{"file_name": "2024_10_1931_2182_EN.pdf", "text": "[2024] 10 S.C.R. 1931 : 2024 INSC 812\n\nState of U.P. & Ors. \nv. \nM/s Lalta Prasad Vaish and sons\n\n(Civil Appeal No. 151 of 2007)\n\n23 October 2024\n\n[Dr Dhananjaya Y Chandrachud,* CJI, Hrishikesh Roy, \nAbhay S Oka, B.V. Nagarathna,* J B Pardiwala, \nManoj Misra, Ujjal Bhuyan, Satish Chandra Sharma, \nAugustine George Masih, JJ.]\n\nIssue for Consideration\n\nThe issues which arise for adjudication in this reference pertain \nto the scope of the power of the State Legislatures under Entry 8 \nand the meaning of the phrase “intoxicating liquor”. The question \nis whether “intoxicating liquor” in Entry 8 only includes potable \nalcohol, such as alcoholic beverages or also includes alcohol which \nis used in the production of other products; whether Entry 52 of \nList I of the Seventh Schedule to the Constitution overrides Entry 8 \nof List II; whether the expression ‘intoxicating liquors’ in Entry 8 of \nList II of the Seventh Schedule to the Constitution includes alcohol \nother than potable alcohol; and whether a notified order under \nSection 18G of the Industries (Development and Regulation) Act \nis necessary for Parliament to occupy the field under Entry 33 of \nList III of the Seventh Schedule to the Constitution.\n\nHeadnotes†\n\nConstitution of India – Entry 8 of List II of the Seventh \nSchedule  – Whether Entry 8 of List II of the Seventh \nSchedule to the Constitution is an industry-based entry or a \nproduct-based entry:\n\nHeld: [Per Dr Dhananjaya Y Chandrachud, CJI, for himself \nand for Hrishikesh Roy, Abhay S Oka, J B Pardiwala, Manoj \nMisra, Ujjal Bhuyan, Satish Chandra Sharma, Augustine George \nMasih, JJ.] Entry 8 of List II of the Seventh Schedule to the \nConstitution is both an industry-based entry and a product-based \nentry – The words that follow the expression “that is to say” in the \n\n* Author\n\n\f1932 \n\n[2024] 10 S.C.R.\n\nEntry are not exhaustive of its contents – It includes the regulation of \neverything from the raw materials to the consumption of ‘intoxicating \nliquor”. [Para 140(a)] – [Per B.V. Nagarathna, J. (dissenting)] \nEntry  8-List II deals with “intoxicating liquors” – The misuse, \ndiversion or abuse of “industrial alcohol” as “intoxicating liquors” can \nalso be controlled and prevented under Entry 8-List II by the State \nLegislatures having regard to Article 47 of the Constitution – It is \nalso made clear that the Industries (Development and Regulation) \nAct 1951 which has been enacted by the Parliament by virtue of \nEntry 52-List I has taken control of “Fermentation Industries” as a \nscheduled industry – Such “Fermentation Industries” would exclude \n“intoxicating liquors”. [Para 33(a)]\n\nConstitution of India – Entry 52 of List I, Entry 24 of List II – \nWhether Parliament can occupy the field of the entire industry \nmerely by issuing a declaration under Entry 52 of List I:\n\nHeld: [Per Dr Dhananjaya Y Chandrachud, CJI, for himself \nand for Hrishikesh Roy, Abhay S Oka, J B Pardiwala, Manoj \nMisra, Ujjal Bhuyan, Satish Chandra Sharma, Augustine \nGeorge Masih, JJ.] Parliament cannot occupy the field of the \nentire industry merely by issuing a declaration under Entry 52 \nof List I – The State Legislature’s competence under Entry 24 of \nList II is denuded only to the extent of the field covered by the law \nof Parliament under Entry 52 of List I. [Para 140(b)] – [Per B.V. \nNagarathna, J. (dissenting)] Parliament can occupy the field of \nthe entire industry by merely issuing a declaration under Entry \n52-List I and the State Legislature’s competence under Entry 24-\nList II is denuded to the field of the entire industry and specifically \nto the extent of the field covered by the law of Parliament under \nEntry 52-List I. [Para 33(b)]\n\nConstitution of India – Whether Parliament have the legislative \ncompetence to enact a law taking control of the industry of \nintoxicating liquor covered by Entry 8 of List II in exercise of \nthe power under Article 246 read with Entry 52 of List I:\n\nHeld: [Per Dr Dhananjaya Y Chandrachud, CJI, for himself \nand for Hrishikesh Roy, Abhay S Oka, J B Pardiwala, Manoj \nMisra, Ujjal Bhuyan, Satish Chandra Sharma, Augustine George \nMasih, JJ.] Parliament does not have the legislative competence \n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n1933\n\nto enact a law taking control of the industry of intoxicating liquor \ncovered by Entry 8 of List II in exercise of the power under \nArticle 246 read with Entry 52 of List I. [Para 140(c)] – [Per B.V. \nNagarathna, J. (concurring)]. [Para 33(c)]\n\nConstitution of India – Meaning of the expression ‘intoxicating \nliquor’ by judgments of the Bombay High Court in FN Balsara v. \nState of Bombay, this Court in FN Balsara and Southern \nPharmaceuticals:\n\nHeld: [Per Dr Dhananjaya Y Chandrachud, CJI, for himself and \nfor Hrishikesh Roy, Abhay S Oka, J B Pardiwala, Manoj Misra, \nUjjal Bhuyan, Satish Chandra Sharma, Augustine George Masih, \nJJ.] The judgments of the Bombay High Court in FN Balsara v. State \nof Bombay, this Court in FN Balsara and Southern Pharmaceuticals \ndid not limit the meaning of the expression ‘intoxicating liquor’ to \nits popular meaning, that is, alcoholic beverages that produce \nintoxication – All the three judgments interpreted the expression \nto cover alcohol that could be noxiously used to the detriment of \nhealth. [Para 140(d)] – [Per B.V. Nagarathna, J. (dissenting)] \nThe context of the controversy must be borne in mind in the said \ncases – The aforesaid decisions in substance limited the meaning \nof the expression “intoxicating liquors” to its popular meaning i.e. \n“alcoholic beverages” that produce intoxication – Therefore, in the \ncontext of prohibition of “intoxicating liquor” as a beverage, there \ncould not have been prohibition of production of alcohol used for \nmedicinal and toilet preparation as well as “industrial alcohol” or \nnon-potable alcohol. [Para 33(d)]\n\nConstitution of India – Expression ‘intoxicating liquor’ in \nEntry 8 – Legislative meaning and judicial meaning:\n\nHeld: [Per Dr Dhananjaya Y Chandrachud, CJI, for himself \nand for Hrishikesh Roy, Abhay S Oka, J B Pardiwala, Manoj \nMisra, Ujjal Bhuyan, Satish Chandra Sharma, Augustine George \nMasih, JJ.] The expression ‘intoxicating liquor’ in Entry 8 has not \nacquired a legislative meaning on an application of the test laid \ndown in Ganon Dunkerley. [Para 140(e)] – [Per B.V. Nagarathna, J. \n(dissenting)] The expression “intoxicating liquor” in Entry 8 has \nacquired a legislative and judicial meaning over the decades as \ndiscussed. [Para 33(e)]\n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f1934 \n\n[2024] 10 S.C.R.\n\nConstitution of India – Evolution of Legislative Entries on \nAlcohol – Use of expression “intoxicating liquor”:\n\nHeld: [Per Dr Dhananjaya Y Chandrachud, CJI, for himself \nand for Hrishikesh Roy, Abhay S Oka, J B Pardiwala, Manoj \nMisra, Ujjal Bhuyan, Satish Chandra Sharma, Augustine George \nMasih, JJ.] The study of the evolution of the legislative entries \non alcohol indicates that the use of the expressions “intoxicating \nliquor” and “alcoholic liquor for human consumption” in the Seventh \nSchedule was a matter well-thought of – It also indicates that the \nmembers of the Constituent Assembly were aware of use of the \nvariants of alcohol as a raw material in the production of multiple \nproducts. [Para 140(f)] – [Per B.V. Nagarathna, J. (dissenting)] \nThe members of the Constituent Assembly were clear in what \nthey envisaged within the scope and ambit of the expression \n“intoxicating liquors” in Entry 8-List II – This is also evident from \nItem 26 of the First Schedule of the IDRA – “Intoxicating liquors” is \nonly a segment of the “Fermentation Industries”, namely, potable \nalcohol – There was no intention on the part of the members of the \nConstituent Assembly to read within the expression “intoxicating \nliquors” non-potable or “industrial alcohol” – Further, in order to \nhave a consistency between what was envisaged under Entry 84-\nList I and Entry 51-List II in the context of alcoholic liquors for \nhuman consumption, the taxing Entry in List II which is within the \nlegislative competence of the States follows the regulatory Entry \nin Entry 8-List II – Therefore, the use of the expression “industrial \nalcohol” or non-potable alcohol in Synthetics and Chemicals (7J) \nwas only to crystallise all variants of alcohol which were non-potable \nand to distinguish the same from potable alcohol meant only for \nhuman consumption as a beverage. [Para 33(f)]\n\nConstitution of India – Entry 8 of List II – Scope and ambit:\n\nHeld: [Per Dr Dhananjaya Y Chandrachud, CJI, for himself \nand for Hrishikesh Roy, Abhay S Oka, J B Pardiwala, Manoj \nMisra, Ujjal Bhuyan, Satish Chandra Sharma, Augustine \nGeorge Masih, JJ.] Entry 8 of List II is based on public interest – It \nseeks to enhance the scope of the entry beyond potable alcohol – \nThis is inferable from the use of the phrase ‘intoxicating’ and \nother accompanying words in the Entry – Alcohol is inherently a \nnoxious substance that is prone to misuse affecting public health \nat large  – Entry 8 covers alcohol that could be used noxiously \n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n1935\n\nto the detriment of public health – This includes alcohol such as \nrectified spirit, ENA and denatured spirit which are used as raw \nmaterials in the production of potable alcohol and other products – \nHowever, it does not include the final product (such as a hand \nsanitiser) that contains alcohol since such an interpretation will \nsubstantially diminish the scope of multiple other legislative \nentries. [Para 140(g)] – [Per B.V. Nagarathna, J. (dissenting)] \nThe entire controversy cannot be viewed from the point of view \nof alcohol being used as a raw material and final product such \nas hand sanitizer containing alcohol – The potential misuse of \nalcohol cannot be the basis for interpreting an Entry such as \nEntry  8-List  II  – Ultimately, the “Fermentation Industries” have \nto be borne in mind which takes within its canvas only non-\npotable /“industrial alcohol” – The aspect of public health having \na corelation to Entry 8-List II dealing with “intoxicating liquor” and \nthe misuse of alcohol cannot be a guide while interpreting the \ncontent of the said Entry and therefore, its scope and ambit being \namplified beyond what it really envisages as a field of legislation \nfor the States to legislate upon. [Para 33(g)]\n\nConstitution of India – The judgment in Synthetics (7J) – \nOverruled:\n\nHeld: [Per Dr Dhananjaya Y Chandrachud, CJI, for himself \nand for Hrishikesh Roy, Abhay S Oka, J B Pardiwala, Manoj \nMisra, Ujjal Bhuyan, Satish Chandra Sharma, Augustine \nGeorge Masih, JJ.] The judgment in Synthetics (7J) is overruled \nin terms of this judgment. [Para 140(h)] – [Per B.V. Nagarathna, J. \n(dissenting)] The judgment in Synthetics and Chemicals (7J) \nneed not be overruled in relation to Section 18G of the IDRA and \nit continues to be good law in the context of what is comprised in \nthe expression “industrial alcohol” and “intoxicating liquors” except \nwhat has been clarified above in Entry 8-List II.[Para 33(h)]\n\nConstitution of India – Entry 8 of List II – Industries (Development \nand Regulation) Act 1951 – Item 26:\n\nHeld: [Per Dr Dhananjaya Y Chandrachud, CJI, for himself \nand for Hrishikesh Roy, Abhay S Oka, J B Pardiwala, Manoj \nMisra, Ujjal Bhuyan, Satish Chandra Sharma, Augustine \nGeorge Masih, JJ.] Item 26 of the First Schedule to the IDRA \nmust be read as excluding the industry “intoxicating liquor”. \n[Para 140(i)] – [Per B.V. Nagarathna, J. (dissenting)] Item 26 of \n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f1936 \n\n[2024] 10 S.C.R.\n\nthe First Schedule of the IDRA must be read excluding only what \nis contained in the expression “intoxicating liquors” as interpreted \nabove in Entry 8-List II. [Para 33(i)]\n\nConstitution of India – Correctness of the judgment in Tika \nRamji on the interpretation of word ‘industry’:\n\nHeld: [Per Dr Dhananjaya Y Chandrachud, CJI, for himself \nand for Hrishikesh Roy, Abhay S Oka, J B Pardiwala, Manoj \nMisra, Ujjal Bhuyan, Satish Chandra Sharma, Augustine \nGeorge Masih, JJ.] The correctness of the judgment in Tika \nRamji on the interpretation of word ‘industry’ as it occurs in the \nLegislative entries does not fall for determination in this reference.\n[Para 140(j)] – [Per B.V. Nagarathna, J.] Tika Ramji is held to be \nnot good law insofar as the requirement of issuance of a notified \norder as a condition precedent for the field to be occupied, has \nbeen mandated therein.