JUDGMENT

B.P. Jeevan Reddy, J.-Until the Commencement of the Constitution and for a few years thereafter, rectified spirit was mainly used for the purpose of manufacturing country liquor, Indian Made Foreign Liquors (I.M.F.L.) and other intoxicating drinks. Its use for industrial purposes was not significant. The rapid pace of industrialization from mid-fifties onwards brought into existence several industries, which required rectified spirit as one of their raw materials, with the result the demand of rectified spirit for industrial purposes went up substantially and has been going up. Evidently, in recognition of this fact, did the Union of India amend, in the year 1956, the Schedule to the Industries (Regulation and Development) Act, 1951 including the alcohol industry therein.

2. Notwithstanding the aforesaid amendment of the Schedule to the Industries (Regulation and Development Act, 1951, the establishment of a distillery, its working and the distribution and sale of the rectified spirit produced by it continued to be regulated by the States as before, under various enactments in force in those States. Similar was the position in the State of Bihar where the first petitioner-distillery is located. As a matter of fact, right up to the year 1991-92, it was getting its licence renewed under the provisions of the Bihar Excise Act. The original license itself was granted under the Bihar Act. In or about the year 1992, the authorities of the Bihar State proposed to cancel the petitioner s license for certain reasons assigned by them. The petitioner objected it on the ground that the grant and cancellation of license in respect of a distillery manufacturing rectified spirit is the exclusive province of the Government of India and that the State Government had no say in the matter. With this contention has it approached this Court. It relies upon the seven-Judge Constitution Bench decision of this Court in Synthetics and Chemicals Limited v. State of Uttar Pradesh1. The petitioner says that it was licensed to manufacture and manufactures only industrial alcohol and no other alcohols or liquors.

3. According to the division of legislative powers contained in the Seventh Schedule to the Constitution (relatable to Article 246), the power to legislation the subject of "industries" is assigned to the States. Entry 24 in List-II reads :"24. Industries subject to the provisions of Entries 7 and 52 of List-I .* Entries 7 and 52 in List-I, referred to in Entry 24 of List-II, read thus :

"7. Industries declared by Parliament by law to be necessary for the purpose of defence or for the prosecution of war.

52. Industries, the control of which by the Union is declared by Parliament by law to be expedient in the public interest."

4. In the year 1951, the Parliament enacted the Industries (Development and Regulation) Act, 1951 (I.D.R. Act). Section 2 contains a declaration in terms of Entry 52 of List-I. By virtue of this enactment, the Parliament took over the control of the industries specified in the first Schedule denuding the States of that power. In the year 1956, the Schedule to the I.D.R. Act was amended, as stated hereinbefore, including inter alia Item 26. Item 26 reads: "26. Fermentation Industries : (i) alcohol; (ii) other products of fermentation industries". As a matter of fact, however, the several State enactments continued to regulate the establishment, functioning and disposal of rectified spirit and other products of these distilleries even after 1956. Nobody ever questioned it until an industry, Synthetics and Chemicals Limited (Synthetics) did so by way of writ petitions filed in the Allahabad High Court in or about the years 1975-78. Synthetics was a licensee for the wholesale vend of denatured spirit**. It questioned the levy of vend fee on denatured spirit imposed by the State of Uttar Pradesh under the provisions of the Uttar Pradesh Excise Act and the Rules made thereunder. It contended that the power to levy