specified period or to sell the whole or a part
of the articles so held in stock to such person
or class of persons and in such circumstances
as may be specified in the order;
(e) for regulating or prohibiting any class of
commercial or financial transactions relating
to such article or class thereof which in the
opinion of the authority making the order are,
or if unregulated are likely to be, detrimental to
public interest;
(f) for requiring persons engaged in the distribution
and trade and commerce in any such article
or class thereof to mark the articles exposed
or intended for sale with the sale price or to
exhibit at some easily accessible place on the
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premises the price-lists of articles held for sale
and also to similarly exhibit on the first day of
every month, or at such other time as may be
prescribed, a statement of the total quantities
of any such articles in stock;
(g) for collecting any information or statistics with
a view to regulating or prohibiting any of the
aforesaid matters; and
(h) for any incidental or supplementary matters,
including, in particular, the grant or issue of
licences, permits or other documents and the
charging of fees therefor.
(3) Where, in pursuance of any order made with
reference to clause (d) of sub-section (2), any person
sells any article, there shall be paid to him the price
therefor—
(a) where the price can consistently with the
controlled price, if any, be fixed by agreement,
the price so agreed upon;
(b) where no such agreement can be reached, the
price calculated with reference to the controlled
price, if any, fixed under this section;
(c) where neither clause (a) nor clause (b) applies,
the price calculated at the market rate prevailing
in the locality at the date of sale.
(4) No order made in exercise of any power conferred
by this section shall be called in question in any court.
(5) Where an order purports to have been made
and signed by an authority in exercise of any power
conferred by this section, a court shall, within the
meaning of the Indian Evidence Act, 1872 (1 of
1872), presume that such order was so made by
that authority.
Explanation.— In this section, the expression “article
or class of articles” relatable to any scheduled industry
includes any article or class of articles imported into
India which is of the same nature or description as the
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article or class of articles manufactured or produced
in the scheduled industry.”
7.4 The reason as to why Section 18G was inserted to the IDRA
must be noted. In paragraph 3 of the Statement of Objects and
Reasons, it has been stated as under:
“At present, the power to control prices and distribution
of various goods under this Act is confined to industrial
undertakings registered or licensed under the Act.
In all other cases, it is necessary to have recourse
to powers derived from the Essential Supplies
(Temporary Powers) Act, 1946 and the Supply and
Prices of Goods Act, 1950. Both these enactments
have a limited period of life. It is proposed to add a
chapter taking power to control the distribution and
price of goods produced in scheduled industries
and of similar goods even, though they may be of
imported origin.”
The aforesaid reflects that the IDRA has brought under Central
control the development and regulation of a number of important
industries, the activities of which affect the country as a whole and
the development of which must be governed by economic factors
of all-India import.
Similarly, in the Statement of Objects and Reasons of Amendment
Act 72 of 1971, it has been stated as under:
“The industries included in the First Schedule to the
Industries (Development and Regulation) Act, 1951
are those the control of which by the Union has been
considered to be expedient in the public interest. The
proper development of these industries is vital to the
economic development of the country. These industries
not only substantially contribute to the Gross National
Product of the country, but also afford gainful employment
to millions of people.”
7.5 Section 29E was inserted with effect from 14.05.2016 by Act
27 of 2016. As already noted, Item 26 of the First Schedule
deals with “Fermentation Industries” and after amendment
by Act 27 of 2016 with retrospective effect from 08.05.1952,
“Fermentation Industries” have been clarified as “other than
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potable alcohol”. Therefore, alcohol and other products of
“Fermentation Industries” would refer to products which are
“other than potable alcohol”.

Article 47: Directive Principle of State Policy:
8. Since we are trying to ascertain the true meaning of “intoxicating
liquors” in Entry 8 – List II, Article 47 of the Constitution of India,
which is a Directive Principle of the State Policy, is relevant as the
said Article deals, inter alia, with intoxicating drinks. The same reads
as under:
“47. Duty of the State to raise the level of nutrition and
the standard of living and to improve public health
The State shall regard the raising of the level of nutrition and
the standard of living of its people and the improvement of
public health as among its primary duties and, in particular,
the State shall endeavour to bring about prohibition of the
consumption except for medicinal purposes of intoxicating
drinks and of drugs which are injurious to health.”
What is significant are the words “the State shall endeavour to
bring about prohibition of the consumption, except for medicinal
purposes of intoxicating drinks which are injurious to health”. It is on
the basis of the said Directive Principle that several prohibition and
excise laws have been enacted in several States as a constitutional
goal to improve the health of the people of India in the context of
prevention and prohibition of consumption of “intoxicating liquors”.
The manufacture, export, import, transport or sale of “intoxicating
liquors” is prohibited except in accordance with a licence, permit or
pass granted in that behalf. The State legislations confer power on
State Governments in matters concerning liquor licensing and also
with regard to imposition of excise duty.
8.1 The following decisions of this Court could be considered at
this stage as they are of relevance to the controversy under
consideration:
a) In Cooverjee B. Bharucha vs. Excise Commissioner
and the Chief Commissioner, Ajmer, AIR 1954 SC
220 (“Cooverjee B. Bharucha”), the right of a citizen to
carry on trade and business in liquor under Article 19(1)
(g) of the Constitution was considered. The impact of
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liquor on a person who consumes it as well as on the
society was discussed. With reference to an American
decision in Crowley vs. Christensen (1890) 34 Law Ed.
620 (“Crowley”) at p. 623, it was observed that when
liquor is consumed, first of all it affects the person who
consumes it, and subsequently, it affects those who are
immediately connected and dependent upon him. Hence,
there is a need to regulate the business of manufacture
and trade in liquor. It was observed that no citizen has an
inherent right to sell “intoxicating liquors” in retail. This is
because the business of liquor is attended with danger to
the community. It can, therefore, be entirely prohibited or
regulated as per the discretion of the Government and the
Authority concerned. It was held that Regulation could also
be in the form of issuance of licences to eligible persons
under a particular legislation. The provisions of regulation
of liquor, which permit certain eligible persons to carry on
the trade to the exclusion of the general public and thereby
possibly create a monopoly, is also permissible in law.
b) In State of Assam vs. Sristikar Dowerah, AIR 1957 SC
414 (“Sristikar Dowerah”), it was observed as under:
“no person has any absolute right to sell liquor
and that the purpose of the Act and the rules
is to control and restrict the consumption of
intoxicating liquors, such control and restriction
being obviously necessary for the preservation of
public health and morals, and to raise revenue.”
The above observation is in line with Article 47 of the
Constitution of India which is a Directive Principle.
c) The constitutional validity of the Bombay Prohibition Act,
1949 was challenged in FN Balsara. One of the arguments
raised was that the said Act could be justified under
Entry I -List II which relates to public order. This was by
placing reliance on a tendency in Europe and America
with regard to alcoholism as a menace to public order.
However, the said submission was not pursued further
before this Court as there were other express provisions
under the pertinent Entry which dealt with “intoxicating
liquors”. The short question considered was whether the
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Bombay Prohibition Act, 1949 in pith and substance was
a law relating to possession and sale, etc. of “intoxicating
liquors” or whether it related to import and export of
“intoxicating liquors”. Dealing with the validity of the
aforesaid Act, this Court noted the word “liquor” ordinarily
means “a strong drink as opposed to soft drink” but it must
in any event be a beverage which is ordinarily drunk as
noted by the Bombay High Court. The High Court further
noted that although the State Legislature may prevent
the consumption of non-intoxicating beverages and also
prevent the use as drinks of alcoholic liquids which are
not normally consumed as drinks, it cannot prevent the
legitimate use of alcoholic preparations which are not
beverages nor the use of medicinal and toilet preparations
containing alcohol. This view was challenged before this
Court. Noting the several meanings of “liquor” from the
Oxford English Dictionary, it was observed that as a
general meaning it is a liquid but as a special meaning it
means a drink or beverage produced by fermentation or
distillation. It was observed that this is the popular and
most widely accepted meaning and the basic idea of
beverage prominently ran through the main provisions of
the various Acts of this country as well as America and
England, relating to “intoxicating liquor”. Reference was
made to the definition of “intoxicating liquors” in various
overseas jurisdiction and also Bombay Abkari Act, 1878 as
well as other provincial Acts such as the Punjab Excise Act,
1914; the UP Excise Act, 1910; Madras Abkari Act, 1886,
etc. It was observed that the framers of the Government
of India Act, 1935 could not have been entirely ignorant
of the acceptance in which the word “liquor” covers not
only those alcoholic liquids which are generally used for
beverage purposes and produce intoxication, but also all
liquids containing alcohol. It may be that the latter meaning
is not the meaning which is attributed to the word “liquor”
in common parlance especially when that word is prefixed
by the qualifying word “intoxicating”, but in my opinion
having regard to the numerous statutory definitions of that
word, such a meaning could not have been intended to be
excluded from the scope of the term “intoxicating liquor”
as used in Entry 31 – List II. Consequently, on analysing
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the provisions of the impugned Act, it was observed that
only those provisions which affected the possession, selling
and consumption of any medicinal and toilet preparations
and commendation of any intoxicant or hemp were invalid.
d) In Nagendra Nath vs. Commissioner of Hills Division,
AIR 1958 SC 398 (“Nagendra Nath”), it was reiterated
that there is no inherent right in a citizen to sell liquor and
that the control and restriction over the consumption of
“intoxicating liquors” was necessary for the preservation
of public health and morals and to raise revenue.
e) The question, whether Section 43 of the Bengal Excise Act,
1909, under which the licence of a liquor contractor was
withdrawn, violated Articles 14 and 19 of the Constitution
of India was considered in Amar Chandra Chakraborty
vs. Collector of Excise, Government of Tripura, AIR
1972 SC 1863 (“Amar Chandra Chakraborty”). It was
observed that in view of the injurious effect of excessive
consumption of liquor on health, the trade or business must
be treated as a class by itself and it cannot be treated
on par with other trades while testing the matter from the
angle of Article 14 of the Constitution.
f) In State of Orissa vs. Harinarayan Jaiswal, AIR 1972
SC 1816 (“Harinarayan Jaiswal”), it was observed that
one of the important purposes of selling the exclusive
right to vend liquor was to raise revenue and since the
Government had the power to sell exclusive privileges,
there was no basis for contending that the owner of the
privileges could not decline to accept the highest bid if it
thought that the price offered was inadequate.
g) Similarly, in Nashirwar vs. State of Madhya Pradesh,
AIR 1975 SC 360 (“Nashirwar”), it was observed that
there was no fundamental right of citizens to carry on
trade or to do business in liquor. It was observed in the
said case as under:
“There are three principal reasons to hold that
there is no fundamental right of citizens to
carry on trade or to do business in liquor. First,
there is the police power of the State to enforce
public morality to prohibit trades in noxious or
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dangerous goods. Second, there is power of
the State to enforce an absolute prohibition of
manufacture or sale of intoxicating liquor. Article
47 states that the State shall endeavour to bring
about prohibition of the consumption except for
medicinal purposes of intoxicating drinks and of
drugs which are injurious to health. Third, the
history of excise law shows that the State has
the exclusive right or privilege of manufacture
or sale of liquor.”
h) In Har Shankar vs. The Deputy Excise and Taxation
Commissioner, AIR 1975 SC 1121 (“Har Shankar”), this
Court, speaking through Y.V. Chandrachud, C.J, observed
that the State has the power to prohibit trades which
are injurious to the health and welfare of the public, that
elimination and exclusion from business is inherent in the
nature of liquor business as no person has an absolute
right to deal in liquor. Also, all forms of dealings in liquor
have, due to their inherent nature, been treated as a class
by themselves by all civilized communities. Therefore, the
contention that the persons who carry on trade or business
in liquor have an unrestricted fundamental right as such
was rejected. Thus, it was observed that while a citizen
has a right to do business in liquor, the State can make
law imposing reasonable restrictions on the said right in
public interest.
Summarising the aforesaid judgments in Har Shankar, it
was observed that there is no fundamental right to carry
out trade or business in intoxicants. The State, under its
regulatory powers, has the right to prohibit absolutely every
form of activity in relation to intoxicants, its manufacture,
storage, export, import, sale and possession. In all their
manifestations, these rights are vested in the State and
indeed without such vesting there can be no effective
regulation of various forms of activities in relation to
intoxicants. Therefore, the States’ right to regulate activities
in relation to intoxicants to the extent of prohibiting would
imply that even when permission to deal with intoxicants
is granted, the same can be regulated. This is because
the rights in regard to intoxicants belong to the State and
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it is open to the Government to part with those rights for a
consideration. The power of the Government to charge a
price for parting with its rights and not the mode of fixing
that price is what constitutes the essence of the matter.
It was also held that neither does the label affixed to the
price determine the true nature of the charge levied by the
Government nor its right to levy the same. By use of the
expression “licence fee” or “fixed fee”, what is meant is
the price or consideration which the Government charges
to the licencees for parting with its privileges and granting
them the licences. That the object of imposing licence
fee is for the purpose of regulation so that the number
of persons who wish to engage in liquor trade are kept
under check and within reasonable limits. It was also
observed that the Government can, on its own, trade in its
own rights or privileges and can deal with liquor or grant
leases of its rights and issue requisite permits or licences
or passes on payment of such fees as may be prescribed.
Ultimately, it was observed that the amount payable by
the licencees on the basis of the bids offered by them in
auctions is neither a fee in the technical sense, nor a tax,
but is in the nature of the price of a privilege. It was also
held that the State has the power to grant liquor licences
on payment of such fees as the consideration for parting
with the privileges that the State has. That the payment
demanded is in the form of excise revenue, which could
be in the form of any payment, duty, fee, tax or fine
ordered under the provisions of a particular enactment or
Rules made thereunder relating to liquor or intoxicating
drugs but would not include a fine imposed by a Court of
law. That such an imposition could be recovered in the
manner authorised by law. Consequently, in Har Shankar,
this Court repelled the contention of the retailed vendors
of country liquor holding licences for the sale of liquor in
specified vends.
i) In Khoday Distilleries Ltd. vs. State of Karnataka (1995)
1 SCC 574 (“Khoday Distilleries”), the Constitution
Bench of this Court summarised the law on the subject
relating to right to carry on trade or business in “potable
liquor” as under:
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“(a) The rights protected by Article 19(1) are not
absolute but qualified. The qualifications are
stated in clauses (2) to (6) of Article 19. The
fundamental rights guaranteed in Article 19(1)(a)
to (g) are, therefore, to be read along with the
said qualifications. Even the rights guaranteed
under the Constitutions of the other civilized
countries are not absolute but are read subject
to the implied limitations on them. Those implied
limitations are made explicit by clauses (2) to
(6) of Article 19 of our Constitution.
(b) The right to practise any profession or to
carry on any occupation, trade or business
does not extend to practising a profession or
carrying on an occupation, trade or business
which is inherently vicious and pernicious, and
is condemned by all civilised societies. It does
not entitle citizens to carry on trade or business
in activities which are immoral and criminal
and in articles or goods which are obnoxious
and injurious to health, safety and welfare of
the general public, i.e., res extra commercium,
(outside commerce). There cannot be business
in crime.
(c) Potable liquor as a beverage is an intoxicating
and depressant drink which is dangerous and
injurious to health and is, therefore, an article
which is res extra commercium being inherently
harmful. A citizen has, therefore, no fundamental
right to do trade or business in liquor. Hence the
trade or business in liquor can be completely
prohibited.
(d) Article 47 of the Constitution considers
intoxicating drinks and drugs as injurious
to health and impeding the raising of level
of nutrition and the standard of living of the
people and improvement of the public health.
It, therefore, ordains the State to bring about
prohibition of the consumption of intoxicating
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drinks which obviously include liquor, except
for medicinal purposes. Article 47 is one of
the directive principles which is fundamental in
the governance of the country. The State has,
therefore, the power to completely prohibit the
manufacture, sale, possession, distribution and
consumption of potable liquor as a beverage,
both because it is inherently a dangerous article
of consumption and also because of the directive
principle contained in Article 47, except when it
is used and consumed for medicinal purposes.
(e) For the same reason, the State can create
a monopoly either in itself or in the agency
created by it for the manufacture, possession,
sale and distribution of the liquor as a beverage
and also sell the licences to the citizens for the
said purpose by charging fees. This can be done
under Article 19(6) or even otherwise.
(f) For the same reason, again, the State can
impose limitations and restrictions on the trade or
business in potable liquor as a beverage which
restrictions are in nature different from those
imposed on the trade or business in legitimate
activities and goods and articles which are res
commercium. The restrictions and limitations
on the trade or business in potable liquor can
again be both under Article 19(6) or otherwise.
The restrictions and limitations can extend to the
State carrying on the trade or business itself to
the exclusion of and elimination of others and/
or to preserving to itself the right to sell licences
to do trade or business in the same, to others.
(g) When the State permits trade or business
in the potable liquor with or without limitation,
the citizen has the right to carry on trade or
business subject to the limitations, if any, and
the State cannot make discrimination between
the citizens who are qualified to carry on the
trade or business.
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(h) The State can adopt any mode of selling
the licences for trade or business with a view
to maximise its revenue so long as the method
adopted is not discriminatory.
(i) The State can carry on trade or business
in potable liquor notwithstanding that it is an
intoxicating drink and Article 47 enjoins it to
prohibit its consumption. When the State carries
on such business, it does so to restrict and
regulate production, supply and consumption
of liquor which is also an aspect of reasonable
restriction in the interest of general public. The
State cannot on that account be said to be
carrying on an illegitimate business.
(j) The mere fact that the State levies taxes or
fees on the production, sale and income derived
from potable liquor whether the production, sale
or income is legitimate or illegitimate, does not
make the State a party to the said activities. The
power of the State to raise revenue by levying
taxes and fees should not be confused with
the power of the State to prohibit or regulate
the trade or business in question. The State
exercises its two different powers on such
occasions. Hence the mere fact that the State
levies taxes and fees on trade or business in
liquor or income derived from it, does not make
the right to carry on trade or business in liquor
a fundamental right, or even a legal right when
such trade or business is completely prohibited.
(k) The State cannot prohibit trade or business
in medicinal and toilet preparations containing
liquor or alcohol. The State can, however, under
Article 19(6) place reasonable restrictions on
the right to trade or business in the same in
the interests of general public.
(l) Likewise, the State cannot prohibit trade
or business in industrial alcohol which is not
used as a beverage but used legitimately for
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industrial purposes. The State, however, can
place reasonable restrictions on the said trade
or business in the interests of the general public
under Article 19(6) of the Constitution.
(m) The restrictions placed on the trade or
business in industrial alcohol or in medicinal and
toilet preparations containing liquor or alcohol
may also be for the purposes of preventing their
abuse or diversion for use as or in beverage.”
(underlining by me)

Survey of Judicial Precedents:
Synthetics and Chemicals (7J):
9. Since the main controversy in this case turns on the correctness of
the decision in Synthetics and Chemicals (7J), it is necessary to
advert to the same in some detail.
9.1 In the said case, the main contour of the controversy was
whether vend fee in respect of “industrial alcohol” under different
legislations and rules in different States was valid. In this context,
the following three questions were considered:
"(i) whether the power to levy excise duty in case of
industrial alcohol was with the State Legislature
or the Central Legislature?
(ii) what is the scope and ambit of Entry 8 of List
II of the Seventh Schedule of the Constitution?
(iii) whether, the State Government has exclusive
right or privilege of manufacturing, selling,
distributing, etc. of alcohols including industrial
alcohol. In this connection, the extent, scope
and ambit of such right or privilege has also to
be examined.”
9.1.1 In this background, the expressions “intoxicating liquors”
and “alcoholic liquors for human consumption” were
considered and also Article 47 of the Constitution which
deals with the State’s duty regarding the improvement
of public health and to bring about prohibition of
the consumption except for medicinal purposes of
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intoxicating drinks and of drugs which are injurious to
health. Reference was also made to Entry 52 – List I
which deals with industries, the control of which by the
Union is declared by Parliament by law to be expedient
in public interest.
9.1.2 It was the contention of the petitioners therein that
the IDRA was enacted with a view to developing and
controlling various important industries. Section 2 of the
IDRA declares that it is expedient in the public interest
that Union should take under its control the industries
specified in the First Schedule.
9.1.3 The said case did not concern primarily with potable
alcohol for the purpose of human consumption but
with ethyl alcohol (rectified spirit) as an industrial raw
material for manufacture of downstream products. This
Court concerned itself with the taxing power of the
States to impose and levy excise duty on “industrial
alcohol” and/or imposts such as vend fees. “Power
Alcohol” was defined as ethyl alcohol containing not
less than 95.5 per cent volume of ethanol measured at
60°F, corresponding to 74.4 over proof strength. That
rectified spirit was ethyl alcohol or ethanol with 96 per
cent alcohol. On dehydration, ethyl alcohol with 99.5
per cent volume of ethanol is produced.
9.1.4 This Court noted that on 08.05.1952, the Parliament
enforced the IDRA which contains, inter alia, Section
18G which was inserted w.e.f. 01.10.1953, whereby
the Central Government was empowered for securing
equitable distribution and availability at fair prices of any
article or class of articles relatable to any scheduled
industry to provide for regulating the supply and
distribution thereof, and trade and commerce therein by
a notified order. The notified order was also to provide
for controlling the prices at which such article or class
of articles could be bought or sold. The said Act was
amended in 1956. Item 26 was inserted in the First
Schedule to the said Act and empowered the Central
Government to control the “Fermentation Industries”
including alcohol industries.
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Under the UP Licences for the Possession of Denatured
Spirit and Specially Denatured Spirit Rules, 1976,
special licence for possession of denatured spirit for
industrial purposes was required. “Special denatured
spirit” was defined as spirit rendered “unfit for human
consumption”. As per the Rules, licences for possession
of denatured spirit including specially denatured spirit
for industrial purposes were to be of three kinds – (i)
Form FL 39; (ii) Form FL 40; and (iii) Form FL 41.
9.1.5 In that background, it was submitted on behalf of the
Union of India that the legislative competence of the
State enactments in various States will have to be
determined with reference to following Entries in List I –
7, 52, 59, 84, 96, 97 and Entries in List II - 8, 24, 26,
27, 51, 52, 54, 56, 62 and Entries in List III - 19 and
33. That there is a dichotomy between Entry 84 – List I
and Entry 51 – List II but this would not control the
interpretation of other Entries. It was urged that there
was no such dichotomy as regards Entry 8 – List II
as it is not subject to Entry 52 – List I as the subject
matters of these two Entries are different. That Entry
52 – List I deals with industries while Entry 8 – List II
deals with “intoxicating liquors”. The power to levy
taxes is to be read from the Entry relating to taxes
and not from the general Entry. That industry is a topic
of legislation left to the Parliament and to the State.
Identifying of Entries is by reference to a declaration
under Entry 7 – List I and Entry 52 – List I. The aspect
of legislation with regard to subject matter of Entries
is the topic “industry”. On the other hand, the subject
matter of legislation under Entry 8 – List II is the topic
“intoxicating liquors”. Therefore, according to the Union
of India, there was no conflict.
9.1.6 In view of the above submission on behalf of the Union
of India, the only question which was to be determined
was, whether, “intoxicating liquors” in Entry 8 – List
II is confined to potable liquor or includes all liquors.
That the State Legislature had no power to levy excise
duty on “industrial alcohol” as the latter is “not fit for
human consumption” and the State Legislature will have
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State of U.P. & Ors. v.
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power to levy fee in respect of all alcohol (see Entry
66 read with Entry 6 - List II). The State Legislature
has power to legislate on the topic “intoxicating liquors”
under Entry 8 - List II. It being a general Entry, will not
comprehend a power of taxation but will comprehend
a power to levy fee read with Entry 66 – List II.
9.1.7 According to the Union of India, with regard to industries
the control of which by the Union is declared by
Parliament by law to be expedient in public interest,
Parliament will have exclusive legislative competence
vide Entry 52 - List I. This power includes the power
to declare by Parliament that control by the Union of
industries relating to all types of alcohol is expedient
in public interest. Once Parliament makes such a
declaration, the State Legislature will be denuded of its
power under Entry 24 - List II on the aspect “industry”
with respect to all subject matters.
9.1.8 It was also contended that the power to collect the lump
sum amount by way of auction by any right or otherwise
conferring the right to sell alcohol is neither a power
to levy tax nor a power to levy fee but it will fall within
the legislative competence of the State Legislature
under Entry 8 – List II. But this power will extend only
to alcohol for human consumption. Also, there can be
a complete prohibition with regard to manufacture and
sale of alcohol fit for human consumption because there
is no fundamental right to carry on business in alcohol
even for human consumption (see Article 47 of the
Constitution and other judgments already discussed).
The State can, therefore, collect an amount called
vend fee, shop rent etc. for conferring on a citizen
the right to manufacture and sell alcoholic liquors if
it is fit for human consumption. This power cannot
extend to “industrial alcohol” or “alcohol contained in
the medicinal or toilet preparations”. According to the
Union of India, there was no power to levy such rent
or fee with regard to “industrial alcohol” because (a)
“industrial alcohol” and “alcoholic liquors for medicinal
and toilet preparations” cannot be completely prohibited;
(b) as there is a right to carry on business in “industrial
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alcohol”, any prohibition on manufacture of “industrial
alcohol”, would be violative of Article 19(1)(g) of the
Constitution. Therefore, in the absence of a power to
completely prohibit, there will be no power to collect
sums for conferring rights to manufacture or sell except
the levy of taxes and fees.
9.1.9 On behalf of the State of UP, it was submitted that in
order to appreciate the controversy, it was necessary
to realise that the real problem arises from the fact
that the denaturants can be converted into renaturants
through an illicit process. Therefore, they supported the
levy. It was submitted that the vend fee on denatured
alcohol or denatured spirit or what is known as “industrial
alcohol” has been challenged on mainly two grounds,
namely, (a) States lack legislative competence, and (b)
after the enactment of the IDRA, the States’ power is
completely lost.
9.1.10 The contention of the State was that there is no dichotomy
between ethyl alcohol to be used for beverages and to
be used for “industrial purposes”. The levy, in any case,
was on manufacture of ethyl alcohol and not on its use.
The levy was stipulated jointly or severally both under
Entries 8 and 51 - List II; Entry 33 - List III, and as per
police powers, regulatory and other incidental charges
were collected. That levy was a regulatory power under
Articles 19(6) and 19(6)(ii) of the Constitution.
9.1.11 According to the State, Parliament has no power to
legislate on “industrial alcohol”, since “industrial alcohol”
was also “alcoholic liquors for human consumption”. It
was contended that Entry 84 - List I expressly excludes
alcoholic liquors for human consumption and therefore,
the residuary Entry 97 - List I will not operate as against
its own legislative interest. The aforesaid submissions
were made on the assumption that “industrial liquor” or
“ethyl alcohol” is fit for human consumption.
9.1.12 This Court stated that the expression must be
understood in its common and normal sense. “Industrial
alcohol” as it is, is incapable of being consumed by a
normal human being. The expression ‘consumption’
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must also be understood in the sense of direct physical
intake by human beings in this context. That utilisation
in some form or the other is consumption for the benefit
of human beings if “industrial alcohol” is utilised for
production of rubber tyres, etc. It was held that the
utilisation of those tyres in the vehicles used by human
beings cannot, in the context in which the expression
has been used in the Constitution, be understood to
mean that alcohol has been for human consumption.
9.1.13 This Court observed that when the framers of the
Constitution used the expression “alcoholic liquors
for human consumption”, they meant and still
the expression means, that “liquor which as it is
consumable in the sense capable of being taken by
human beings as such as a beverage or a drink” and
Entry 84 - List I must be understood in that sense. It
was contended that denatured spirit could also be by
appropriate cultivation or application or admixture with
water etc., transformed into ‘alcoholic liquors for human
consumption’ and as such, transformation would not
entail any process of manufacture as such. There is no
organic or fundamental change in this transformation.
However, this aspect was not examined, the reason
being that the Constitutional provisions specially
dealing with the delimitation of powers in a federal polity
must be understood in a broad commonsense point
of view as understood by common people for whom
the Constitution is made. Alcoholic or “intoxicating
liquors” must be understood as these are, not what
these are capable of or able to become. Consequently,
in paragraph 86 it was concluded as follows:
“86. The position with regard to the control of
alcohol industry has undergone material and
significant change after the amendment of 1956
to the IDR Act. After the amendment, the State
is left with only the following powers to legislate
in respect of alcohol:
(a) It may pass any legislation in the nature of
prohibition of potable liquor referable to Entry
6 of List II and regulating powers.
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(b) It may lay down regulations to ensure that
non-potable alcohol is not diverted and
misused as a substitute for potable alcohol.
(c) The State may charge excise duty on potable
alcohol and sales tax under Entry 52 of List
II. However, sales tax cannot be charged
on industrial alcohol in the present case,
because under the Ethyl Alcohol (Price
Control) Orders, sales tax cannot be charged
by the State on industrial alcohol.
(d) However, in case State is rendering any
service, as distinct from its claim of so-called
grant of privilege, it may charge fees based
on quid pro quo. See in this connection, the
observations of Indian Mica case [(1971)
2 SCC 236 : 1971 Supp SCR 319 : AIR
1971 SC 1182].”
9.1.14 Oza, J. gave a concurring separate opinion wherein
he considered the question relating to validity of the
levies made by the States on alcohol which is utilised
by the industries for manufacturing the products where
alcohol is a raw material. Some of these industries
themselves (i) manufacture alcohol as they have
their own distilleries and from their distilleries through
pipelines it goes to their industrial units where this is
used as a raw material (ii) whereas some are industries
which purchase alcohol or denatured spirit on being
allotted by the Government.
9.1.15 On a comparison of the language of Entry 84 – List I
and Entry 51 – List II, it was observed by Oza, J. that
the powers of taxation on alcoholic liquors have been
based on the way in which they are used, as admittedly
alcoholic liquors is a very wide term and may include
variety of types of alcoholic liquors but the Constitution-
makers distributed them into two heads:
(a) for human consumption
(b) other than for human consumption
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9.1.16 Alcoholic liquors which are for human consumption were
put in Entry 51 - List II authorising the State Legislature
to levy tax on them whereas alcoholic liquors other than
for human consumption have been left to the Central
Legislature under Entry 84 – List I for levy of duty of
excise. This scheme of the Entries in two Lists clearly
indicates the line of demarcation for purposes of taxation
of alcoholic liquors. What has been excluded in Entry
84 has specifically been put within the authority of the
State for purposes of taxation.
9.1.17 Speaking about Entry 8 – List II, it was observed that
this Entry talks about “intoxicating liquors” and further
it refers to production, manufacture, possession,
transport, purchase and sale of “intoxicating liquors”.
From the scheme of Entries in the three Lists, it is
clear that taxing Entries have been specifically enacted
conferring powers of taxation whereas other Entries
pertain to the authority of the Legislature to enact
laws for purposes of regulation. That the declaration is
made by the Parliament and this industry, i.e., industry
based on fermentation and alcohol has been declared
to be an industry under the IDRA and, therefore, is
directly under the control of the Centre, and in respect
of regulation the authority of the State Legislature in
Entry 8 - List II could only be subject to the IDRA or
Rules made thereunder by the Centre.
9.1.18 It was observed that high concentration of ethyl alcohol
which is a product of distillation after fermentation is
extracted in various concentrations and can also be
extracted in a very high concentration above 90 per
cent which is generally termed as rectified spirit. It is
used as raw material for various industries. It is often
supplied after being mixed with methylated alcohol or
being denatured by other processes only to safeguard
against its use for conversion into alcoholic beverages
for human consumption. Ethyl alcohol is diluted by water
and its percentage is brought to 40 or 45 or below then
it becomes fit for human consumption.
9.1.19 The contention of the States was that various duties
for purposes of regulation were imposed to prevent
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the conversion of rectified spirit or methylated alcohol
to be diverted from industrial to potable use. In other
words, the contention was that these levies had been
imposed in order to prevent the conversion of alcoholic
liquors which are not fit for human consumption to those
which are fit for human consumption. Therefore, the
levies could be justified as regulatory fees.
9.1.20 The said contention was repelled and it was concluded
that Entry 8 – List II could not be invoked to justify the
levy by the State in respect of alcoholic liquors which
are not made for human consumption. Thus, the Court
held that alcoholic liquors which are made for human
consumption would not include alcoholic liquors not
made for human consumption or “industrial alcohol”.