[Para 33(j)]\n\nConstitution of India – Entry 8 of List II and Entry 33(a) of List III – \nIndustries (Development and Regulation) Act 1951 – s.18G:\n\nHeld: [Per Dr Dhananjaya Y Chandrachud, CJI, for himself \nand for Hrishikesh Roy, Abhay S Oka, J B Pardiwala, Manoj \nMisra, Ujjal Bhuyan, Satish Chandra Sharma, Augustine George \nMasih, JJ.] The issue of whether Section 18G of the IDRA covers \nthe field under Entry 33(a) of List III does not arise for adjudication \nin view of the finding that denatured alcohol is covered by Entry 8 \nof List II”. [Para 140(k)] – [Per B.V. Nagarathna, J. (dissenting)] \nDenatured alcohol belongs to the family of “industrial alcohol” \nand therefore, Section 18G of the IDRA has a bearing on the \nsaid product – Section 18G occupies the field under Entry 33(a)-\nList III and, thereby, only Parliament is competent to legislate on \nall articles or class of articles related to a scheduled industry i.e. \n“Fermentation Industries”. [Para 33(k)]\n\nConstitution of India – Article 246 – Federal balance of the \ndistribution of legislative powers between the Union and the \nStates:\n\nHeld: [Per Dr Dhananjaya Y Chandrachud, CJI, for himself \nand for Hrishikesh Roy, Abhay S Oka, J B Pardiwala, Manoj \nMisra, Ujjal Bhuyan, Satish Chandra Sharma, Augustine \nGeorge Masih, JJ.] The federal balance of the distribution of \n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n1937\n\nlegislative powers between the Union and the States rests on \nthe interpretation of the phrase “notwithstanding” in Clause (1) of \nArticle 246 and “subject to” in Clause (3) of Article 246 – It is more \nthan clear that the phrases provide predominance to Parliament \nover State Legislatures – The federal balance lies not on the \nrecognition that the Constitution grants Parliament predominant \nlegislative power but on the identification of the scope of such \npredominance – The scope of the non-obstante clause in Article \n246(1) and the subjugation clause in Article 246(3) must not be \ninterpreted in isolation but along with the substantive provisions \nof the clauses – Clause (1) of Article 246 grants Parliament the \n“exclusive power” to enact laws with respect to matters in List I – \nSimilarly, Clause (3) of Article 246 grants the Legislature of States, \nthe “exclusive power” to enact laws with respect to matters in \nList  II – On a holistic interpretation of the provisions, it is clear \nthat the non-obstante clause in Article 246(1) and the subjugation \nclause in Article 246(3) do not permit Parliament to enact laws with \nrespect to the entries in List II – Each of the legislative bodies are \nsovereign and supreme within the sphere that is allocated to them \nin the Seventh Schedule – It is crucial to note that Clause (1) of \nArticle 246 stipulates that the power of Parliament to make laws with \nrespect to entries in List I is ‘notwithstanding’ not just the power to \nmake laws with respect to matters in the Concurrent list but also \nthe power to make laws with respect to matters in the State List – A \ncombined reading of the non-obstante clause and the subjugation \nclause along with the use of the phrase “exclusive power” means \nonly one thing, that when there is a conflict between the entries \nin List I and List II, the power of Parliament supersedes. [Para 44]\n\nConstitution of India – Legislative entries – Interpretation – \nOverlap between two entries:\n\nHeld: [Per Dr Dhananjaya Y Chandrachud, CJI, for himself \nand for Hrishikesh Roy, Abhay S Oka, J B Pardiwala, Manoj \nMisra, Ujjal Bhuyan, Satish Chandra Sharma, Augustine \nGeorge Masih, JJ.] The legislative entries must be given a wide \nmeaning – All incidental and ancillary matters which can be fairly \nand reasonably comprehended must be brought within them – \nHowever, if there is an overlap between two entries the Court \nmust endeavour to interpret the entries harmoniously – While \ninterpreting the entries harmoniously, it must be ensured that no \nentry is rendered redundant – This principle of construction applies \n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f1938 \n\n[2024] 10 S.C.R.\n\nequally to entries within the same List and entries within different \nlists – The principle of parliamentary supremacy must be applied \nonly when the attempted reconciliation by the above methods of \ninterpretation fails. [Para 51] \n\nConstitution of India – Entry 8 of List II – Usage of phrase \n“that is to say”:\n\nHeld: [Per Dr Dhananjaya Y Chandrachud, CJI, for himself \nand for Hrishikesh Roy, Abhay S Oka, J B Pardiwala, Manoj \nMisra, Ujjal Bhuyan, Satish Chandra Sharma, Augustine George \nMasih, JJ.] The expression ‘that is to say’ in Entry 8 of List II \ncannot be interpreted to circumscribe the scope of the entry – The \nwords that follow ‘that is to say’ are illustrative and explanatory \nof the scope of the provision – The expression does not limit the \nscope of the entry – Thus, the scope of Entry 8 of List II cannot \nbe limited to the ‘production, manufacture, possession, transport, \npurchase and sale’ of Intoxicating Liquor. [Para 55] \n\nConstitution of India – Entry 52 of List I – Whether an implied \nlimitation can be read into Entry 52 of List I in the absence of \nthe expression “to the extent to which”:\n\nHeld: [Per Dr Dhananjaya Y Chandrachud, CJI, for himself \nand for Hrishikesh Roy, Abhay S Oka, J B Pardiwala, Manoj \nMisra, Ujjal Bhuyan, Satish Chandra Sharma, Augustine George \nMasih, JJ.] If an implied limitation is not read into the Entry, \nParliament by a simple declaration may take over the complete \nindustry and subject the power of the State Legislature to make any \nprovision with respect to that industry to the power of Parliament – \nThis interpretation diminishes the scope of competence of the \nState Legislature under Entry 24 of List II – Such an interpretation \ncompletely tilts the federal balance that entries 52 of List I and 24 \nof List II seek to maintain – The power of Parliament in Entry 52 of \nList I is defined by the phrase ‘control’ – The Entry does not read \nas “industries, declared by Parliament by law to be expedient in the \npublic interest” – The Entry states “Industries, the control of which \nby the Union is declared by Parliament by law to be expedient in \nthe public interest” – The law enacted by Parliament must not be \nan abstract declaration but must specify the extent of control that \nis necessary to be taken in public interest – The State Legislature \nwill have the competence to legislate with respect to the field which \nis not the subject matter of control – The legislative competence of \n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n1939\n\nthe State Legislature is only denuded to the extent of the ‘control’ \nby the Union declared by the law of Parliament to be expedient \nin the public interest. [Para 65] \n\nConstitution of India – Whether Parliament under Entry 52 of \nList I takes over the industry of intoxicating liquor covered \nby Entry 8 of List II:\n\nHeld: [Per Dr Dhananjaya Y Chandrachud, CJI, for himself \nand for Hrishikesh Roy, Abhay S Oka, J B Pardiwala, Manoj \nMisra, Ujjal Bhuyan, Satish Chandra Sharma, Augustine George \nMasih, JJ.] No – Entry 52 of List I is a general entry dealing with \nindustry – Entry 8 of List II is a special entry dealing with one \nparticular industry – The consequence of interpreting Entry  52 \nto cover the industry of ‘intoxicating liquor’ is two-fold: first, it \nwould amount to deleting the words ‘production, manufacture’ in \nEntry 8; and second, the State Legislature also loses its exclusive \ncompetence to legislate upon the product of the industry, rendering \nEntry 8 fully redundant – This is because the legislative competence \non products of industries covered by Entry 52 of List I is placed \nin Entry 33 of List III – As a consequence, Parliament does not \nhave the legislative competence to enact a law taking control \nof the industry of intoxicating liquor under Entry 52 of List I. \n[Paras 71(e), 72] \n\nConstitution of India – Entry 8 of List II – Intoxicating Liquor:\n\nHeld: [Per Dr Dhananjaya Y Chandrachud, CJI, for himself \nand for Hrishikesh Roy, Abhay S Oka, J B Pardiwala, Manoj \nMisra, Ujjal Bhuyan, Satish Chandra Sharma, Augustine George \nMasih, JJ.] It is clear from the analysis of various judgments that \nthe meaning of the phrase ‘intoxicating liquor’ in Entry 8 of List II \nhas been expanded beyond the narrow definition of alcoholic \nbeverages that produce an ‘intoxicating effect’ upon consumption – \nLiquids which contain alcohol and which can possibly be used \n(or misused) as intoxicating liquor have been included within the \nmeaning of the phrase. [Para 82] \n\nWords and Phrases – Intoxicating Liquor – Interpretation:\n\nHeld: [Per Dr Dhananjaya Y Chandrachud, CJI, for himself \nand for Hrishikesh Roy, Abhay S Oka, J B Pardiwala, Manoj \nMisra, Ujjal Bhuyan, Satish Chandra Sharma, Augustine \n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f1940 \n\n[2024] 10 S.C.R.\n\nGeorge Masih, JJ.] The expression ‘intoxicating liquor’ can \npossibly be interpreted to mean the following: (a) Alcohol which \nis used as a beverage for human consumption such as beer or \ngin, that is, potable liquor; (b) If liquor means liquid, then Entry 8 \nof List II includes all liquids which contain alcohol; and (c) Alcohol \nwhich is used as a raw material to prepare other products such as \npharmaceutical products and cosmetic drugs – This could include \ndenatured alcohol but also other types of alcohol that are used in \nthe production of products without denaturing it. [Para 107] \n\nWords and Phrases – Alcoholic Liquor – Meaning:\n\nHeld: [Per Dr Dhananjaya Y Chandrachud, CJI, for himself \nand for Hrishikesh Roy, Abhay S Oka, J B Pardiwala, Manoj \nMisra, Ujjal Bhuyan, Satish Chandra Sharma, Augustine George \nMasih, JJ.] ‘Alcoholic liquor’ defines the scope of the provision \nbased on the ingredient, that is, ‘alcohol’ – In contrast, ‘intoxicating \nliquor’ defines the scope of the provision based on the effect, that \nis, intoxication – Thus, even liquor which colloquially or traditionally \nis not considered as alcoholic liquor may be covered by the \nphrase ‘intoxicating liquor’ if it produces the effect of intoxication. \n[Para 112(a)]\n\nWords and Phrases – Intoxicate – Meaning:\n\nHeld: [Per Dr Dhananjaya Y Chandrachud, CJI, for himself \nand for Hrishikesh Roy, Abhay S Oka, J B Pardiwala, Manoj \nMisra, Ujjal Bhuyan, Satish Chandra Sharma, Augustine George \nMasih, JJ.] “Intoxicate” means the ability of someone to lose \ncontrol of their behaviour – It could also mean poison – Thus, the \npurpose of substituting the adjective which indicates the ingredient \n(alcohol) with the impact (intoxication) seems to be enhance the \nscope of the Entry to cover liquor which has an impact on health. \n[Para 112(b)] \n\nConstitution of India – Entry 8-List II and Art.47 – Industrial \nalcohol – Intoxicating liquor:\n\nHeld: [Per B.V. Nagarathna, J.] Merely because “industrial alcohol” \nor non-potable alcohol such as rectified spirit can be converted \ninto “intoxicating liquors” or alcohol fit for human consumption as \na beverage (potable alcohol), that would not empower the State \nLegislature to tax or impose any levy on such “industrial alcohol” – \n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n1941\n\nHowever, since the expression “intoxicating liquors” in Entry 8-List II \ndeals specifically with alcohol used as a beverage and meant for \nhuman consumption, it would be within the scope and ambit of \nthe said Entry for the State Legislature to regulate any abuse or \nconversion of “industrial alcohol” as a beverage, which is, in fact, \nharmful when consumed – Therefore, having regard to Article 47 of \nthe Constitution, a State Legislature can even prohibit manufacture \nof “intoxicating liquors” in a State as one of the objects of which \nwould be to negate the conversion or abuse of “industrial alcohol” \nas alcohol fit for human consumption. [Para 11.2]\n\nConstitution of India – Entry 8-List II – Intoxicating liquor – \nIntoxicating effect – Direct and indirect human consumption:\n\nHeld: [Per B.V. Nagarathna, J.] What prima facie appears is \nthat the “intoxication” effect is a sine qua non for the legislative \ncompetence of States on any liquors potentially coming within \nthe scope of Entry 8-List II – In the absence of an “intoxicating” \neffect from liquors, a State Legislature cannot legislate on the \nsubject – However, what is required to be seen is the nature of \nthe product which leads to such an intoxicating effect upon human \nconsumption of the same – Here, the expression consumption \nmust be explained  – It is not all kinds of human consumption, \ndirect or indirect, which is the determining factor – It is only direct \nconsumption i.e. as an ingestion by the act of drinking as a beverage \nor a drink – An indirect consumption by use of alcoholic liquors as \na raw material for any other product, industrial, medicinal or a toilet \nitem cannot be included as part of Entry 8-List II – Secondly, merely \nbecause there can be a potential misuse of “industrial alcohol”, \nfor example, by converting rectified spirit (“industrial alcohol”) as \na beverage which has an intoxicating effect, Entry 8-List II cannot \nbe stretched to include such “industrial alcohol” – The prevention \nof abuse of “industrial alcohol” as a beverage is also covered \nunder Entry 8-List II – Thus, what is carved out of “Fermentation \nIndustries” in Entry 24-List II is only “intoxicating liquors” used \nas beverage and thus, for direct human consumption the said \nsubject is placed in Entry 8-List II – This would imply that the \nrest of “Fermentation Industries” would be within the scope and \nambit of Entry 24-List II which is subject to Entry 52-List I and is \na scheduled industry as per Section 2 read with Item 26 of First \nSchedule of IDRA. [Para 12.14]\n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f1942 \n\n[2024] 10 S.C.R.\n\nConstitution of India – Entry 8-List II – Intoxicating liquor – \nContours of interpretation:\n\nHeld: [Per B.V. Nagarathna, J.] In deciding on “intoxicating liquors”, \nthe contours of interpretation must be concerned only with the very \nnature of the product of “intoxicating liquors” rather than the entire \nindustry concerning alcohol – Entry 8-List II provides the legislative \ncompetence to States to regulate production, manufacture, \npossession, transport, purchase and sale of only “intoxicating \nliquors” – It must follow from this that what is being produced or \nmanufactured or possessed or transported or purchased or sold \nmust actually be “intoxicating liquors” and not any other alcoholic \nproduct. [Para 12.16]\n\nConstitution of India – Entry 52-List I – Industries (Development \nand Regulation) Act – Item 26 of the First Schedule – s.18G:\n\nHeld: [Per B.V. Nagarathna, J.] The IDRA is enacted by \nParliament under Entry 52-List I taking control of, inter alia, \n“Fermentation Industries” as noted in Item 26 of the First Schedule \nto the said Act – Section 18G deals with any article or class of \narticles relatable to any scheduled industry i.e. “Fermentation \nIndustries” in the instant cases – The Explanation to Section 18G \nstates that the expression “article or class of articles” relatable \nto any scheduled industry i.e. “Fermentation Industries” herein \nincludes any article or class of articles imported into India which \nis of the same nature or description as the article or class of \narticles, manufactured or produced in the scheduled industry – \nThe explanation is inclusive and not an exhaustive one – For \nimmediate reference Item 26 of the First Schedule of the IDRA \npursuant to the 2016 amendment is “The fermentation industries \n(other than potable alcohol): (i)  Alcohol; (ii) other products of \nfermentation industries” – The Item 26 w.e.f. 14.05.2016, has \nbeen amended to clarify that “Fermentation Industries” refers to \nindustries others than potable alcohol – This is for the reason \nthat “intoxicating liquors” in Entry 8-List II is equated to only \npotable alcohol and rest of the industry of the “Fermentation \nIndustries” other than potable alcohol is a scheduled industry – \nOnce an industry is a