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SUPREME COURT OF INDIA
DHANANJAYA Y. CHANDRACHUD, CJI, HRISHIKESH ROY, ABHAY S. OKA, J.B. PARDIWALA, MANOJ MISRA, UJJAL BHUYAN, SATISH CHANDRA SHARMA, AUGUSTINE GEORGE MASIH, B.V. NAGARATHNA, JJ.
State of U.P. & Ors. - Appellants
Versus
M/S Lalta Prasad Vaish and Sons - Respondent
Civil Appeal No 151 of 2007 With Special Leave Petition (C)….(CC) No. 7999 of 2017 With Special Leave Petition (C) No. 27241 of 2019 With Special Leave Petition (C) No. 18582 of 2023 With Special Leave Petition (C) No. 19275 of 2004 With Special Leave Petition (C) No. 16505 of 2004 With Special Leave Petition (C) No. 26110 of 2004 With Special Leave Petition (C) No. 26111 of 2004 With Civil Appeal No. 580 of 2008 With Civil Appeal No. 152 of 2007 With Civil Appeal No. 153 of 2007 With Civil Appeal No. 610 of 2008 With Special Leave Petition (C) No. 20204 of 2012 With Civil Appeal No. 6768 of 2014 With Special Leave Petition (C) No. 20519 of 2014 With Special Leave Petition (C) No. 25447 of 2014 With Special Leave Petition (C) No. 3160 of 2015 With Special Leave Petition (C) No. 4057 of 2015 With Civil Appeal No. 2084 of 2020 With Civil Appeal No. 4987 of 2021 With Diary No. 41507 of 2019 With Special Leave Petition (C) No.18686 of 2022 With Diary No. 7447 of 2023 With Civil Appeal No. 154 of 2007 With Civil Appeal No. 671 of 2008 With Civil Appeal No. 672 of 2008 With Civil Appeal No. 688 of 2008 With Civil Appeal No. 750 of 2008 And With Civil Appeal No. 5093 of 2011
Decided On : 23-10-2024
Per DHANANJAYA Y. CHANDRACHUD, CJI, (With HRISHIKESH ROY, ABHAY S. OKA, J.B. PARDIWALA, MANOJ MISRA, UJJAL BHUYAN, SATISH CHANDRA SHARMA, AUGUSTINE GEORGE MASIH, B.V. NAGARATHNA, JJ. Concurring)(Majority View)
(A) Constitution of India – Entry 8 of State list, List II, of Seventh Schedule – Whether “intoxicating liquor” in Entry 8 only includes potable alcohol, such as alcoholic beverages or also includes alcohol which is used in production of other products – Entry 8 of List II is based on public interest – It seeks to enhance scope of entry beyond potable alcohol – This is inferable from use of 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 detriment of public health – This includes alcohol such as rectified spirit, ENA and denatured spirit which are used as raw materials in production of potable alcohol and other products – However, it does not include final product (such as a hand sanitiser) that contains alcohol since such an interpretation will substantially diminish scope of other legislative entries – Entry 8 of List II of Seventh Schedule to Constitution is both an industry-based entry and a product-based entry – Words that follow expression “that is to say” in Entry are not exhaustive of its contents – It includes regulation of everything from raw materials to consumption of ‘intoxicating liquor’ – Parliament does not have legislative competence to enact a law taking control of industry of intoxicating liquor covered by Entry 8 of List II in exercise of power under Article 246 read with Entry 52 of List I – Parliament cannot occupy field of entire industry merely by issuing a declaration under Entry 52 of List I – State Legislature’s competence under Entry 24 of List II is denuded only to the extent of field covered by law of Parliament under Entry 52 of List I. (Para 140)