Synthetics and Chemicals (2J):
9.2 In State of U.P. vs. Synthetics and Chemicals Ltd. (1991)
4 SCC 139 (“Synthetics and Chemicals (2J)”), a two-Judge
Bench of this Court (speaking through Sahai J. who also wrote
the concurring judgment along with Thommen, J.) observed
that the High Court relied upon the observations in paragraph
86 of the judgment of the Constitution Bench in Synthetics
and Chemicals (7J), namely, “sales tax cannot be charged on
“industrial alcohol” and, therefore, held that due to operation of
the Ethyl Alcohol (Price Control) Orders, sales tax cannot be
charged by the State on “industrial alcohol” and struck down
the levy.
9.2.1 In Synthetics and Chemicals (2J), it was categorically
argued by the learned Advocate General appearing for
the State of Uttar Pradesh that the reference to “sales
tax” in the judgment of this Court between the same
parties (before seven-Judge Bench) was accidental
and did not arise from the judgment. This was because
the levy of sales tax was not in question at any stage
of the arguments nor was the question considered as
it was not in issue. In fact, the question which arose
for consideration in the earlier litigation was in regard
to the validity of “vend fee and other fees” charged by
the States. This Court held that vend fee or transport
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State of U.P. & Ors. v.
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fee and similar fees, unless supported by quid pro quo,
interfered with the control exercised by the Central
Government under IDRA and the various orders made
thereunder with respect to prices, licences, permits,
distribution, transport, disposal, acquisition, possession,
use, consumption, etc., of articles related to a controlled
industry, “industrial alcohol” being one of them. The
casual reference to sales tax in the concluding portion
of the judgment was accidental and per incuriam was
the submission.
9.2.2 While considering the said plea, this Court observed that,
the only question which had to be determined between
the same parties in Synthetics and Chemicals (7J)
was, “whether “intoxicating liquors” in Entry 8 - List II
was confined to potable liquor or includes all liquors.”
Answering this question, this Court categorically held
that “intoxicating liquors” within the meaning of Entry
8 - List II was confined to “potable liquor” and did not
include “industrial liquor”.
9.2.3 Therefore, the only question that was considered by
the seven-Judge Bench of this Court was whether the
State could levy “excise duty” or “vend fee” or “transport
fee” and the like by recourse to Entry 51 or 8 - List
II in respect of “industrial alcohol”. This Court by a
detailed discussion in the seven-Judge Bench decision
had observed that the impugned statutory provisions
purportedly levying fees or enforcing restrictions in
respect of “industrial alcohol” were impermissible in view
of the control assumed by the Central Government in
exercise of its power under Section 18G of the IDRA
in respect of a declared industry falling under Entry
52 - List I, read with Entry 33 - List III.
9.2.4 In this decision, it was observed that the aforesaid
decision of this Court was not an authority for the
proposition canvassed by the assessee in challenging
the provision. This Court could not have intended to
say that the Price Control Orders made by the Central
Government under the IDRA imposed a fetter on the
legislative power of the State under Entry 54 - List II
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to levy taxes on the sale or purchase of goods. The
reference to sales tax in paragraph 86 of that judgment
was merely accidental or per incuriam and therefore,
had no effect.
9.2.5 In the earlier litigation of Synthetics and Chemicals
(7J), the question was whether the State Legislature
could levy vend fee or excise duty on “industrial alcohol”.
The seven-Judge Bench answered in the negative as
“industrial alcohol” being unfit for human consumption,
the State Legislature was incompetent to levy any duty
of excise either under Entry 51 or Entry 8 - List II of
the Seventh Schedule.
The judgment of this Court in Synthetics and Chemicals
(7J) has been considered in later decisions and they could be
adverted to at this stage itself.

Bileshwar Khand Udyog:
9.3 In Shri Bileshwar Khand Udyog Khedut Sahakari Mandali
Ltd. vs. State of Gujarat (1992) 2 SCC 42 (“Bileshwar Khand
Udyog”), it was observed that Synthetics and Chemicals (7J)
finally brought down the curtain in respect of “industrial alcohol”
by taking it out of the purview of both Entry 8 and Entry 51 -
List II and the competency of the State to frame any legislation
to levy any tax or duty was excluded. But by that a provision
enacted by the State for supervision which is squarely covered
under Entry 33 – List III which deals with production, supply
and distribution which includes regulation cannot be assailed.
It was further observed as under:
“4. …The Bench in Synthetic & Chemical’s case
made it clear that even though the power to levy tax
or duty on industrial alcohol vested in the Central
Government the State was still left with power to
lay down regulations to ensure that non-potable
alcohol, that is, industrial alcohol, was not diverted
and misused as substitute for potable alcohol. …
In paragraph 88 of the decision it was observed
that in respect of industrial alcohol the States, were
not authorised to impose the impost as they have
purported to do in that case but that did not effect
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any imposition of fee where there were circumstance,
to establish that there was quid pro quo for the fee
nor it will affect any regulatory measure.”
9.4 It was further observed that the principle of occupied field
precluded States from trenching on any power which was
already covered by a Central legislation. But in absence of any
provision in IDRA touching upon regulation or ensuring that
“industrial alcohol” was not diverted the State was competent
to legislate on it under Entry 33 – List III.

Gujchem Distillers:
9.5 In Gujchem Distillers India Ltd. vs. State of Gujarat (1992) 2
SCC 399 (“Gujchem Distillers”), the judgment in Synthetics
and Chemicals (7J) was followed and the fee of 7 paise per litre
was held to be a regulatory measure, namely, for denaturation
of spirit and supervision of the said process.

Modi Distillery:
9.6 In State of UP vs. Modi Distillery (1995) 5 SCC 753 (“Modi
Distillery”), the facts were that the Allahabad High Court had
allowed the writ petitions filed by the respondents therein who
are manufacturers of Indian-made foreign liquor and quashed the
orders impugned demanding excise duty from them. Referring
to the provisions of the UP Excise Act, 1910 and the definitions
therein on the different types of liquor, this Court speaking
through Bharucha, J. (as he then was) observed in paragraphs
9, 10 and 11 as under:
“9. It is convenient now to note the judgment of
a Bench of seven learned Judges of this Court in
Synthetics and Chemicals Ltd. v. State of U.P.
[(1990) 1 SCC 109] This Court stated that it had
no doubt that the framers of the Constitution, when
they used the expression “alcoholic liquors for
human consumption”, meant, and the expression
still means, that liquor which, as it is, is consumable
in the sense that it is capable of being taken
by human beings as such as a beverage or
drink. Alcoholic or intoxicating liquors had to be
understood as they were, not what they were
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capable of or able to become. Entry 51 of List II was
the counterpart of Entry 84 of List I. It authorised
the State to impose duties of excise on alcoholic
liquors for human consumption manufactured or
produced in the State. It was clear that all duties
of excise save and except the items specifically
excepted in Entry 84 of List I were generally within
the taxing power of the Central Legislature. The
State Legislature had limited power to impose
excise duties. That power was circumscribed
under Entry 51 of List II. It had to be borne in
mind that, by common standards, ethyl alcohol
(which had 95 per cent strength) was an industrial
alcohol and was not fit for human consumption.
The ISI specifications had divided ethyl alcohol
(as known in the trade) into several kinds of
alcohol. Beverages and industrial alcohols were
clearly and differently treated. Rectified spirit for
industrial purposes was defined as spirit purified by
distillation having a strength not less than 95 per
cent by volume of ethyl alcohol. Dictionaries and
technical books showed that rectified spirit (95 per
cent) was an industrial alcohol and not potable as
such. It appeared, therefore, that industrial alcohol,
which was ethyl alcohol (95 per cent), by itself
was not only non-potable but was highly toxic.
The range of potable alcohol varied from country
spirit to whisky and the ethyl alcohol content
thereof varied between 19 to about 43 per cent,
according to the ISI specifications. In other words,
ethyl alcohol (95 per cent) was not an alcoholic
liquor for human consumption but could be used
as a raw material or input, after processing and
substantial dilution, in the production of whisky,
gin, country liquor, etc. In the light of experience
and development, it was necessary to state that
“intoxicating liquor” meant only that liquor which
was consumable by human beings as it was.
10. What the State seeks to levy excise duty upon
in the Group ‘B’ cases is the wastage of liquor
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after distillation, but before dilution; and, in the
Group ‘D’ cases, the pipeline loss of liquor during
the process of manufacture, before dilution. It is
clear, therefore, that what the State seeks to levy
excise duty upon is not alcoholic liquor for human
consumption but the raw material or input still in
process of being rendered fit for consumption by
human beings. The State is not empowered to
levy excise duty on the raw material or input that
is in the process of being made into alcoholic
liquor for human consumption.
11. That the measure of excise duty upon alcoholic
liquor for human consumption is the alcoholic
strength thereof does not make any difference in
this behalf. It is only the alcoholic strength of the
final product which is relevant.”
In paragraph 14, it was further observed as under:
14. … The demand for excise duty is not a regulatory
measure. The power of the State to levy excise duty
cannot be expanded with reference to its power
to regulate manufacture. We are not required to
and do not express any opinion in regard to the
power of the State to regulate the manufacture of
alcoholic liquors for human consumption.
9.6.1 Consequently, the appeals were allowed with regard to
levy of excise duty upon wastage of Indian-made foreign
liquor exported outside the State of Uttar Pradesh. Rest
of the appeals were dismissed.

Shree Krishna Gyanoday Sugar Ltd.:
9.7 In Shree Krishna Gyanoday Sugar Ltd. vs. State of Bihar
(1996) 10 SCC 11, (“Shree Krishna Gyanoday Sugar Ltd.”),
the question was whether Rule 9 of the Bihar & Orissa Excise
Rules, 1990, framed under the Bihar and Orissa Excise Act,
1915, was ultra vires the said Act. In the alternative, the question
was whether the said Rule covered the appellants’ distilleries
which were manufacturing not only denatured spirit but also
potable liquor.
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9.7.1 It was contended that the distilleries of the appellants
therein were having composite licences to manufacture
not only denatured spirit and other spirits for industrial
use but were also manufacturing potable spirit or country
liquor and that for these distilleries the State had no
power or jurisdiction to invoke Rule 9 of the Rules. The
High Court repelled the contention of the appellants
therein. It was held that Rule 9 was not ultra vires
the provisions of the aforesaid Act. It was cautioned
that if a distillery which manufactures denatured spirit
attempts to alter any denatured spirit with the intention
that such spirit may be used for human consumption,
whether as a beverage or internally as a medicine, it
would be committing an offence which is punishable
under Section 49 of the aforesaid Act. Therefore, it
was permissible for the Excise Authorities under the
Act to supervise the working of such distilleries so that
they may not commit such offences and to oversee
their manufacturing activities. This was because the
denatured spirit, if illegally altered and made fit for
human consumption, would have a devastating effect
on the health of consumers and may even result in fatal
consequences or loss of vision and other pernicious
physical handicaps. Therefore, supervision was
provided at the cost of distilleries and the licencees of
the distilleries will have to bear the cost of maintenance
of such supervision. The same would squarely fall
within the regulatory powers for framing Rules with a
view to see that the provisions of the aforesaid Act are
not stifled or tinkered with by such licencee distilleries.
9.7.2 It was observed that the expression “commercial”
would fall in the same category as denatured spirit,
meaning thereby those spirits which are not fit for human
consumption. They would not cover potable spirits even
assuming that they are commercial spirits. That, the
expression “other commercial spirits” as contemplated
by the Rule are those spirits which are unfit for human
consumption and they do not cover potable liquor which
cannot fall in line with denatured spirit. Thus, it was
observed that the expression “or any other commercial
[2024] 10 S.C.R. 2091

State of U.P. & Ors. v.
M/s Lalta Prasad Vaish and sons

spirit” must mean those spirits which fall in the category
of spirits unfit for human consumption like denatured
spirits which are used for “industrial purposes” or any
other purpose other than for human consumption. It
was held that Rule 9 of the aforesaid Rule would apply
to only those distilleries which were licenced solely
and wholly for the purpose of manufacturing either
denatured spirit or any other commercial spirit unfit
for human consumption but would not include those
distilleries which are licenced for manufacturing along
with denatured spirit or other industrial spirits unfit for
human consumption, also potable liquor which is fit
for human consumption. Hence, it was observed that
the appellant therein, who had composite and multiple
licences to manufacture potable liquor, was outside
the sweep of second part of Rule 9 of the aforesaid
Rules. That to such distilleries the first part of the Rule
may apply wherein the State will have to bear the cost
of providing supervisors and establishments for that
purpose but the cost of such establishment cannot be
foisted on such distilleries.

Bihar Distillery:
9.8 In Bihar Distillery, narrating the history with regard to the
legislations on rectified spirit and in the context of the IDRA,
and the incorporation of Item 26 in the First Schedule of the
said Act which deals with “Fermentation Industries”: (i) Alcohol,
(ii) other products of “Fermentation Industries”, this Court,
speaking through Jeevan Reddy, J., noted that the decision in
Synthetics and Chemicals (7J) called for demarcation of the
spheres of the Union and the States, particularly in the matter
of alcoholic liquors.
9.8.1 This Court observed that insofar as “intoxicating
liquors”/potable liquors are concerned, it is the
exclusive province of the States. But for manufacturing
“intoxicating liquors”, or for manufacturing “industrial
alcohol”, as the case may be, one must have to
manufacture or purchase alcohol. It is only thereafter
that the alcohol is either converted into “industrial
alcohol” (by denaturing it) or into “potable liquors” by
2092 [2024] 10 S.C.R.

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reducing the strength of alcohol (which is normally of
95% purity or above). Alcohol can however be used
for industrial purposes even without denaturing it. To
say that the States step in only when alcohol becomes
potable and not before it, creates a doubt and enough
room for abuse apart from difficulties of supervision
and regulation, such as, in the matter of licensing such
industries — whether the Centre alone or the States
or both should do it. Therefore, notices were issued
to all the State Governments as well as Union of India
and the interplay between the Entries of Lists I, II and
III which are under consideration here and which are
extracted above, were discussed.
9.8.2 It was opined that Entry 51 - List II and Entry 84 - List
I complement each other inasmuch as both provide for
duties of excise. However, Entry 51 - List II empowers
the State to levy duties of excise on alcoholic liquors
for human consumption, which is expressly excluded
from Entry 84 - List I. Therefore, alcoholic liquors may
be used for several purposes, one of which is meant
for human consumption. It was further observed that
Entry 8 – List II does not use the expression “alcoholic
liquors for human consumption” but employs the
expression “intoxicating liquors” and significantly, the
words “for human consumption” is conspicuous by its
absence. According to Jeevan Reddy, J., this is for
the obvious reason that the very word “intoxicating”
signifies “for human consumption”. Thus, Entry 8 -
List II emphasizes all aspects of “intoxicating liquors”
within the State’s sphere, i.e., to say production,
manufacture, possession, transport, purchase and
sale of “intoxicating liquors”. In this context, Entry
6 - List II was relied upon to observe that the said
Entry, which, inter alia, deals with “public health”, has
a close nexus to prohibiting or regulating consumption
of “intoxicating liquors”.
9.8.3 It was next opined that clause (a) in Entry 33 – List III
is also significant. That though the control of certain
industries may have been taken over by the Union by
virtue of a declaration made by Parliament in terms of
[2024] 10 S.C.R. 2093

State of U.P. & Ors. v.
M/s Lalta Prasad Vaish and sons

Entry 52 - List I, yet the “trade and commerce in, and
the production, supply and distribution of the products
of such industry” is placed in the Concurrent List.
According to Jeevan Reddy, J., this would mean that
it could be regulated by both by the Union as well as
by the States, subject, of course, to Article 254 of the
Constitution.
9.8.4 It was observed that insofar as the field is not occupied
by the laws made by the Union, the States are free
to legislate. It was further observed that Entry 24 -
List II is in the nature of a general Entry. It deals with
industries but is made expressly subject to Entries 7
and 52 - List I. That by making a declaration in terms
of Entry 52 - List I in Section 2 of the IDRA, the Union
has taken control of the several industries mentioned
in the Schedule to the Act. As a result, the States have
been denuded of their power to legislate with respect to
those industries on that account. It was further observed
that a three-Judge Bench in McDowell had held that
Entry 52 overrides only Entry 24 - List II and no other
Entry in List II. That Entry 8 – List II is not overborne
in any manner by Entry 52 – List I, which means that
so far as “intoxicating liquors” are concerned, they are
within the exclusive sphere of the States.
9.8.5 Referring to the judgment of Sabyasachi Mukharji,
J. ( as he then was) in Synthetics and Chemicals
(7J), particularly paragraph 85, it was observed that
the expression “both potable and” is an accidental
error as the judgment in its earlier paragraphs had
stated that so far as potable alcohol is concerned, they
are governed by Entry 8 – List II and are within the
exclusive domain of the States. The said judgment did
not intend to convey that the industries engaged in the
manufacture or production of potable liquors have been
controlled by the Union by virtue of Item 26 of the First
Schedule to the IDRA. So far as potable liquors are
concerned, their manufacture, production, possession,
transport, purchase and sale are within the exclusive
domain of the States and the Union of India has no
say in the matter.
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9.8.6 In this case, the Court further noted the contentions
urged on behalf of the State to the effect that rectified
spirit is “intoxicating liquors” within the meaning of Entry
8 - List II and hence outside the purview of Entry 24 -
List II, which would in turn mean that the Union cannot
take over its control by making a declaration in terms
of Entry 52 - List I. Further Item 26 of the Schedule to
the IDRA is ineffective and invalid insofar as it seeks
to regulate the production and manufacture, etc. of
rectified spirit. The State submitted that the decision
to the contrary in Synthetics and Chemicals (7J) is
not correct and requires reconsideration.
9.8.7 The State next contended that Entry 51 - List II and
Entry 84 - List I speak of “alcoholic liquors for human
consumption” and not “alcoholic liquors “fit” for human
consumption”. That the judgment in Synthetics and
Chemicals (7J), read the word “fit” in the Entries and
thus curtailed the legislative power of the States. It
was further contended that rectified spirit is really and
essentially “intoxicating liquors” and by the process
of “reduction of liquor” by adding water and spices
(optional) does not cease it to be “intoxicating liquors”.
In the State of U.P., bulk of the rectified spirit is used
for the purpose of obtaining country liquor or IMFLs
and a small quantity is used for industrial purposes.
Therefore, the expression “intoxicating liquors” must
include rectified spirit. It was further submitted that
during the course of manufacture of rectified spirit,
potable liquor comes into existence and the main raw
material for rectified spirit is molasses.
9.8.8 However, on behalf of the distilleries, it was contended
that there is no good reason for doubting the correctness
of the decision in Synthetics and Chemicals (7J) or
for referring the issue to a larger Constitution Bench of
nine or more Judges. This was because if the States’
submission were to be accepted, then Item 26 in the
Schedule to the IDRA would become superfluous and
meaningless. Therefore, this Court in Synthetics and
Chemicals (7J) speaking through Sabyasachi Mukharji,
J., drew a line between the respective spheres of the
[2024] 10 S.C.R. 2095

State of U.P. & Ors. v.
M/s Lalta Prasad Vaish and sons

Union and the States. It was also contended that despite
the insertion of Item 26 in the IDRA, the State was not
totally denuded of any power to make a law with respect
to rectified spirit or for that matter “industrial alcohol”.
In this regard, Entry 33 - List III and Section 18G read
with other provisions of the IDRA were considered and
by placing reliance on Tika Ramji, it was observed that
“the possibility of an order under Section 18G being
issued by the Central Government would not be enough.
The existence of such an order would be the essential
prerequisite before any repugnancy could ever arise”.
9.8.9 On a conspectus consideration, this Court held that
the decision in Synthetics and Chemicals (7J), did
not deal with the aspects which arose for consideration
in this case and that it was mainly concerned with
“industrial alcohol”, i.e., denatured rectified spirit.
While holding that rectified spirit is “industrial alcohol”,
it recognised at the same time that it can be utilised
for obtaining country liquor (by diluting it) or for
manufacturing Indian Made Foreign Liquor (“IMFL”).
When the decision says that rectified spirit with 95%
alcohol content v/v is “toxic”, what it meant was that if
taken as it is, it is harmful and injurious to health. By
saying “toxic”, it did not mean that it cannot be utilised
for potable purposes either by diluting it or by blending
it with other items. The Court in Bihar Distillery noted
that the undeniable fact is, that rectified spirit is both
“industrial alcohol” as well as a liquor which can be
converted into country liquor just by adding water.
It is also the basic substance from which IMFL are
made. Denatured rectified spirit, of course, is wholly
and exclusively “industrial alcohol”. It was observed
that this basic factual premise which was not and
could not be denied by any one raised certain aspects
for consideration therein which were not raised or
considered in Synthetics and Chemicals (7J).
9.8.10 It was noted that Synthetics and Chemicals (7J) did
not deal with rectified spirit which could be converted
into potable alcohol and was merely concerned with
“industrial alcohol” which could not be so converted,
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i.e., denatured rectified spirit. A distinction was drawn
between industries engaged in manufacturing rectified
spirit meant exclusively for supply to industries
(industries other than those engaged in obtaining
or manufacturing of potable liquor), whether after
denaturing it or without denaturing it, and industries
engaged in manufacturing rectified spirit exclusively for
the purpose of obtaining or manufacturing potable liquor.
In the first case, the industry was to be under “the total
and exclusive control of the Union and be governed
by the IDRA and the rules and regulations made
thereunder”. As far as the second case is concerned,
it was noted that “they shall be under the total and
exclusive control of the States in all respects and at
all stages including the establishment of the distillery”.
9.8.11 It was thus noted that Synthetics and Chemicals
(7J) was mainly concerned with “industrial alcohol”,
i.e., denatured rectified spirit. This Court raised
several questions with regard to the supervision of the
manufacture of country liquor or IMFL, which is not
the concern of the Union but the bulk of the rectified
spirit produced in many States is meant for and is
utilised for obtaining or manufacturing potable liquors.
The question was then at what stage, would the State
intervene in the process of manufacture of potable
liquor - whether until the stage of potable liquor is
reached, or whether there has to be supervision even
at a stage prior thereto by the States. This Court took
into consideration the fact that under Entry 33(a) - List
III, the States do have the power to legislate on this
field, provided the field is not occupied by any law
made by the Union. Further, in the interests of law,
public health, public revenue and also in the interests of
proper delineation of the spheres of the Union and the
States, it was noted that there has to be a clear line of
demarcation drawn at the stage of clearance or removal
of rectified spirit. In the matter of the levies, when the
removal or clearance is for industrial purpose, the levy
of duties of excise and all other control is with the
Union but when the removal/clearance is for obtaining
[2024] 10 S.C.R. 2097