scheduled industry under the provisions \nof IDRA, in the context of Section 18G the Central Government \nmay notwithstanding anything contained in any other provision \n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n1943\n\nof IDRA by a notified order provide for regulating the supply and \ndistribution thereof and trade and commerce therein of a product \nof scheduled industry. [Paras 15.7, 15.8] \n\nConstitution of India – Art.254 – Doctrine of repugnancy in \nthe context of the legislative subjects which are enumerated \nin List III or the Concurrent List:\n\nHeld: [Per B.V. Nagarathna, J.] Article 254 of the Constitution \napplies the doctrine of repugnancy in the context of the legislative \nsubjects which are enumerated in List III or the Concurrent List – \nWhile applying the principles of repugnancy under Article 254, a \nsine qua non is to identify the conflict between the laws made by \nthe Parliament and the laws made by the State Legislature – The \nconflict between the said laws is the basis for the application of \nArticle 254 – The conflict could be direct when both the laws \ncannot operate together or it could be indirect when the State \nlaw entrenches upon a Parliamentary or Central law – But when \nlaws made by the Parliament or the State Legislature can be \nimplemented without there being any conflict, the principle of \nrepugnancy would not apply inasmuch as there would be no \ncontrary results owing to the applicability of both sets of laws – In \nother words, there cannot be a situation where obeying the State \nlaws would result in disobeying the Parliamentary laws – Thus, \nwhen laws are made under an Entry in List III or the Concurrent \nList by both the Parliament as well as by the State Legislature, \nthe Court must first ascertain whether the two sets of laws can \noperate harmoniously, if not, whether harmonious interpretation \ncould be given to the said laws so as to avoid a conflict between \nthe two – It is only when there is a conflict between the two \nsets of laws inasmuch as the State laws would be abridging the \nParliamentary law, in such a case, the doctrine of Parliamentary \nsupremacy would apply i.e. when a harmonious interpretation is not \npossible – Even if the two laws overlap, if they are complimentary \nto each other, in such a case, there would be no application of \nthe principle of Parliamentary supremacy – Thus, when there is \nabsolute inconsistency between the two sets of laws, and they are \nnot reconcilable then, the principle of Parliamentary supremacy \nwould apply in the context of repugnancy. [Para 16.2] \n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f1944 \n\n[2024] 10 S.C.R.\n\nPrinciples/Doctrines – Doctrine of occupied field:\n\nHeld: [Per B.V. Nagarathna, J.] The application of the doctrine of \noccupied field is a technique adopted by the constitutional courts \nin order to ensure that there is no potential conflict that could arise \nbetween the State laws and the existing Parliamentary law having \nregard to the nature of the legislative powers, their importance in \nthe socio-economic sphere of governance in the country and such \nother considerations. [Para 16.6]\n\nConstitution of India – Entry 8-List II and Art.254 – Industries \n(Development and Regulation) Act – s.18G, Item 26 of First \nSchedule – Whether Item 26 which speaks of “Fermentation \nIndustries” to include “industrial alcohol” or non-potable \nalcohol as a product of such industry which has been taken \ncontrol of by the Union under the provisions of IDRA (and \nwhich is excluded from the scope and ambit of Entry 8-List II), \nfalls within the scope and ambit of a scheduled industry, and \nthereby Section 18G would apply on the said aspects:\n\nHeld: [Per B.V. Nagarathna, J.] The answer is in the affirmative for \nthe following reasons: firstly, insofar as the potable or “intoxicating \nliquors” is concerned, the legislative field is exclusively with the \nState Legislature – However, in respect of the scheduled industry \nwhich is “Fermentation Industries” (which does not take within \nits scope and ambit potable alcohol) vide Item 26 of the First \nSchedule, all other types of alcohol including “industrial alcohol” \ncan be regulated only by the Parliamentary law and the Central \nGovernment – Any other interpretation would imply that even in the \nface of Section 18G being incorporated into the IDRA and in the \nabsence of any notified order being issued, the States Legislatures \nand the State Governments would have the legislative competence \nto make laws on what is the subject matter of Section 18G of IDRA \nunder Entry 33(a)-List III – Then, each State could make its own \nlaw on the said subject matter covered under Section 18G of IDRA \npertaining to a scheduled industry – If in respect of the products \nof a scheduled industry, the States make laws and there are a \nvariety of laws made by the individual States which are in force \nin respect of the subject under Section 18G of IDRA then when a \nnotified order is issued, the Central Government’s notified order \nwould apply if there is a direct conflict between the State laws or \n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n1945\n\nlegal regime in place and the notified order that is issued – This \nwould result in a legal quagmire vis-à-vis a scheduled industry – \nIt cannot then be said that it is necessary to ascertain whether \nthere is a direct conflict between the State law and the notified \norder made by the Central Government at every instance such \nan order is issued and if there is such a direct conflict then, the \nParliamentary law would apply on the strength of Article 254 of \nthe Constitution. [Paras 16.7 and 16.8]\n\nConstitution of India – Entry 33(a)-List III – Industries \n(Development and Regulation) Act – s.18G, Item 26 of First \nSchedule – Whether, under Entry 33(a)-List III, the States \nhave been denuded of their powers by virtue of insertion of \nSection 18G to the IDRA, i.e., Section 18G having occupied \nthe field to the extent of control as mentioned and the States \nwould not have the competence to pass any law relating to \nEntry 33(a)-List III:\n\nHeld: [Per B.V. Nagarathna, J.] Answer is in affirmative – This is \nbecause Section 18G has been inserted by Parliament to the IDRA \nwhich is an enactment made pursuant to Entry 52-List I – Entry 52-\nList I speaks of the Union by declaration made by Parliament \nby law taking control of such scheduled industry (Section 2 of \nthe IDRA) such as the “Fermentation Industries” herein – The \nindustries which are controlled of by the Union are specified in \nthe First Schedule to the IDRA – “Fermentation Industries” is \na scheduled industry – Therefore, the Union has taken control \nof “Fermentation Industries”  – For the sake of clarification, in \nthe year 2016 an amendment was made to expressly exclude \npotable alcohol from “Fermentation Industries” and it includes \nonly non-potable alcohol such as “industrial alcohol” – The \ndetailed discussion made is in regard to only “industrial alcohol” \nbeing non-potable alcohol – “Intoxicating liquors” being potable \nalcohol is not within the scheduled industry – Therefore, the said \nproducts of “Fermentation Industries” which have been taken \ncontrol of by the Union by virtue of insertion of the Section 18G \nof the IDRA would come within the scope and ambit of the said \nSection. [Para 16.10] \n\nConstitution of India – Importance of “Industrial Alcohol” to \nthe Indian Economy – Discussed. [B.V. Nagarathna, J.]\n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f1946 \n\n[2024] 10 S.C.R.\n\nCase Law Cited\n\nIn the Judgment of Dr Dhananjaya Y Chandrachud, CJI.\n\nSynthetics and Chemicals Ltd. v. State of UP [1989] Supp. 1 SCR \n623 : (1990) 1 SCC 109 – overruled.\n\nState of Madras v. Gannon Dunkerley [1959] 1 SCR 379 : 1959 \nSCR 379 – followed.\n\nTika Ramji v. State of UP [1956] 1 SCR 393 : AIR 1956 SC 676 – \nheld inapplicable.\n\nNashirwar v. State of MP [1975] 2 SCR 861 : 1975 AIR 360; Har \nShanker v. Dy. Excise and Taxation Commissioner, AIR 1957 SC \n414; Synthetics & Chemicals v. State of UP [1980] 2 SCR 531 : \n(1980) 2 SCC 441; State of Bombay v. FN Balsara [1951] 1 SCR \n682  : (1951) SCC 860; Indian Mica and Micancite Industries  v. \nState of Bihar [1971] Supp. 1 SCR 319 : (1971) 2 SCC 236; Shri \nBileshwar Khand Udyog Khedut Sahakari Mandali v. State of Gujarat \n[1992] 1 SCR 391 : (1992) 2 SCC 42; Gujchem Distillers India v. \nState of Gujarat [1992] 1 SCR 675 : (1992) 2 SCC 399; State of \nAP v. McDowell [1996] 3 SCR 721 : (1996) 3 SCC 709; Vam Organic \nChemicals v. State of UP [1997] 1 SCR 403 : (1997) 2 SCC 715; \nBihar Distillery v. Union of India [1997] 1 SCR 680 : (1997) 2 SCC \n727; Government of Haryana v. Haryana Brewery (1997) 5 SCC \n758; State of UP v. Modi Distillery [1995] Supp. 3 SCR 119 : (1995) \n5 SCC 753; Deccan Sugar & Abkari v. Commissioner of Excise, \nAP (2004) 1 SCC 243; State of UP v. Vam Organic [2003] Supp. \n4 SCR 957 : (2004) 1 SCC 225; RP Sharma v. State of UP 2004 \nSCC OnLine All 159; State of UP v. Lalta Prasad [2007] 11 SCR \n670 : (2007) 13 SCC 463; SIEL Ltd v. Union of India [1998] Supp. \n1 SCR 560  : (1998) 7 SCC 26; ITC Ltd  v. Agricultural Produce \nMarket Committee [2002] 1 SCR 441 : (2002) 9 SCC 232; Jindal \nStainless Steel v. State of Haryana [2016] 10 SCR 1 : (2017) 12 \nSCC 1 [617]; Hoechst Pharmaceuticals  v. State of Bihar [1983] \n3 SCR 130  : (1983) 4 SCC 45; State of WB  v. Committee for \nProtection of Democratic Rights [2010] 2 SCR 979 : (2010) 3 SCC \n571; Calcutta Gas Co. (Proprietary) Ltd. v. State of W.B. [1962] \nSupp. 3 SCR 1 : 1962 SCC OnLine SC 60 : AIR 1962 SC 1044; \nUnion of India v. HS Dhillon [1972] 2 SCR 33 : (1971) 2 SCC 779; \nTMA Pai Foundation v. State of Karnataka [1993] Supp. 3 SCR \n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n1947\n\n117 : (2002) 8 SCC 481; State of Karnataka v. State of Meghalaya \n[2022] 18 SCR 516  : (2023) 4 SCC 416; MPV Sundararamier \n& Co.  v. State of Andhra Pradesh [1958] 1 SCR 1422  : (1958) \n9 STC 298; R Abdul Quader & Co.  v. STO [1964] 6 SCR 867; \nUnited Province v. Atiqa Begum (1940) FCR 110; Godfrey Phillips \nIndia Ltd. v. State of UP [2005] 1 SCR 732 : (2005) 2 SCC 515; \nHarakchand Ratanchand Banthia v. Union of India [1970] 1 SCR \n479 : (1969) 2 SCC 166; Bhola Prasad v. The King Emperor (1942) \n4 FCR 17; Bansal Wire Industries  v. State of UP [2011] 7 SCR \n416 : (2011) 6 SCC 545; Sait Rikaji Furtarnal v. State of AP (1991) \nSupp (1) SCC 202; CST  v. Popular Trading Company [2000] 2 \nSCR 983 : (2000) 5 SCC 511; State of Punjab v. Devans Modern \nBrewaries [2003] Supp. 5 SCR 930 : (2004) 11 SCC 26; State of \nBombay v. Bombay Education Society [1955] 1 SCR 568 : (1954) \n2 SCC 152; Indian Aluminium Co. Ltd. v. Assistant Commissioner \nof Commercial Taxes (Appeals) [2001] 1 SCR 407 : (2001) 2 SCC \n201; State of Bombay v. Bombay Education Society [1955] 1 SCR \n568 : (1954) 2 SCC 152; Mineral Area Development Authority v. \nM/s Steel Authority of India [2024] 8 SCR 540 : 2024 INSC 554; \nIshwari Khetan Sugar Mills v. State of UP [1980] 3 SCR 331 : (1980) \n4 SCC 136; Baijnath Kedia v. State of Bihar [1970] 2 SCR 100; \nState of Haryana v. Chanan Mal [1976] 3 SCR 688; Hingir-Rampur \nCoal Co. Ltd. v. State of Orissa [1961] 2 SCR 537 : AIR 1961 SC \n459; State of Orissa v. M.A. Tulloch and Co. [1964] 4 SCR 461 : \nAIR 1964 SC 1284; Baijnath Kadio v. State of Bihar [1970] 2 SCR \n100 : (1969) 3 SCC 838, 847-848 : AIR 1970 SC 1436; State of \nHaryana v. Chanan Mal [1976] 3 SCR 688 : (1977) 1 SCC 340, \n351 : AIR 1976 SC 1654; Wavery Jute Mills Co. Ltd. v. Raymon & \nCo (2018) 4 SCC 743; FN Balsara v. State of Bombay 1950 SCC \nOnLine Bom 57; Southern Pharmaceuticals and Chemical v. State \nof Kerala [1982] 1 SCR 519 : (1981) 4 SCC 391; Kone Elevator \nIndia (P) Ltd. v. State of T.N. [2014] 5 SCR 912 : (2014) 7 SCC 1; \nAhmedabad Municipal Corporation  v. GTL Infrastructure Limited \n[2016] 11 SCR 172 : (2017) 3 SCC 545; Rainbow Steels v. Sales \nTax Commissioner, UP [1981] 2 SCR 727 : AIR 1981 SC 2010; \nState of Bombay v. Hospital Mazdoor Sabha AIR 1960 SC 610; \nRohit Pulp and Paper Mills Ltd v. Collector of Central Excise [1990] \n2 SCR 797 : AIR 1991 SC 754; Kannan Devan Hills Produce v. \nState of Kerala [1973] 1 SCR 356  : (1972) 2 SCC 218; Ganga \nSugar Corporation  v. State of UP [1980] 1 SCR 769  : (1980) 1 \n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f1948 \n\n[2024] 10 S.C.R.\n\nSCC 223; Viswanathiah & Co. v. State of Karnataka [1991] 1 SCR \n305 : (1991) 3 SCC 258 – referred to.\n\nIn the Judgment of B.V. Nagarathna, J.\n\nKhoday Distilleries Ltd. v. State of Karnataka [1995] Supp. 6 SCR \n759 : (1995) 1 SCC 574 – followed.\n\nState of Assam  v. Sristikar Dowerah AIR 1957 SC 414; \nNashirwar  v. State of MP [1975] 2 SCR 861  : 1975 AIR 360; \nDeep Chand v. State of UP [1959] Supp. 2 SCR 8 : AIR 1959 \nSC 648 – relied on.\n\nTika Ramji v. State of Uttar Pradesh [1956] 1 SCR 393 : AIR 1956 \nSC 676 – held not good law (insofar as the requirement of \nissuance of a notified order as a condition precedent).\n\nSynthetics and Chemicals Ltd.  v. State of Uttar Pradesh [1989] \nSupp. 1 SCR 623 : AIR 1990 SC 1927 – need not be overruled.\n\nState of Bombay v. FN Balsara [1951] 1 SCR 682 : 1951 SCC 860 : \nAIR 1951 SC 318; Calcutta Gas Co. (Proprietary) Ltd. v. State of \nW.B. [1962] Supp. 3 SCR 1 : 1962 SCC OnLine SC 60 : AIR 1962 \nSC 1044; Indian Mica and Micancite Industries v. State of Bihar \n[1971] Supp. 1 SCR 319 : (1971) 2 SCC 236; Ishwari Khetan Sugar \nMills v. State of UP [1980] 3 SCR 331 : AIR 1980 SC 1955 : (1980) \n4 SCC 136; State of AP v. McDowell [1996] 3 SCR 721 : (1996) \n3 SCC 709; Bihar Distillery v. Union of India [1997] 1 SCR 680 : \n(1997) 2 SCC 727; Vam Organic Chemicals v. State of UP [1997] 1 \nSCR 403 : (1997) 2 SCC 715; State of UP v. Vam Organic [2003] \nSupp. 