Supreme Court Allows States to Tax Industrial Alcohol

Why in the news?

The Supreme Court ruled that states have the authority to tax industrial alcohol, overturning previous rulings and clarifying the federal balance between Centre and state powers.

Supreme Court Allows States to Tax Industrial Alcohol

About the SC Ruling on Taxing Industrial Alcohol:

  • A nine-judge Bench of the Supreme Court ruled 8:1 that states can tax industrial alcohol, not just alcoholic beverages.
  • The key issue was whether “intoxicating liquor” includes industrial alcohol. The majority ruled in favour of states.
  • Justice BV Nagarathna dissented, arguing industrial alcohol regulation should remain with the Centre.

Constitutional Overlap: Centre vs State Power:

  • The dispute stemmed from two overlapping entries in the Seventh Schedule of the Constitution.
  • States argued they need power over industrial alcohol to prevent misuse for illicit liquor production, while the Centre claimed exclusive control under the Industries (Development and Regulation) Act, 1961.

Key Constitutional Framework:

  • State List (Entry 8): States can legislate on “intoxicating liquors” for human consumption.
  • Union List (Entry 52): Central government regulates industries of public interest.
  • Concurrent List (Entry 33): Both states and Centre can legislate on industries, with central laws prevailing in case of conflict.

Legal Interpretation:

  • The Industries (Development and Regulation) Act, 1951 (IDRA) grants the Centre control over industrial alcohol, suggesting limited state autonomy.

Industrial Alcohol vs. Intoxicating Liquors:

  • Industrial Alcohol: Used as raw material in manufacturing processes, not for human consumption.
  • Intoxicating Liquors: Alcoholic beverages meant for human consumption, regulated by states.

Associated Article:

https://universalinstitutions.com/supreme-court-queries-centres-strict-stance-on-industrial-alcohol-regulation/