State of U.P. & Ors. v.
M/s Lalta Prasad Vaish and sons

or manufacturing potable liquors, the levy of duties and
all other control is with the States. It was observed that
there is a need for joint control and supervision of the
process of manufacture of rectified spirit and its use
and disposal. Hence, certain observations were made
by way of elaboration by taking into consideration the
nature of the product and its use, namely supply for
industries or “industrial alcohol” or use for potable
purposes and the circumstances of misuse of rectified
spirit (for industrial purposes) by diverting it for potable
purposes, which are as under:
(1) (a) So far as industries engaged in manufacturing
rectified spirit meant exclusively for supply to
industries (industries other than those engaged
in obtaining or manufacture of potable liquors),
whether after denaturing it or without denaturing
it, are concerned, they shall be under the total and
exclusive control of the Union and be governed
by the IDR Act and the rules and regulations
made thereunder. In other words, where the
entire rectified spirit is supplied for such industrial
purposes, or to the extent it is so supplied, as the
case may be, the levy of excise duties and all
other control including establishment of distillery
shall be that of the Union.
(b) The power of the States in the case of such
an industry is only to see and ensure that rectified
spirit, whether in the course of its manufacture or
after its manufacture, is not diverted or misused
for potable purposes. They can make necessary
regulations requiring the industry to submit
periodical statements of raw material and the
finished product (rectified spirit) and are entitled
to verify their correctness. For this purpose, the
States will also be entitled to post their staff in
the distilleries and levy reasonable regulatory
fees to defray the cost of such staff.
(2) So far as industries engaged in the manufacture
of rectified spirit exclusively for the purpose of
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obtaining or manufacturing potable liquors — or
supplying the same to the State Government or its
nominees for the said purpose — are concerned,
they shall be under the total and exclusive control
of the States in all respects and at all stages
including the establishment of the distillery. In other
words, where the entire rectified spirit produced is
supplied for potable purposes — or to the extent
it is so supplied, as the case may be — the levy
of excise duties and all other control shall be that
of the States.
(3) So far as industries engaged in the manufacture
of rectified spirit, both for the purpose of (a)
supplying it to industries (other than industries
engaged in obtaining or manufacturing potable
liquors/ intoxicating liquors) and (b) for obtaining
or manufacturing or supplying it to Governments/
persons for obtaining or manufacturing potable
liquors are concerned, the following is the position:
(a) The power to permit the establishment and
regulation of the functioning of the distillery is
concerned, it shall be the exclusive domain of the
Union. But so far as the levy of excise duties is
concerned, the duties on rectified spirit removed/
cleared for supply to industries (other than
industries engaged in obtaining or manufacturing
potable liquors), shall be levied by the Union;
b) the duties of excise on rectified spirit cleared/
removed for the purposes of obtaining or
manufacturing potable liquors shall be levied by
the State Government concerned. The disposal,
i.e., clearance and removal of rectified spirit in the
case of such an industry shall be under the joint
control of the Union and the State concerned to
ensure evasion of excise duties on rectified spirit
removed/cleared from the distillery.
c) It is obvious that in respect of these industries
too, the power of the States to take necessary
steps to ensure against the misuse or diversion of
[2024] 10 S.C.R. 2099

State of U.P. & Ors. v.
M/s Lalta Prasad Vaish and sons

rectified spirit meant for industrial purposes (supply
to industries other than those engaged in obtaining
or manufacturing potable liquors) to potable
purposes, both during and after the manufacture
of rectified spirit, continues unaffected.
d) Any rectified spirit supplied, diverted or
utilised for potable purposes, i.e., for obtaining or
manufacturing potable liquors shall be supplied to
and/or utilised, as the case may be, in accordance
with the State excise enactment concerned and
the rules and regulations made thereunder. If the
State is so advised, it is equally competent to
prohibit the use, diversion or supply of rectified
spirit for potable purposes.
(4) It is advisable and necessary that the Union
Government makes necessary rules/regulations
under the IDR Act directing that no rectified
spirit shall be supplied to industries except after
denaturing it save those few industries (other than
those industries which are engaged in obtaining or
manufacturing potable liquors) where denatured
spirit cannot be used for manufacturing purposes.
(5) So far as rectified spirit meant for being supplied
to or utilised for potable purposes is concerned, it
shall be under the exclusive control of the States
from the moment it is cleared/removed for that
purpose from the distillery — apart from other
powers referred to above.
(6) The power to permit the establishment of any
industry engaged in the manufacture of potable
liquors including IMFLs, beer, country liquor and
other intoxicating drinks is exclusively vested in
the States. The power to prohibit and/or regulate
the manufacture, production, sale, transport or
consumption of such intoxicating liquors is equally
that of the States.
9.8.12 The aforesaid decision in Bihar Distillery was
doubted in Deccan Sugar and Abkari Co. Ltd. vs.
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Commissioner of Excise (1998) 3 SCC 272 (“Deccan
Sugar and Abkari Co. Ltd.”), and the appeals were
referred to a larger Bench which followed Synthetics
and Chemicals (7J) and Modi Distillery without
expressly overruling the decision in Bihar Distillery.
Opining that Synthetics and Chemicals (7J) continued
to hold the field, it was noted that the State’s power
was limited to regulation of non-potable alcohol for
the limited purpose of preventing its use as alcoholic
liquors. Ultimately, the appeal filed by the state was
dismissed as the levies could not be treated as a
regulatory measure.

McDowell:
9.9 In McDowell, the State of Andhra Pradesh had prohibited
the manufacture of liquor by an amendment in the Andhra
Pradesh Prohibition Act, 1995. The appellants therein who were
manufactures of “intoxicating liquors” challenged the constitutional
validity of the Act by which the Prohibition Act was amended to
include Section 7-A by which the manufacture of liquor came to be
prohibited. This was owing to the lack of legislative competence
in view of Item 26 in the First Schedule of the IDRA, which
according to the writ petitioners therein, vested the control of
alcohol industries exclusively in the Union and denuded the State
Legislature of its power to licence or regulate the manufacture
of liquor. This argument was further based on the fact that
“Fermentation Industries” were included in the Schedule of the
IDRA and hence the State was denuded of its power to licence
and regulate manufacture of liquor which industry and its product
were within the exclusive province of the Union and hence the
State lost its competence to grant, refuse or renew the licences
The position of law was reiterated as under: -
“It follows from the above discussion that the
power to make a law with respect to manufacture
and production and its prohibition (among other
matters mentioned in Entry 8 in List-II) belongs
exclusively to the State Legislatures. Item 26 in
the First Schedule to the IDR Act must be read
subject to Entry 8 and for that matter, Entry 6 in
List II. So read, the said item does not and cannot,
[2024] 10 S.C.R. 2101

State of U.P. & Ors. v.
M/s Lalta Prasad Vaish and sons

deal with manufacture, production of intoxicating
liquors. All the petitioners before us are engaged in
the manufacture of intoxicating liquors. The State
Legislature is, therefore, perfectly competent to make
a law prohibiting their manufacture and production
in addition to their sale, consumption, possession
and transport with reference to Entries 8 and 6 in
List-II of the Seventh Schedule to the Constitution
read with Article 47 thereof.”
The Civil Appeals were dismissed by this Court.

Vam Organic I:
9.10 In Vam Organic I, the Notification dated 18.05.1990 issued by
the Excise Commissioner, Uttar Pradesh, was assailed before
the High Court and the writ petition was dismissed. By the
said Notification, certain amendments were made to the Rules
published vide Notification dated 26.09.1910. Section 41 of the
UP Excise Act, 1910 gave power to the Excise Commissioner
to make Rules, inter alia, for regulating the manufacture,
supply, storage or sale of any intoxicant. The earlier Rule 2 was
substituted by a new Rule 2 titled “Denaturation of Spirit”. The
amended Rule provided for a new licence for denaturation of
spirit in a prescribed form to be issued by the Collector to all
distilleries situated within his district holding licence PD-1 or PD-2
and persons holding licences FL-16, FL-39, FL-40 and FL-41 to
denature the spirit. A licence fee for denaturation of spirit at the
rate of 7 paise per litre was levied in advance. The appellants
in this case who were manufacturers of vinyl acetate monomer
(a basic organic chemical for which “industrial alcohol” was the
main feed stock being produced in the distillery) contended
that the entire “industrial alcohol” produced was denatured as
per the method approved by the State Excise Authorities and
was being used in their factory for manufacturing vinyl acetate
monomer. The appellants held licences in the form of FL-39
to enable them to use the “industrial alcohol” as the main raw
material for their product. The notification was challenged on two
grounds: firstly, that the State of Uttar Pradesh has no power
to legislate in respect of “industrial alcohol” or to levy taxes in
respect thereof. Secondly, that the levy being not based on
quid pro quo was otherwise bad.
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9.10.1 In this case, before considering the legal contentions,
this Court highlighted the difference between “industrial
alcohol”, denatured spirit and potable liquor. Ethyl
alcohol was noted to be rectified spirit of 95% v/v in
strength. Rectified spirit was highly toxic and unfit for
human consumption. However, rectified spirit diluted
with water was noted to be country liquor. Rectified spirit,
as it was, can be used for manufacture of various other
products like chemicals, etc. Rectified spirit, produced
for industrial use was required by a Notification issued
under the Act to be denatured in order to prevent the
spirit from being directed to human consumption.
Rectified spirit was denatured by adding denaturants
which made the spirit unpalatable and nauseating.
As such rectified spirit could be converted to potable
liquor but once denatured it could be used only as
“industrial alcohol”.
9.10.2 It was observed that in Synthetics and Chemicals
(7J) the question of legislative competence of the
State to impose tax or levy on “industrial alcohol”
was ruled in the negative, so far as ethyl alcohol/
rectified spirit is concerned. Further, even if the
State had the regulatory power to prevent misuse of
“industrial alcohol” for potable purposes, such power
did not include power to levy any impost. It was further
observed that denaturation is a statutory duty imposed
by a notification under the U.P. Excise Act and as no
service by the State was being provided for the same,
no fee could be charged and even if the State had to
incur any expenses for enforcement of the requirement
of denaturation, there is no quid pro quo between the
expenses incurred and the fees charged. This Court
noted that the term “industrial alcohol” is not used in
any of the Lists and whether alcoholic liquors other
than “alcoholic liquors for human consumption” or
“intoxicating liquors” was a State subject or a Union
subject should be the real controversy. It was with a
view to describing that particular kind of liquor the
term “industrial alcohol” is used. It was observed that
after an analysis of all the provisions of law giving the
[2024] 10 S.C.R. 2103

State of U.P. & Ors. v.
M/s Lalta Prasad Vaish and sons

Union Parliament and the State Legislature jurisdiction
to legislate on alcohol, this Court in Synthetics and
Chemicals (7J) held that the impugned notifications
therein, imposing certain fees as vend fee or transport
fee, etc. were within the legislative competence of the
State. That this Court was fully aware of the fact that
rectified spirit was the ingredient for “intoxicating liquors”
or alcoholic liquors for human consumption although
rectified spirit/ethyl alcohol as well as denatured spirit
are referred to as “industrial alcohol” in that judgment.
This Court did not hold that the State will have no
power whatsoever in relation to “industrial alcohol”. In
fact, in the judgment in Synthetics and Chemicals
(7J), the Court has enumerated the various areas
relating to “industrial alcohol” in which the State could
still legislate or make rules. In that regard paragraph
86 of the judgment in Synthetics and Chemicals (7J)
was quoted. Of course, the same has been explained
in Synthetics and Chemicals (2J), discussed above.
This Court observed in this case that denaturation
of spirit meant for industrial use is meant to prevent
misuse of non-potable alcohol for human consumption
and as such was specifically mentioned by the Court
to be within the legislative competence of the State.
This Court observed in para 14 as under:
“14. It is to be noticed that the States under
Entries 8 and 51 of List II read with Entry 84
of List I have exclusive privilege to legislate
on intoxicating liquor or alcoholic liquor for
human consumption. Hence, so long as
any alcoholic preparation can be diverted to
human consumption, the States shall have
the power to legislate as also to impose taxes
etc. In this view, denaturation of spirit is not
only an obligation on the States but also within
the competence of the States to enforce.”

Haryana Brewery Ltd.:
9.11 In Government of Haryana vs. Haryana Brewery Ltd. (2002)
4 SCC 547 (“Haryana Brewery Ltd.”), the controversy related
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to levy of excise duty on beer brewed by the respondent therein.
Rule 35 of the Punjab Brewery Rules, 1956 and Section 32 of
the Punjab Excise Act, 1914 were considered. It was observed
by this Court that the said Rule was only an enabling provision
which would help the Excise Authorities in calculating what
would be the quantity of beer manufactured and fit for human
consumption on which excise duty could be imposed. The said
Rule was declared valid and it did not require any reading down
as had been done by the High Court. It was observed that the
tax was on the end product and not on the raw material. Rule
35 indicated that in order to determine what was the quantity
of beer manufactured which was fit for human consumption,
after all the processes were completed, one had to see what
was the quantity of raw materials which were utilised for the
manufacture of beer and then allowance for wastage of seven
per cent had to be made and thereafter the quantity of beer
manufactured was determined. That the figure taken for the
purpose of calculating the excise duty was only on the end
product, namely the beer produced, and not the quantity of
the raw material used in manufacture of beer, during which
loss of some quantity as wastage would have occurred and
there could not be a deduction of any sum or proportion as
wastage from the quantity of end product in order to arrive at
that quantity. In such a case, the question of determining any
allowance of seven per cent for wastage did not arise. Therefore,
the Excise Authorities could levy excise duty only on the beer
after it had been manufactured and the levy was on the quantity
manufactured. How this quantity had to be arrived was to be
determined according to Section 32 read with Rule 35 of the
aforementioned Act and Rules. Hence, Rule 35 was sustained
as valid and it did not require any reading down.

Industrial Corporation (P) Ltd.:
9.12 In the State of Bihar vs. Industrial Corporation (P) Ltd.
(2003) 11 SCC 465 (“Industrial Corporation (P) Ltd.”), the
respondent companies were engaged in the manufacture of
rectified spirit from molasses allotted to them by the Controller
of Molasses in terms of the Bihar Molasses (Control) Act, 1947
and they had been granted licences under various provisions of
the Bihar and Orissa Excise Act, 1915. It was found that certain
[2024] 10 S.C.R. 2105

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quantity of rectified spirit had to be produced but instead there
was a shortfall and therefore, notice was issued and penalty
was imposed on the premise that the respondents therein had
diverted the molasses towards manufacturing either country
liquor or liquor which was fit for human consumption. Assailing
the same, writ petitions were filed before the High Court which
had allowed the said writ petitions. Therefore, the State had
appealed before this Court.
9.13 This Court noted that molasses is a by-product of sugar
and mainly used as raw material for manufacture of spirit,
including alcohol for human consumption. The respondents
in the said case were engaged in the manufacture of rectified
spirit from molasses and penalty was imposed owing to a loss
of revenue by reason of loss of wastage of molasses while
carrying on manufacture of such rectified spirit. One of the
contentions raised was that the State has power to impose
duty only on the spirit which is for human consumption and
the respondents therein had not carried out any activities in
relation to manufacture of potable liquor from the molasses. It
was observed that the judgment in Modi Distillery applied to
the said case and therefore, no penal duty could be imposed
on rectified spirit. Reliance placed on Bihar Distillery was not
gone into inasmuch as it was observed that it was unnecessary
to go into the question of the correctness of the observations
made in Bihar Distillery. However, the observations of the High
Court therein were that in view of the judgment of this Court in
Synthetics and Chemicals (7J), the State had no legislative
competence even in relation to potable liquor, (which is fit for
human consumption), was not correct.

Vam Organic II:
9.14 In Vam Organic II, a notification dated 13.01.1990 whereby
licence fee of 15 paise per litre was sought to be imposed on
the quantity of specially denatured spirit (STS) obtained from
distilleries in the State of Uttar Pradesh under Rule 3(a) of
the UP Licences for the Possession of Denatured Spirit and
Specially Denatured Spirit Rules, 1976 was assailed before the
Allahabad High Court. The writ petitions were allowed, and the
State had filed appeals before this Court. Section 3 (13) of the
UP Excise Act, 1910 (for short, “1910 Act”) had defined the word
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“intoxicant” as meaning “any liquor or intoxicating drug”. The
word “liquor” in turn was defined in Section 3(11) as meaning
“intoxicating liquors and includes spirits of wine, spirit, wine,
tari, pachwai, beer and all liquid consisting of or containing
alcohol, also any substance which the State Government may
by notification declare to be liquor for the purposes of the Act.”
In paragraph 6 of the judgment, it was observed that “industrial
alcohol” is not liquor nor is it potable as such. However, it
may be utilized to produce a kind of liquor if it is denatured.
“Denatured” in Section 3(9) of the Act was defined to mean
“rendered unfit for human consumption in such manner as
may be prescribed by the State Government by notification in
this behalf”. Thus, the State Act equated “industrial alcohol”
to non-potable alcohol and not fit for human consumption. To
ensure the denaturation of “industrial alcohol” under Section
41 of the 1910 Act, Rules were made in the year 1976. It was
contended by the appellant State that the word “industry” has
been construed by the Constitution Bench of this Court in ITC
Ltd. vs. Agricultural Produce Market Committee (2002)
9 SCC 232 (“ITC Ltd.”) to mean only manufacture and
production. Therefore, the State was competent under Entry 33 -
List III to regulate the products of an industry which was declared
to be a controlled industry under Entry 52 - List I. Since there
was no Central legislation occupying the field, the State law
must be held to be valid.
9.14.1 Referring to Synthetics and Chemicals (7J), it was
observed that since the coming into force of the IDRA on
08.05.1952, the State Legislatures are constitutionally
incompetent to levy tax on “industrial alcohol”. This
principle was reiterated in Modi Distillery wherein it
was held that the State’s power to levy excise duty
was limited to alcoholic liquors for human consumption
which means, that liquor which, as it is, is consumable
in the sense that it is capable of being taken by human
beings as such as a beverage or drink. Therefore,
even if ethyl alcohol (95 per cent) could be used as a
raw material or input, after processing and substantial
dilution, in the production of whisky, gin, country liquor
etc. nevertheless, it was not “intoxicating liquors”
which expression meant only that liquor which was
[2024] 10 S.C.R. 2107

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M/s Lalta Prasad Vaish and sons

consumable by human beings as it was. Therefore,
the State could not legislate on “industrial alcohol”
despite the fact that such “industrial alcohol” has the
potential to be used to manufacture alcoholic liquors
for human consumption.
9.14.2 Ultimately, in paragraph 43 of the judgment, it was
pithily observed as under:
“43. Considering the various authorities
cited, we are of the view that the State
Government is competent to levy fee for the
purpose of ensuring that industrial alcohol
is not surreptitiously converted into potable
alcohol so that the State is deprived of
revenue on the sale of such potable alcohol
and the public is protected from consuming
such illicit liquor. But this power stops with
the denaturation of the industrial alcohol.
Denatured spirit has been held in Vam
Organics I to be outside the seisin of the
State Legislature. Assuming that denatured
spirit may by whatever process be renatured
(a proposition which is seriously disputed by
the respondents) and then converted into
potable liquor, this would not give the State
the power to regulate it. Even according to
the demarcation of the fields of legislative
competence as envisaged in Bihar Distillery
industrial alcohol for industrial purposes falls
within the exclusive control of the Union and
according to Bihar Distillery “denatured
rectified spirit, of course, is wholly and
exclusively industrial alcohol” (SCC p. 742,
para 23).”

Analysis of Judicial Dicta:
10. I shall now analyse the judgments of this Court on the points in
controversy.
10.1 In Indian Mica, the question which came up was whether the
fee levied under Rule 111 of the Bihar and Orissa Excise Rules
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framed under Section 90 of the Bihar and Orissa Excise Act,
1915 on denatured spirit used and possessed by the appellants
therein had sufficient quid pro quo for the levy. This Court struck
down the levy as being unjustified and excessive as there was
no co-relationship between the levy and the services rendered.
10.2 In Southern Pharmaceuticals and Chemicals vs. State of
Kerala, AIR 1981 SC 1863 (“Southern Pharmaceuticals”),
being aggrieved by the dismissal of their writ petitions and
upholding the constitutional validity of Section 12-A and other
sections of the Kerala Abkari Act, and Rules 13 and 16 of
the Kerala Rectified Spirit Rules, 1972, the manufacturers
of medicinal and toilet preparations containing alcohol had
filed the appeal before this Court questioning the legislative
competence of State to enact a law relating to medicinal and
toilet preparations containing alcohol under Entry 8 - List II.
Repelling the said contention in light of the scheme of legislation
and its history, it was observed that impugned Act was relatable
to Entry 8 - List II. Reference was also made to the judgment
of this Court in FN Balsara and it was held that the main
purpose of the impugned Act was to consolidate the law relating
to manufacture, sale and possession of “intoxicating liquors”
which squarely fell under Entry 8 - List II, while the main object
of the Central Act was to provide for the levy and collection of
duties of excise on medicinal and toilet preparations containing
alcohol falling under Entry 84 - List I. According to this Court
when the framework of the two enactments was examined,
it was apparent that the Central and the State legislations
operated in two different and distinct fields. It was held that in
the matter of making rules or detailed provisions to achieve
the object and purpose of a legislation, there may be some
provisions seemingly overlapping or encroaching upon the
forbidden field, but that does not warrant the striking down of
the impugned Act as ultra vires the State Legislature.
10.3 In Synthetics and Chemicals (7J), the question for
consideration was whether different legislations and rules
in respect of “industrial alcohol” enacted by the States were
valid. In my view, this Court was clear about the concept of
“industrial alcohol” and “intoxicating liquors” and therefore, the
State Legislatures’ competence to levy excise duty on “industrial
alcohol” was considered as the seminal issue. In that context,
[2024] 10 S.C.R. 2109

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the scope and ambit of Entry 8 - List II was also considered.
It is in the context of the taxing power of the States, i.e., to
levy excise duty on “industrial alcohol” and/or impost(s) such
as vend fees which was the point of controversy.
In the above backdrop, the question was crystallised to whether
the expression “intoxicating liquors” in Entry 8 - List II is confined
to potable liquor or includes all liquors. It was observed that
the expression “alcoholic liquors for human consumption”
used by the framers of the Constitution in Entry 51 – List II
and Entry 84 – List I meant that liquor which is consumed by
human beings directly as a beverage or as a drink. It was
observed that alcoholic liquor or “intoxicating liquors” must be
understood as common people would understand it and not what
certain alcoholic products are capable of being transformed or
converted into. That when excise duty was being levied under
Entry 84 - List I, it did not include alcoholic liquors for human
consumption but included denatured spirit which is “industrial
alcohol”. It was observed that merely because the denatured
spirit could be treated with water and transformed into alcoholic
liquors into human consumption which did not involve a process
of manufacture, the States would not have the legislative
competence to levy excise duty under Entry 51 - List II.
10.4 Subsequently, in Synthetics and Chemicals (2J), it was
clarified that the question which arose for consideration before
the seven-Judge Bench was with regard to the validity of “vend
fee and other fees” charged by the States. The two-Judge
Bench clarified that the seven-Judge Bench had answered
the question whether, “intoxicating liquors” in Entry 8 - List II
was confined to only potable liquor or other liquors also and it
was held that it included only potable liquor and not “industrial
alcohol”. However, it was clarified that the State has the power
to levy taxes on sale or purchase of goods under Entry 54 -
List II and therefore paragraph 86 of the seven-Judge Bench
in Synthetics and Chemicals (7J) was clarified in those
terms. It was observed that in paragraph 86 by an accident
(due to an inadvertence) the prohibition of sales tax being
levied by the States on the “industrial alcohol” was adverted to
without there being a discussion on that aspect of the matter
and, therefore, to that extent the dictum of the seven-Judge
Bench in Synthetics and Chemicals (7J) was per incuriam.
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It was further clarified that the seven-Judge Bench was only
concerned with the question whether the State Legislature
could levy vend fee or excise duty on “industrial alcohol” and
that the said question was answered in the negative by holding
that “industrial alcohol” being unfit for human consumption, the
State Legislature was incompetent to levy any duty of excise
under Entry 51 - List II.
10.5 In the above context, it was also observed that alcohol can
be divided into two categories, namely, potable and non-
potable alcohol. That alcohol which is potable is “intoxicating
liquors” for human consumption directly as a beverage and
comes within the scope and ambit of Entry 8 - List II and the
State Legislature has the power to regulate such “intoxicating
liquors” by making relevant laws. However, non-potable liquor
or “industrial alcohol” as it is popularly called, can be diluted
and consumed as a beverage, and the State has an obligation
and powers to regulate and ensure that there is no such abuse
having regard to Article 47 of the Constitution being a Directive
Principle of State Policy. Hence, under Entry 8 - List II, the
State can make laws for prevention of production, possession,
sale etc. of non-potable alcohol as “intoxicating liquors”. Such
regulation would be intra vires Entry 8 - List II and would not
be in conflict with any other Entry in List I, II or List III. This
would also be in line with Article 47 of the Constitution.
10.6 The aforesaid view was affirmed in Bileshwar Khand Udyog
by holding that clarity was brought about in respect of “industrial
alcohol” in Synthetics and Chemicals (7J) and the competency
of the State to frame any legislation to levy any tax or duty
on “industrial alcohol” was excluded. However, under Entry
33 - List III, there was power vested in the State insofar as
“industrial alcohol” was concerned as the said product was a
product of a scheduled industry, namely, Item 26 of the First
Schedule of the IDRA which was enacted pursuant to Entry
52 - List I. This is subject to the intention of the Parliament to
occupy the field as per the provisions of the IDRA, in particular,
under Section 18G of the said Act. Gujchem Distillers also
followed the aforesaid judgment. Khoday Distilleries also
emphasised the fact that the State has the power to completely
prohibit the manufacture, sale, possession, distribution and
consumption of potable liquor as a beverage but the State
[2024] 10 S.C.R. 2111