4 SCR 957 : (2004) 1 SCC 225; State of Karnataka v. State \nof Meghalaya [2022] 18 SCR 516 : (2023) 4 SCC 416; RMDC v. \nUnion of India, AIR 1957 SC 628; MPV Sundararamier & Co. v. \nState of Andhra Pradesh [1958] 1 SCR 1422 : (1958) 9 STC 298 : \nAIR 1958 SC 468; Cooverjee B. Bharucha v. Excise Commissioner \nand the Chief Commissioner, Ajmer [1954] 1 SCR 873 : AIR 1954 \nSC 220; Nagendra Nath v. Commissioner of Hills Division [1958] \n1 SCR 1240 : AIR 1958 SC 398; Amar Chandra Chakraborty v. \nCollector of Excise, Government of Tripura [1973] 1 SCR 533  : \nAIR 1972 SC 1863; State of Orissa v. Harinarayan Jaiswal [1972] \n3 SCR 784 : AIR 1972 SC 1816; Har Shanker v. Dy. Excise and \nTaxation Commissioner [1975] 3 SCR 254 : AIR 1975 SC 1121; \n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n1949\n\nState of U.P. v. Synthetics and Chemicals Ltd. [1991] 3 SCR 64 : \n(1991) 4 SCC 139; Shri Bileshwar Khand Udyog Khedut Sahakari \nMandali v. State of Gujarat [1992] 1 SCR 391 : (1992) 2 SCC 42; \nGujchem Distillers India  v. State of Gujarat [1992] 1 SCR 675  : \n(1992) 2 SCC 399; State of UP v. Modi Distillery [1995] Supp. 3 \nSCR 119  : (1995) 5 SCC 753; Shree Krishna Gyanoday Sugar \nLtd. v. State of Bihar [1996] Supp. 4 SCR 680 : (1996) 10 SCC \n11; Deccan Sugar and Abkari Co. Ltd. v. Commissioner of Excise \n(1998) 3 SCC 272; Government of Haryana v. Haryana Brewery \nLtd [2002] 1 SCR 942  : (2002) 4 SCC 547; State of Bihar  v. \nIndustrial Corporation (P) Ltd [2003] Supp. 3 SCR 362 : (2003) \n11 SCC 465; ITC Ltd. v. Agricultural Produce Market Committee \n[2002] 1 SCR 441 : (2002) 9 SCC 232; Southern Pharmaceuticals \nand Chemicals v. State of Kerala [1982] 1 SCR 519 : AIR 1981 \nSC 1863; Baijnath Kedia  v. State of Bihar [1970] 2 SCR 100  : \nAIR 1970 SC 1436; Hingir-Rampur Coal Co., Ltd. v. The State of \nOrissa [1961] 2 SCR 537 : AIR 1961 SC 459; State of Orissa v. \nM.A. Tulloch and Co. [1964] 7 SCR 816  : AIR 1964 SC 1284; \nState of Haryana. v. Chanan Mal [1976] 3 SCR 688 : AIR 1976 \nSC 1654; Gujarat University v. Shri Krishna Ranganath Mudholkar \n[1963] Supp. 1 SCR 112 : AIR 1963 SC 703; Baharul Islam v. The \nIndian Medical Association [2023] 9 SCR 917 : 2023 SCC OnLine \nSC 79; Modern Dental College & Research Centre  v. State of \nMadhya Pradesh (2016) 7 SCC 353; The South India Corporation \n(P) Ltd.  v. The Secretary, Board of Revenue Trivandrum [1964] \n4 SCR 280  : AIR 1964 SC 207; Ashok Leyland Ltd.  v. State of \nTamil Nadu [2004] 1 SCR 306  : (2004) 3 SCC 1; M/s. Hoechst \nPharmaceuticals Ltd.  v. State of Bihar [1983] 3 SCR 130  : AIR \n1983 SC 1019; Mineral Area Development Authority Etc. v. M/s. \nSteel Authority of India & Others (Civil Appeal Nos. 4056-4064 of \n1999); Indian Aluminium company Limited v. Karnataka Electricity \nBoard [1992] 3 SCR 213  : (1992) 3 SCC 580; Shree Krishna \nGyanoday Sugar Ltd.; Belsund Sugar Co. Ltd.  v. State of Bihar \n[1999] Supp. 1 SCR 146 : (1999) 9 SCC 620; SIEL Ltd. v. Union \nof India [1998] Supp. 1 SCR 560  : (1998) 7 SCC 26; State of \nKerala v. Mar Appraem Kuri Company Limited [2012] 4 SCR 448 : \n(2012) 7 SCC 106; Deep Chand  v. State of UP [1959] Supp. 2 \nSCR 8 : AIR 1959 SC 648; State of W.B. v. Union of India [1964] \n1 SCR 371 : AIR 1963 SC 1241 – referred to.\n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f1950 \n\n[2024] 10 S.C.R.\n\nCrowley v. Christensen (1890) 34 Law Ed. 620; South Carolina v. \nUnited States (1905) 199 US 437; Prafulla Kumar Mukherjee v. Bank \nof Commerce Limited, Khulna AIR 1947 P.C. 60; United Province v. \nAtiqa Begum (1940) FCR 110: AIR 1941 FC 16 – referred to.\n\nBooks and Periodicals Cited\n\nIn the Judgment of Dr Dhananjaya Y Chandrachud, CJI.:\n\nF.B. Wright, Distillation of Alcohol and De-Naturing (2nd ed. \n1907); Stuart Walton, Norma Miller, An Encyclopedia of Spirits \n& Liqueurs and How to Cook with Them (2000); KA Jacques, \nTP Lyons, DR Kelsall (ed), The Alcohol Textbook: A reference \nfor the beverage, fuel and industrial alcohol industries (4th ed. \nNottingham University Press); Alcohol Denaturants-Specification \n(Second Revision), ICS 71.100.80; Constitutional Law of India, \nVolume 3 (4th edn.) [25.57] 2340-2341; Constitution of India, \nArticle 13; Shiva Rao (Vol II) pg. 666; Committee on Indian \nConstitutional Reform (Volume  1 Part I) 369; Joint Committee \non Indian Constitutional Reform (Volume 1 Part I) 148-149; 18th \nAmendment of US Constitution; Report of the Joint Committee \non Indian Constitutional Reform; Constituent Assembly Debates \n(2 September 1949) Volume IX.\n\nIn the Judgment of B.V. Nagarathna, J.:\n\nCooley’s “Constitutional Limitations” [2nd ed. Boston : Little, Brown \n& Company, p.58]; Halsbury’s Laws of England (Fourth Edition), \nVolume 26; Black’s Law Dictionary, 5th Edition, Pg.1278; Nicholas \nin his Australian Constitution, 2nd Edition, page 303; Sugarcane \n(Control) Order, 1955; XIIth five-year plan (2012-2017) of the \nPlanning Commission.\n\nList of Acts\n\nIn the Judgment of Dr Dhananjaya Y Chandrachud, CJI.:\n\nConstitution of India; Constitution (One Hundred and First \nAmendment) Act 2016; Industries (Development and Regulation) \nAct, 1951; Industries (Development and Regulation) Amendment \nAct 2016; U.P Excise (Amendment) (Re-enactment and Validation) \nAct 1976; Bombay Abkari Act 1878; Madras Abkari Act 1886; \nBengal Excise Act 1909; Bihar Excise Act 1915; MP Excise Act \n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n1951\n\n1915; Punjab Excise Act 1914; Chhattisgarh Excise Act 1915; UP \nExcise Act 1910; Government of India Act 1919; Central Provinces \nand Berar Act 14 of 1938, AIR 1939 FC 1; C.P & Berar Taxation \nAct, AIR 1939 FC 1; Bombay Prohibition Act, 1949; Abkari Act \n1077; Bengal Excise Act 1909; MP Excise Act 1916; Punjab \nExcise Act 1914; Chhattisgarh Excise Act 1915; United Province \nExcise Act 1910; Licensing (Consolidating Act) 1872; Spirits Act \n1880; Government of India Act 1935; UP Sugarcane Act; U.P \nExcise (Amendment) (Re-enactment and Validation) Act 1976; \nLicense Consolidation Act 1910; Indian Power Alcohol Act 1948; \nEthyl Alcohol (Price Control) Order 1966; Mines and Minerals \n(Development and Regulation) Act 1957; UP Sugar Undertakings \n(Acquisition) Act 1971; Oriental Gas Company Act 1960; Andhra \nPradesh Prohibition Act 1995; Bombay Prohibition Act 1949; \nNational Prohibition Act 1919.\n\nIn the Judgment of B.V. Nagarathna, J.:\n\nConstitution of India; Industries (Development and Regulation) Act, \n1951; Punjab Brewery Rules, 1956; Specially Denatured Spirit \nRules, 1976; Kerala Rectified Spirit Rules, 1972; Government of \nIndia Act, 1919; Government of India Act, 1935; Bombay Abkari \nAct, 1878; Punjab Excise Act, 1914; UP Excise Act, 1910; Madras \nAbkari Act, 1886; Bengal Excise Act, 1909; Bihar & Orissa Excise \nRules, 1990; Bihar and Orissa Excise Act, 1915; Andhra Pradesh \nProhibition Act, 1995; Bihar Molasses (Control) Act, 1947; Customs \nand Excise Act, 1952; Licensing Act, 1964; U.P. Sugar Undertaking \n(Acquisition) Ordinance, 1971; Companies Act, 1956; Uttar Pradesh \nSugarcane (Regulation of Supply and Purchase) Act, 1953; \nEssential Commodities Act, 1955 (Act 10 of 1955); Sugarcane \n(Control) Order, 1955; Kerala Chitties Act 23 of 1975; (Central) \nChit Funds Act, 1982; Kerala Finance Act 7 of 2002; Food Safety \nand Standards Act, 2006.\n\nList of Keywords\n\nIn the Judgment of Dr Dhananjaya Y Chandrachud, CJI.\n\nEntry 8 of List II; Industry based entry; Product based entry; \nExpression “that is to say”; Intoxicating liquor; Entry 52 of List I; \nEntry 24 of List II; Article 246 of Constitution; Alcoholic liquor; \nPotable alcohol; Non-potable alcohol; Rectified spirit; Denatured \n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f1952 \n\n[2024] 10 S.C.R.\n\nspirit; Judgment in Synthetics (7J); Item 26 of First Schedule \nto IDRA; Industry; Section 18G of IDRA; Entry 33(a) of List III; \nDistribution of Legislative Power; Scheme of Legislative Entries; \nHarmonious interpretation; Federal Balance; Overlap of two \nEntries; Expression “to the extent to which”; Intoxicate; State \nLegislature.\n\nIn the Judgment of B.V. Nagarathna, J.:\n\nEntry 8-List II; Intoxicating liquor; Industrial alcohol; State \nLegislature; Article 47 of Constitution; Fermentation Industries; \nAlcoholic beverages; Item 26 of First Schedule of IDRA; Potable \nalcohol; Non-Potable alcohol; Judgment in Synthetics and \nChemical (7J); Human consumption; Misuse of alcohol; Public \nhealth; Section 18G of IDRA; Entry 33(a)-List III; Intoxicating \neffect; Direct and indirect human consumption; Article 254 of the \nConstitution; Doctrine of repugnancy; Doctrine of Parliamentary \nsupremacy; Harmonious interpretation; Doctrine of occupied field; \nScheduled industries.\n\nCase Arising From\n\nCIVIL APPELLATE JURISDICTION: Civil Appeal No. 151 of 2007\n\nFrom the Judgment and Order dated 16.12.2004 of the High Court \nof Judicature at Allahabad in CMWP No. 421 of 1997\n\nWith\n\nSpecial Leave Petition (C)….(Cc) No. 7999 of 2017, Special \nLeave Petition (C) No. 27241 of 2019, Special Leave Petition \n(C) No. 18582 of 2023, Special Leave Petition (C) Nos. 19275, \n16505, 26110 and 26111 of 2004, Civil Appeal No. 580 of 2008, \nCivil Appeal Nos. 152 and 153 of 2007, Civil Appeal No. 610 of \n2008, Special Leave Petition (C) No. 20204 of 2012, Civil Appeal \nNos. 6768 of 2014, Special Leave Petition (C) Nos. 20519 and \n25447 of 2014, Special Leave Petition (C) Nos. 3160 and 4057 \nof 2015, Civil Appeal No. 2084 of 2020, Civil Appeal No. 4987 of \n2021, Diary No. 41507 of 2019, Special Leave Petition (C) No. \n18686 of 2022, Diary No. 7447 of 2023, Civil Appeal No. 154 of \n2007, Civil Appeal Nos. 671, 672, 688 and 750 of 2008 and Civil \nAppeal No. 5093 of 2011\n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n1953\n\nAppearances for Parties\n\nR. Venkataramani, AG, Tushar Mehta, SG, Nalin Kohli, Lokesh \nSinhal, Sr. A.A.Gs., Shadan Farasat, Saurabh Mishra, AAGs, \nK.N. Balgopal, Adv.Gen., Amit Kumar, Adv. Gen./Sr. Adv., Kuldeep \nParihar, DAG, Dinesh Dwivedi, Arvind P Datar, V. Giri, Dhruv \nAgarwal, Dhruv Agrawal, Rajiv Dutta, J.S. Attri, S. Nandakumar, \nBalbir Singh, Jaideep Gupta, Arvind Datar, Sr. Advs., Samar \nVijay Singh, Bhakti Vardhan Singh, Rahul Unnikrishnan, Prateek \nDwivedi, Vikas Singh Jangra, Manish Kumar, Amit Kumar Pathak, \nPatiraj Yadav, Krishnam Mishra, Pawan Kishore Singh, Nishant \nSingh, Keshav Mittal, Amit Ojha, Azeem A Dost, Ms. Sabarni Som, \nPrashant Sharma, Akshat Kumar, Pankaj Bhagat, C.K. Sasi, Meena \nK Poulose, Harsher Sunder, Nihar Dharmadhikari, Rao Vishwaja, \nRahul Narang, Raj Bahadur Yadav, Ms. Sonali Jain, Mukesh Kumar \nSingh, Raman Yadav, Kartikay Aggarwal, Abhishek Kumar Pandey, \nChitvan Singhal, Mrs. Ameyvikrama Thanvi, Mukesh Kumar Maroria, \nPratyush Shrivastava, Ms. Sansriti Pathak, Navanjay Mahapatra, \nMs. Ameyavikrama Thanvi, Vatsal Joshi, Bhuvan Kapoor, Varun \nChugh, Mrinal Elkar Mazumdar, Ms. Indira Bhakar, Mukesh Kumar \nVerma, Shashwat Parihar, Harish Pandey, Rajesh Singh Chauhan, \nApoorv Kurup, Piyush Beriwal, Mukul Singh, Omar Ahmad, Ms. \nTahira Karanjawala, Ishan Gaur, Ms. Simran Jeet, Vikram Shah, \nPratibhanu Kharola, Tuhin Dey, Shreyas Maheswari, Ms. Astha \nSingh, Aditya Shankar Dixit, Abhimanyu Bhandari, Ejaz Maqbool, \nRaghavendra M. Bajaj, Mrs. Garima Bajaj, Ms. Akriti Chaubey, S. \nMahesh Sahasranaman, Ms. Rooh-e-hina Dua, Saif Zia, Harshit \nKhanduja, Sahib Kochar, Ms. Ritika Kohli, Md Faisal Masood, \nAmbhoj Kumar Sinha, Praveen Kumar, Ms. Sunaina Kumar, \nPradeep Kumar Dubey, Abhigya Kushwah, Mrs. Sunita Yadav, \nVineeth S., Ravindra Kumar Gupta, Siddharth Rajkumar Murarka, \nRohan Rohatgi, Akhilesh Kumar Shrivastava, Mrs. Shubhangini \nRohatgi, Anirudh Bakhru, Harshit Anand, Harshit Khaduja, Ankit \nKhera, Ms. Hrishika Jain, M.P. Vinod, Sanjeev Kumar Singh, Kumar \nDushyant Singh, Shighra Kumar, Bhishm Pratap Singh, Devansh \nShekhar, Ms. Pooja Singh, Ms. Subasri Jaganathan, Ms. Neha \nSingh, Mrs. Vanita Bhargava, Sanjeev Kumar Kapoor, Aakash \nBajaj, Ajay Bhargava, Ms. Prerona Banerjee, Ms. Nandita Chauhan, \nMs. Tijil Thakur, Ms. Aarushi Yadav, Narinder Kumar Verma, M/s. \nKhaitan & Co., Ajit Sharma, Krishnamohan K., Ms. Dania Nayyar, \nYamini Sharma, Praveen Chaturvedi, Vikas Kumar Singh, D.S. \nMishra, Pradeep Kumar Mathur, Rameshwar Prasad Goyal, Ms. \n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f1954 \n\n[2024] 10 S.C.R.\n\nDeepika Nandakumar, Niraj Gupta, Naresh Kumar, Mrs. Nanita \nSharma, Vivek Sharma, Shailendra Singh, Mahesh Tiwari, Nishit \nAgrawal, Ms. Kanishka Mittal, Ms. Vanya Agrawal, Ms. Upasna \nAgrawal, Shrey Kapoor, Vikash Kumar Jha, Vinay Garg, Upendra \nMishra, Ms. Neetu Rawat, Ankit Shah, Manan Verma, Milind Kumar, \nB.S. Rajesh Agrajit, Vishal Meghwal, Ms. Priya Nagar, Aravindh \nS., Akshay Gupta, Ms. Devina Sehgal, D.L. Chidananda, Ms. \nPallavi Langar, Shivam Singh, Ms. Bahuli Sharma, Sahil Bhatiya, \nIshwar Singh, Ms. Shaswati Parhi, Suyash Vyas, Divyansh Mishra, \nPashupathi Nath Razdan, Mirza Kayesh Begg, Ms. Maitreyee \nJagat Joshi, Astik Gupta, Ms. Akanksha Tomar, Argha Roy, Ms. \nOjaswini Gupta, Ms. Ruby, Ms. Mamta Bharwaj, Dhananjaya \nMishra, Aaditya Aniruddha Pande, Siddharth Dharmadhikari, \nBharat Bagla, Naman Tandon, Ms. Monica Benjamin, Karan \nSachdev, Shyam Gopal, Ranjeev Khatana, Rajnjeev Khatana, \nSourav Singh, Adarsh Dubey, Ms. Preet S. Phanse, Ankit Roy, \nAnshul Malik, Sarthak Sharma, Ms. Shruti Agrawal, Ms. Nimisha \nMenon, Ayushman Arora, Sravan Kumar Karanam, Ms. Shireesh \nTyagi, Ms. Tayade Pranali Gowardhan, Ms. Jayashree PK, Aniket \nSingh, Mrs. B. Renuka Devi, Ms. Mamatha Ralla, P. Santhosh \nKumar, Abhimanyu Tewari, Ms. Eliza Bar, Jatinder Kumar Bhatia, \nPawanshree Agrawal, Ms. Astha Sharma, Srisatya Mohanty, Ms. \nAnju Thomas, Sanjeev Kaushik, Ms. Mantika Haryani, Shreyas \nAwasthi, Himanshu Chakravarty, Ridhi Bose, Ms. Ripul Swati \nKumari, Bhanu Mishra, Ms. Muskan Surana, Ms. Lihzu Shiney \nKonyak, Ms. Anvita Dwivedi, Divyanshu Srivastava, Ms. Himanshi \nShakya, Nikunj Gupta, Dr. Monika Gusain, Mahfooz Ahsan Nazki, \nSahil Bhalaik, Polanki Gowtham, KV Girish Chowdary, T Vijaya \nBhaskar Reddy, Ms. Rajeswari Mukherjee, Meeran Maqbool, \nMs. Archita Nigam, Tushar Giri, Siddharth Khanna, Rajiv Kumar \nChoudhry, Ajay K. Jain, Ms. Swati Ghildiyal, Ms. Devyani Bhatt, \nMs. Srujana Suman Mund, Sabarish Subramanian, C. Kranthi \nKumar, Vishnu Unnikrishnan, Naman Dwivedi, B. Sarathraj, Danish \nSaifi, Raghvendra Kumar, Anand Kumar Dubey, Devvrat Singh, \nVarun Singh, Nishant Verma, Pukhrambam Ramesh Kumar, Karun \nSharma, Ms. Anupama Ngangom, Ms. Rajkumari Divyasana, Tushar \nJarwal, Ms. Anuradha Dutt, Rahul Sateeja, Pranav Bansal, Sanyam \nAgarwal, B.R. Menon, Ms. B. Vijayalakshmi Menon, Ms. Mrinal \nGopal Elker, Saurabh Singh, Ms. K. Enatoli Sema, Ms. Limayinla \nJamir, Amit Kumar Singh, Ms. Chubalemla Chang, Prang Newmai, \nAvijit Mani Tripathi, Advs. for the appearing parties.