(B) Constitution of India – Article 246 – Constitutional distribution of legislative power – Federal balance lies not on recognition that Constitution grants Parliament predominant legislative power but on identification of scope of such predominance – Scope of non-obstante clause in Article 246(1) and subjugation clause in Article 246(3) must not be interpreted in isolation but along with substantive provisions of clauses – When there is conflict between an entry in List I and entry in List II which is not ‘capable of reconciliation’ power of Parliament to legislate with respect to a field covered by List I must supersede exercise of power by State legislature to that extent – There is difference between ‘overlap’ and ‘conflict’ – Overlap occurs when two or more things or fields partially intersect – However, conflict occurs when two or more entries operate in exactly same field – Courts while dealing with overlap of legislative entries must endeavour to diminish overlap and not enhance it by including it in field of conflict – Federal supremacy accorded to Parliament ticks in at stage of ‘conflict’. (Paras 44, 45 and 50)
(C) Interpretation of Statute – Entries must be conferred widest meaning possible – Interpreting a phrase or words in Legislative Lists based on legal import of phrase is, in many ways an exception to settled principle of interpreting entries – Legislative entries delimit scope of competence of legislative bodies – If entries are interpreted based on meanings or definitions in a legislation, purpose of Seventh Schedule may become redundant – Though wide meaning that may be ascribed to a particular expression by definition in a statute will have to be given effect to, if statute is otherwise found to be valid, it will be a contradiction in terms to test validity of statute on touchstone of it being within legislative entry, by a reference to definition contained in statute. (Para 85)
(D) Constitution of India – Entry 8 of State list, List II, of Seventh Schedule – Whether “intoxicating liquor” in Entry 8 only includes potable alcohol, such as alcoholic beverages or also includes alcohol which is used in production of other products – Parliament under Entry 52 of List I does not have legislative competence to enact a law taking control of the industry of intoxicating liquor – State Legislatures will have control over industry of ‘intoxicating liquor’ – Parliament could not have taken control of field covered by Entry 8 – State does not have competence to levy excise duty with respect to toilet and medical preparations containing alcohol – However, this cannot influence interpretation of phrase ‘intoxicating liquor’ in Entry 8 of List II – Seventh Schedule demarcates legislative competence on taxes and regulation – Legislature cannot derive taxation powers from a general regulatory entry – Lack of competence to levy tax on products other than alcoholic beverage cannot influence interpretation of regulatory entry – They operate in separate spheres. (Paras 108 and 132)
Facts of the case:
“Intoxicating liquor” falls within legislative domain of State Legislatures under Entry 8 of State list, List II, of Seventh Schedule to Constitution. Issues which arise for adjudication in this reference pertain to scope of power of State Legislatures under Entry 8 and meaning of phrase “intoxicating liquor”. 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, (1990) 1 SCC 109 (“Synthetics [7J]), a seven-Judge Bench delineated the scope of the regulatory powers of State Legislatures on “intoxicating liquor”. Correctness of Synthetics [7J] (supra) has been referred to a larger Bench.
Findings of Court:
Judgment in Synthetics (7J) ((1990) 1 SCC 109) is overruled in terms of this judgment. Item 26 of First Schedule to the IDRA must be read as excluding industry of “intoxicating liquor”, as interpreted in this judgment. Correctness of judgment in Tika Ramji (AIR 1956 SC 676) on interpretation of word ‘industry’ as it occurs in legislative entries does not fall for determination in this reference. Issue of whether Section 18G of IDRA covers field under Entry 33 of List III does not arise for adjudication in view of finding that denatured alcohol is covered by Entry 8 of List II.
Result : Reference answered.