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cannot prohibit trade and business in medicinal and toilet
preparations containing liquor or alcohol. In the same way, the
State cannot prohibit trade or business in “industrial alcohol”
which is not used as a beverage but used legitimately for
industrial purposes. It was held that restrictions imposed by
the States on trade or business in “industrial alcohol” or in
medicinal and toilet preparations containing liquor or alcohol
could be for the purpose of preventing their abuse or diversion
for use as or in beverages.
10.7 In Shree Krishna Gyanoday Sugar Ltd. it was categorically
observed that the excise authorities under the concerned
State Act could supervise the working of the distilleries which
had composite licences to manufacture not only denatured
spirit and other spirits for industrial use but also potable spirit
or country liquor in order to prevent alteration of denatured
spirit and make it fit for human consumption. Therefore, at the
distilleries of the licencees, supervision had to be provided
as it was a regulatory measure. In this context also, it was
clarified that the denatured spirit is a spirit which is not fit for
human consumption and non-potable, and was also called as
“other commercial spirits” under the rules in question, as they
are used for industrial purposes or any other purpose other
than human consumption as a beverage. This was opposed to
potable liquor which is fit for human consumption. It was finally
observed that in respect of such distilleries having composite
licencees, the State will have to provide the cost of supervisors
and the same could not be foisted on such distilleries.
10.8 Jeevan Reddy, J., in Bihar Distillery, also held that insofar
as “intoxicating liquors or potable liquors” are concerned,
they fall in the exclusive province of the State. However,
alcohol can be used for the industrial purposes even without
denaturing it. Significantly, it was held that Entry 8 - List II uses
the expression “intoxicating liquors” which signifies “liquor for
human consumption”. The absence of the words “for human
consumption” in Entry 8 – List II is irrelevant as the word
“intoxicating” signifies human consumption, i.e., as a beverage
and all aspects of its production, manufacture, possession,
transport, sale and purchase of “intoxicating liquors” are covered
under the said Entry. Also the accidental error in para 85 of the
Synthetics and Chemicals (7J) was explained to say that all
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potable liquor shall be governed by Entry 8 - List II which is
within the exclusive domain of the State. Further, Entry 8 - List II
is outside the purview of Entry 24 - List II and the Union cannot
take control of “intoxicating liquors” by making a declaration in
terms of Entry 52 - List I. It was further observed that Synthetics
and Chemicals (7J) mainly dealt with “industrial alcohol”, i.e.,
denatured rectified spirit.
10.9 In Bihar Distillery, this Court further observed that the States
have the power to legislate under Entry 33(a) – List III provided
the field is not occupied by the Union. That there was a clear
line of demarcation at the stage of removal or clearance of
the product, i.e., if the clearance is for “industrial” purpose,
the duties of excise and all other control is with the Union but
if the removal or clearance is for obtaining or manufacturing
“potable liquor”, the levy of duty and other control is with the
State. It was observed that there was a need for joint control
and supervision of the process of manufacture of rectified
liquor and its use and disposal for ensuring that “industrial
alcohol” was not misused by diverting it for potable purpose
and consequently certain concrete observations were made
in the said judgment which is of a binding nature.
10.10 The challenge to the notification issued by the excise
commissioner, Uttar Pradesh dated 18.05.1990 was a subject
matter of controversy in Vam Organic I, in the context of
legislative competence of the State of Uttar Pradesh to
impose tax or levy on “industrial alcohol”, ethyl alcohol and
rectified spirit. It was observed that the expression “industrial
alcohol” is not used in any of the three Lists of the Seventh
Schedule of the Constitution. Referring to Synthetics and
Chemicals (7J), this Court observed that the judgment
in the aforesaid case proceeded to consider that rectified
spirit was the ingredient for “intoxicating liquors” or alcoholic
liquors for human consumption. The same was referred to
as “industrial alcohol” in respect of which the State has no
power whatsoever under Entries 8 and 51 – List II, while
the States have the exclusive competence to legislate
on “intoxicating liquors” or “alcoholic liquors for human
consumption” but if any alcoholic preparation is diverted for
human consumption, the States would have the power to
legislate under Entry 8 - List II.
[2024] 10 S.C.R. 2113

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10.11 Again, Jeevan Reddy, J. speaking for the Court in Bihar
Distillery noted that in Synthetics and Chemicals (7J)
a distinction was drawn between rectified spirit meant
exclusively for industries (“industrial alcohol”) and rectified
spirit exclusively used for obtaining potable alcohol. The
said judgment did not deal with rectified spirit which could
be converted to potable alcohol as such. That insofar as
the first category was concerned, it was under the exclusive
control of the Union and the second category was under the
control of the State at all stages including the establishment
of the distillery.
10.12 In Vam Organic II, the history of the legislations on “intoxicating
liquors” as well the earlier judgments of this Court were
considered and it was observed that the State Legislatures
are constitutionally not competent to levy tax on “industrial
alcohol” since the coming into force of the IDRA on 08.05.1952.
It was opined that Synthetics and Chemicals (7J) continued
to hold the field and therefore, the States’ power was limited
to regulation of non-potable alcohol for the limited purpose
of preventing its use as alcoholic liquors.

Further Analysis:
11. The survey of the aforesaid decisions of this Court and their analysis
clearly indicate the golden thread of continuity in all of them, i.e., this
Court has been clear on what is meant by the expression “industrial
alcohol” as simplified to refer to all alcohol which is “not fit for human
consumption as a beverage or non-potable alcohol”. By contrast,
the use of the expression “potable alcohol” refers to “intoxicating
liquors” used for human consumption as a beverage or as a drink.
However, in paragraph 85 of Synthetics and Chemicals (7J) the
expression “both potable and” is an inadvertent insertion inasmuch
as there was no reason to state that licences to manufacture potable
alcohol was vested in the Central Government. Therefore, to that
extent the judgment in Synthetics and Chemicals (7J) calls for a
clarification. Apart from that the following points would emerge from
paragraph 85:
(i) That, on insertion of Item 26 of the First Schedule to IDRA,
the control of “Fermentation Industries” has vested exclusively
in the Union.
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(ii) Therefore, even the States cannot themselves manufacture
“industrial alcohol” without the permission of the Central
Government.
(iii) “Industrial alcohol” cannot be amenable to States’ claim to
possession of exclusive privilege and the States can neither
rely on Entry 8 – List II nor Entry 33 – List III as a basis for
such claim.
(iv) The States cannot claim that under Entry 33 – List III, it can
regulate “industrial alcohol” as a product of the scheduled
industry as the Union under Section 18G of the IDRA has
evinced a clear intention to occupy the whole field. The doctrine
of occupied field under Article 254 has been applied in the said
case which shall be adverted to later.
(v) Any exercise of power by the States under Entry 8 – List II is
not an exercise of power under Entry 33 – List III.
11.1 The aforesaid judgments state that insofar as “intoxicating
liquors” or potable liquors are concerned, Entry 8 - List II is
the regulatory Entry while Entry 51 - List II is the taxation Entry
which provides for imposition of excise duty on potable liquor
also called alcoholic liquors for human consumption. Conversely,
insofar as “industrial alcohol” is concerned, the control of the
said industry is vested with the Union owing to Section 2 of
the IDRA read with the other provisions of the said Act, which
enactment has been made by virtue of Entry 52 - List I. That
the Union has taken under its control “Fermentation Industries”
as per Item 26 of the First Schedule to the IDRA which has
been enacted by the Parliament in relation to Entry 52 - List I
excluding “intoxicating liquors”. “Fermentation Industries” relates
to various products manufactured, processed, etc. as a result
of fermentation process. Such products of fermentation are
broadly classified as “industrial alcohol” (non-potable alcohol)
and “intoxicating liquors” (potable alcohol). This classification
is for the purpose of identifying the nature of the product, its
use in the industry and consequently, dividing the subject of the
legislation between the Parliament and the State Legislature.
11.2 The aforesaid decisions also indicate that merely because
“industrial alcohol” or non-potable alcohol such as rectified
spirit can be converted into “intoxicating liquors” or alcohol fit
[2024] 10 S.C.R. 2115

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for human consumption as a beverage (potable alcohol), that
would not empower the State Legislature to tax or impose any
levy on such “industrial alcohol”. However, since the expression
“intoxicating liquors” in Entry 8 - List II deals specifically with
alcohol used as a beverage and meant for human consumption,
it would be within the scope and ambit of the said Entry for
the State Legislature to regulate any abuse or conversion of
“industrial alcohol” as a beverage, which is, in fact, harmful
when consumed. Therefore, having regard to Article 47 of the
Constitution, a State Legislature can even prohibit manufacture
of “intoxicating liquors” in a State as one of the objects of
which would be to negate the conversion or abuse of “industrial
alcohol” as alcohol fit for human consumption.
11.3 The judgment of this Court in Synthetics and Chemicals
(7J), was also clear about the controversy before it, namely,
the competence of the Uttar Pradesh State Legislature to
impose vend-fee on “industrial alcohol” when the same is a
product of “Fermentation Industries” and, therefore, under the
control of the Union.
11.4 However, the sum and substance of the controversy has to
be answered by this Court on the premise that, despite there
being clarity in the minds of the authorities under the States
as well as the Centre, repeated imposition of imposts in the
form of tax or excise duties etc., have brought several cases
before this Court for adjudication. Ultimately, those who are
in the business of “industrial alcohol” or “intoxicating liquors”,
namely, non-potable and potable liquor respectively are clear
about the nature of their business and the products that they
are dealing with. Hence, I feel that it is incumbent for this
Court to enhance the clarity and not create a further legal
regime which would cause confusion and legal uncertainty
in the economy.

Meaning of “intoxicating liquors”:
12. Before embarking on an enquiry in this Reference to understand
the scope of the expression “intoxicating liquors” as it appears in
Entry 8 – List II, it would be useful to highlight that this Court has
relied on pre-constitutional legislations and the Constitution of India
while interpreting the scope of the expression “intoxicating liquors”.
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12.1 At the outset, I may refer to Cooley’s “Constitutional Limitations”
[2nd ed. Boston : Little, Brown & Company, p.58], wherein it
is explained as follows:
“In interpreting clauses we must presume that words
have been employed in their natural and ordinary
meaning. Says Marshall, Ch. J.: “The framers of the
Constitution, and the people who adopted it, must
be understood to have employed words in their
natural sense, and to have understood what they
meant.” This is but saying that no forced or unnatural
construction is to be put upon their language; and
it seems so obvious a truism that one expects to
see it universally accepted without question; but the
attempt is so often made by interested subtlety and
ingenious refinement to induce the courts to force
from these instruments a meaning which their framers
never held, that it frequently becomes necessary to
re-declare this fundamental maxim.”
(underlining by me)
Therefore, one task before this Court is to ascertain to what extent
“intoxicating liquors” had acquired a natural and ordinary meaning
at the time of the Constitution coming into force.
12.2 I may note another cardinal rule of interpretation explained by
Sir Maurice Gwyer C.J., of the Federal Court of India in In Re:
the Central Provinces and Berar Act No. XIV of 1938, 1939
1 FCR 80, while discussing the principles of interpretation of
a constitutional provision as under:
“I conceive that a broad and liberal spirit should
inspire those whose duty it is to interpret it; but I
do not imply by this that they are free to stretch
or pervert the language of the enactment in the
interests of any legal or constitutional theory, or
even for the purpose of supplying omissions or of
correcting supposed errors. A Federal Court will not
strengthen, but only derogate from, its position, if it
seeks to do anything but declare the law; but it may
rightly reflect that a Constitution of a Government is
a living and organic thing, which of all instruments
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has the greatest claim to be construed ut res magis
valeat quam pereat.”
12.3 The learned Chief Justice Dr. Chandrachud, in his opinion has
conducted an extensive inquiry into identification of legislative
meaning of the phrase and its legislative history, but found
that no conclusive answer can be reached on the legal import
of “intoxicating liquors”. With due respect, I view that such
an enquiry needs to give due primacy to the ordinary and
natural meaning of words and also test their connotations in
colloquial use by the Constitution makers so as to give it a
constitutional flavour.

A Historical Perspective:
12.4 A historical enquiry would show that “intoxicating liquors”
was first used in Entry 31 – List II in the Government of India
Act, 1935. This was a departure from the legislative head in
Devolution Rules framed under the Government of India Act,
1919 insofar as the Entry therein was “alcoholic liquor”. The
revisions in List II of Government of India Act, 1935 were
partly the product of a Joint Select Committee chaired by Lord
Linlithgow. Later, the word “liquors” was also qualified by the
word “intoxicating”.
12.5 I may briefly refer to the following remarks of Brewer, J. in
South Carolina vs. United States (1905) 199 US 437 (“South
Carolina”):
“To determine the extent of the grants of power, we
must, therefore, place ourselves in the position of
the men who framed and adopted the Constitution,
and inquire what they must have understood to be
the meaning and scope of those grants.”
12.6 In this backdrop, it is useful to draw sustenance from certain
contemporaneous legislations and Hansard records that go
to show that the phrase “intoxicating liquors” was used in the
context of consumption. On 30.04.1889, the House of Commons
on a motion moved by Mr. S. Smith to discuss how the fiscal
system of the Government of India led to the establishment
of spirit distilleries, liquor and opium shops in a large number
of places where till recently (from the date of question) they
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never existed had several references to “intoxicating liquors”
exclusively in the context of consumption. On 29.06.1904, Mr.
Herbert Roberts, a person interested in temperance asked the
Secretary of State for India whether he was aware that the
number of ‘shops open for the sale of “intoxicating liquors”
and drugs in India rose from 97,910 in 1901–02 to 99,497
in 1902–03’ and whether he was in a position to explain the
reasons for this increase in the number of shops opened and
the consequent increase in consumption. Most interestingly,
on 13.07.1937, in a sitting of the House of Lords, Lord Clwyd
(formerly Mr. Herbert Roberts) asked the Secretary of State
for India the following question:
“To ask His Majesty’s Government what was the
amount in pounds sterling of the net Excise revenue
of India for the years 1933–1934, 1934–1935 and
1935–1936 respectively; what was the recorded
consumption of country spirits in 1935–1936 in
Bengal, Madras, Bombay, Sind, Bihar and Orissa, the
United Provinces, the Punjab, the North-West Frontier
Province, the Central Provinces and Berar, Assam and
Burma respectively; what was the number of shops
licensed for the sale of intoxicating liquor, the net
amount of Excise revenue, and the cost of Excise
administration in each Province in 1930–1931 and
1935–1936; and what was the percentage of Excise
revenue compared with the total revenue accruing
to the Provincial Governments in each case for the
year 1935–1936.”
12.7 This enquiry reflects that “intoxicating liquors” has not only been
a term of common parlance but was also used in administration
for assessment and regulation of consumption of spirits in
provinces in pre-independence India from the point of view of
collection of revenue.

Constituent Assembly Debates:
12.8 I might also take persuasive strength from the use of the
expression “intoxicating liquors” in Constituent Assembly
Debates in the context of Article 47. Sri B.G. Kher speaking
on the ruin caused by the consumption of alcohol noted the
use of “intoxicating liquors” and drugs as a vice.
[2024] 10 S.C.R. 2119

State of U.P. & Ors. v.
M/s Lalta Prasad Vaish and sons

12.9 The aforesaid discussion points to the fact that there was
a consumption-oriented meaning attached to “intoxicating
liquors” that was used for legal and administrative purposes.
To ascertain the breadth of the phrase “intoxicating liquors”
as it was used by the draftsmen of the Constitution and the
Government of India Act, 1935 one cannot be bound by
only the definitions provided in legislative enactments, or
lack thereof.
12.10 The Constitution of India clearly employs three distinct
expressions relevant to the present controversy:
(a) Entry 51 - List II refers to duties on ‘alcoholic liquors
for human consumption’;
(b) Article 47 uses the words “consumption of ‘intoxicating
drinks’”; and
(c) Entry 8 – List II uses the words in question – “intoxicating
liquors”
12.11 I may observe that the expression “alcoholic liquors for
human consumption” as it appears in Entry 51 – List II and
intoxicating drinks as it appears in Article 47 have been
categorically used in the context of human consumption as a
beverage, as rightly observed by the learned Chief Justice in
his opinion. Herein, I might note that appellants have sought to
contend that the expression “intoxicating liquors” as it appears
in Entry 8 – List II has no explicit neighboring context which
would indicate that it is restricted to mean only potable liquor.
12.12 The first interpretive question therefore is, whether the absence
of the context of consumption expands “intoxicating liquors”
to also include “industrial alcohol”. In my opinion, the words
“intoxicating liquors” itself explains that Entry 8 – List II does
not seek to travel beyond “intoxicating liquors” meant for
human consumption i.e., potable alcohol. This was also the
view of Jeevan Reddy, J. in Bihar Distillery.
12.13 Another distinguishing consideration is the use of “intoxicating”
as an adjective to liquor i.e., as a qualifier whereas elsewhere
in the Constitution the word “alcoholic” accompanies the word
liquor. Learned Chief Justice has carefully found following
three inferences which are summarized as under:
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a) Ingredient vs. Effect: “Alcoholic liquor” defines the scope
of the provision based on the ingredient, that is, alcohol
whereas “intoxicating liquors” defines the scope based
on effect i.e. intoxication. Therefore, liquor which is not
colloquially considered alcoholic liquor may be covered
by the phrase “intoxicating liquors”.
b) Broader intent: ‘Intoxicate’ means either the ability of
someone to lose control of their behavior or poison. Thus,
the purpose of substituting the adjective which indicates
the impact with the ingredient seems to have enhanced
the scope of the Entry to cover all liquor which has an
impact on health; and
c) Public interest purpose: There is a discernible public
interest in covering the entire stage from production to
sale of “intoxicating liquors”. Additionally, Entry 31 – List II
in the Government of India Act, 1935 also regulated
narcotic drugs and opium along with “intoxicating
liquors”. However, references to them were deleted to
prevent overlapping with entries in the Concurrent List.
In substance, the inference that is drawn is that all –
alcohol, narcotic drugs and opium – are products which
can be noxiously used because they are also used as
raw materials in the production of other products.
12.14 What prima facie appears is that the “intoxication” effect is a
sine qua non for the legislative competence of States on any
liquors potentially coming within the scope of Entry 8 – List
II. In the absence of an “intoxicating” effect from liquors, a
State Legislature cannot legislate on the subject. However,
in my view, what is required to be seen is the nature of the
product which leads to such an intoxicating effect upon human
consumption of the same. Here, the expression consumption
must be explained. It is not all kinds of human consumption,
direct or indirect, which is the determining factor. It is only direct
consumption i.e. as an ingestion by the act of drinking as a
beverage or a drink. An indirect consumption by use of alcoholic
liquors as a raw material for any other product, industrial,
medicinal or a toilet item cannot be included as part of Entry
8 – List II. Secondly, merely because there can be a potential
misuse of “industrial alcohol”, for example, by converting
[2024] 10 S.C.R. 2121

State of U.P. & Ors. v.
M/s Lalta Prasad Vaish and sons

rectified spirit (“industrial alcohol”) as a beverage which has
an intoxicating effect, Entry 8 – List II cannot be stretched
to include such “industrial alcohol”. The prevention of abuse
of “industrial alcohol” as a beverage is also covered under
Entry 8 – List II. Thus, what is carved out of “Fermentation
Industries” in Entry 24 – List II is only “intoxicating liquors”
used as beverage and thus, for direct human consumption
the said subject is placed in Entry 8 – List II. This would imply
that the rest of “Fermentation Industries” would be within the
scope and ambit of Entry 24 – List II which is subject to Entry
52 – List I and is a scheduled industry as per Section 2 read
with Item 26 of First Schedule of IDRA.
12.15 One must also be cognizant of the fact that Entry 8 – List II
concerns itself with “intoxicating liquors” even from a historical
perspective. Constitutional framers were not engaged in a
theoretical task of demarcating legislative fields but in their
utmost wisdom and pragmatism distributed legislate fields
between Parliament and State Legislatures that would continue
to determine the governance of the nation. One must note
that a construction of Entry 8 – List II should not potentially
give the States the legislative competence to legislate on
“industrial alcohol” which is a scheduled industry under IDRA.
That Entry 8 – List II which deals with “intoxicating liquors”
cannot also subsume industries for manufacture of “industrial
alcohol”, etc.
12.16 Therefore, in deciding on “intoxicating liquors”, the contours
of interpretation must be concerned only with the very nature
of the product of “intoxicating liquors” rather than the entire
industry concerning alcohol. Entry 8 – List II provides the
legislative competence to States to regulate production,
manufacture, possession, transport, purchase and sale of
only “intoxicating liquors”. It must follow from this that what is
being produced or manufactured or possessed or transported
or purchased or sold must actually be “intoxicating liquors”
and not any other alcoholic product.
12.17 Halsbury’s Laws of England (Fourth Edition), Volume 26
defines the meaning of “intoxicating liquors” as discussed in
the context of the distinction between wholesale and retail
trade. It is stated that “Dealing wholesale” means “the sale at
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any one time to any one person of not less than two gallons
or one case of spirits, wine or made-wine, or not less than
four and a half gallons or two cases of beer”. “Selling by
retail” means “the sale at any one time to any one person
of not more than two gallons or one case of spirits, wine or
made-wine or not more than four and a half gallons or two
cases of beer or cider”. The following definitions are apposite:
(i) “Spirits” is defined to mean spirits of any description and
includes all liquors mixed with spirits and all mixtures,
compounds and preparations made with spirits, but does
not include methylated spirits : Customs and Excise
Act, 1952.
(ii) “Wine” means liquor obtained from the alcoholic
fermentation of fresh grapes or the must of fresh grapes,
whether or not it is fortified with spirits or flavoured with
aromatic extracts.
(iii) “Made-wine” means any liquor obtained from the alcoholic
fermentation of any substance or by mixing a liquor so
obtained or derived from a liquor so obtained with any
other liquor or substance, but does not include wine,
beer, black beer, spirits or cider. This definition replaced
an earlier one in different terms of “British wine”.
(iv) The definition of “beer” includes ale, porter, stout and any
other description of beer and any other liquor which is
made or sold as a description of beer or as a substitute
for beer which on analysis of a sample at any time is
found to be of a strength exceeding two degrees of
proof, but does not include liquor made elsewhere than
upon the licenced premises of a brewer for sale which
on analysis of a sample at any time is found to be of
an original gravity not exceeding 1,016 degrees and to
be of a strength not exceeding two degrees of proof :
Customs and Excise Act, 1952.
(v) “Intoxicating liquors” means spirits, wine, beer, cider and
any fermented, distilled or spiritous liquor but (apart from
cider) does not include any liquor for the sale of which
by wholesale no excise licence is required : Licensing
Act, 1964.
[2024] 10 S.C.R. 2123

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(vi) “Cider” means cider or perry of a strength less than 8.7
per cent of alcohol by volume at 20 degrees Centigrade
obtained from the fermentation of apple or pear juice
without the addition at any time of any alcoholic liquor or
liquor or substance which communicates colour or flavour
other than such as the Commissioner of Customs and
Excise may allow as appearing to them to be necessary
to make cider or perry : Customs and Excise Act, 1952.
(vii) “Intoxicating liquors other than spirits” includes beer,
wine, made-wine and cider.
12.18 It may also be useful to outline some undisputed elements of
“industrial alcohol”. It is an undisputed position that “industrial
alcohol” is not meant to be consumed as a human beverage. In
other words, it is not produced or manufactured to be meant for
direct human consumption as a beverage. However, only when
misused, as an intoxicating substance after some treatment,
howsoever limited, “industrial alcohol” certainly could cause
the “intoxicating” effect on direct human consumption.
12.19 Two distinguished interpretations have been contended before
us. In effect, the respondents contend that “intoxicating liquors”
must be so constructed that it includes only “liquors which are
meant to intoxicate” as is. Per contra, the appellants contend
that it is a cardinal rule of interpretation that legislative Entries
be given the widest possible construction and therefore
Entry 8 – List II should be read as “liquors which can intoxicate
even when mischievously used”. The effect of the appellants’
construction is that Entry 8 – List II will give States the
legislative field on “industrial alcohol”, which by design is not
sought to be intoxicating but rather could intoxicate because
of its misuse.
12.20 Before proceeding further, I may first note a notable feature
of the phraseology of Entry 8 – List II of the Constitution
of India and Entry 40 – List II, as Entry 8 appeared in the
Draft Constitution. Neither in the Constitution nor in the Draft
Constitution was there any other Entry in List II that used an
adjective as a qualifier. Whether use of the word “intoxicating”
enlarges or limits the scope of “liquors” is something that
needs to be answered. Herein, “intoxicating” is an adjective
that is adjoined to “liquors” and explains an effect that is
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caused. In this regard, learned Solicitor General contended
that “intoxicating” has been used to expand beyond the limits of
“alcoholic liquors” because States have an interest in regulating
other “intoxicating liquors” such as bhang. It needs no labour
that an “intoxicating” effect can be said to be caused only
upon actual consumption by human beings. Unlike potable
alcohol, “industrial alcohol” by its design, intent and purpose
is neither sought to be consumed and cause an intoxicating
effect nor is it produced keeping in mind its intoxicating effect
on human beings. If we were to read “industrial alcohol” as
“intoxicating liquors” which even though by design is neither
supposed to be consumed nor have an effect on health but
has the constituents that could be “intoxicating” when misused,
it would enable a cumbersome interpretational plane.
12.21 It is useful to allude to the sine qua non of Entry 8 – List II
i.e. the intoxicating effect. In my view, the sine qua non of
Entry 8 – List II i.e. the “intoxicating” effect of liquor has to be
read as (i) an effect, and (ii) an intended effect of the industry
and its products. One might argue that even “industrial alcohol”
due to its very constituents could cause an intoxicating effect,
when mischievously consumed, albeit with dire consequences.
However, such an argument ignores that the fundamental
nature of “industrial alcohol” is that it is non-potable i.e. when
put to its actual use, neither is it intended to be consumed by
human beings as a beverage nor, as a corollary, is sought
to cause an “intoxicating” effect on human beings. “Industrial
alcohol” can be said to cause an “intoxicating” effect only
when it is mischievously directed away from its actual purpose
and use and towards human consumption. To accept such
a rationale for interpreting Entry 8 – List II would lead to
an anomalous situation wherein the marginal mischievous
use of “industrial alcohol” would bring in the whole industry
of “industrial alcohol” to Entry 8 – List II and take it out of
Entry 24 – List II viz. “industrial alcohol” which is not always
meant to intoxicate a human being but could only sometimes
when used mischievously or abused would wholly become
a legislative field for States to legislate. It is to avoid such
an abuse that States have the powers to prevent by suitable
legislative and administrative measures, as has been held in
the aforesaid decisions of this Court.
[2024] 10 S.C.R. 2125

State of U.P. & Ors. v.
M/s Lalta Prasad Vaish and sons

12.22 Viewed from another perspective, the exception (mischievous
use) cannot lead to governing of the norm (original intended
use) through such construction of Entry 8 – List II. Put into
practice, this would translate into legislative regulation of
production, manufacture, possession, transport, purchase
and sale of the entire industry and product of “industrial
alcohol” only because of its possible misuse or mischievous
use. This reading would be tantamount to attaching to the
constitutional intent an absurdity i.e. the part governing the
whole or in other words, bringing within the ambit of Entry
8 – List II something which is an exception as a main aspect
of the Entry. A careful revisit pertinent at this point would be to
paragraph 86 of Synthetics and Chemicals (7J), wherein it
was held that States continue to have legislative competence
to ensure that non-potable alcohol is not misdirected to potable
alcohol. That is different from saying that States have the right
to regulate “industrial alcohol” or non-potable alcohol. A power
to legislate as to the principal matter specifically mentioned in
the Entry also includes within its expanse, legislation touching
incidental and ancillary matters. However, ancillary matters
by a backdoor cannot be included within the Entry, beyond
what is covered as the principal. Herein, the ancillary matter
being prevention of mischievous use of “industrial alcohol”
would be within Entry 8 – List II but “industrial alcohol” as
such would not be included.
Hence, the analysis of the relevant Entries in the three Lists
must be in the backdrop of the aforesaid discussion.