\n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n1955\n\nJudgment / Order of the Supreme Court\n\nJudgment\n\nDr Dhananjaya Y Chandrachud, CJI\n\nTable of Contents*\n\nA. Background .............................................................................\ni. Relevant constitutional provisions ................................\nii. The judgment in Synthetics (7J) ....................................\niii. The aftermath of Synthetics (7J) ....................................\niv. The Reference Order(s) ...................................................\nB. Submissions ............................................................................\ni. Appellants’ submissions .................................................\nii. Respondent’s submissions .............................................\nC. The distinction between potable and non-potable \n\n5\n5\n8\n16\n22\n26\n26\n35\n\nalcohol ..................................................................................... 42\nD. Issues ...................................................................................... 45\n45\nE. Analysis ....................................................................................\n45\ni. The constitutional distribution of legislative power ....\nii. Scheme of legislative entries .........................................\n48\niii. The field covered by Entry 52 of List I and Entry 8 of \n\nList II .................................................................................. 51\na. The scope of Entry 8 ................................................ 52\n52\nI. The meaning of ‘that is to say’ ........................\nII. Product or industry based entry .......................\n55\nb. Scope of Entry 52 of List I: the absence of “to the \n\nextent to which” ......................................................... 57\n\nc. Reconciling the potential overlap between Entry 52 \nof List I and Entry 8 of List II .....................................\niv. Scope of Entry 8: Meaning of ‘intoxicating liquor’ ......\na. Precedent on the interpretation of ‘intoxicating \nliquor ’: exploring FN Balsara and Southern \nPharmaceuticals ......................................................\n\n63\n70\n\n71\n\n* Ed. Note: Pagination as per the original Judgment.\n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f1956 \n\n[2024] 10 S.C.R.\n\nb. The legal import of ‘intoxicating liquor’ .....................\nc. Evolution of the legislative lists on ‘intoxicating \nliquor’ .........................................................................\nd. The harmonious interpretation ..................................\nv. The correctness of the decision in Synthetics \n\n79\n\n85\n96\n\n(7J) ..................................................................................... 102\n\nvi. The impact of the decision on Item 26 of the First \n\nSchedule of IDRA ............................................................. 113\n\nvii. The (ir)relevance of the decision in Tika Ramji to the \n\ndispute .............................................................................. 115\nviii. Section 18G of IDRA and Entry 33 of List III ................ 119\nF. Conclusion .............................................................................. 120\n\nA. Background\n\n1. \n\n“Intoxicating liquor” falls within the legislative domain of the State \nLegislatures under Entry 8 of the State list, List II, of the Seventh \nSchedule to the Constitution. The issues which arise for adjudication \nin this reference pertain to the scope of the power of the State \nLegislatures under Entry 8 and the meaning of the phrase “intoxicating \nliquor”. The question is whether “intoxicating liquor” in Entry 8 only \nincludes potable alcohol, such as alcoholic beverages or also \nincludes alcohol which is used in the production of other products. \nIn Synthetics and Chemicals Ltd. v. State of UP,1 (“Synthetics \n[7J]), a seven-Judge Bench delineated the scope of the regulatory \npowers of State Legislatures on “intoxicating liquor”. The correctness \nof Synthetics [7J] (supra) has been referred to a larger bench. We \nanswer the reference in this judgment. \n\ni. \n\nConstitutional provisions\n\n2. The State has the legislative competence under Entry 24 of List II \nover ‘industries’ but this is subject to entries 7 and 52 of List I.2 \nUnder Entry 52 of List I, Parliament has legislative competence over \nsuch industries, the control of which by the Union is declared by \n\n1 \n\n2 \n\n[1989] Supp. 1 SCR 623 : (1990) 1 SCC 109\n\n“24. Industries subject to the provisions of Entries 7 and 52 of List I”\n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n1957\n\nParliament by law to be expedient in the public interest.3 Entry 7 of \nList I deals with industries which are declared by Parliament by law \nto be necessary for the purpose of defence or for the prosecution of \nwar.4 Under Entry 33 of List III, the State Legislatures and Parliament \ncan legislate on trade and commerce in, and the production, \nsupply and distribution of the products of industries controlled by \nParliament under Entry 52 of List I.5 Entry 8 of List II deals with \n‘intoxicating liquors’.6 These words are followed by the expression \n“that is to say, the production, manufacture, possession, transport, \npurchase and sale of intoxicating liquors”. The Seventh Schedule \nalso demarcates taxing powers related to alcohol separately. \nEntry 84 of List I (before it was amended by the Constitution (One \nHundred and First Amendment) Act 2016) enabled Parliament to \nlevy duties of excise on tobacco and other goods manufactured or \nproduced in India except alcoholic liquors for human consumption \nbut including medicinal and toilet preparations containing alcohol.7 \nEntry 51 of List II confers the State Legislature the competence \nto levy duties of excise, inter alia, on alcoholic liquors for human \nconsumption but not including medicinal and toilet preparations \ncontaining alcohol.8\n\n3 \n\n4 \n\n5 \n\n6 \n\n7 \n\n“52. Industries, the control of which by the Union is declared by Parliament by law to be expedient in the \npublic interest.”\n\n“7. Industries declared by Parliament by law to be necessary for the purpose of defence or for the \nprosecution of war.”\n\n“33. Trade and commerce in, and the production, supply and distribution of –\n(a) The products of any industry where the control of such industry by the Union is declared by Parliament \nby law to be expedient in the public interest, and imported goods of the same kind as such products;\n(b) Foodstuffs, including edible oilseeds and oils;\n(c) Cattle fodder, including oilcakes and other concentrates;\n(d) Raw cotton, whether grinned or ungrinned, and cotton seed; and\n(e) Raw jute.”\n\n“8. Intoxicating liquors, that is to say, the production, manufacture, possession, transport, purchase and \nsale of intoxicating liquors” \n\n“84. Duties of excise on tobacco and other goods manufactured or produced in India except- \n\n(a) Alcoholic liquors for human consumption;\n(b) Opium, Indian hemp and other narcotic drugs and narcotics,\nBut including medicinal and toilet preparations containing alcohol or any substance included in \nsub-paragraph (b) of this entry. \nBut including medicinal and toilet preparations containing alcohol or any substance included in \nsub-paragraph (b) of this entry.”\n\n8 \n\n“51. Duties of excise on the following goods manufactured or produced in the State and counterveiling \nduties at the same or lower rates on similar goods manufactured or produced elsewhere in India:-\n\n(a) Alcoholic liquors for human consumption;\n(b) Opium, Indian hemp and other narcotic drugs and narcotics,\nBut not including medicinal and toilet preparations containing alcohol or any substance included in \nsub-paragraph (b) of this entry. \n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f1958 \n\n[2024] 10 S.C.R.\n\n3. \n\nIn exercise of the power under Article 2469 read with Entry 52 of List I, \nParliament enacted the Industries (Development and Regulation) \nAct 1951.10 Section 2 of IDRA stipulates that it is expedient in public \ninterest that the Union should take control of the industries specified \nin the First Schedule to the enactment. Item 26 of the First Schedule \nread as follows: \n\n“26. Fermentation industries: \n\n(1) Alcohol \n\n(2) Other products of fermentation industries”\n\n4. \n\nIn 2016, Item 26 of the First Schedule to the IDRA was amended to \nexclude potable alcohol from the ambit of the Item.11 Item 26 reads \nas follows after the amendment:\n\n“26. Fermentation industries (other than potable alcohol):\n\n(1) Alcohol \n\n(2) Other products of fermentation industries”\n\n5. Section 18-G of IDRA12 grants the Central Government the power to \nregulate the supply and distribution “of any article or class of articles \nrelatable to a scheduled industry” for securing equitable distribution \nand availability at fair prices.\n\n9 \n\n10 \n\n11 \n\n12 \n\n“246. Subject matter of laws made by Parliament and by the Legislatures of States.”\n\n“IDRA”\n\nThe Industries (Development and Regulation) Amendment Act 2016\n\n“18G. Power to control supply, distribution, price, etc., of certain articles.—\n(1) The Central Government, so far as it appears to it to be necessary or expedient for securing the \nequitable distribution and availability at fair prices of any article or class of articles relatable to any \nscheduled industry, may, notwithstanding anything contained in any other provision of this Act, by notified \norder, provide for regulating the supply and distribution thereof and trade and commerce therein.\n(2) Without prejudice to the generality of the powers conferred by sub-section (1), a notified order made \nthereunder may provide—\n\n(a) for controlling the prices at which any such article or class thereof may be bought or sold;\n(b) for regulating by licences, permits or otherwise the distribution, transport, disposal, acquisition, \npossession, use or consumption of any such article or class thereof;\n(c) for prohibiting the withholding from sale of any such article or class thereof ordinarily kept for \nsale;\n(d) for requiring any person manufacturing, producing or holding in stock such article or class \nthereof to sell the whole or the part of the articles so manufactured or produced during a specified \nperiod or to sell the whole or a part of the article so held in stock to such person or class of persons \nand in such circumstances as may be specified in the order;\n(e) for regulating or prohibiting any class of commercial or financial transactions relating to such \narticle or class thereof which in the opinion of the authority making the order are, or if unregulated \nare likely to be, detrimental to public interest;\n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n1959\n\nii. \n\nThe judgment in Synthetics (7J)\n\n6. The United Provinces Excise Act 191013 was enacted to “consolidate \nand amend the law in force in the United Provinces relating to \nthe import, export, transport, manufacture, sale and possession \nof intoxicating liquor and of intoxicating drugs”. In exercise of the \npowers under the UP Excise Act, the Government of the United \nProvinces levied vend fee14 on ‘denatured spirit’ from the wholesale \ndealer of denatured spirit. The UP Excise Act was amended \nto include Section 24-A. Section 24-A provided that the Excise \nCommissioner may grant licence for the manufacture or sale of \nany ‘foreign liquor’. ‘Foreign Liquor’ was defined in the subordinate \nRules to include “all rectified, perfumed, medicated and denatured \nspirit.”15 The constitutional validity of the amendment including \nSection 24-A was challenged before the Allahabad High Court. The \nHigh Court upheld the challenge. The UP State Legislature enacted \nthe U.P Excise (Amendment) (Re-enactment and Validation) Act \n1976 including Section 24-A relying on the decisions of this Court \n\n(f) for requiring persons engaged in the distribution and trade and commerce in any such article \nor class thereof to mark the articles exposed or intended for sale with the sale price or to exhibit \nat some easily accessible place on the premises the price-lists of articles held for sale and also \nto similarly exhibit on the first day of every month, at such other time as may be prescribed, a \nstatement of the total quantities of any such articles in stock;\n(g) for collecting any information or statistics with a view to regulating or prohibiting any of the \naforesaid matters; and\n(h) for any incidental or supplementary matters, including, in particular, the grant of issue of \nlicences, permits, or other documents and charging of fees therefor.\n\n(3) Where in pursuance of any order made with reference to clause (d) of sub-section (2), any person \nsells any article, there shall be paid to him the price therefor—\n\n(a) where the price can consistently with the controlled price, if any, be fixed by agreement, the \nprice so agreed upon;\n(b) where no such agreement can be reached, the price calculated with reference to the controlled \nprice, if any, fixed under this section;\n(c) where neither clause (a) nor clause (b) applies, the price calculated at the market-rate prevailing \nin the locality at the date of sale.\n\n(4) No order made in exercise of any power conferred by this section shall be called in question in any \nCourt.\n(5) Where an order purports to have been made and signed by an authority in exercise of any power \nconferred by this section, a Court shall, within the meaning of the Indian Evidence Act, 1872 (1 of 1872), \npresume that such order was so made by that authority.\nExplanation.—In this section, the expression “article or class of articles” relatable to any scheduled \nindustry includes any article or class of articles imported into India which is of the same nature or \ndescription as the article or class of articles manufactured or produced in the scheduled industry.”\n\n13 \n\n“UP Excise Act”\n\n14 Vend fee means the fee that is paid by a licenses dealer to sell the products in retain.\n\n15 Section 4(2) of the UP Act provides that the State may declare what shall be deemed to be foreign liquor \n\nor country liquor \n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f1960 \n\n[2024] 10 S.C.R.