Key Points: - Entry 8, List II is interpreted to cover intoxicating liquors broadly, including non-potable alcohol and materials used in fermentation industries; see overruled Synthetics (7J) reasoning and current interpretation (!) (!) (!) (!) (!) . - IDRA Section 2 and Item 26 (Fermentation Industries) place control of certain industries in the Union; the 2016 amendment excludes potable alcohol from Item 26, affecting the demarcation between Union and State powers (!) (!) (!) . - Section 18G of IDRA empowers Central regulation of scheduled industries; the Court discusses whether occupancy of the field requires a notified order and how it impacts Entry 33, List III and the occupied field doctrine (!) (!) (!) . - The judgment outlines the doctrine of occupied field and its effect on State competence to legislate under Entry 33, List III when Parliament has declared control over a scheduled industry (!) (!) . - The Government of India’s arguments emphasize a harmonized federal balance and the special status of Entry 52 vs Entry 8; prior precedents like Calcutta Gas Company, McDowell, Bihar Distillery, Synthetics are discussed and overruled/modified in view of the nine-judge bench’s conclusions (!) (!) (!) (!) (!) . - The conclusions state Entry 8 List II is both industry-based and product-based, cannot be entirely overridden by Entry 52, and that Parliament cannot take over the field of intoxicating liquors under IDRA; states retain competence over intoxicating liquors, with regulation of industrial alcohol limited to preventing misuse (!) (!) (!) . - The 2016 amendment clarifies the demarcation by excluding potable alcohol from Fermentation Industries, placing non-potable alcohol under Union control; but intoxicating liquors for human consumption remain State domain (!) (!) . - The judgment tests the three-lists framework, aiming to preserve federal balance while allowing central regulation in certain critical industries; repugnancy/occupied-field concepts govern conflicts between Union and State laws (!) (!) (!) .
JUDGMENT :
Dr Dhananjaya Y Chandrachud, CJI
Table of Contents
| A. Background |
| i. Relevant constitutional provisions |
| ii. The judgment in Synthetics (7J) |
| iii. The aftermath of Synthetics (7J) |
| iv. The Reference Order(s) |
| B. Submission |
| i. Appellants’ submissions |
| ii. Respondent’s submissions |
| C. The distinction between potable and non-potable alcohol |
| D. Issues |
| E. Analysis |
| i. The constitutional distribution of legislative power |
| ii. Scheme of legislative entries |
| iii. The field covered by Entry 52 of List I and Entry 8 of List II |
| a. The scope of Entry 8 |
| I. The meaning of ‘that is to say’ |
| II. Product or industry based entry |
| 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’ |
| a. Precedent on the interpretation of ‘intoxicating liquor’: exploring FN Balsara and Southern Pharmaceuticals |
| b. The legal import of ‘intoxicating liquor’ |
| c. Evolution of the legislative lists on ‘intoxicating liquor’ |
| d. The harmonious interpretation |
| v. The correctness of the decision in Synthetics (7J) |
| vi. The impact of the decision on Item 26 of the First Schedule of IDRA |
| vii. The (ir)relevance of the decision in Tika Ramji to the dispute |
| viii. Section 18G of IDRA and Entry 33 of List III |
| F. Conclusion |
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, (1990) 1 SCC 109 (“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[“24. Industries subject to the provisions of Entries 7 and 52 of List I”] Under Entry 52 of List I, Parliament has legislative competence over such industries, the control of which by the Union is declared by Parliament by law to be expedient in the public interest3[“52. Industries, the control of which by the Union is declared by Parliament by law to be expedient in the public interest.”]. 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 war4[“7. Industries declared by Parliament by law to be necessary for the purpose of defence or for the prosecution of war”]. 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[“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”]. Entry 8 of List II deals with ‘intoxicating liquors’6
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 detriment of public health – State Legislat....
State is only empowered to levy excise duty on alcoholic liquor for human consumption – State has no power to levy excise duty on wastage of liquor after distillation.
The appellant does not require a central license under the Industries Act for manufacturing potable alcohol as it does not qualify as an industrial undertaking.
The State had no legislative competence to levy Excise Duty on rectified spirit not fit for human consumption, and the imposition of Excise Duty on presumptive production of liquor was ultra vires to....
Point of law : Owner of cinema house cannot challenge the setting up of a new cinema house because it does not result in injury to a legal right or legally protected interest, the business competitio....
Advocates appeared :For the Appellant : Vashistha Narayan Dubey For the Respondent : Manish Nair
There is no fundamental right to trade in liquor; state policies can modify licensing rights as long as they comply with statutory provisions.
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