Analysis of relevant Entries in the three Lists:
13. While analysing Entry 52 – List I which deals with industries, the
control of which by the Union is declared by Parliament by law to
be expedient in public interest, it would be useful to refer to Entries
7 and 54 – List I. What is common in all these three Entries is that
there is a declaration made by the Parliament. Entries 7, 52 and
54 – List I read as under:
“7. Industries declared by Parliament by law to be necessary
for the purpose of defence or for the prosecution of war.
xxx
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52. Industries, the control of which by the Union is declared
by Parliament by law to be expedient in the public interest.
xxx
54. Regulation of mines and mineral development to the
extent to which such regulation and development under
the control of the Union is declared by Parliament by law
to be expedient in the public interest.”
13.1 What is common between Entry 52 – List I and Entry 54 –
List I is the fact that control of industries or regulation and
development of mines and mineral development respectively
is to the degree or extent under the control of the Union
which is expressed by a declaration made by Parliament by
law to be expedient in the public interest. Thus, under Entry
52 – List I, the intent to control an industry: (i) by the Union;
(ii) by a declaration by Parliament by law; and (iii) which law
is expedient in the public interest are the key phrases to be
taken note of. Thus, if there is a declaration by Parliament
by law (such as IDRA) to control any of the industries by the
Union, such as “Fermentation Industries” which is expedient
in the public interest then, to the extent of such control, the
industries would be covered under Entry 52 – List I. This is
also evident on a reading of Entry 24 – List II which also deals
with the field of legislation being “industries” subject to the
provision of Entries 7 and 52 – List I. As already noted above,
Entry 7 – List I pertains to industries declared by Parliament
by law to be necessary for the purpose of defence or for the
prosecution of war. Entry 52 – List I deals with “industries”,
the control of which by the Union is declared by Parliament
by law to be expedient in the public interest.
13.2 In Ishwari Khetan, the facts were that the Governor of Uttar
Pradesh promulgated an Ordinance on 03.07.1972, styled
as U.P. Sugar Undertaking (Acquisition) Ordinance, 1971,
with a view to transferring and vesting sugar undertakings
set out in the Schedule to the Ordinance in the U.P. State
Sugar Corporation Limited, a Government Company within
the meaning of Section 617 of the Companies Act, 1956.
Subsequently, the Ordinance was repealed and replaced by
an Act. The Schedule to the Act enumerated twelve sugar
undertakings which stood transferred to and vested in the
[2024] 10 S.C.R. 2127

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Corporation w.e.f. 03.07.1971, the date on which the Ordinance
was issued. Writ Petitions were filed before the Allahabad High
Court challenging the constitutional validity of the Ordinance as
well as the Act on various grounds. The Division Bench of the
High Court had repelled the contentions advanced on behalf
of the petitioners therein and upheld the constitutional validity
of the Act. Before this Court, the main thrust of the attack was
that the U.P. Legislature lacked legislative competence to enact
the impugned Act. This was because under Entry 52 – List I
the Parliament had made the requisite declaration in Section
2 of the IDRA and in view of Item 25 of the First Schedule
to the Act i.e. sugar, being a declared industry therein, that
industry was excluded from Entry 24 - List II. Hence U.P. State
Legislature was denuded of all legislative power to legislate
in respect of sugar industry and the impugned legislation was
void on account of legislative incompetence.
13.2.1 D.A. Desai, J. for himself and on behalf of V.R.
Krishna Iyer and S. Murtaza Fazal Ali, JJ. wrote
for the majority. This Court analysed the relevant
Entries keeping in view the legislative perspective
and historical background through which Entries 7
and 52 – List I, Entry 24 - List II and Entry 33 - List
III, inter alia, had passed through. Considering Entry
52 – List I and Entry 24 - List II, it was observed that
“industry” as a head of legislation is to be found in
Entry 24 - List II with the limitation that it is subject to
Entries 7 and 52 - List I. The difference in the language
in which Entries 7 and 52 - List I is couched has a
bearing on the interpretation of Entry 52 - List I. The
subject “industry” being enumerated in List II, the
State Legislature has power to legislate in respect to it
and keeping aside the words “subject to the provision
of Entries 7 and 52 of List I”, the State Legislature
alone can legislate in respect of the legislative head
“industry”. Ipso facto Parliament would have no power
to legislate in respect of industry as a legislative head.
Under Entry 52 - List I, unless and until a declaration
is made by Parliament by law to assume control over
specified industries, the embargo on the power of
Parliament to legislate in respect of industry would
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not be lifted. The declaration has to be made by
Parliament by law to assume control over specified
industry in public interest. Thus, the extent of control
would be known by the declaration so made by law.
This would necessarily depend upon the legislation
enacted spelling out the degree of control assumed
which is a pre-requisite for assuming control over
a specified industry. As a result to that extent, the
State Legislature would be denuded of its powers to
legislate under Entry 24 - List II. It was contended that
the industry in respect of which control is assumed for
the purpose of their development and regulation have
been set out in the First Schedule and in the manner
provided in the statute i.e. IDRA which also provides
the limit of control to the extent mentioned in the said
Act. It was contended that Section 2 has to be read
along with the Act and not read de hors the Act. This
would mean the provision of the Act would make the
control concrete and specific and the manner in which
exercise has to be laid down and not some abstract
control. Thus, the control has to be concrete and the
mode and method of its exercise must be regulated
by law. That under the IDRA, Sections 3 to 30 set
out various modes and methodology, power and
procedure to effectuate the control which the Union
acquired by virtue of the declaration contained in
Section 2 of the IDRA. On these contentions, it was
observed that absence of the words “to the extent
herein provided” in Section 2 of the IDRA would not
lead to the conclusion that the control assumed was
to be something in abstract, total and unfettered and
not as per the provisions of the IDRA. It was thus held
that to the extent Union acquired control by virtue of
declaration in Section 2 of the IDRA as amended from
time to time, the power of the State Legislature under
Entry 24 - List II to enact any legislation in respect
of declared industry so as to encroach upon the field
of control occupied by IDRA would be taken away.
13.2.2 In this regard, reliance was placed on Baijnath Kedia
vs. State of Bihar, AIR 1970 SC 1436 (“Baijnath
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Kedia”). Thus to the extent the provision of the
IDRA occupies the field, the State Legislature stands
denuded of its power to legislate in respect of such
declared industry. Examining the provision of the
IDRA, it was held that in pith and substance, the
impugned Act was one for acquisition of scheduled
undertakings to the corporation, which would in no
way come in conflict with any of the provision of the
IDRA or would not trench upon any control exercise
by the Union under the various provisions of the IDRA.
That the IDRA is not concerned with the ownership of
industrial undertaking in declared industry except the
control over the management of the undertaking by the
owner. Thus the legislative power of the State under
Entry 24 - List II is eroded only to the extent control is
assumed by the Union pursuant to a declaration made
by the Parliament in respect of a declared industry as
spelt out by the legislative enactment and the field
occupied by such enactment is the measure of erosion.
Subject to such erosion, on the remainder the State
Legislature will have power to legislate in respect of a
declared industry without in any way trenching upon
the occupied field. It was held that State Legislature
which is otherwise competent to deal with industry
under Entry 24 – List II can deal with that industry
in exercise of other powers enabling it to legislate
under different heads set out in Lists II and III and
this power cannot be denied to a State. The second
limb of the submission therein is not related to the
present controversy and need not be adverted to. It
was finally observed that the impugned Act was not
intended to take over management or control of any
industrial undertaking by the State Government as
in pith and substance, it was enacted to acquire the
scheduled undertakings in terms of Entry 42 – List III.
13.2.3 In Ishwari Khetan, Pathak, J. (as he then was) for
himself and for Koshal, J. (minority view) observed that
while they broadly agreed with the final conclusion, on
several points, reached by Desai, J. in his judgment,
they preferred to refrain from expressing any opinion
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on the question whether the declaration made by
Parliament in Section 2 of the IDRA in respect of the
industries specified in the First Schedule to that Act can
be regarded as limited to removing from the scope of
Entry 24 - List II only so much of the legislative field as
is covered by the subject matter and content of that Act
or it can be regarded as effecting the removal from that
Entry of the entire legislative field embracing all matters
pertaining to the industries specified in the declaration.
It was further opined that the observations made by
this Court in Hingir-Rampur Coal Co., Ltd. vs. The
State of Orissa, AIR 1961 SC 459 (“Hingir-Rampur”);
State of Orissa vs. M.A. Tulloch and Co., AIR 1964
SC 1284 (“M.A. Tulloch”); Baijnath Kedia vs. State
of Bihar, AIR 1970 SC 1436 (“Baijnath Kedia”); and
State of Haryana. vs. Chanan Mal, AIR 1976 SC
1654 (“Chanan Mal”), would not be of assistance in
this behalf. In each of those cases, the declaration
made by Parliament in the concerned enactment
limited the control of the regulation of the mines and the
development of minerals to the extent provided in the
enactment. Whether the terms in which the declaration
has been made in Section 2 of the IDRA, a declaration
not expressly limiting control of the specific industries
to the extent provided by the Act, can be construed as
being so limited was a matter which, they thought, should
be dealt with in some more appropriate case. That the
range of considerations encompassed within the field
of enquiry to which the point was amenable had not
been sufficiently covered before the Court. “This was
for the good reason and, hence, the provocation was
limited.” Therefore, the controversy could be adequately
answered on the ground that the legislation impugned
therein fell within Entry 42 - List III and would not be
related to Entry 52 - List I or Entry 24 - List II.
13.2.4 Therefore, there was a reluctance to enter upon an
examination of the mutually competing claims of Entry
52 - List I and Entry 24 - List II — Entries which deal
with “industries”. Consequently, the appeals were
dismissed.
[2024] 10 S.C.R. 2131