\n\nin Nashirwar v. State of MP16 and Har Shanker v. Dy. Excise \nand Taxation Commissioner.17 The Allahabad High Court upheld \nthe validity of the U.P Excise (Amendment) (Re-enactment and \nValidation) Act 1976.18 \n\n7. The appellants in Synthetics & Chemicals v. State of UP19 \n(“Synthetics [2J]”), held licenses for wholesale vend of ‘denatured \nspirit’. They instituted proceedings under Article 226 of the Constitution \nbefore the Allahabad High Court for seeking a direction to quash the \nnotification by which vend fee was levied from a wholesale licence \ndealer of ‘denatured spirit’. The High Court dismissed the petitions. \nIt held that the phrase ‘intoxicating liquors’ in Entry 8 of List II of \nthe Seventh Schedule to the Constitution includes denatured spirit \nand that the State was, therefore, competent to levy the vend fee \non denatured spirit.\n\n8. Proceedings under Article 136 were instituted for challenging the \ndecision of the High Court. Proceedings were also initiated under \nArticle 32 challenging the constitutional validity of the levy of vend \nfee. A two-Judge Bench of this Court in Synthetics (2J) (supra) \nheard the writ petition and the appeals against the judgments of \nthe Allahabad High Court together. Three issues arose before the \nBench. On the issue of the meaning of the phrase ‘intoxicating \nliquor’ in Entry 8, the two-Judge Bench referred to the decisions of \nthis Court in State of Bombay v. FN Balsara,20 Nashirwar (supra) \nand Har Shanker (supra) and held that the decisions indicate that \nthe phrase ‘intoxicating liquor’ in Entry 8 of List II comprises of \nliquor which contains alcohol, both potable and non-potable.21 The \nsecond issue was whether in view of IDRA, the power of the State \nto regulate alcohol (both potable and non-potable) was denuded. \nIn particular, reference was made to the notification issued by the \nUnion under Section 18-G of the IDRA prescribing the price of \nvarious types of alcohol and rectified spirit. The two-Judge Bench \nreferred to the decision of a three-Judge Bench of this Court in Tika \n\n16 \n\n[1975] 2 SCR 861 : 1975 AIR 360\n\n17 AIR 1957 SC 414\n\n18 \n\n19 \n\n20 \n\n21 \n\n1976 ALJ 436 (FB)\n\n[1980] 2 SCR 531 : (1980) 2 SCC 441\n\n[1951] 1 SCR 682 : (1951) SCC 860\n\n(1980) 2 SCC 441 [18]\n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n1961\n\nRamji v. State of UP22 and entry 33 of List III to hold that the State \nLegislature had the power to legislate regarding the production, \nsupply and distribution of the products of the industries notified by \nParliament under Entry 52 of List I.23 The two-Judge Bench further \nheld that the Ethyl Alcohol (Price Control) Order issued by the Central \nGovernment in exercise of the power under Section 18G of IDRA did \nnot take away the exclusive rights of the State Government relating to \nintoxicating liquor.24 The third issue was whether the phrase ‘foreign \nliquor’ in Section 24-A includes denatured spirit or only alcohol for \nhuman consumption. The Bench held that the meaning of the phrase \ncannot be restricted to alcohol for human consumption since “when \nliquor is put to any use such as manufacture of other articles, the \nliquor is all the same consumed.”25 \n\n9. Review petitions were filed against the decision of this Court in \nSynthetics (2J) (supra). Writ petitions were also filed for challenging the \nrules by which vend fees were levied in Uttar Pradesh, and provisions \nof various laws enacted by the then State of Bombay, and the States \nof Tamil Nadu and Andhra Pradesh by which exclusive privilege of \ndealing with any intoxicant was vested in the State. The matters were \nheard by a seven-Judge Bench in Synthetics (7J) (supra). \n\n10. Justice Sabyasachi Mukharji, writing for himself and five other judges \n\nframed the following issues for consideration: \n\n“2. The main question that falls for consideration in these \nmatters is whether the vend fee in respect of the industrial \nalcohol under different legislations and rules in different \nStates is valid. […] The questions with which we are mainly \nconcerned are the following: \n\nWhether the power to levy excise duty in case of industrial \nalcohol was with the State legislature or the Central \nlegislature;\n\nWhat is the scope and ambit of Entry 8 of List II of the \nSeventh Schedule of the Constitution?\n\n22 \n\n23 \n\n24 \n\n25 \n\n[1956] 1 SCR 393 : AIR 1956 SC 676\n\n(1980) 2 SCC 441 [25-28]\n\n(1980) 2 SCC 441 [28]\n\n(1980) 2 SCC 441 [34]\n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f1962 \n\n[2024] 10 S.C.R.\n\nWhether, the State Government has exclusive right or \nprivilege of manufacturing, selling, distributing etc. of \nalcohols including industrial alcohol. In this connection, \nthe extent, scope and ambit of such right or privilege has \nalso to be examined.”\n\n11. The decision, first, laid down the meaning of the terms, ‘rectified \nspirit’, ‘industrial alcohol’, and ‘ethyl alcohol’. The decision noted \nthat the petitioners and appellants were manufacturers of ‘ethyl \nalcohol’ and that ‘ethyl alcohol’, which is also known as rectified \nspirit is an industrial alcohol. The judgement, used the three phases \ninterchangeably:\n\n“74. It has to be borne in mind that by common standards \nethyl alcohol (which has 95 per cent) is an industrial alcohol \nand is not fit for human consumption. The petitioners and \nthe appellants were manufacturing ethyl alcohol(95 per \ncent) (also known as rectified spirit) which is an industrial \nalcohol. ISI specification has divided ethyl alcohol (as \nknown in the trade) into several kinds of alcohol. Beverage \nand industrial alcohols are clearly and differently treated. \nRectified spirit for industrial purposes is defined as “spirit \npurified by distillation having a strength not less than 95 per \ncent of volume by ethyl alcohol”. Dictionaries and technical \nbooks would show that rectified spirit (95 per cent) is an \nindustrial alcohol and is not potable as such. It appears, \ntherefore, that industrial alcohol which is ethyl alcohol (95 \nper cent) by itself is not only non-potable but is highly toxic. \nThe range of spirits of potable alcohol is from country spirit \nto whisky and the ethyl alcohol content varies between \n19 to about 43 per cent. These standards are according \nto the ISI specifications. In other words ethyl alcohol (95 \nper cent) is not alcoholic liquor for human consumption \nbut can be used as a raw material input after processing \nand substantial dilution in the production of whisky, gin, \ncountry liquor, etc.”\n\n12. This Court allowed the challenge on the following grounds:\n\na. The phrase ‘intoxicating liquor’ in Entry 8 means ‘liquor which \nis consumable by human being as it is” for the following \nreasons: (i) In FN Balsara (supra), this Court was not aware \n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n1963\n\nof the full use of alcohol as industrial alcohol;26 and (ii) Only \ntwo decisions of this Court have dealt with industrial alcohol. \nOne was the decision in Synthetics (2J) (supra) and the other \nwas the decision in Indian Mica and Micancite Industries v. \nState of Bihar27 in which this Court held that Parliament had \nthe legislative competence to levy tax on alcoholic liquor not \nfit for human consumption;28\n\nb. The provisions that are challenged are not regulatory but seek \nto levy a tax.29 List II does not confer the State Legislature the \npower to levy of tax on industrial alcohol;30\n\nc. \n\nIn view of Item 26 of the First Schedule to IDRA, the control \nof alcohol industries vests exclusively in the Union. Thus, the \npower to issue licenses to manufacture both potable and non-\npotable alcohol vests in the Central Government;31\n\nd. The State can also not regulate industrial alcohol as a ‘product’ \nof the controlled industry in terms of Entry 33 of List III because \nthe Union occupies the whole field on industrial alcohol as \nevinced by Section 18G of the IDRA;32\n\ne. Even otherwise, the impugned provisions do not regulate a \nproduct of the scheduled industry. Rather, they deal with the \nmanufacture and sale of industrial alcohol;33\n\nf. \n\nThe power of the States to legislate on the subject of alcohol \nis restricted to laws which (paragraph 86 of Synthetics (7J) \n(supra)):\n\ni. \n\nii. \n\nProhibit potable alcohol in terms of Entry 6 of List II which \nconcerns public health; \n\nLay down regulations to ensure that non-potable alcohol is \nnot diverted and misused as a substitute for potable alcohol; \n\n26 \n\n27 \n\n28 \n\n(1990) 1 SCC 109 [74]\n\n[1971] Supp. 1 SCR 319 : (1971) 2 SCC 236\n\n(1990) 1 SCC 109 [75]\n\n29 On the distinction between tax and fee (see (1990) 1 SCC 109 [69-73]\n\n30 \n\n31 \n\n32 \n\n33 \n\n(1990) 1 SCC 109 [83]\n\n(1990) 1 SCC 109 [85]\n\n(1990) 1 SCC 109 [85]\n\n(1990) 1 SCC 109 [85]\n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f1964 \n\n[2024] 10 S.C.R.\n\niii. Charge excise duty on potable alcohol and sales tax under \nEntry 52 of List II. However, sales tax cannot be charged \non industrial alcohol; and\n\niv. Charge fees on a quid pro quo basis, in return for some \nservice rendered by the state, as distinct from fees for \ngrant of a privilege in terms of Indian Mica (supra).\n\n13. However, the judgment in paragraph 88 makes the following \n\nobservations: \n\n“On an analysis of the aforesaid decisions and practice, \nwe are clearly of the opinion that in respect of industrial \nalcohol the States are not authorised to impose the impost \nthey have purported to do. In that view of the matter, the \ncontentions of the petitioners must succeed and such \nimpositions and imposts must go as being invalid in law \nso far as industrial alcohol is concerned. We make it \nclear that this will not affect any impost so far as potable \nalcohol as commonly understood is concerned. It will also \nnot affect any imposition of levy on industrial alcohol fee \nwhere there are circumstances to establish that there was \nquid pro quo for the fee sought to be imposed. This will \nnot affect any regulating measure as such.”\n\n14. Paragraph 88 lays down the following three principles: \n\na. States do not have the competence to levy tax on industrial \n\nalcohol;\n\nb. States have the competence to levy tax on potable alcohol; and\n\nc. States have the competence to levy fee on industrial alcohol. \n\n15. Justice Oza in his concurring opinion held: \n\na. The legislative entries in List I and List II clearly demarcate the \ntaxing powers of Parliament and State Legislature. Entry 84 of \nList I covers levy of excise duty on alcoholic liquor for other \nthan human consumption and Entry 51 of List II covers levy of \nexcise duty on alcoholic liquor for human consumption;34\n\n34 \n\n(1990) 1 SCC 109 [97]\n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n1965\n\nb. Parliament controls the alcohol industry since Item 26 of IDRA \ndeals with industry based on fermentation and alcohol. The \ncompetence of the State Legislature under Entry 8 can only \nbe subject to IDRA;35 and\n\nc. \n\nThe regulation of the State under Entry 8 of List II can only be \nlimited to prevent the conversion of alcoholic liquors for industrial \nuse for human consumption. Regulatory fee can be levied by \nthe State for this limited purpose.\n\niii. The aftermath of Synthetics (7J)\n\n16. Subsequently, the interpretation of the decision in Synthetics (7J) \n(supra) came up before this Court in numerous occasions. In Shri \nBileshwar Khand Udyog Khedut Sahakari Mandali v. State of \nGujarat,36 the constitutional validity of Section 58-A of the Bombay \nProhibition Act 1949 was challenged. Section 58-A enabled the \nState Government to direct that “the manufacture, import, export, \ntransport, storage, sale, purchase, use, collection or cultivation of any \nintoxicant, denatured spiritous preparations, hemp, mhowra flowers \nor molasses” would be in the supervision of persons appointed by \nthem and the costs of such staff were required to be borne by the \nperson engaged in the activity. This Court rejected the challenge. \nRelying on Synthetics (7J) (supra), the two-Judge Bench observed \nthat though industrial alcohol is not covered by the regulatory powers \nunder Entry 8 or the taxing power under Entry 51 of List II, the State \nhas powers to ensure that industrial alcohol is not diverted to be \nused as potable alcohol and this is covered by Entry 33 of List III.37 \n\n35 \n\n36 \n\n37 \n\n(1990) 1 SCC 109 [100]\n\n[1992] 1 SCR 391 : (1992) 2 SCC 42\n\n“4. […] Levy as a fee under Entry 8 of List II of Seventh Schedule or excise duty under Entry 51 are \ndifferent than cost of supervision charged under Section 58-A. The former has to stand the test of a levy \nbeing in accordance with law on power derived from one of the constitutional entries. Since Synthetics \nand Chemicals case [Synthetics and Chemicals Ltd. v. State of U.P. (1990) 1 SCC 109] finally brought \ndown the curtain in respect of industrial alcohol by taking it out of the purview of either Entry 8 or 51 \nof List II of Seventh Schedule the competency of the State to frame any legislation to levy any tax or \nduty is excluded. But by that a provision enacted by the State for supervision which is squarely covered \nunder Entry 33 of the Concurrent List which deals with production, supply and distribution which includes \nregulation cannot be assailed. The bench in Synthetics and Chemicals case [Synthetics and Chemicals \nLtd. v. State of U.P. (1990) 1 SCC 109] made it clear that even though the power to levy tax or duty \non industrial alcohol vested in the Central Government the State was still left with power to lay down \nregulations to ensure that non-potable alcohol, that is, industrial alcohol, was not diverted and misused \nas substitute for potable alcohol. This is enough to justify a provision like Section 58-A.”\n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f1966 \n\n[2024] 10 S.C.R.