State of U.P. & Ors. v.
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13.3 When the expression “subject to” is used in an Entry in List II it
would imply that the said Entry is subordinate to the respective
Entries in List I and has to be read along with the relevant
Entry in List I. Thus, on a conjoint reading of Entry 24 – List
II with Entry 52 – List I, it is apparent that Entry 24 – List II is
subject to Entry 52 – List I. The expression “subject to” in the
Entries in List II has been a subject matter of interpretation in
several decisions and is of legal import.
13.3.1 As per Black’s Law Dictionary, 5th Edition, Pg.1278,
“subject to” means “liable, subordinate, subservient,
inferior, obedient to, governed or affected by.”
13.3.2 The relevant judgments of this Court on the point are
discussed as under:
a) In Hingir Rampur Coal Company vs. State of
Orissa (1961) 2 SCR 537 (“Hingir Rampur”),
while interpreting the import of the expression
“subject to” in Entry 23 – List II and the interplay
of that Entry with Entry 54 – List I, this Court
observed as undisputed the position in law that,
once a Central Act containing a declaration by
Parliament covering the field is passed as required
by Entry 54 – List I, the State Legislature had no
legislative competence to enact a legislation on
the subject that has already been occupied by a
Central legislation – not for reason of repugnancy
but rather competence at the very inception.
b) In Gujarat University vs. Shri Krishna
Ranganath Mudholkar, AIR 1963 SC 703
(“Shri Krishna”), this Court was tasked with
interpreting Entry 11 - List II, which, although
stands omitted now, earlier read as ‘Education
including universities, subject to the provisions
of Entries 63, 64, 65 and 66 of List I and Entry
25 of List III’. Therein, it was held that use of the
expression “subject to” in Entry 11 - List II clearly
indicated that legislation in respect of excluded
matters cannot be made by the State Legislature.
By the Constitution (Forty-Second Amendment),
1976, Entry 11 – List II was omitted, as noted
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above, and Entry 25 – List III was substituted
as, ‘Education, including technical education,
medical education and universities, subject to
the provisions of Entries 63, 64, 65 and 66 of
List I; vocational and technical training of labour.’
In this context, this Court in Baharul Islam vs.
The Indian Medical Association, 2023 SCC
OnLine SC 79 (“Baharul Islam”), while referring
to Modern Dental College & Research Centre
vs. State of Madhya Pradesh (2016) 7 SCC
353 (“Modern Dental College”), explained that
where one Entry is made ‘subject to’ another
Entry, it means that out of the scope of the former
Entry a field of legislation covered by the latter
Entry has been reserved to be specially dealt
with by the appropriate Legislature.
c) Similarly, while interpreting the significance of a
constitutional provision being subject to another
in The South India Corporation (P) Ltd. vs. The
Secretary, Board of Revenue Trivandrum, AIR
1964 SC 207 (“South India Corporation”), this
Court observed that the expression “subject to”
conveys the idea of a provision yielding place to
another provision or other provisions to which it
is made subject.
d) Helpful reference may also be made to the import
of “subject to” in legislative uses. In Ashok
Leyland Ltd. vs. State of Tamil Nadu (2004)
3 SCC 1 (“Ashok Leyland Ltd.”) this Court
held that “subject to” is an expression whereby
a limitation is expressed.
13.4 Having noted as above, it is also crucial to examine the
interplay between Entry 52 – List I, Entry 24 – List II and
Entry 8 – List II. Entry 24 – List I is a regulatory Entry which
provides State Legislatures with the competence to legislate on
“industries” subject to Entry 7 – List I and Entry 52 – List I. In
effect, Entry 52 – List I enables the Union to take an industry
out of the legislative competence of States and bring it within
Entry 52 – List I. In the instant cases, the primary question is
whether there is any overlap between Entry 52 – List I and
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Entry 8 – List II. In other words, is there any conflict between
the exclusive competence of State Legislatures under Entry 8 –
List II and the regulation of industries the control of which by
the Union is declared by Parliament by law to be expedient
in the public interest under Entry 52 – List I?
13.4.1 It is a settled law that the meaning of “industries” in
Entry 52 – List I and Entry 24 – List II is coextensive.
Therefore, what is out of Entry 24 – List II will also
not be within Entry 52 – List I. In that context, it has
been contended before us that Entry 8 – List II is a
unique Entry as it is not limited to only the product of
“intoxicating liquors” but also takes within its sweep the
“industry” of “intoxicating liquors”. It was also submitted
that Entry 8 – List II unlike Entry 24 – List II is not
subject to Entries in List – I and therefore the industry
of “intoxicating liquors” is the exclusive domain of State
Legislatures. The import of such a position is that if
Entry 8 – List II is held to be both an industry-based and
product-based Entry, the Entry would empower States
to legislate on both the product of “intoxicating liquors”
and production of the product as well. Furthermore,
as Entry 8 – List II is not subject to Entry 52 – List I,
the industry of “intoxicating liquors” will be out of Entry
24 – List II, and therefore, coextensively under Entry
52 – List I the Union would not have the legislative
competence to legislate on what lies exclusively within
Entry 8 – List II.
13.4.2 Learned Chief Justice Dr. Chandrachud in his proposed
judgment has observed that the Seventh Schedule
differentiates between the industry and product of
industry and, even further, Entry 8 – List II is special
because such a distinction made in the general Entries
is not adopted in Entry 8 – List II. As rightly pointed
out, it is the potential overlap between Entry 52 – List I
and Entry 8 – List II which must be resolved herein.
13.4.3 In this regard, reference to the dictum of this Court
in Calcutta Gas Company is apposite, wherein the
interpretation between Entries 24 and 25 – List II in
relation to Entry 52 – List I was considered. It was
observed that Entry 24 – List II in its widest amplitude
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takes in all industries, including that of “gas and gas-
works”. So does Entry 25 – List II which comprehends
gas industry. There is, therefore, an apparent conflict
between the two Entries and they overlap with each
other. It was observed that in such a contingency the
doctrine of harmonious construction must be invoked.
While Entry 24 – List II covers a very wide field, that is,
the field of entire industry being within the legislative
competence of the State, Entry 25 – List II dealing with
“gas and gas-works”, can be confined to a specific
industry, that is, the “gas industry”. This was possibly
because only one or two States are concerned with
“gas industry” and it was not considered to be of an
all-India importance and therefore, was carved out of
Entry 24 – List II and given a separate Entry as Entry
25 – List II, as otherwise if a declaration by law was
made by Parliament within the meaning of Entry 7 or
Entry 52 - List I, gas and “gas industries” would be
taken out of the legislative power of States. Therefore,
by the doctrine of harmonious construction, “gas and
gas works” were found to be within the exclusive field
allotted to the States and outside the legislative field of
Parliament. It was further observed that the expression
“industry” in Entry 52 - List I bears the same meaning
as that in Entry 24 - List II, with the result that the said
expression in Entry 52 - List I also does not take in
the industry of “gas and gas works”. If so, it followed
that the IDRA, in so far as it purported to deal with the
“gas industry” is beyond the legislative competence
of Parliament.
13.4.4 Keeping the aforesaid dictum in mind, it must be
observed that Entry 8 – List II being a special Entry
prevails over the general Entry 24 – List II. Therefore,
while Entry 52 – List and Entry 8 – List II overlap on
the aspect of “industry” of “intoxicating liquors”, Entry
52 – List I cannot takeover the “industry” of “intoxicating
liquors”.
13.5 Therefore, the next question is whether Entry 8 – List II which
deals with “intoxicating liquors”, that is to say, the production,
manufacture, possession, transport, purchase and sale of
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State of U.P. & Ors. v.
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“intoxicating liquors” is restricted to only alcoholic liquors
for human consumption i.e., potable alcohol or it would also
extend to non-potable alcohol or “industrial alcohol”. In other
words, if “industrial alcohol” is read within the meaning of
Entry 24 – List II then, whether, on account of the declaration
made by the Parliament in Section 2 of the IDRA in terms of
Entry 52 – List I it would be excluded from Entry 24 – List II
and included under Entry 52 – List I as per the provisions of
the IDRA. In other words, the question is whether Entry 8 –
List II which deals with “intoxicating liquors” would take within
its scope and ambit “industrial alcohol”?
One of the ways of answering these questions would be to
compare Entry 84 – List I as it stood prior to 16.09.2016 with
Entry 51 – List II although both are taxation Entries. Entry
84 – List I dealt with duties of excise on tobacco and other
goods manufactured or produced in India except – (a) alcoholic
liquors for human consumption; (b) opium, Indian hemp and
other narcotic drugs and narcotics, but including medicinal and
toilet preparations containing alcohol or any substance included
in sub-paragraph (b) of this Entry. Entry 51 – List II talks of
duties of excise on the goods manufactured or produced in the
State and countervailing duties at the same or lower rates on
similar goods manufactured or produced elsewhere in India,
namely, - (a) alcoholic liquors for human consumption; (b)
opium, Indian hemp and other narcotic drugs and narcotics,
but not including medicinal and toilet preparations containing
alcohol or any substance included in sub-paragraph (b) of this
Entry. Both are taxation entries.
13.6 On a comparative reading of the said two Entries, what is
evident is that excise duty on goods manufactured as per
Entry 84 – List I excludes duty of excise on alcoholic liquors
for human consumption. This is subject to the further exception
that, if, any medicinal and toilet preparations containing alcohol
or any substance included in sub-paragraph (b) of the said
Entry, namely, opium, Indian hemp and other narcotic drugs
and narcotics, then, the excise duty is leviable as per Entry
84 – List I by the Union or Central Government. Conversely,
under Entry 51 – List II, goods manufactured or produced in
the State would be subject to excise duty such as on – a)
alcoholic liquors for human consumption; b) opium, Indian hemp
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and other narcotic drugs and narcotics, but does not include
medicinal and toilet preparations containing alcohol or any
substance included in sub-paragraph (b) of the said Entry. In
other words, alcoholic liquors not meant for human consumption
and medicinal and toilet preparations containing alcohol or any
substance such as opium, Indian hemp and other narcotic
drugs and narcotics would be subject to excise duty leviable
under Entry 84 – List I by the Central Government. Insofar as
alcoholic liquors for human consumption is concerned, the
States have the power to levy excise duty.
13.7 Therefore, in my view, the framers of the Constitution
bifurcated alcoholic liquors for human consumption as distinct
from alcohol used for medicinal and toilet preparations or
any other liquor including “industrial liquor” on which excise
duty is leviable under Entry 84 – List I. What is the purpose
of excluding levy of excise duty under Entry 84 – List I on
alcoholic liquors for human consumption and including the
same under Entry 51 – List II and thereby giving the powers
to the State Legislature to levy excise duty on such alcoholic
liquors? The intent of the framers of the Constitution was to
categorize alcoholic liquors into following two categories and
accordingly divide the legislative powers between Parliament
and State Legislature:
(a) alcoholic liquors for human consumption (potable alcoholic
liquors); and
(b) alcoholic liquors not for human consumption such as
“industrial alcohol” (non-potable alcoholic liquors).
At this stage itself, it is made clear that if alcoholic liquor, which
is manufactured for the purpose of using the same as a raw
material in the manufacture or production of any other “industrial
product” and is subject to a process, would not come within the
scope and ambit of “alcoholic liquors for human consumption”.
As noted, the said product is also known as “industrial alcohol”.
Such “alcoholic liquors” or “industrial alcohol” are not used
directly for human consumption as a beverage. On the other
hand, it would be an abuse of such “industrial alcohol”, if
consumed as a beverage. Merely because it can be subjected
to a process and mischievous human consumption is possible,
does that make “industrial alcohol” “alcoholic liquors for human
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consumption” within the meaning of Entry 84 – List I and Entry
51 – List II and also “intoxicating liquors” within the scope and
ambit of Entry 8 – List II?
13.8 A person or an entity which is not engaged in the manufacture
of alcoholic liquors for human consumption as a beverage is
not authorised to manufacture “industrial alcohol” and subject
it to a process and sell it as alcoholic liquors for human
consumption. The same is prohibited and has to be dealt with
having regard to the scope and ambit of Entry 8 – List II. On
the other hand, it is only “intoxicating liquors” which is directly
for human consumption as a beverage and the production,
manufacture, possession, transport, purchase and sale of such
“intoxicating liquors”, as per Entry 8 – List II, which is within
the competence of State Legislature i.e. for the purpose of
regulation of such “intoxicating liquors” which would also entail
levy of an excise duty on such “intoxicating liquors” as per
Entry 51 – List II as alcoholic liquor for human consumption.
Therefore, on “intoxicating liquors” which is alcoholic liquors
directly for human consumption as a beverage, excise duty is
levied by the State Legislature and regulated under Entry 8 –
List II. Also, under Entry 84 – List I, the Parliament has no
power to levy any such excise duty on such “intoxicating
liquors” meant for human consumption as a beverage as
it is an expressly excluded item. In other words, alcoholic
liquors for human consumption is thus directly relatable to
“intoxicating liquors” and the expression “intoxicating liquors”
in Entry 8 – List II means alcoholic liquors directly for human
consumption as a beverage. Thus, no other alcoholic liquors
can be regulated as per Entry 8 – List II except to ensure that
there is no abuse/misuse of “industrial alcohol” being treated
for human consumption by subjecting it to a particular process;
nor can any excise duty be levied on such liquor by the State
Legislature.
Hence, any “intoxicating liquors” would mean alcoholic liquors
for human consumption which is produced, manufactured,
possessed, transported, purchased or sold and can be
regulated under Entry 8 – List II by the State Legislature but
alcoholic liquors which are not for human consumption as a
beverage would not come within the scope of the expression
“intoxicating liquors”, such as “industrial alcohol” which
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would in turn be regulated by Entry 24 – List II which Entry
is subject to Entry 52 – List I and can be controlled by the
Union exclusively. Thus, “industrial alcohol” and medicinal
and toilet preparations which contain alcohol can be taxed
as per Entry 84 – List I by the Central Government in the
form of central excise duty.
13.9 Merely because “industrial alcohol” by a process can be
converted to alcohol for human consumption as a beverage
does not entitle the State Legislature to tax or regulate
“industrial alcohol”. On the other hand, the States as per
Entry 8 – List II have the power to regulate “intoxicating
liquors” which is for human consumption as a beverage and
in that regard have the power to prohibit “industrial alcohol”
being converted to alcohol for human consumption as a
beverage. This is in order to protect the health of citizens
which is a Directive Principle of State Policy under Article
47 of the Constitution and in order to prohibit unauthorised
use/misuse of “industrial alcohol” produced in the State from
being converted and sold as “intoxicating liquors” meant for
human consumption as a beverage.
13.10 This interpretation would become clearer on a reading of
Entry 33(a) – List III which deals with, inter alia, trade and
commerce in, and the production, supply and distribution
of the products of any industry where the control of such
industry by the Union is declared by Parliament by law to be
expedient in the public interest, and also includes imported
goods of the same kind as such products. Therefore, if
products of any industry where the control of such industry
by the Union has been declared by Parliament by law to
be expedient in public interest are manufactured in India or
imported into India, then as per Entry 33(a) – List III, on the
production, supply and distribution of and trade and commerce
of such industrial products, the State Legislature would not
have any exclusive power to pass a law under Entries 26
and 27 – List II as they are subject to Entry 33(a) – List III.
In other words, in view of the passing of the IDRA, under
Entry 52 – List I and the inclusion of, inter alia, products of
“Fermentation Industries” such as “industrial alcohol” in Item
26 of the First Schedule of the IDRA, the State Legislatures
would be subject to the powers of the Parliament to pass
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a law in the matter of production, supply, distribution, trade
and commerce of such industrial product.
13.11 Therefore, if the control of any industry has been declared
by Parliament by law to be expedient in the public interest,
then in such a case, in the matter of production, supply and
distribution of products of such industry, Entry 27 – List II
would be subject to Entry 33(a) – List III. Thus, the subject
production, supply and distribution of goods found in Entry
27 – List II as well as in Entry 33(a) – List III regarding any
product of an industry has a nexus with Entry 52 – List I.
13.12 Further, Entry 24 – List II which deals with industries, is
itself subject to Entry 52 – List I. Therefore, if any industry
is mentioned in the First Schedule of the IDRA which is a
legislation passed by the Parliament by virtue of Entry 52 –
List I, a reading of the same conjointly with Entry 33(a) –
List III would mean that particular industry which has been
mentioned in the First Schedule of IDRA would be under the
control of the Union. However, as far as the products of such
industry are concerned, Entry 33(a) – List III deals with the
aspect of production and supply and distribution as well as
trade and commerce. Thus, if any particular industry is not
mentioned or is deleted from the First Schedule of IDRA,
then automatically Entry 33(a) – List III would not apply to
such industrial products and the subject would squarely fall
within the scope and ambit of Entry 24 – List II and Entry
27 – List II.
14. There is another way of looking at the Entries under consideration.
As already noted, Entry 24 - List II which deals with the subject
“industries”, enables legislative competence to the State Legislature
to enact laws on the said subject. Therefore, at a first glance the
subject “industries” is a State subject. However, Entry 24 - List II
is subject to Entries 7 and 52 - List I which have been discussed
above. In particular, Entry 52 - List I deals with “industries”, the control
of which is taken over by the Union by a declaration made by the
Parliament by law as it is expedient in public interest. In respect of
“such industries”, as covered within the scope and ambit of Entry
52 - List I, it would imply that under Entry 33(a) - List III, insofar as
the products of any such industry are concerned where the control
of such industry by the Union is declared by the Parliament by law to
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be expedient in public interest and import of goods of the same kind
as such products have to be read in consonance with the scheme of
the Entries. It would mean that if any legislation has been made by
the Parliament, such as the IDRA and an industry is named in the
First Schedule thereof such as “Fermentation Industries” in the instant
cases, the State Legislation would be subject to the Parliamentary
legislation. The said Entry is in the Concurrent List and the Parliament
as well as the State Legislature have the competence to pass such
laws. Then, the question that would arise, is whether, there would be
repugnancy between the laws made by Parliament and laws made
by a State Legislature and if so, how could it be resolved.
14.1 In this regard, Section 18G which is a part of Chapter IIIB of
the IDRA could be considered. The said Section states that the
Central Government, so far as it appears to be necessary or
expedient for securing the equitable distribution and availability
at fair prices of any article or class of articles relatable to
any scheduled industry, i.e. any of the industries specified
in the First Schedule of IDRA may, notwithstanding anything
contained in any other provision of the IDRA by notified order,
provide for regulating the supply and distribution thereof and
trade and commerce therein. This provision deals particularly
with regard to regulation of supply and distribution, trade and
commerce of any article relatable to scheduled industry. Sub-
section (2) of Section 18G states that without prejudice to
the generality of the powers conferred by sub-section (1) of
Section 18G, a notified order made may provide for various
aspects. Sub-section (4) of Section 18G states that no order
made in exercise of any power conferred by this section shall
be called in question in any court.
14.2 One of the contentions raised in this batch of cases is with
regard to whether the Central Government has to, in fact,
issue a notified order with regard to regulating the supply and
distribution and trade and commerce of any article or class of
articles relatable to any scheduled industry so as to indicate
that the State Legislature cannot pass any legislation under
Entry 33(a) - List III. In my considered view, the fact that an
industry is a scheduled industry under the IDRA would imply that
at any time the Central Government is empowered to issue a
notified order providing for regulating the supply and distribution
and trade and commerce of the products of such a scheduled
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State of U.P. & Ors. v.
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industry. But in the absence of there being an issuance of a
notified order as such can the State Legislature be denuded
of their powers to pass any law under Entry 33(a) - List III?
14.3 Having regard to the emerging situation in the economy in the
matter of supply and distribution and trade and commerce of any
article or class of articles relatable to any scheduled industry,
the Central Government may issue a notified order for the
purpose of regulating the same so as to secure its equitable
distribution and availability at fair prices of the products of
such industry.
14.4 A situation may suddenly arise making it necessary or expedient
to issue a notified order under Section 18G of the IDRA. One
cannot envisage the emerging circumstances in an economy
such as the Indian economy where the need for issuance of
such a notified order would arise. It could be for instance to
curb hoarding and black marketeering of a particular article
of a scheduled industry in order to stifle price rise. It could
be for ensuring a minimum or maximum price for any article
related to a scheduled industry which is a raw material or
ancillary input for a product/article of another scheduled or
non-scheduled industry. Sudden rise in prices of commodities/
articles relatable to any scheduled industry due to natural
disasters, floods, famines, financial emergency or other such
reasons could necessitate issuance of a notified order under
Section 18G of the IDRA. Of recent occurrence is the Covid-19
pandemic which would have necessitated issuance of notified
orders on certain articles related to scheduled industries. The
field of legislation must therefore be left open for the Central
Government to act by issuance of a notified order as and
when thought necessary or expedient to secure and achieve
the objects stated in the said provision.
14.5 But, can it be held that in the absence of any such notified
order issued by the Central Government, the States could
pass laws under Entry 33(a) - List III? Would it lead to a
legal confusion and an overlapping and contradiction? This
is because if it is held that in the absence of there being
a notified order actually issued by the Central Government
under Section 18G of the IDRA, the States are empowered
to pass laws under Entry 33(a) - List III and such laws are in
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fact made under the aforesaid Entries by the States and the
Central Government subsequently decides to issue a notified
order under Section 18G of the IDRA, the question would be,
what would be the fate of the laws made by the States if they
overlap with the notified order issued under Section 18G of
the IDRA? Obviously, the control of any industry being taken
over by the Union under the provisions of the IDRA would
imply that the Central Government is empowered to issue a
notified order in terms of Section 18G of the said Act as and
when it is necessary or expedient to secure the equitable
distribution and availability at a fair price of any article related
to any scheduled industry. In such a case, the notified order
being issued under Section 18G of the IDRA, would have an
overriding effect on the States’ laws if any made under Entry
33(a) – List III in regard to trade and commerce, supply and
distribution of such articles or products of the scheduled industry
which are covered under the notified order and the same would
no longer be applicable wherever there is a conflict in the laws.
14.6 A law made by the State Legislature under any Entry of List
III or Concurrent List is no doubt subject to Article 254 of the
Constitution. However, Entry 33(a) - List III is in a way unique
inasmuch as the said Entry would have to be read in the
context of Entry 52 - List I which relates to the IDRA which
is enacted by Parliament under the said Entry and therefore,
inter alia, to Section 18G of the IDRA. When Entry 52 - List I
and any law such as IDRA empowers the Union or Central
Government to take certain steps under the provisions of the
said Act, it would imply that the State Legislature is, per se,
denuded of its powers to make any law under Entry 33(a) - List
III. Applying the above interpretation, when once the Central
Government has the powers under Section 18G of the IDRA in
the matter of regulating supply and distribution and trade and
commerce of any article of a scheduled industry so as to secure
the equitable distribution and availability at fair price, the field/
contours as covered under Section 18 of IDRA is occupied by
the Parliament and, consequently by the Central Government
to issue a notified order as and when the necessity arises.
14.7 The reason for holding so is because List III which is the
Concurrent List is governed by Article 254 of the Constitution
which deals with inconsistency between laws made by
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State of U.P. & Ors. v.
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Parliament and laws made by the Legislatures of the States.
The same is expressed as the doctrine of repugnancy. Clause
(1) of Article 254 states that –
(i) if any provision of a law made by the Legislature of a
State is repugnant to any provision of a law made by
Parliament which Parliament is competent to enact, or
(ii) to any provision of an existing law with respect to one of
the matters enumerated in the Concurrent List,
then, subject to clause (2) thereof, the law made by Parliament,
whether passed before or after the law made by the Legislature
of such State, or, as the case may be, the existing law, shall
prevail and the law made by the Legislature of the State shall,
to the extent of the repugnancy, be void.
Under Article 13(3)(a), law includes any ordinance, order, bye-
law, rule, regulation, notification, custom or usage having in
the territory of India the force of law.
14.8 Clause (2) of Article 254 is an exception to clause (1). It states
that where a law made by the Legislature of a State with respect
to one of the matters enumerated in the Concurrent List contains
any provision repugnant to the provisions of an earlier law made
by Parliament or an existing law with respect to that matter,
then, the law so made by the Legislature of such State shall,
if it has been reserved for the consideration of the President
and has received his assent, prevail in that State. The proviso
states that nothing in clause (2) of Article 254 would prevent
Parliament from enacting at any time any law with respect to
the same matter including a law adding to, amending, varying
or repealing the law so made by the Legislature of the State.
14.9 What is of significance under the second portion of Article
254(1) is that the law has to be passed by the Parliament
either before or after the law made by the Legislature of such
a State, secondly, such a law must be with respect to one of
the matters enumerated in the Concurrent List. The above is a
case of actual repugnancy. There can also be a case of what
can be called potential repugnancy, which is also expressed as
the doctrine of occupied field which shall be discussed at this
stage in the context of the observations made in Synthetics
and Chemicals (7J).
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Entry 33(a) – List III vs. Entry 52 - List I: Observations in
Synthetics and Chemicals (7J):
15. Article 246 of the Constitution deals with the division of legislatives
subjects between the Parliament and the Legislatures of the States.
Both sub-clauses (1) and (2) begin with a non-obstante clause while
sub-clause (3) begins with a “subject to” clause. On a holistic reading
of Article 246, it emerges that the Parliament has exclusive power to
make laws with respect to any of the matters enumerated in List I
and it also has the power to make laws with respect to any of the
matters enumerated in List III or the Concurrent List (vide clause
(2) of Article 246). The non-obstante clauses in clauses (1) and (2)
of Article 246 in my view, are significant inasmuch as they envisage
parliamentary supremacy over laws made by the State Legislature
even in respect of a subject enumerated in List II as clause (3) of
Article 246 is subject to clauses (1) and (2) of Article 246. This is
despite the State Legislatures having exclusive competence over
the subjects mentioned in List II. However, the said position would
apply only when there is a conflict between a State Law and a Union
Law which is irreconcilable or cannot be interpreted harmoniously.
15.1 The Parliament as well as the Legislature of any State have
also concurrent powers to make laws in respect of any of the
matters enumerated in List III. This is notwithstanding anything
in clause (3) of Article 246 but is subject to clause (1) thereof.
This would imply that any law made by the Legislature of a
State in List III or the Concurrent List is subject to a law made
by Parliament in List I. This also has a bearing on first part of
the clause (1) of Article 254. Therefore, in my view, the doctrine
of parliamentary supremacy is writ large in Articles 246 and
254 both in the manner of arrangement of the subjects in the
three Lists as well as the extent to which the State Legislatures
have competence with regard to the subjects assigned to them
particularly in List III or the Concurrent List.
15.2 In this case, we have to consider Entry 33(a) – List III in light
of Entry 52 - List I and the observations made by this Court
in Synthetics and Chemicals (7J). Entry 33(a) – List III is
in the Concurrent List and it speaks of trade and commerce
in, and production, supply and distribution of the products
of any industry where the control of such industry by the
Union is declared by Parliament by law to be expedient in the
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public interest, and imported goods of the same kind as such
products. A dissection of this Entry would indicate that insofar
as products of any industry which is a scheduled industry in
terms of a law made by Parliament by virtue of Entry 52 –
List I viz. where the control of such scheduled industry has
been assumed by the Union (insofar as trade and commerce
in, and production, supply and distribution of the products of
such industry), both the Union as well as the States have
concurrent powers to enact laws. It must be remembered that
Entry 33(a) – List III is a field of legislation and therefore,
deals with the concurrent legislative competence of both the
Union as well as the State Legislature. An enactment under
such an Entry by the State is subject to the application of
the principle of repugnancy as envisaged in Article 254 of
the Constitution discussed above.
15.3 One cannot lose sight of the fact that the IDRA has been
enacted by Parliament taking control of certain industries
such as the “Fermentation Industries”, which is the subject
matter of controversy in the present cases, on the strength
of Entry 52 – List I. The degree of control envisaged under
the various provisions of the IDRA have been detailed in the
various provisions of the said Act. Section 18G was inserted to
IDRA w.e.f. 01.10.1953. The said Section in the IDRA is also
a provision which has been inserted pursuant to Entry 52 -
List I. The said Section empowers the Central Government
to issue a notified order for securing the equitable distribution
and availability at fair prices of any article or class of articles
relatable to any scheduled industry. The expression “notified
order” is defined in Section 3(e) of the IDRA to mean the
issuance of a notification in the official gazette.
15.4 It is necessary to note that Entry 33(a) – List III will apply
only when a law such as IDRA has been enacted pursuant
to Entry 52 – List I, which has enabled the Union to take
control of certain industries such as “Fermentation Industries”.
While Entry 33(a) – List III is a field of legislation which deals
with trade and commerce in, and the production, supply and
distribution of, inter alia, the products of the scheduled industry
under IDRA, Section 18G thereof deals with securing equitable
distribution and availability at fair prices of any article or class
of articles relatable to any scheduled industry. The Explanation
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to Section 18G states that the expression “article or class
of articles” relatable to any scheduled industry includes any
article or class of articles imported into India which is of the
same nature or description as the article or class of articles
manufactured or produced in the scheduled industry. An
article manufactured or produced in the scheduled industry is
nothing but a product of a scheduled industry. Therefore, the
expression “the products of any scheduled industry” comes
within the scope and ambit of the expression “article or class
of articles” relatable to any scheduled industry. Thus, Section
18G which pertains to a scheduled industry is also relatable
to Entry 33(a) – List III though it is a part of IDRA which is a
Parliamentary law enacted on the basis of Entry 52 – List I.
15.5 The question that would then arise is, whether, by the mere
insertion of Section 18G to the IDRA with effect from 01.10.1953,
the State Legislatures have been denuded of their legislative
competence in the matter of regulation of supply and distribution
and trade and commerce of products of any scheduled industry.
The conundrum which has arisen in this case is on account of
the observation in paragraph 85 of Synthetics and Chemicals
(7J), which, inter alia, reads as under:
“85. … The State cannot claim that under Entry 33 of
List III, it can regulate industrial alcohol as a product
of the scheduled industry, because the Union, under
Section 18-G of the IDR Act, has evinced clear
intention to occupy the whole field.…”
The aforesaid observations mean that by the very insertion
of Section 18G to the IDRA, there is a denudation of the
State’s legislative competence vis-à-vis Entry 33(a) – List III
with respect to a product of a scheduled industry which in the
instant cases is the “Fermentation Industries”.
15.6 The aforesaid observation which has led to a reference to
this nine-Judge Bench has to be considered in light of Entry
52 – List I, Entry 33(a) – List III and Section 18G of the IDRA.
As already stated, it is pursuant to Entry 52 – List I that the
IDRA has been enacted by the Parliament declaring the taking
of control of industries mentioned in the First Schedule to
the said Act called a scheduled industry. Entry 33(a) – List III
deals with trade and commerce in, and production, supply and
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distribution of the products of any industry where the control of
such industry by the Union is declared by Parliament by law to
be expedient in the public interest and imported goods of the
same kind as such products i.e. with reference to a scheduled
industry. The nexus between Entry 33(a) – List III and Entry
52 – List I is with regard to the Union taking control of certain
industries such as “Fermentation Industries” in the instant
cases by a declaration made by Parliament by law. Section
2 of the IDRA has made such a declaration and hence, it is
in respect of the products of any industry whose control has
been taken by the law i.e. IDRA, pursuant to Entry 52 – List I
that Entry 33(a) – List III gives the legislative competence to
both the Parliament as well as the State Legislatures.
15.7 As already noted, the IDRA is enacted by Parliament under
Entry 52 – List I taking control of, inter alia, “Fermentation
Industries” as noted in Item 26 of the First Schedule to
the said Act. Section 18G deals with any article or class of
articles relatable to any scheduled industry i.e. “Fermentation
Industries” in the instant cases. The Explanation to Section 18G
states that the expression “article or class of articles” relatable
to any scheduled industry i.e. “Fermentation Industries” herein
includes any article or class of articles imported into India
which is of the same nature or description as the article or
class of articles, manufactured or produced in the scheduled
industry. The explanation is inclusive and not an exhaustive
one. For immediate reference Item 26 of the First Schedule
of the IDRA pursuant to the 2016 amendment is extracted
as under:
“26. The fermentation industries (other than
potable alcohol):
(i) Alcohol
(ii) other products of fermentation industries.”
The said Item 26 was added w.e.f. 08.05.1952 even prior
to the insertion of Section 18G to the IDRA which is w.e.f.
01.10.1953. However, w.e.f. 14.05.2016, Item 26 has been
amended to clarify that “Fermentation Industries” refers to
industries others than potable alcohol. This is for the reason
that “intoxicating liquors” in Entry 8 – List II is equated to only
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potable alcohol and rest of the industry of the “Fermentation
Industries” other than potable alcohol is a scheduled industry.
15.8 Once an industry is a scheduled industry under the provisions
of IDRA, in the context of Section 18G the Central Government
may notwithstanding anything contained in any other provision
of IDRA by a notified order provide for regulating the supply
and distribution thereof and trade and commerce therein of
a product of scheduled industry. A notified order may also
provide -
(a) for the purpose of controlling the prices at which any
such article or class of articles may be bought or sold for;
(b) for regulating the licences, permits or otherwise the
distribution, transport, disposal, acquisition, possession,
use or consumption of any such article or class thereof;
(c) for prohibiting the withholding from sale of any such article
or class thereof ordinarily kept for sale;
(d) for requiring any person manufacturing, producing or
holding in stock any such article or class thereof to sell the
whole or part of the articles so manufactured or produced
during a specified period or to sell the whole or a part of the
articles so held in stock to such person or class of persons
in such circumstances as may be specified in the order;
(e) for regulating or prohibiting any class of commercial or
financial transactions relating to such article or class
thereof which in the opinion of the authority making the
order are, or if unregulated are likely to be, detrimental
to public interest;
(f) for requiring persons engaged in the distribution and
trade and commerce in any such article or class thereof
to mark the articles exposed or intended for sale with the
sale price or to exhibit at some easily accessible place on
the premises the price-lists of articles held for sale and
also to similarly exhibit on the first day of every month,
or at such other time as may be prescribed, a statement
of the total quantities of any such articles in stock;
(g) for collecting any information or statistics with a view to
regulating or prohibiting any of the aforesaid matters; and
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(h) for any incidental or supplementary matters, including, in
particular, the grant or issue of licences, permits or other
documents and the charging of fees therefor.
15.9 Sub-section (4) of Section 18G provides that no order made
in exercise of any power conferred under Section 18G shall
be called in question in any court. Thus, a notified order may
be issued by the Central Government bearing in mind the
situations and conditions which may arise in the Indian economy
pertaining to a particular scheduled industry.
Article 254, Repugnancy and Doctrine of Occupied Field:
16. There is also a further angle to the matter in the context of
concurrent powers of Parliament and State Legislatures vis-à-vis
Entry 33(a) – List III and Article 254 of the Constitution. Nicholas
in his Australian Constitution, 2nd Edition, page 303, refers to three
tests of inconsistency or repugnancy:
(i) There may inconsistency in the actual terms of the competing
statutes;
(ii) Though there may be no direct conflict, a State law may be
inoperative because the commonwealth law; or commonwealth
court is intended to be a complete exhaustive Code; and
(iii) Even in the absence of intention, a conflict may arise when
both State and commonwealth seek to exercise their powers
over the same subject matter.”
16.1 In Tika Ramji, this Court accepted the above three rules evolved
by Nicholas, among others, as a useful guide to test the question
of repugnancy. The same was also quoted by this Court in
M/s. Hoechst Pharmaceuticals Ltd. vs. State of Bihar, AIR
1983 SC 1019 (“Hoechst Pharmaceuticals Ltd.”). In the said
case, it was observed that the question of repugnancy between a
law made by Parliament and a law made by the State Legislature
arises only in case both the legislations occupy the same field
with respect to one of the matters enumerated in the Concurrent
List and there is direct conflict between the two laws. It is only
when both these requirements are fulfilled that the State law
will, to the extent of repugnancy, become void. Article 254(1)
has no application to cases of repugnancy due to overlapping
found between List II on the one hand and Lists I and III on
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the other. If such overlapping exists in any particular case, the
State law would be ultra vires because of non-obstante clause
in Article 246(1) read with the opening words “subject” in Article
246(3). In such a case, the State law will fail not because of
repugnance to the Union law but due to want of legislative
competence. Thus, the question of repugnancy arises only when
both the Legislatures are competent to legislate in the same
field, that is, with respect to one of the matters mentioned in
the Concurrent List. Hence, Article 254(1) cannot apply unless
both the Union and the State laws relate to a subject specified
in the Concurrent List and they occupy the same field.
16.2 Thus, Article 254 of the Constitution applies the doctrine of
repugnancy in the context of the legislative subjects which are
enumerated in List III or the Concurrent List. While applying
the principles of repugnancy under Article 254, a sine qua
non is to identify the conflict between the laws made by the
Parliament and the laws made by the State Legislature. The
conflict between the said laws is the basis for the application
of Article 254. The conflict could be direct when both the laws
cannot operate together or it could be indirect when the State
law entrenches upon a Parliamentary or Central law. But when
laws made by the Parliament or the State Legislature can be
implemented without there being any conflict, the principle of
repugnancy would not apply inasmuch as there would be no
contrary results owing to the applicability of both sets of laws.
In other words, there cannot be a situation where obeying
the State laws would result in disobeying the Parliamentary
laws. Thus, when laws are made under an Entry in List III or
the Concurrent List by both the Parliament as well as by the
State Legislature, the Court must first ascertain whether the
two sets of laws can operate harmoniously, if not, whether
harmonious interpretation could be given to the said laws so
as to avoid a conflict between the two. It is only when there
is a conflict between the two sets of laws inasmuch as the
State laws would be abridging the Parliamentary law, in such
a case, the doctrine of Parliamentary supremacy would apply
i.e. when a harmonious interpretation is not possible. Even if
the two laws overlap, if they are complimentary to each other,
in such a case, there would be no application of the principle
of Parliamentary supremacy. Thus, when there is absolute
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inconsistency between the two sets of laws, and they are not
reconcilable then, the principle of Parliamentary supremacy
would apply in the context of repugnancy.
16.3 The next question that would arise is, whether, the principle of
repugnancy in Article 254 of the Constitution could have a wider
ramification inasmuch as even in the absence of there being
two sets of laws which have been made by the Parliament and
by the State Legislature but owing to the nature of the law that
the Parliament has made, the State Legislature is incompetent
in making a law on the same subject. In other words, whether
a law enacted by the Parliament can prevent a law being made
by the State Legislature on the same subject on the premise
that the field has been occupied by the Parliamentary law. This
is expressed in what is known as the doctrine of occupied field.
By this, it would mean that the law enacted by the Parliament
has occupied the field in its entirety and consequently, the
States have no legislative competence to make a law on the
very same aspect. In other words, if a law is made by the
Parliament, does it occupy the entire field so as to reduce or
negate the legislative competence of the State Legislature to
make a similar law? How does one determine whether the
legislative field has been occupied? Firstly, there must be a
Parliamentary law in place with an intention to occupy the
field. Secondly, the contours of the field must be determined.
Consequently, the State Legislature would be prevented from
making the law in terms of what has been determined by the
Parliament to occupy the field. Thus, the intention to occupy
the field must be explicit and clear and discernible with the
result that the State Legislature would have a reduced field or
the legislative competence would be one of total prohibition to
make a similar law. For instance, whether the Parliamentary law
intends to put in place a complete and exhaustive regulatory
scheme, as a result of which the State Legislature is denuded
of its powers to make any State regulation in the field as a
whole. This intention would have to be discerned on a reading
of the statute as a whole and the particular provisions which
should emanate such an intention. Thus, there must be a clear
intention to occupy the field by a Parliamentary legislation.
Further, the extent of the field sought to be occupied must be
clearly demarcated. In other words, whether the Parliament
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has evinced to exclude the State Legislature from making a
law on a similar subject by virtue of an Entry in List III?
16.4 In order to answer this question, the provisions of the Act made
by the Parliament have to be examined threadbare in order
to ascertain a clear intention of the Parliament to occupy the
field so as to negate the Legislature of the States to have the
competence to make a similar law. Thus, while a direct conflict
of a Parliamentary law and a State law could be resolved on
the touchstone of a harmonious interpretation of the two laws
(vide second part of article 254(1)), a potential conflict between
a Parliamentary law which has been enacted and a potential or
future law by a State Legislature is avoided on the touchstone
of the doctrine of occupied field.
16.5 While applying the occupied field doctrine, Courts must
delicately balance the legislative competence of the Parliament
and the State Legislatures in making laws on a particular subject
under the Concurrent List and apply the doctrine of occupied
field only having regard to the intention of the Parliament to
occupy the field and the Parliament defining the contours of
the field sought to be occupied by a comparative and coherent
reading of the other Entries in List I and List II, having bearing
on the concerned Entry in List III of the Constitution. Such
balancing need to be done by Courts in order to ascertain
whether despite legislative competence being provided to the
State Legislatures under a particular Entry in the Concurrent
List but owing to what has been stated in any law made under
Entry in List I (Union List) having a bearing on an Entry in the
Concurrent List being made subject to any Entry in the Union
List, would result in the State Legislatures being denuded
of legislative competence to make laws on a similar subject
under an Entry in List III such as Entry 33(a) – List III which
is under consideration.
16.6 The application of the doctrine of occupied field is a technique
adopted by the constitutional courts in order to ensure that
there is no potential conflict that could arise between the
State laws and the existing Parliamentary law having regard
to the nature of the legislative powers, their importance in the
socio-economic sphere of governance in the country and such
other considerations.
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16.7 Applying the aforesaid principles to the cases at hand, the
question is whether by virtue of insertion of Section 18G to
the IDRA, the legislative competence of the State Legislatures
under Entry 33(a) – List III vis-à-vis products of the scheduled
industry namely, “Fermentation Industries” would be governed
within the scope and ambit of Section 18G of the IDRA
and consequently, the State Legislatures would have no
competence to make a law in regard to the products of a
scheduled industry in respect of which Section 18G applies.
This is by bearing in mind the twin tests referred to above
namely, the intention of the Parliament to occupy the field
and the demarcation of the areas in which the field is sought
to be occupied. In other words, in the instant case, whether
Item 26 which speaks of “Fermentation Industries” to include
“industrial alcohol” or non-potable alcohol as a product of
such industry which has been taken control of by the Union
under the provisions of IDRA (and which is excluded from the
scope and ambit of Entry 8 – List II), falls within the scope
and ambit of a scheduled industry, and thereby Section 18G
would apply the aspects referred to above.
16.8 The answer is in the affirmative for the following reasons: firstly,
insofar as the potable or “intoxicating liquors” is concerned,
the legislative field is exclusively with the State Legislature.
However, in respect of the scheduled industry which is
“Fermentation Industries” (which does not take within its scope
and ambit potable alcohol) vide Item 26 of the First Schedule,
all other types of alcohol including “industrial alcohol” can
be regulated only by the Parliamentary law and the Central
Government. Any other interpretation would imply that even
in the face of Section 18G being incorporated into the IDRA
and in the absence of any notified order being issued, the
States Legislatures and the State Governments would have
the legislative competence to make laws on what is the subject
matter of Section 18G of IDRA under Entry 33(a) – List III. Then,
each State could make its own law on the said subject matter
covered under Section 18G of IDRA pertaining to a scheduled
industry. If in respect of the products of a scheduled industry,
the States make laws and there are a variety of laws made
by the individual States which are in force in respect of the
subject under Section 18G of IDRA then when a notified order
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is issued, the Central Government’s notified order would apply if
there is a direct conflict between the State laws or legal regime
in place and the notified order that is issued. This would result
in a legal quagmire vis-à-vis a scheduled industry. It cannot
then be said that it is necessary to ascertain whether there is
a direct conflict between the State law and the notified order
made by the Central Government at every instance such an
order is issued and if there is such a direct conflict then, the
Parliamentary law would apply on the strength of Article 254 of
the Constitution. Such a legal confusion and conundrum would
not be conducive to a scheduled industry such as “Fermentation
Industries” dealing with “industrial alcohol” which is a commodity
of critical and significant importance in the Indian economy.
16.9 Sub-section (4) of Section 18G also states that no order in
exercise of power conferred by the Section shall be called
in question in any court. Thus, the question of repugnancy
between an existing State law and the notified order of the
Central Government cannot be raised before a court of law.
Then, whether both the State law as well as the notified order
can be simultaneously obeyed. If not, what would be the
remedy. Sub-section (4) of Section 18G also indicates that the
Parliament has intended to occupy the field as demarcated
under Section 18G. Such an interpretation has to be given in
order to avoid a legal uncertainty and quandary in the economy
in the context of Section 18G of the IDRA.
16.10 Thus, the question, whether, under Entry 33(a) – List III,
the States have been denuded of their powers by virtue
of insertion of Section 18G to the IDRA, i.e., Section 18G
having occupied the field to the extent of control as above
mentioned and the States would not have the competence to
pass any law relating to Entry 33(a) – List III, in my view, has
to be answered in the affirmative. This is because Section
18G has been inserted by Parliament to the IDRA which is
an enactment made pursuant to Entry 52 – List I. Entry 52 –
List I speaks of the Union by declaration made by Parliament
by law taking control of such scheduled industry (Section 2 of
the IDRA) such as the “Fermentation Industries” herein. The
industries which are controlled of by the Union are specified
in the First Schedule to the IDRA. “Fermentation Industries” is
a scheduled industry. Therefore, the Union has taken control
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of “Fermentation Industries”. For the sake of clarification, in
the year 2016 an amendment was made to expressly exclude
potable alcohol from “Fermentation Industries” and it includes
only non-potable alcohol such as “industrial alcohol”. The
detailed discussion made above is in regard to only “industrial
alcohol” being non-potable alcohol. “Intoxicating liquors” being
potable alcohol is not within the scheduled industry. Therefore,
the said products of “Fermentation Industries” which have
been taken control of by the Union by virtue of insertion of
the Section 18G of the IDRA would come within the scope
and ambit of the said Section.
16.11 In this context, by way of analogy, it would be of relevance to
refer to my dissenting opinion dated 25.07.2024 in Mineral
Area Development Authority Etc. vs. M/s. Steel Authority
of India & Others (Civil Appeal Nos.4056-4064 of 1999)
(“Mineral Area Development Authority”) wherein the
interpretation of Entry 50 – List II vis-à-vis Entry 54 – List I
came up for consideration and it was observed by me that
even a taxation Entry i.e. Entry 50 – List II was subject to the
limitation imposed by Parliament by law relating to mineral
development in terms of the Entry 54 – List I. Thus, the
doctrine of parliamentary supremacy in the context of an Entry
in List II (State List) with an Entry in List I (Union List) was
considered. For immediate reference the following passage
from said opinion could be extracted:
“8.6 However, what is pertinent to be considered
in this case is, Entry 50 - List II in juxtaposition
with Entry 54 - List I. As already noted, Entry
50 - List II is a taxation Entry which empowers a
State Legislature to impose tax on mineral rights.
However, this power of the State Government is not
an absolute power inasmuch as Entry 50 - List II
itself states that the power of the State Legislature
to impose tax on mineral right is “subject to any
limitations imposed by Parliament by law relating
to mineral development”. In other words, if there
is any limitation imposed by the Parliament by law
relating to mineral development then that would
have an impact on the legislative competence of
the State Legislature to impose a tax on mineral
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rights. The key expressions of Entry 50 - List II
are “taxes on mineral rights” and “subject to any
limitations imposed by the Parliament by any law
on mineral development”. Thus, the Parliament
can impose any limitation on the State’s right to
impose a tax on mineral rights by way of a law
relating to mineral development. Thus, while Entry
50 - List II speaks of taxes on mineral rights and
is a taxation Entry empowering States to impose
taxes on mineral rights, the same is not unbridled
or absolute but is subject to any limitation to be
imposed by Parliament by law relating to mineral
development. In other words, if Parliament intends
to regulate mineral development in the country, it
can do so by a law made as per Entry 54 - List I
and to that extent the taxation Entry in Entry 50 -
List II could be limited and the State’s right to
impose a tax on mineral rights by a law would be
affected. Thus, a taxation Entry in Entry 50 - List II
can be affected by Entry 54 - List I in the interest
of mineral development by Parliament imposing a
limitation on the State’s right to tax mineral rights.
In other words, if the Union has by a law taken
control of, inter alia, mineral development with the
Parliament passing a law, then the State’s power
to impose any tax on mineral rights would, to that
extent, be denuded, if the Parliamentary or Central
law creates a limitation to impose such a tax, if it
relates to mineral development. It is in the above
backdrop that the controversy must be considered.
8.7 Exercise of mineral rights have to be consistent
with mineral development in the country, which
would embrace, inter alia, uniformity in mineral
development throughout the country having regard
to several factors which would otherwise come in the
way of such development. Hence, the framers of the
Constitution introduced Entry 50 - List I enabling a
limitation being imposed on Entry 50 - List II although
that is a taxation Entry giving powers to the States
to impose taxes on mineral rights. It is subject to
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any limitation imposed by Parliament under Entry
54 - List I.
8.8 The golden thread which runs through Entry 54 -
List I and Entry 23 - List II is that the Entries deal
with regulation of mines and mineral development.
Thus, any aspect of regulation of mines and mineral
development taken under the control of the Union by a
declaration made by the Parliament by a law, denudes
the State Legislature of its legislative competence
to pass any law to that extent. If a Parliamentary
law such as MMDR Act, 1957 is enacted and deals
with certain aspects of mineral development, to that
extent the State Legislature would be denuded of
its competence to pass any law on the said aspect.
The legislative competence vested with the State
Legislature is, therefore, not an absolute one but is
subject to a Parliamentary law enacted as per Entry
54 - List I dealing with mineral development.
In the circumstance, the aforesaid observations made in Synthetics
and Chemicals (7J) are in consonance with the constitutional
framework of Article 246 read with the Entries in Lists I and III and
the doctrine of occupied field applies in the context of Section 18G
of IDRA enacted under Entry 52 – List I and Entry 33(a) – List III.
17. One of the contentions raised was that so long as the notified order
has not been issued by the Central Government which triggers
the exercise of powers under Section 18G of the IDRA, the States
would have the legislative competence to pass laws under Entry
33(a) – List III. In my view, the issuance of a notified order under
Section 18G is only a ministerial act to be performed and to be
complied with by the Central Government by a publication in the
official gazette. The object of publication of a notified order in the
official gazette is to inform the world at large about the contents
of the said order. This could happen at any point of time having
regard to the situations and conditions which emerge in the Indian
economy with regard to a product of a scheduled industry which
is also described as an article or class of articles relatable to any
scheduled industry under Section 18G of IDRA. Thus, when the
field is occupied by Section 18G of the IDRA which is an enactment
made pursuant to Entry 52 – List I and the State Legislatures are
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denuded of legislative competence for passing any law under Entry
33(a) – List III in respect of a product of a scheduled industry which
is read within the definition of article or class of articles relatable to
any scheduled industry as per the Explanation to Section 18G, the
issuance of a notified order pales into insignificance in the context
of repugnancy. The issuance of a notified order has relevance only
for the purpose of intimation of action being taken on any particular
article or class of article of a scheduled industry by the Central
Government in an occupied field.
17.1 As far as the controversy whether “Fermentation Industries”
being under the control of the Union could enable the State
Legislature to pass a law by virtue of Entry 33 (a) - List III of
the Constitution, in the context of a product of “Fermentation
Industries” and in the context of Section 18G of the IDRA, there
has been a cleavage of opinion of this Court in the aforesaid
judgments. While in Synthetics and Chemicals (7J), it was held
that mere insertion of Section 18G into the statute of the IDRA,
would imply that the field has been occupied by the Union and,
therefore, the State has no jurisdiction to exercise its powers
under the said Entry and therefore, has been denuded of all
its powers, the subsequent decisions in Bihar Distillery etc.,
have opined that the said position may not be correct. In other
words, unless action is taken under Section 18G of the IDRA
by the actual issuance of a notified order and if such a notified
order is repugnant to an existing State legislation or action being
initiated thereto, the question of repugnancy would arise. The
judgment of this Court in Tika Ramji has been referred to and
how far the said judgment would have an application in the
present controversy is a matter to be analysed.
17.2 In Tika Ramji, the vires of the Uttar Pradesh Sugarcane
(Regulation of Supply and Purchase) Act, 1953 (hereinafter
referred to as “UP Act”) was assailed by the petitioners therein.
It was contented that the State of Uttar Pradesh had no power to
enact the said Act as the same was with respect to the subject
of industries, the control of which by the Union was declared by
Parliament by law to be expedient in the public interest within
the meaning of Entry 52 – List I and was, therefore, within the
exclusive province of Parliament. It was further contended that
the Act was ultra vires the powers of the State Legislature and
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was a colorable exercise of legislative power by the State. It
was further contended that it was repugnant to the IDRA and
the Essential Commodities Act, 1955 (Act 10 of 1955) also a
Central Act. That in the event of this Court were to hold that
the impugned Act was within the legislative competence of the
State Legislature, it was void by reason of such repugnancy. It
was also contended that the impugned Act stood repealed to
the extent that it had been repealed by Section 16 of Act 10
of 1955 and by clause (7) of the Sugarcane (Control) Order,
1955, made in exercise of the powers conferred by Section 3
of Act 10 of 1955 (a Central Act).
17.3 It was observed that even if it was assumed that sugarcane
was an article or class of articles relatable to the sugar
industry within the meaning of Section 18G of the IDRA, since
no order was issued by the Central Government in exercise
of the powers vested in it under that section, no question of
repugnancy could ever arise because repugnancy must exist
in fact and not depend merely on a possibility. The possibility
of an order under Section 18G being issued by the Central
Government would not be enough. The existence of such an
order would be an essential prerequisite before any repugnancy
could ever arise.
17.4 Without going into the other aspects of the case, in my view,
this Court was not right in holding that since no order was
issued by the Central Government under Section 18G of the
IDRA, the legislative field was open to both the Central as well
as the State Governments to take action. That portion of the
judgment in Tika Ramji in my view is not correct.
17.5 The judgments of this Court including that of the Constitution
Bench in Tika Ramji; Indian Aluminium company Limited
vs. Karnataka Electricity Board (1992) 3 SCC 580 (“Indian
Aluminium company”); Shree Krishna Gyanoday Sugar
Ltd.; Belsund Sugar Co. Ltd. vs. State of Bihar (1999) 9
SCC 620 (“Belsund Sugar Co. Ltd.”) and SIEL Ltd. vs.
Union of India (1998) 7 SCC 26 (“SIEL Ltd.”) have lost sight
of the fact that when a notified order is issued under Section
18G of the IDRA it is pursuant to a Central enactment made
by virtue of Entry 52 – List I and it is not an exercise of power
under Entry 33(a) – List III. When once Section 18G has been
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inserted to the IDRA in respect of a scheduled industry, the
control being taken over by the Union in respect of the very
same scheduled industry, legislative competence cannot remain
with the State Legislature also under Entry 33(a) – List III in
respect of the aspects or field covered under Section 18G of
IDRA which is a Parliamentary enactment.
18. There is another angle to the matter. Article 254 in the normal course
would apply when there is a direct conflict between the laws made
by the Parliament and the State Legislature under an Entry in the
Concurrent List. But in the instant case, it can also be held that the
conflict is not between a law or an action taken by the Parliament or
the Central Government under Entry 33(a) – List III versus a State
law that could be made or action taken under the very same Entry.
Here, the conflict arises between action that could be taken by the
Central Government under Section 18G of IDRA made by virtue of
Entry 52 – List I as opposed to a State law or action which could
be made under Entry 33(a) – List III. In such case, the doctrine of
repugnancy would arise as per the first part of Article 254(1) between
Entry 52 – List I and Entry 33(a) – List III and not in respect of the
second part of Article 254(1). Thus, when the Central Government
seeks to exercise power in respect of a scheduled industry under
Section 18G of the IDRA it is pursuant to the said Act being made
under Entry 52 – List I. Hence, any action to be taken by the Central
Government under Section 18G is not really an action that would
be taken under Entry 33(a) – List III.
18.1 On this aspect, reference must be made to judgment of this
Court in State of Kerala vs. Mar Appraem Kuri Company
Limited (2012) 7 SCC 106 (“Mar Appraem Kuri Company”).
The Constitution Bench of this Court speaking through Kapadia,
C.J., considered the question - when does repugnancy arise in
the context of whether Kerala Chitties Act 23 of 1975 becoming
repugnant to the (Central) Chit Funds Act 40 of 1982 under
Article 254(1) upon making of the Central Act (i.e. 19.08.1982
when the President gave his assent) or whether the Kerala
Chitties Act 23 of 1975 would become repugnant to the Central
Act as and when the notification under Section 1(3) of the
Central Act bringing the Central Act into force in the State
of Kerala is issued. In other words, the question raised was
whether making of the law or its commencement brings about
repugnancy or inconsistency as envisaged in Article 254(1) of
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the Constitution. In this context, reference was made to Deep
Chand vs. State of UP, AIR 1959 SC 648 (“Deep Chand”)
and it was observed as under:
“30. That, in Deep Chand v. State of U.P., three
principles were laid down as indicative of repugnancy
between a State law and a Central law, which have to
be borne in mind by the State Legislature whenever it
seeks to enact a law under any entry in the Concurrent
List. Thus, where there is a Central law which intends
to override a State law or where there is a Central law
intending to occupy the field hitherto occupied by the
State law or where the Central law collides with the
State law in actual terms, then the State Legislature
would have to take into account the possibility of
repugnancy within the meaning of Article 254 of the
Constitution. In this connection, it was submitted that
Tests 1 and 2 enumerated in Deep Chand do not
require the Central law to be actually brought into force
for repugnancy between two competing legislations to
arise in the context of Article 254 of the Constitution.”
18.2 In paragraph 40, it was observed that the expression “subject
to” in clauses (2) and (3) of Article 246 denotes supremacy of
Parliament and the same is extracted as under:
“40. However, the principle of federal supremacy in
Article 246(1) cannot be resorted to unless there is
an “irreconcilable” conflict between the entries in the
Union and State Lists. The said conflict has to be
a “real” conflict. The non obstante clause in Article
246(1) operates only if reconciliation is impossible. As
stated, the parliamentary legislation has supremacy
as provided in Articles 246(1) and (2). This is of
relevance when the field of legislation is in the
Concurrent List. The Union and the State Legislatures
have concurrent power with respect to the subjects
enumerated in List III. [See Article 246(2).] Hence, the
State Legislature has full power to legislate regarding
subjects in the Concurrent List, subject to Article
254(2) i.e. provided the provisions of the State Act
do not come in conflict with those of the Central Act
on the subject. [See Amalgamated Electricity Co.
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(Belgaum) Ltd. v. Municipal Committee, Ajmer
[AIR 1969 SC 227 : (1969) 1 SCR 430 ]. Thus, the
expression “subject to” in clauses (2) and (3) of Article
246 denotes supremacy of Parliament.”
18.3 In paragraph 43, it was observed as under:
“43. Our Constitution gives supremacy to Parliament
in the matter of making of the laws or legislating with
respect to matters delineated in the three Lists. The
principle of supremacy of Parliament, the distribution
of legislative powers, the principle of exhaustive
enumeration of matters in the three Lists are all to
be seen in the context of making of laws and not in
the context of commencement of the laws.”
18.4 Dealing with the question of repugnancy and the ways in which
it would arise between Parliamentary legislation and States’
legislation, it was observed in paragraph 47 as under:
“47. The question of repugnancy between parliamentary
legislation and State legislation arises in two ways.
First, where the legislations, though enacted with
respect to matters in their allotted spheres, overlap
and conflict. Second, where the two legislations
are with respect to matters in the Concurrent List
and there is a conflict. In both the situations, the
parliamentary legislation will predominate, in the first,
by virtue of non obstante clause in Article 246(1); in
the second, by reason of Article 254(1).”
18.5 Ultimately, in paragraph 61, it was stated as under:
“61. The entire above discussion on Articles 245, 246,
250, 251 is only to indicate that the word “made” has
to be read in the context of the law-making process
and, if so read, it is clear that to test repugnancy
one has to go by the making of law and not by its
commencement.”
18.6 On the facts of the said case, this Court held that on the
enactment of the (Central) Chit Funds Act, 1982 on 19.08.1982,
intending to occupy the entire field of chits under Entry 7 - List
III, the State Legislature was denuded of its power to enact
the Kerala Finance Act 7 of 2002.
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18.7 Thus, when the State of Kerala intended to amend the State
Act in 2002, it was bound to keep in mind the fact that there is
already a Central law on the same subject made by Parliament
in 1982, though not in force in Kerala, whereunder there is a pro
tanto repeal of the State Act. Therefore, the State Legislature
ought to have followed the procedure in Article 254(2) and
ought to have obtained the assent of the President.
18.8 Ultimately, in paragraph 78, issue was summed up as under:
“78. To sum up, Articles 246(1), (2) and 254(1)
provide that to the extent to which a State law is in
conflict with or repugnant to the Central law, which
Parliament is competent to make, the Central law shall
prevail and the State law shall be void to the extent
of its repugnancy. This general rule of repugnancy
is subject to Article 254(2) which inter alia provides
that if a law made by a State Legislature in respect
of matters in the Concurrent List is reserved for
consideration by the President and receives his/her
assent, then the State law shall prevail in that State
over an existing law or a law made by Parliament,
notwithstanding its repugnancy.”
19. Further, reference could also be made to the Food Safety and
Standards Act, 2006 (“FSSA, 2006”) which has been enacted pursuant
to Entry 52 – List I where the Parliament by a declaration made
under Section 2 of the said Act has declared that it is expedient in
the public interest that the Union should take under its control the
food industry. Consequently, clause (b) of Entry 33 – List III which
speaks of food stuffs, including edible oils seeds, and oils would be
impacted on account of the FSSA, 2006 and the declaration made
therein pursuant to Entry 52 – List I to the extent of the control under
the said Act.
20. The reason for the aforesaid view would have to be also considered
from the point of view of the fact that when an “industry” is taken
control of by the Union by specifying it in the First Schedule of the
IDRA, it becomes a scheduled industry and to the extent of control
envisaged as per the Schedule and as per the provisions of IDRA. It
is only those industries which are critical and of vital significance to
the Indian economy which are taken control of by the Union and one
such industry is “Fermentation Industries”, which inter alia comprises
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of “industrial alcohol” both as a product and as a raw material for
other industries.
21. Conversely, if any industry is not a scheduled industry and does not
come within the scope and ambit of First Schedule of the IDRA, in
such an event, not only Entry 24 - List II but also Entries 26 and
27 - List II would fully operate. Then, Entries 26 and 27 - List II would
not be subject to the restriction under Entry 33(a) - List III nor to
Entry 52 - List I. The States would have the liberty to pass laws with
regard to trade and commerce, production supply and distribution
of goods of any industry under Entries 26 and/or 27 - List II without
there being any restriction in terms of Entry 33(a) - List III. In other
words, insofar as a non-scheduled industry is concerned, Entry
33(a) - List III would not at all apply and Entries 26 and/or 27 - List
II would apply in the matter of production, supply and distribution
of goods or trade and commerce of the products of any industry or
any other specific Entry in List II, as the case may be.
22. In the above context, the intention of the Constitution makers in the
matter of division of legislative subjects between the Parliament
and the States have to be clearly understood. In order to achieve
consistency of dividing the subjects of legislation not only within the
particular Lists, namely, the Union List, State List and Concurrent List
but also, inter se, between the three Lists so as to have a clarity in the
matter of the Parliament or the State Legislature having competence
to make laws, the prescription under Article 246 and the mandate
thereof would give a clue regarding interpretation of the Entries in the
three Lists. To reiterate, Articles 246 (1) and (2) of the Constitution
begins with a non-obstante clause and Article 24(3) begins with a
“subject to” clause. On a conspectus reading of aforesaid clauses
of Article 246, it is evident that the Legislature of a State has the
power to make laws with respect to any matter enumerated in List III,
i.e., Concurrent List, subject to List I which deals with Parliament’s
exclusive powers to make laws in respect of any matter enumerated
in List I. Therefore, a subject placed in List III, i.e., the Concurrent
List can also be subject to the exclusive power of Parliament to
make laws with respect to any matter enumerated in List I (vide first
part of Article 254(1)). Thus, the intention of the Constitution makers
was to preserve parliamentary supremacy while at the same time
maintaining a federal balance in the matter of distribution of the
fields of legislation vis-à-vis various Entries in the three Lists. This
is also evident on a reading of Article 246(3) which deals with the
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exclusive powers to make laws by State Legislatures in respect of
matters enumerated in List II being subject to clauses (1) and (2)
of Article 246, i.e., subject to the Union List and the Concurrent List
is in a case of conflict of laws which is irreconcilable.
23. Any other view would result in a situation wherein the State
Legislatures on the strength of Entry 33(a) – List III would have their
own legislations on the premise that there is no notified order issued
by the Central Government in respect of the scheduled industry
under Section 18G of the IDRA, and if subsequently in respect of
a product of a scheduled industry, the Central Government is to
issue a notification under Section 18G of the IDRA, the laws that
are in operation in the various States would become repugnant if
there is a direct conflict between the said State laws with the notified
order issued by the Central Government under Section 18G of the
IDRA. This would result in a legal quagmire and uncertainty leading
to confusion. Therefore, for this reason also States cannot have
legislative competence to pass laws or take any action in respect of
any product of a scheduled industry from the moment Section 18G
has been inserted to the IDRA which has been enacted pursuant
to Entry 52 – List I. As a result, time of insertion of Section 18G to
the IDRA, the intention of the Union is to occupy the field insofar as
an article or articles of scheduled industry is concerned which will
also include a product of a scheduled industry. Consequently, the
States are denuded of their powers to pass any law insofar as the
said subject-matter is concerned.
24. In State of W.B. vs. Union of India, AIR 1963 SC 1241 (“State
of W.B.”), this Court on a comparative analysis of List I in Seventh
Schedule to the Constitution with the Seventh Schedule to the
1935 Act noted that the powers of the Union have been enlarged
particularly in the field of economic unity and that this was done as
it was felt that there should be centralised control and administration
in certain fields of common interest if rapid economic and industrial
progress had to be achieved by the nation. Reference in this regard
was also made, inter alia, to the transfer of new Entry 33 – List III
in the Constitution from List II of the 1935 Act. It was observed that
the result of ensuring such economic unity was a departure from
any traditional pattern of federation and a conscious decision for the
common good. Furthermore, in identifying deviations from traditional
features of federations, this Court noted a notable feature that is true
of the Indian constitutional framework:
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“26. … (c) Distribution of powers between the Union
and the regional units each in its sphere coordinate and
independent of the other. The basis of such distribution of
power is that in matters of national importance in which
a uniform policy is desirable in the interest of the units,
authority is entrusted to the Union, and matters of local
concern remain with the States. …”

Importance of “Industrial Alcohol” to the Indian Economy:
25. It is necessary to note the importance of “industrial alcohol” in
the Indian economy. “Industrial alcohol” is important to the Indian
economy for it is used in at least two sectors: i) as a key feedstock
for production of various chemicals in the chemicals industry; and
ii) as liquid fuel to be blended with petrol.
25.1 As regards the chemical industry, the XIIth five-year plan (2012-
2017) of the Planning Commission (“PC Report”) notes that
“alcohol-based chemical industry occupies an important place
in the Indian chemical industry and is a key contributor to the
growth of the sector”. It also notes that several alcohol-based
chemicals are made using “industrial alcohol” and are used
as building blocks for various downstream industries such as
“synthetic fibres and synthetic yarn, drugs and pharmaceuticals,
agrochemicals, personal care products, dyestuffs, pigments,
flavours & fragrances etc.” Further, the PC Report notes that
alcohol based chemical industry “contributes to green chemistry”
as chemicals are manufactured using ethanol instead of being
manufactured through the petro-chemical route. It also notes
that they contribute to foreign exchange reserves.
25.2 As regards blending of ethanol with petrol, the contribution
of Ethanol Blended with Petrol (EBP) programme of the
Government of India appears significant. In this programme,
fuel-grade ethanol is blended with petrol and is sold by Oil
Marketing Companies (OMCs) for use as a fuel in automobiles.
In response to an Unstarred Question No.2764 answered on 20th
December, 2023, the Minister of State for Ministry of Consumer
Affairs, Food & Public Distribution had answered that:
i) The Government of India has been implementing EBP
programme and has fixed the target of 20% blending of
ethanol with petrol by 2025;
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ii) The supply of ethanol to OMCs has increased by more
than 13 times from 38 crore litres in ESY 2013-13 to 502
crore litres in ESY 2022-23;
iii) To achieve the target of 20% blending by 2025, about 1016
crore litres of ethanol would be required and for this, about
1700 crore litres of ethanol producing capacity is required.
25.3 Further, a report of the Ministry of Petroleum and Natural Gas,
Government of India titled “Ethanol Growth Story” suggests
that the EBP programme has at least three benefits: first, it
raises income of farmers which is evident from the observation
that OMCs have paid sugar mills nearly Rs.81,796 crore for
ethanol supplies up to 2022. Second, it reduces import bills
and improves India’s energy security. The report suggests that
the cumulative foreign exchange impact is estimated to be over
Rs.53,894 crore between 2014 and 2022. Third, it lowers CO2
emissions and promotes a cleaner environment. The report
estimates that Greenhouse gas emissions were reduced by
318.2 lac tonnes due to the EBP programme between 2014
and 2022.
26. Thus, insofar as “Fermentation Industries” (other than potable alcohol)
is concerned, both alcohol and other products of “Fermentation
Industries” being a scheduled industry under the IDRA passed
under Entry 52 – List I it would clearly be within the scope of Union
legislation. It is clarified that as far as the concept of “intoxicating
liquors” versus “industrial alcohol” is concerned, it is clear that Entry
33(a) – List III does not deal with “intoxicating liquors” which is a
State subject under Entry 8 – List II. “Fermentation Industries” is a
controlled industry and is a scheduled industry under the IDRA. It
has been clarified by the 2016 Amendment that Item 26 dealing with
“Fermentation Industries” does not include potable alcohol. Therefore,
insofar as “intoxicating liquors” which is “potable liquors” is concerned,
only the State Legislatures have the legal competence to enact laws
concerning the said subject. Therefore, other types of liquor (i.e.
excluding “intoxicating liquors”) comes within the nomenclature of
“Fermentation Industries” which is a scheduled industry under IDRA.
27. Since qua State Legislatures, Article 246(2) is also subject to Article
246(1), the legislation which could have been made under List III
(Concurrent List) can also be subject to legislation made under Entry
52 – List I. This is expressly so having regard to Entry 33(a) – List
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III as any law regarding trade and commerce in, and the production,
supply and distribution of the products of any industry where the
control of such industry by the Union is declared by Parliament by
law to be expedient in the public interest, and imported goods of
the same kind as such products, would be subject to a law made
as per Entry 52 – List I i.e., IDRA. This is because a Parliamentary
law which is made by virtue of an Entry under List I has supremacy
over any other law in List II or List III when they are irreconcilable
or when the doctrine of occupied field applies respectively.
28. In Mineral Area Development Authority, I have voiced similar
concerns as in the present case in the following words:
“36.3 The Government of India Act, 1935 was the first
comprehensive blueprint for legislative division of power in
India between federal, provincial and concurrent spheres
which resolved residuary powers to rest with the Federal
Government. Though there are apparent similarities
between the Government of India Act, 1935 and the Indian
Constitution, yet factors, such as, regulation of economic
competition and the development of twentieth century
welfare States guided the constitutional blueprint for a
model of federalism in which provincial initiative should not
preclude national coordination, particularly, in the fields of
socio-economic spheres.
36.4 According to Tillin, “in the case of India, political
economy considerations intersect with the accommodation
of diversity in shaping the resulting forms of federalism”.
The question of a desirable balance between Central and
the State Governments has to be viewed in the context
of the country continuing to confront the need to promote
economic growth while upholding and expanding social
rights.
Sarkaria Commission Report on Centre-State Relations:
37. Resolved to study and reform the existing arrangements
between the Union and the States in an evolving socio-
economic scenario, the Ministry of Home Affairs vide
Order dated 09.06.1983 constituted a Commission under
the Chairmanship of Justice R.S. Sarkaria with Shri B.
Sivaraman and Dr. S.R. Sen having due regard to the
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framework of the Constitution. At this stage, reference to
Section 5, Chapter II – Legislative Relations of the Report of
the Sarkaria Commission (“Sarkaria Commission Report”)
may be of assistance:
“2.5.21 In every Constitutional system having
two levels of government with demarcated
jurisdiction, contents respecting power are
inevitable. A law passed by a State legislature
on a matter assigned to it under the Constitution
though otherwise valid, may impinge upon
the competence of the Union or vice versa.
Simultaneous operation side-by-side of two
inconsistent laws, each of equal validity, will be
an absurdity. The rule of Federal Supremacy
is a technique to avoid such absurdity, resolve
conflicts and ensure harmony between the
Union and State laws. This principle, therefore,
is indispensable for the successful functioning
of any federal or quasi-federal Constitution. It
is indeed the kingpin of the federal; system.
“Draw it out, the entire system falls to pieces”
2.5.22 If the principles of Union Supremacy are
excluded from Articles 246 and 254, it is not
difficult to imagine its deleterious results. There
will be every possibility of our two-tier political
system being stultified by internecine strife,
legal chaos and confusion caused by a host
of conflicting laws, much to the bewilderment
of the common citizen. Integrated legislative
policy and uniformity on basic issues of
common Union-State concern will be stymied.
The federal principle of unity in diversity will be
very much a casualty. The extreme proposal
that the power of Parliament to legislate on a
Concurrent topic should be subject to the prior
concurrence of the States, would, in effect,
invert the principle of Union Supremacy and
convert it into one of State Supremacy in the
Concurrent sphere. The very object of putting
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certain matters in the Concurrent List is to enable
the Union Legislature to ensure uniformity in
laws on their main aspects throughout the
country. The proposal in question will, in effect,
frustrate that object. The State Legislatures
because of their territorially limited jurisdictions,
are inherently incapable of ensuring such
uniformity. It is only the Union, whose legislative
jurisdiction extends throughout the territory
of India, which can perform this pre-eminent
role. The argument that the States should
have legislative paramountcy over the Union
is basically unsound. It involves a negation of
the elementary truth that the ‘whole’ is greater
than the ‘part’.”
(emphasis supplied)