\n\n17. \n\nThis decision was followed by another two-Judge Bench in Gujchem \nDistillers India v. State of Gujarat.38\n\nIn State of AP v. McDowell,39 the prohibition of sale and consumption \nof intoxicating liquor in the State of Andhra Pradesh was challenged. \nThe petitioners submitted that the State did not have the competence \nto prohibit consumption. For this purpose, reference was made to the \nobservations in paragraph 85 of Synthetics (7J) (supra), where the \nCourt had observed that after the enactment of IDRA, the power to \nissue licenses to manufacture both potable and non-potable liquor \nvested in Parliament. The three-Judge Bench rejected the argument \nby referring to observations in paragraph 86(a) Synthetics (7J) \n(supra) that States have the power to enact legislation in the nature \nof prohibiting potable liquor.40 In Vam Organic Chemicals v. State \nof UP41 [“Vam Organic I”], the rules issued under the UP Excise \nAct providing for power to issue licenses for denaturation of spirit \nand levy of denaturing fee was challenged. Justice A M Ahmadi \n(as the learned Chief Justice then was) writing for the two-Judge \nBench noted that Synthetics (7J) (supra) did not hold that the State \nwill not have any power over ‘industrial alcohol’.42 Specifically, the \ntwo-Judge Bench referred to the observations in paragraph 86(b) \nthat the State may lay down regulations to ensure that non-potable \nalcohol is not misused as a substitute for potable alcohol. Justice \nAhmadi observed that the process of denaturing was to ensure it \nwas not misused as potable alcohol which would be covered by the \nobservations in Synthetics (7J) (supra).43 \n\n18. \n\nIn Bihar Distillery v. Union of India,44 the petitioner challenged \nthe State’s cancellation of their license for preparing “rectified \nspirit” on the ground that the State lacked competence in view of \n\n38 \n\n39 \n\n40 \n\n41 \n\n42 \n\n43 \n\n[1992] 1 SCR 675 : (1992) 2 SCC 399\n\n[1996] 3 SCR 721 : (1996) 3 SCC 709\n\n(1996) 3 SCC 709 [33]\n\n[1997] 1 SCR 403 : (1997) 2 SCC 715\n\n[1997] 1 SCR 403 : (1997) 2 SCC 715 [13]\n\n(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 \nEntry 84 of List I have exclusive privilege to legislate on intoxicating liquor or alcoholic liquor for human \nconsumption. Hence, so long as any alcoholic preparation can be diverted to human consumption, \nthe States shall have the power to legislate as also to impose taxed etc. In this view, denaturation of spirit \nis not only an obligation on the States but also within the competence of the States to enforce. [ emphasis \nsupplied] \n\n44 \n\n[1997] 1 SCR 680 : (1997) 2 SCC 727\n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n1967\n\nSynthetics (7J) (supra). Justice B P Jeevan Reddy, writing for the \ntwo-Judge Bench held that the observations in paragraph 85 that \nParliament has legislative competence over both potable and non-\npotable alcohol in view of the enactment of IDRA was a typographical \nerror.45 The Bench further observed that Synthetics (7J) (supra) \nwas mainly concerned with legislative competence over “denatured \nrectified spirit” (which was exclusively and wholly industrial alcohol) \nand not “rectified spirit” (which could be used directly for industrial \npurposes or denatured for industrial purposes or used to prepare \nliquor for human consumption.)46 This Court held that the line of \ndemarcation must be drawn at the stage of clearance of the rectified \nspirit since it was used for the preparation of both potable alcohol \n(over which the State had competence under Entry 8 of List II) and \nnon-potable alcohol (over which the State did not have competence \nunder Entry 8 of List II):\n\n“23. The line of demarcation can and should be drawn at \nthe stage of clearance/removal of the rectified spirit. Where \nthe removal/clearance is for industrial purposes (other than \nthe manufacture of potable liquor), the levy of duties of \nexcise and all other control shall be of the Union but where \nthe removal/clearance is for obtaining or manufacturing \npotable liquors, the levy of duties of excise and all other \ncontrol shall be that of the States. This calls for a joint \ncontrol and supervision of the process of manufacture of \nrectified spirit and its use and disposal.”\n\n19. The decision further elucidated the realm of competence of the State \nand the Union with respect to (a) industries engaged in manufacturing \nrectified spirit meant exclusively for supply to industries; (b) industries \nengaged exclusively in manufacturing rectified spirit for production of \npotable alcohol; and (c) industries engaged in both of the above. This \ndemarcation will be discussed in detail in the subsequent sections of \nthe judgment. To understand the manner in which Bihar Distillery \n(supra) interpreted the judgment in Synthetics (7J) (supra), it is \nsufficient at this stage to know that the demarcation of the competence \nwas based on the purpose for which the rectified spirit was used. \n\n45 \n\n46 \n\n(1997) 2 SCC 727 [12]\n\n(1997) 2 SCC 727 [23]\n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f1968 \n\n[2024] 10 S.C.R.\n\n20. \n\nIn Government of Haryana v. Haryana Brewery,47 a two-Judge \nBench noted the dissonance in multiple decisions interpreting the \njudgment in Synthetics (7J) (supra) and directed that the papers may \nbe placed before the Chief Justice for listing the matters before the \nConstitution Bench. In particular, the Bench noted the observations in \n(i) McDowell (supra) that the State has competence over production \nto sale of “intoxicating liquor”; (ii) Vam Organic I (supra), that State \nhas competence over “denatured spirit”; and (iii) Bihar Distillery \n(supra) that the State’s competence over “rectified spirit” depended \non the purpose for which spirit was going to be used. The Bench \nalso noted the observations of a three-Judge Bench in State of \nUP v. Modi Distillery48 that the State does not have the legislative \ncompetence to levy excise duty on the material or input that is used \nin the process of producing alcoholic liquor for human consumption \nby relying on Synthetics (7J) (supra).49 However, it must be noted \nthat the Bench in Modi Distillery (supra), specifically recorded \nthat it does not “express any opinion in regard to the power of the \nState to regulate the manufacture of alcoholic liquors for human \nconsumption.”50 \n\n21. Meanwhile, another two-Judge Bench51 referred the decision in \nBihar Distillery (supra) to a larger Bench on the ground that it \nwas prima facie contrary to the scheme of legislative competence \nas examined by the Constitution Bench of this Court and the three-\nJudge Bench decision of this Court in Modi Distillery (supra). The \nthree-Judge Bench in Deccan Sugar & Abkari v. Commissioner \nof Excise, AP,52 without overruling the decision in Bihar Distillery \n(supra) observed that this Court in Synthetics (7J) held that the \nState Legislature does not have the competence to levy any excise \n\n47 \n\n48 \n\n49 \n\n(1997) 5 SCC 758\n\n[1995] Supp. 3 SCR 119 : (1995) 5 SCC 753\n\nIn this case, the challenge was to the levy of excise duty on wastage in the preparation of Indian Made \nForeign Liquor (IMFL), pipeline wastage and obscuration (which is the process of adding caramel to \nspirit for the preparation of rum. The Bench relied on the observations in Synthetics (7J) that the \nphrase ‘alcoholic liquor for human consumption’ means the liquor that is consumable “as it is” to hold \nthat the State does not have the power to levy excise duty on the stages of manufacture or preparation \nof the liquor. \n\n50 \n\n(1995) 5 SCC 753 [14]\n\n51 Deccan Sugar and Abkari Co. Ltd. v. Commissioner of Excise, AP (1998) 3 SCC 272\n\n52 \n\n(2004) 1 SCC 243\n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n1969\n\nduty on “rectified spirit”.53 Subsequently, another two-Judge in \nState of UP v. Vam Organic54 [“Vam Organic (II)”], dealt with the \nchallenge to the levy of license fee on ‘denatured industrial alcohol’, \na raw material used in the preparation of Organic compounds. In \nthat case, the State had submitted that it had the power to levy \nthe fee because denatured alcohol could be renatured to produce \npotable alcohol which is covered by paragraph 86(b) of the decision \nin Synthetics (7J). The Bench rejected the submission holding \nthat the State Government is competent to levy fee to ensure that \nindustrial alcohol (which the judgment used alternatively for ethyl \nalcohol) is not “surreptitiously converted into potable alcohol so that \n… the public is protected from consuming illicit liquor”. However, \nthe Bench relying on Vam Organic I (supra) noted that the power \nstops with denaturing and that even if denatured alcohol can be \nre-natured, the States would not have the power to regulate it. The \nrelevant observations are extracted below:\n\n“43. […] We are of the view that the State Government \nis competent to levy fee for the purpose of ensuring that \nindustrial alcohol is not surreptitiously converted into potable \nalcohol so that the State is deprived of revenue on the sale \nof such potable alcohol and the public is protected from \nconsuming such illicit liquor. But this power stops with \nthe denaturation of the industrial alcohol. Denatured \nspirit has been held in Vam Organics-I to be outside the \nseism of the State Legislature. Assuming that denatured \nspirit may by whatever process be renatured (a proposition \nwhich is seriously disputed by the respondents) and then \nconverted into potable liquor, this would not give the State \nthe power to regulate it. Even according to the demarcation \nof the fields of legislative competence as envisaged in \nBihar Distillery industrial alcohol for industrial purposes \nfalls within the exclusive control of the Union and according \nto Bihar Distillery “denatured rectified spirit, of course, is \nwholly and exclusively industrial alcohol.”\n\n(emphasis supplied)\n\n53 \n\n54 \n\n(2004) 1 SCC 243 [2] \n\n(2004) 1 SCC 225\n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f1970 \n\n[2024] 10 S.C.R.\n\niv. The Reference Order(s)\n\n22. Separately, the State of UP levied an ad valorem licence fee on the \nsale of specially denatured alcohol by a wholesale vendor to those \nholding a licence under Form FL 4155 of the UP Excise Act. The fee \nwas levied under the provisions of the UP Spirit Rules. The petitioner \nin RP Sharma v. State of UP56 instituted a writ petition before the \nAllahabad High Court, inter alia, for challenging the relevant rule \nand for a refund of the fee collected by the state. \n\n23. A Division Bench of the Allahabad High Court allowed the petition, \nrelying on the decision in Vam Organic-II (supra) since the fee was \nlevied on the sale of denatured spirit and not to ensure that rectified \nspirit was not diverted for human consumption. The State of UP \npreferred an appeal against the decision before this Court, resulting \nin the present proceedings. The Court issued notice on the matter \nand granted an interim stay of the judgment of the High Court on \n27 August 2004. By its order dated 25 October 2007, a three-Judge \nBench of this Court in State of UP v. Lalta Prasad57 agreed with the \nsubmissions advanced by counsel for the appellants on the need for \nreconsideration by a larger bench. Numerous decisions were relied \non to argue that Section 18G of the IDRA would not deprive the \nStates of the power to enact laws with respect to Entry 33 of List III. \nThe appellants argued that a notification ought to be issued under \nSection 18G for the field under Entry 33 to be occupied. Justice \nAltmas Kabir, writing for the three-Judge Bench observed that that \nthe question of whether Section 18G occupies the field of Entry 33 \non the alcohol industry needs to be referred to a Constitution Bench:\n\n“26. … The 7 Judge Bench did not also have the benefit \nof the reasoning in Ch. Tikaramji’s case (supra) which had \nheld that in the absence of any notified order under Section \n18-G of the 1951 Act no question of repugnancy could \narise, which Mr. Dwivedi urged, recognised the State’s \npower to legislate with regard to matters under Entry 33 \nof List III notwithstanding the provisions and existence of \nSection 18-G in the 1951 Act.\n\n55 Form FL 41 is meant for those industries where alcohol is used as a solvent but some alcohol continues \nto remain in final products such as lacquers, varnish, polishes, adhesives, anti-freezers and brake fluids.\n\n56 \n\n57 \n\n2004 SCC OnLine All 159.\n\n[2007] 11 SCR 670 : (2007) 13 SCC 463\n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n1971\n\n27. Mr. Dwivedi then went on to refer to the judgment \nof this Court in SIEL Limited v. Union of India (1998) \n7 SCC 26 wherein the learned Judges relying on the \npolicy decision in Ch. Tikaramji’s case (supra) explained \nand distinguished the decision of the 7 Judge Bench in \nSynthetics and Chemicals case (supra). […]\n\n28. Yet another case referred to by Mr. Dwivedi was the \ndecision of a Constitution Bench of 5 Judges of this Court \nin Belsund Sugar v. State of Bihar (1999) 9 SCC 620 […]. \nIn the said case also it was observed by the Constitution \nBench that in the absence of promulgation of any statutory \norder covering the filed under Section 18-G it could not \nbe said that mere existence of a statutory provision for \nentrustment of such power would result in regulation of \npurchase and sale of flour even if it is a scheduled industry. \nIt may be noted that even while noting the decision of the \n7 Judge Bench in Synthetics and Chemicals case (supra) \nthe Court placed reliance on the decision rendered in the \nSIEL Ltd. Case (supra). \n\n…\n\n35. On consideration of the aforesaid submissions made \non behalf of the respective parties, we are of the view \nthat Mr. Dwivedi’s submissions have a good deal of force, \nsince by virtue of the interpretation of Section 18-G in \nthe Synthetics and Chemicals case (supra) the power \nof the State to legislate with matters relating to Entry \n33 of List III have been ousted, except to the extent \nas explained in the Synthetics and Chemicals case in \nparagraphs 63-64 of the judgment, where the State’s power \nto regulate, as far as regulating the use of alcohol, which \nwould include the power to make provisions to prevent and/\nor check industrial alcohol being used as intoxicant liquor, \nhad been accepted. … As submitted by Mr. Dwivedi, the \n7 Judge Bench did not have the benefit of the views \nexpressed by this Court earlier in Ch. Tikaramji case \n(supra) where the State’s power to legislate under the \nConcurrent List stood ousted by legislation by the \nCentral Government under Entry 52 of List I and also \n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f1972 \n\n[2024] 10 S.C.R.\n\nin view of Section 18-G of the Industries (Development \nand Regulation) Act, 1951.\n\n36. In our view, if the decision in the Synthetics and \nChemicals case (supra) with regard to the interpretation of \nSection 18-G of the 1951 Act is allowed to stand, it would \nrender the provisions of Entry 33 (a) of List III nugatory \nor otiose. \n\n37. We are, therefore, also of the view that this aspect of \nthe matter requires reconsideration by a larger Bench of this \nCourt, particularly, when the views expressed by 7 Judge \nBench on the aforesaid question have been distinguished \nin several subsequent decisions of this Court, including \nthe two decisions rendered by Constitution Benches of \nfive Judges.”