As the paragraphs extracted above elucidate, the
Commission was of the firm view that the principles of
Union Supremacy cannot be undermined from Articles 246
and 254. While the immediate paragraph is concerned with
legislative actions taken under the List III - Concurrent List,
they provide us a beneficial lens to both the importance
of Union supremacy in matters that demand national
uniformity and the Commission’s following discussion on
“Mines and Minerals” in Chapter XIII.”
29. Constitutional law is mainly concerned with the basic features or the
framework of distribution of powers between the different organs of
the State; between the Union and its units and between the State and
the citizens. But there is something in a Constitution that is even more
primordial than the structure and the features. These are the ideals
on which the founding parents, in their wisdom and sagacity, built
the entire edifice of the Constitution itself. It is all important that this
edifice is not dislodged while attempting to dynamically interpret the
Constitution. These Constitutional ideals are irreducible and underpin
the survival and success of constitutional order and a concordial
society. Federalism is one such ideal where the Constitution defines
a federal structure with a unitary spirit in Article 246 read with the
three Lists of the Seventh Schedule of the Constitution.
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Conclusions on interplay of legislative Entries:
30. In view of the aforesaid discussion, my conclusions on the interplay
of the legislative Entries under consideration are as under:
I. The field of legislation comprised in Entry 8 – List II is carved
out of Entry 24 – List II.
Thus, the subject relating to “intoxicating liquors”, that is to say,
the production, manufacture, possession, transport, purchase
and sale of “intoxicating liquors” being a specific subject is taken
out of the general subject of “industries” under Entry 24 – List II.
II. As a result, Entry 52 – List I or any law made under that Entry
by the Parliament cannot intrude or trench upon any law made
by the State Legislatures under Entry 8 – List II.
Thus, the Parliament cannot take under its control the subject
pertaining to “intoxicating liquors” under any law, such as,
IDRA made under Entry 52 – List I. Therefore, the subject
“intoxicating liquors” falls exclusively within the domain of the
State Legislatures which also have the obligation to prevent
“industrial alcohol” being converted into “intoxicating liquors” as
an abuse and, therefore, pass legislations or take State action
in that regard having regard to Article 47 of the Constitution
of India.
III. Entry 33(a) – List III (Concurrent List) and any law made or
to be made by the State Legislatures under the said Entry is
subject to Parliamentary law made either under Entry 52 –
List I or under Entry 33(a) – List III in terms of the first part and
second part of Article 254(1) respectively.
Thus, if any law has been made by the Parliament by virtue of
Entry 52 – List I, such as, the IDRA and there is an intention to
occupy the field, the State law would be subject to the doctrine
of occupied field. Thus, Section 18G of the IDRA which has
been made by virtue of Entry 52 – List I thereof would prevail
on the basis of the aforesaid doctrine. Consequently, it is held
that issuance of a notified order under Section 18G of the IDRA
is neither a sine qua non nor is it a condition precedent for the
State Legislatures to restrain exercise of powers under Entry
33(a) – List III. In other words, the mere insertion of Section
18G to the IDRA implies that the Parliament has intended to
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occupy the field demarcated under the aforesaid provision.
Also, a notified order when issued by the Central Government
under Section 18G of the IDRA cannot be questioned in any
Court of law. This also indicates that the doctrine of occupied
field applies to the said Section vis-à-vis a scheduled industry
under the IDRA.
IV. If the Parliament has made a law under Entry 52 – List I and
intends to occupy the whole field then the State Legislatures are
denuded of their powers and therefore, they would lack legislative
competence to enact a law under Entry 33(a) – List III.
In the context of “industrial alcohol” and in terms of Item 26 of
the First Schedule of the IDRA i.e. “Fermentation Industries”,
it is only the Central Government which has the powers to act
under Section 18G of the said Act. 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 action in respect of the products of a scheduled industry
under Entry 33(a) – List III.

Effect of overruling Synthetics and Chemicals (7J):
31. The judgment of this Court in Synthetics and Chemicals (7J)
has held the field since 1989 for three and a half decades. The
doubts which have arisen regarding the said judgment subsequently
have led to the reference to a larger Bench. On re-considering
the judgment in Synthetics and Chemicals (7J) in light of the
arguments advanced before this nine-Judge bench and in the
backdrop of the constitutional Entries in the three Lists, I find that
except for a clarification and deletion of the words “both potable
and ” in paragraph 84 of AIR version of the Report, the said judgment
would not call for any intervention. The reasons for saying so can
be stated as under:
Firstly, the judgment has held the field for three and a half
decades on certain concrete ideas pertaining to liquors
as part of “Fermentation Industries”, which is a scheduled
industry, and that part which is excluded from the aforesaid
scheduled industry. This is based on the interplay of Entries
in Lists I and II.
[2024] 10 S.C.R. 2173

State of U.P. & Ors. v.
M/s Lalta Prasad Vaish and sons

The judgment in Synthetics and Chemicals (7J) has
crystallised the concepts of “intoxicating liquors” and
“industrial alcohol” which are clearly distinguished in
legislations of the State and in administration or governance
for several decades on the basis of constitutional
demarcation of legislative entries. Consequently, it held
that “Fermentation Industries” is a controlled industry and
I have now clarified that it does not take within its ambit
“intoxicating liquors” or potable alcohol.
The judgment in Synthetics and Chemicals (7J) correctly
held on a conspectus reading of Entry 8 – List II, Entry
6 - List II and Article 47 that State Legislatures have the
competence to ensure that “industrial alcohol” or non-
potable alcohol is not diverted and misused as a substitute
for potable alcohol.
Secondly, the judgment has correctly considered the
significance of insertion of Section 18G to the IDRA which
is a Parliamentary Law made under Entry 52 – List I and
the consequences that follow in light of the doctrine of
occupied field in the context of “Fermentation Industries”,
a scheduled industry, by bearing in mind the first part of
Article 254(1) of the Constitution.
Thirdly, the reasons assigned in Synthetics and
Chemicals (7J) for invoking the doctrine of occupied
field in the context of “Fermentation Industries” and in the
context of Section 18G of the IDRA would equally apply
to all other scheduled industries under the said Act. Any
interference with the said legal position would have a
cascading effect on other scheduled industries thereby
giving legislative competence in respect of all scheduled
industries to the States under Entry 33(a) – List III. This
would result in multiple States as well as the Union having
powers to make laws which would lead to the scheduled
industries under IDRA pale into insignificance. This would
defeat the purpose of Entry 52 – List I and the laws made
thereunder; such as IDRA.
Fourthly, the critical importance of scheduled industries in
the Indian economy must not be lost sight of. The object
and purpose of Entry 52 – List I and passing of laws on
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the strength of the said Entry by the Parliament taking over
control of certain industries by a declaration made by law
as expedient in the public interest, is a factor which cannot
be lost sight of while answering the reference made to this
Bench in the form of various questions raised. This aspect
has been borne in mind in Synthetics and Chemicals
(7J) while deciding the issues raised therein.
Fifthly, if the judgment in Synthetics and Chemicals
(7J) is overruled then all State legislatures can also make
laws under Entry 33(a) – List III in respect of scheduled
industries. This would result in IDRA made under Entry
52 – List I and Entry 52 – List I itself losing significance
as the object and purpose of taking control of certain
industries by insertion of the said industries as scheduled
industries under the said Act would be defeated.
Sixthly, if industries of critical importance to the Indian
economy which are scheduled industries under the IDRA
which are under the control of the Union by a declaration
made by Parliament by law are allowed to be legislated
upon by the State legislatures, 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 be defeated. This would
result in a haphazard development of such scheduled
industries in the country. For instance, if “industrial alcohol”
is read as coming within the scope and ambit of Entry
8 – List II then it would be excluded from the scheduled
industry. Such a state of affairs would not be conducive
to the economy as the scheduled industries such as
“Fermentation Industries”, minus potable alcohol play a
significant role in the Indian economy.
Seventhly, 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. This approach has been adopted in Synthetics
and Chemicals (7J).
[2024] 10 S.C.R. 2175

State of U.P. & Ors. v.
M/s Lalta Prasad Vaish and sons

Eighthly, the principle of federal balance must yield to
the doctrine of Parliamentary supremacy in certain areas
such as when laws are made under Entry 52 or Entry
54 or Entry 7 – List I such as in the present cases. This
is because of the unique manner in which Article 246 of
the Constitution is worded and the division of legislative
subjects between the Parliament and the State legislatures,
having regard to the unique federal structure in India with
the balance tipping in favour of the Union in certain niche
areas of legislation and governance.
Ninthly, the Amendment Act, 2016 has brought much
needed clarity on the issue and is the correct position of
law compatible with the scheme of legislative competence
as under our Constitution. I have already held that merely
because “industrial alcohol” can be easily manufactured
into or misused to become “intoxicating liquors” would
not grant States the competence to wholly regulate
“industrial alcohol”. State legislatures only have legislative
competence over what is “intoxicating liquors” as a
beverage. Therefore, the judgment in Synthetics and
Chemicals (7J) is good law and was most correct in
postulating that State legislatures will only have the
competence to prevent misuse in interest of public health.
For the aforesaid reasons, I am of the view that although the judgment
in Synthetics and Chemicals (7J) calls for only a clarification, it
does not require any overruling.

My answers to the questions formulated:
32. Consequently, the questions formulated are accordingly answered
as under:
Ques. 1. Does Section 2 of the Industries (Development and
Regulation) Act, 1951, have any impact on the field covered
by Section 18G of the said Act or Entry 33(a) of List III of the
Seventh Schedule of the Constitution?
Ans.: Entry 33(a) – List III has to be read in the context of Entry
52 – List I. IDRA is relatable to Entry 52 – List I. Section 2 of
the IDRA has a nexus and is connected with Section 18G of
the said Act. Therefore, Entry 33(a) – List III is impacted by
Section 2 read with Section 18G of the IDRA.
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Ques. 2. Does Section 18G of the aforesaid Act fall under Entry 52
of List I of the Seventh Schedule of the Constitution, or is it
covered by Entry 33(a) of List III thereof?
Ans.: Section 18G of the IDRA is directly relatable to Entry 52 – List
I which has to be read in the context of Section 2 of IDRA.
The doctrine of occupied field applies and the legislative field
under Entry 33(a) – List III is covered by the said provision
on the basis of doctrine of occupied field under first part of
Article 254 of the Constitution.
Ques. 3. In the absence of any notified order by the Central
Government under Section 18G of the above Act, is the power
of the State to legislate in respect of matters enumerated in
Entry 33 of List III ousted?
Ans.: Yes, even in the absence of any notified order by the Central
Government under Section 18G of the IDRA, the power of
the States to legislate in respect of matters enumerated in
Entry 33(a) – List III is ousted on the basis of the doctrine of
occupied field as aforestated.
On this aspect, the judgment of this Court in Synthetics and
Chemicals (7J) is correct.
Ques. Does the mere enactment of Section 18G of the above Act,
give rise to a presumption that it was the intention of the
Central Government to cover the entire field in respect of
Entry 33(a) - List III so as to oust the States’ competence to
legislate in respect of matters relating thereto?
Ans.: Yes, the mere enactment of section 18G of the IDRA gives
rise to a presumption that it was the intention of the Parliament
and Central Government to cover the entire field in respect
of Entry 33(a) - List III so as to oust the States’ competence
to legislate in respect of matters relating thereto.
Answer given to question (3) above is reiterated here.
Ques. 5. Does the mere presence of Section 18G of the above Act,
oust the State’s power to legislate in regard to matters falling
under Entry 33(a) of List III?
Ans.: Yes, the mere presence of Section 18G of the IDRA would oust
the State’s power to legislate in regard to matters falling under
Entry 33(a) - List III. The doctrine of occupied field applies.
[2024] 10 S.C.R. 2177

State of U.P. & Ors. v.
M/s Lalta Prasad Vaish and sons

Ques. 6. Does the interpretation given in Synthetics and Chemicals
case (1990) 1 SCC 109 in respect of Section 18G of the
Industries (Development and Regulation) Act, 1951, correctly
state the law regarding the States’ power to regulate “industrial
alcohol” as a product of the scheduled industry under Entry
33(a) of List III of the Seventh Schedule of the Constitution
in view of Clause (a) thereof?
Ans.: Yes, the interpretation given in Synthetics and Chemicals
case (1990) 1 SCC 109 in respect of Section 18G of the IDRA
correctly states the law. Even with regard to “industrial alcohol”
as a product which falls within “Fermentation Industries”
in respect of which the Union has assumed control, in the
absence of a notified order, the competence of the State to
act under Entry 33 - List III is denuded.

My answers to the conclusions of learned Chief Justice:
33. His Lordship, the Chief Justice of India has overruled the judgment
in Synthetics and Chemicals (7J) and has come to the following
conclusions and my answers to the same are in a tabular form as under:
Point(s) Conclusions arrived at My Conclusions
by Hon’ble the CJI
a. Entry 8 of List II of the In my view, Entry 8 – List II deals
Seventh Schedule to the with “intoxicating liquors”. The
Constitution is both an misuse, diversion or abuse
industry-based entry and of “industrial alcohol” as
a product-based entry. “intoxicating liquors” can also
The words that follow the be controlled and prevented
expression “that is to say” in under Entry 8 – List II by the
the Entry are not exhaustive State Legislatures having
of its contents. It includes regard to Article 47 of the
the regulation of everything Constitution. It is also made
from the raw materials to the clear that the IDRA which has
consumption of ‘intoxicating been enacted by the Parliament
liquor’; by virtue of Entry 52 – List I has
taken control of “Fermentation
Industries” as a scheduled
industry. Such “Fermentation
Industries” would exclude
“intoxicating liquors”.
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b. Parliament cannot occupy Parliament can occupy the
the field of the entire field of the entire industry by
industry merely by issuing merely issuing a declaration
a declaration under Entry under Entry 52 – List I and
52 of List I. The State t h e S t a t e L e g i s l a t u r e ’s
Legislature’s competence competence under Entry 24
under Entry 24 of List II is – List II is denuded to the
denuded only to the extent field of the entire industry
of the field covered by the and specifically to the extent
law of Parliament under of the field covered by the
Entry 52 of List I; law of Parliament under Entry
52 – List I.
c. Parliament does not have I agree.
the legislative competence
to enact a law taking
control of the industry of
intoxicating liquor covered
by Entry 8 of List II in
exercise of the power
under Article 246 read with
Entry 52 of List I;
d. The judgments of the The context of the controversy
Bombay High Court in must be borne in mind in the
FN Balsara v. State of said cases. The aforesaid
Bombay (supra), this decisions in substance
Court in FN Balsara limited the meaning of the
(su pra) a nd So u th e r n expression “intoxicating
Pharmaceuticals (supra) liquors” to its popular meaning
did not limit the meaning of i.e. “alcoholic beverages”
the expression ‘intoxicating that produce intoxication.
liquor’ to its popular Therefore, in the context of
meaning, that is, alcoholic prohibition of “intoxicating
beverages that produce liquor” as a beverage,
intoxication. All the three there could not have been
judgments interpreted the prohibition of production of
expression to cover alcohol alcohol used for medicinal
that could be noxiously and toilet preparation as well
used to the detriment of as “industrial alcohol” or non-
health; potable alcohol.
[2024] 10 S.C.R. 2179

State of U.P. & Ors. v.
M/s Lalta Prasad Vaish and sons

e. The expression ‘intoxicating The expression “intoxicating
liquor’ in Entry 8 has not liquor” in Entry 8 has acquired
acquired a legislative a legislative and judicial
meaning on an application meaning over the decades as
of the test laid down in per the discussion above.
Ganon Dunkerley (supra);
f. The study of the evolution The members of the
of the legislative entries Constituent Assembly were
on alcohol indicates that clear in what they envisaged
the use of the expressions within the scope and ambit of
“intoxicating liquor” and the expression “intoxicating
“alcoholic liquor for human liquors” in Entry 8 – List II.
consumption” in the Seventh This is also evident from
Schedule was a matter well- Item 26 of the First Schedule
thought of. It also indicates of the IDRA. “Intoxicating
that the members of the liquors” is only a segment of
Constituent Assembly were the “Fermentation Industries”,
aware of use of the variants n a m e l y, p o t a b l e a l c o h o l .
of alcohol as a raw material There was no intention on
in the production of multiple the part of the members of
products; the Constituent Assembly to
read within the expression
“intoxicating liquors”
non-potable or “industrial
alcohol”. Further, in order to
have a consistency between
what was envisaged under
Entry 84 – List I and Entry
51 – List II in the context of
alcoholic liquors for human
consumption, the taxing Entry
in List II which is within the
legislative competence of the
States follows the regulatory
Entry in Entry 8 – List II.
Therefore, the use of the
expression “industrial alcohol”
or non-potable alcohol in
Synthetics and Chemicals (7J)
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was only to crystallise all
variants of alcohol which
were non-potable and to
distinguish the same from
potable alcohol meant only
for human consumption as a
beverage.
g. Entry 8 of List II is based The entire controversy cannot
on public interest. It be viewed from the point of view
seeks to enhance the of alcohol being used as a raw
scope of the entry beyond material and final product such
potable alcohol. This is as hand sanitizer containing
inferable from the use of alcohol. The potential misuse
the phrase ‘intoxicating’ of alcohol cannot be the basis
and other accompanying for interpreting an Entry such
words in the Entry. Alcohol as Entry 8 – List II. Ultimately,
is inherently a noxious the “Fermentation Industries”
substance that is prone have to be borne in mind
to misuse affecting public which takes within its canvas
health at large. Entry 8 only non-potable / “industrial
covers alcohol that could alcohol”. The aspect of public
be used noxiously to the health having a corelation to
detriment of public health. Entry 8 – List II dealing with
This includes alcohol “intoxicating liquor” and the
such as rectified spirit, misuse of alcohol cannot be
ENA and denatured spirit a guide while interpreting the
which are used as raw content of the said Entry and
materials in the production therefore, its scope and ambit
of potable alcohol and being amplified beyond what
other products. However, it really envisages as a field
it does not include the of legislation for the States to
final product (such as legislate upon.
a hand sanitiser) that
contains alcohol since
such an interpretation will
substantially diminish the
scope of multiple other
legislative entries;
[2024] 10 S.C.R. 2181

State of U.P. & Ors. v.
M/s Lalta Prasad Vaish and sons

h. The judgment in Synthetics The judgment in Synthetics
(7J) (supra) is overruled in and Chemicals (7J) need not
terms of this judgment; be overruled in relation to
Section 18G of the IDRA and it
continues to be good law in the
context of what is comprised
in the expression “industrial
alcohol” and “intoxicating
liquors” except what has been
clarified above in Entry 8 –
List II.
i. Item 26 of the First Item 26 of the First Schedule
Schedule to the IDRA of the IDRA must be read
must be read as excluding excluding only what is
the industry “intoxicating contained in the expression
liquor”, as interpreted in this “intoxicating liquors” as
judgement; interpreted above in Entry
8 – List II.
j. The correctness of the In my opinion, Tika Ramji
judgment in Tika Ramji is held to be not good law
(supra) on the interpretation insofar as the requirement of
of word ‘industry’ as it issuance of a notified order as
occurs in the Legislative a condition precedent for the
entries does not fall for field to be occupied, has been
determination in this mandated therein.
reference; and
k. The issue of whether Denatured alcohol belongs
Section 18G of the IDRA to the family of “industrial
covers the field under Entry alcohol” and therefore, Section
33(a) of List III does not 18G of the IDRA has a bearing
arise for adjudication in view on the said product. Section
of the finding that denatured 18G occupies the field under
alcohol is covered by Entry Entry 33(a) – List III and,
8 of List II.” thereby, only Parliament is
competent to legislate on all
articles or class of articles
related to a scheduled industry
i.e. “Fermentation Industries”.
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34. Reference is answered in the above terms.
35. The Registry to place the matters before Hon’ble the Chief Justice of
India for seeking orders for being listed before the appropriate Bench.
36. I must place on record my sincere appreciation to the learned Attorney
General, learned Solicitor General and their teams, learned senior
counsel appearing for the respective parties, learned instructing
counsel and learned counsel for the respective parties for their
valuable assistance to this Bench.

Result of the Case: Reference answered in above terms.

†
Headnotes prepared by: Ankit Gyan