\n\n(emphasis supplied)\n\n24. This Court formulated six questions for adjudication by a larger \n\nBench. They are reproduced below:\n\na. Does Section 2 of the IDRA have any impact on the field \ncovered by Section 18G of the same or Entry 33 of List III of \nthe Seventh Schedule?\n\nb. Does Section 18G of the aforesaid Act fall under Entry 52 of List \nI of the Seventh Schedule of the Constitution, or is it covered \nby Entry 33 of List III thereof? \n\nc. \n\nIn the absence of any notified order by the Central government \nunder Section 18G of the above Act, is the power of the State \nto legislate in respect of matters enumerated in Entry 33 of \nList III ousted? \n\nd. Does the mere enactment of Section 18G of the IDRA, give \nrise to a presumption that it was the intention of the Central \ngovernment to cover the entire field in respect of Entry 33 of List \nIII so as to oust the States’ competence to legislate in respect \nof matters relating thereto? \n\ne. Does the mere presence of Section 18G of the IDRA, oust \nthe State’s power to legislate in regard to matters falling under \nEntry 33(a) of List III?\n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n1973\n\nf. \n\nDoes the interpretation given in Synthetics (supra), in respect \nof Section 18G of the IDRA correctly state the law regarding \nthe States’ power to regulate industrial alcohol as a product \nof the Scheduled industry under Entry 33 of List III in view of \nclause (a) thereof?\n\n25. The batch was placed before a Constitution Bench pursuant to the \nabove order. By an order dated 8 December 2010, the Constitution \nBench observed that the decision in Synthetics (7J) (supra) requires \nto be considered by a Bench of nine Judges and directed the matter \nbe placed before a larger Bench:\n\n“Having meticulously examined the judgment of the \nConstitution Bench of seven learned Judges in the case \nof Synthetics and Chemical Limited & Ors. vs. State of \nUttar Pradesh & Ors., reported in 1990 (1) SCC 109, we \nare of the view that the matter requires consideration by \na Bench of nine Judges.” \n\n26. Though the three-Judge Bench by an order 25 October 2007 only \nreferred the issue of the interplay between Section 18-G of the \nIDRA and Entry 33 of List III to the Constitution Bench, the order \nof the Constitution Bench categorically noted that the correctness \nof the decision in Synthetics (7J) ought to be reconsidered by a \nnine Judge Bench. Thus, this Bench is not limited to the questions \nframed by the three-Judge Bench. \n\nB. Submissions\n\ni. \n\nAppellants’ submissions\n\n27. This Court held in Synthetics (7J) (supra) that denatured spirit is \nindustrial alcohol and is outside the jurisdiction of States under Entry \n8, List II of the Seventh Schedule to the Constitution. It held that \nEntry 8, List II deals only with potable alcohol. Mr Dinesh Dwivedi, \nlearned senior counsel representing the State of UP assailed the \nreasoning in Synthetics (7J) (supra) and argued that the States \nhave jurisdiction over industrial alcohol. He submitted that:\n\na. \n\nLegislative entries are fields of legislation and must be read \nwidely and construed liberally to maintain the federal balance. \nThe exclusive jurisdiction of the States cannot be ousted by \na Parliamentary enactment. Article 245 of the Constitution is \n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f1974 \n\n[2024] 10 S.C.R.\n\nsubject to Article 246 and therefore the division of legislative \npowers must be given their full effect;\n\nb. The term ‘intoxicating liquors’ appearing in Entry 8 of List II of \nthe Seventh Schedule to the Constitution has a rich history and \nlegislative practice accompanying it; \n\nc. \n\nd. \n\nThe term ‘intoxicating liquors’ in Entry 8 of List II is borrowed \nfrom Entry 31, List II of the 1935 Act. The 1935 Act was enacted \nby the British Parliament when the term ‘intoxicating liquors’ had \nattained a specific meaning. This meaning can be discerned \nfrom Section 110 of the License Consolidation Act 1910 and \nSections 3, 4, 5, 116 of the Spirit Act 1880; \n\nIn British legislations, the words ‘intoxicating liquors’ were defined \nto include spirit of all kinds including fermented and distilled \nspirits. The terms ‘intoxicating liquors’ and ‘spirit’ or ‘liquor of all \nkinds’ were used interchangeably in laws in England; \n\ne. Various provincial statutes defined the words ‘liquor’ and ‘sprit’ \nto include all liquids containing alcohol.58 These legislations were \nenacted with the knowledge that alcohol is used for industrial \npurposes. ‘Intoxicating liquors’ in Entry 8 of List II of the Seventh \nSchedule to the Constitution is a comprehensive phrase which \nconnotes all liquids containing alcohol. Therefore, liquor and \nspirit including industrial alcohol have always been under the \njurisdiction of States;\n\nf. \n\nThe 1935 Act used different phrases in Entries 31 and 40 of \nList II of its Seventh Schedule. These entries are relatable \nto Entries 8 and 51 of List II of the Seventh Schedule to the \nConstitution respectively. Whereas the phrase ‘alcoholic liquor \nfor human consumption’ is used in Entry 51 List II for taxation \npurposes, Entry 8 of List II uses the word ‘intoxicating liquors’. \nSimilarly, Entry 84 of List I uses the phrase ‘alcoholic liquor \nnot for human consumption’ and Article 47 uses the phrase \n‘intoxicating drinks’. It would be irrational to presume that the \nframers of the Constitution used different phrases to mean the \nsame thing;\n\n58 Bombay Abkari Act 1878, Madras Abkari Act 1886, Bengal Excise Act 1909, Bihar Excise Act 1915, MP \nExcise Act 1915, Punjab Excise Act 1914, Chhattisgarh Excise Act 1915 and UP Excise Act 1910.\n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n1975\n\ng. The term ‘liquors’ used in a legislation under Entry 31 of List II \nof the Seventh Schedule to the 1935 Act was accepted to mean \nall alcoholic liquids by this Court in FN Balsara (supra). The \nlanguage of Entry 8 of List II of the Seventh Schedule to the \nConstitution is borrowed from Entry 31 of List II of the Seventh \nSchedule to the 1935 Act and must be deemed to have the \nsame meaning; \n\nh. Entry 84 of List I of the Seventh Schedule to the Constitution \nuses the phrase ‘alcoholic liquor not for human consumption’. \nUsage of widely different terms in the Constitution would appear \nirrational if ‘intoxicating liquors’ was understood to exclude \nalcohols used in industries;\n\ni. \n\nj. \n\nk. \n\nEntry 8 of List II includes alcohols used in industries. Since it \nis a specific entry in List II, alcohols used in industries will be \nexcluded from the general entry on industries in Entry 24 of \nList II. The Union cannot take over any industry in pursuance \nof Entry 52 of List I unless the industry falls under Entry 24 of \nList II. Therefore Parliament cannot takeover industrial alcohol \nby making a declaration under the IDRA, which relates to Entry \n52 of List I;\n\nEntry 8 of List II is not subject to any other entry in the Seventh \nSchedule. The Constitution makes specific mention where it \nintends a legislative field to be subject to other entries in the \nSeventh Schedule; and\n\n Synthetics (7J) (supra) fell into error by not considering the \ntraditional meaning of ‘intoxicating liquors’. It also failed to \nnotice all previous decisions, like Ch Tika Ramji v. State of \nUP,59 which defined ‘industry’ for the purpose of Entry 24 of \nList  II and Entry of 52 List I and delineated its scope. It held \nthat the product of an industry notified under the IDRA falls \nunder Entry 33 of List III. \n\n28. Mr Dwivedi submitted that Entry 8 of List II governs the production, \nmanufacture, possession, transport, purchase and sale of intoxicating \nliquors. Since alcohols used in industries fall within the remit of \n‘intoxicating liquors’ the State legislature has exclusive and inalienable \n\n59 \n\n[1956] 1 SCR 393 : 1956 SCC OnLine SC 9\n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f1976 \n\n[2024] 10 S.C.R.\n\njurisdiction in this field. However, in the alternative, the industry i.e. \nthe production and manufacture of alcohols used in industries, would \nbe governed by the general entry, Entry 24 of List II, which can be \ntaken over by the Union upon a declaration under Entry 52, List I. \nThe product of the industry would be governed by Entries 26 and \n27 of List II and would require a declaration under Entry 33 of List III \nfor the Union to occupy the field. He argued that only the production \nand manufacture of industrial alcohol would be governed by the \nUnion List even if the requirement of a declaration under Entry 52 \nof List I is met by Section 2 of the IDRA read with Entry 26 of the \nFirst Schedule to the IDRA. However, no corresponding declaration \nis made under Section 18G of the IDRA to satisfy the requirements \nof Entry 33, List III. The Central government would be required to \nissue a notified order under Section 18G of the IDRA to claim control \nover the product. No such order has been issued and therefore the \nproduct remains in the exclusive domain of the State. Therefore, the \nUnion has not occupied the field under Entry 33, List III.\n\n29. Mr Arvind Datar, learned senior counsel took us through the process \nof making denatured alcohol and potable liquor from molasses \nor grains. He argued that a license is required to make ENA and \nanother license is required to make denatured spirit out of ENA. The \nprocess of denaturation is done before a State Excise Officer and the \nexcise or duty payable against ENA and denatured spirit changes \ndrastically. He argued that States can regulate potable alcohol as \nwell as denatured spirits because the process of denaturing takes \nplace within the same premises. \n\n30. Mr Datar argued that the Synthetics (7J) (supra) must be overruled \n\nbecause:\n\na. \n\nIn para 74 of the judgment, this Court erred in assuming that \nindustrial alcohol and rectified spirit are the same substance. \nRectified spirit or ethyl alcohol, which is per se for human \nconsumption, cannot be used interchangeably with industrial \nalcohol which has undergone denaturation. Ethyl alcohol or \nrectified spirit usually undergoes denaturation for the purpose \nof their use in industries. This would involve payment of fees \nand obtaining of licenses for the process;\n\nb. The expression ‘alcoholic liquor for human consumption’ in \nEntry 51 of List II was mistakenly read as ‘alcoholic liquor \n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n1977\n\nfit for human consumption’ which has a widely different \nmeaning.60 For example, molasses despite not being capable \nof final consumption, as it is, would be alcohol for human \nconsumption. It would undergo a process for making it fit for \nhuman consumption. However, that does not take away from \nthe fact that molasses is intended for human consumption and \nis susceptible to excise. Alcoholic liquor for human consumption \nmeans that the alcoholic liquor is capable of being consumed \nby humans. It would fall under Entry 51, List II while denatured \nalcohol would fall under Entry 84, List I;\n\nc. Everything except denatured spirit is alcohol for human \nconsumption because it has the potential to be consumed by \nhumans. The process of denaturation is carried out only to make \nthe alcohol sufficiently disagreeable for human consumption to \navoid its misuse. ENA and rectified spirit may therefore be for \nhuman consumption and cease to be such upon undergoing \ndenaturation. Mr Datar emphasized that the State does not have \nthe power to levy tax on ENA in terms of Synthetics (7J) (supra) \ndespite being for human consumption. Such an interpretation \nhas drastically reduced the ability of States to levy tax under \nEntry 51 of List II;\n\nd. Unlike what was held in Synthetics (7J) (supra), there are \nno licenses to manufacture industrial alcohol because what is \nmanufactured is only the ENA. ENA can be denatured for the \npurpose of alcohol used in industries. However, it does not \nrequire separate manufacturing units; \n\ne. The 158th Report of the Law Commission of India sought to \naddress the practical problems which arose from the judgment \nof this Court in Synthetics (7J) (supra). It noted that the excise \nlaws in force across different States in the country made no \ndistinction between liquors used for human consumption or for \nother purposes. These pre-Constitution laws closely regulated \nand controlled the manufacture, possession, sale and transport \nof all alcohol and the Union government had no say in the matter. \nThe Report clarified that there is no such thing as ‘industrial \nalcohol’ and that rectified spirit which has 95% alcohol may be \n\n60 Paras 52, 54, Synthetics (supra).\n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f1978 \n\n[2024] 10 S.C.R.\n\nused for industrial and non-industrial purposes. Accordingly, \nthe report opined that litigation on the issue be avoided by \nbringing an amendment to the IDRA, namely, the substitution \nof item 26 in the First Schedule to the IDRA with the phrase \n“Fermentation Industries but not including alcohol.” This was to \nenable the States to levy excise duties on alcohol which had \nbeen the case for over a century prior to the judgment of this \nCourt in Synthetics (supra). Parliament did not amend the \nIDRA as suggested by the Law Commission but instead only \nexcluded potable alcohol from the purview of the Union with \nretrospective effect from the commencement of the IDRA; and\n\nf. \n\n Synthetics (7J) (supra) must be overruled because it suffers \nfrom inconsistency in holding that the States have nothing to do \nwith alcohol as well as holding that they can levy a regulatory \nfee.61\n\n31. Mr Datar submitted that the phrase ‘that is to say’ featuring in \nEntry 8 of List II of the Seventh Schedule connotes that the entry \nis exhaustive. Such a reading would mean that the entire journey \nof intoxicating liquor – from production to purchase and sale will \nfall within the remit of Entry 8 of List II. Since Entry 8 of List II is \nexhaustive and is not subject to any other entry in List I or List III, it \ncannot be transgressed by a law made by Parliament. \n\n32. Relying on the State of Madras v. Gannon Dunkerley,62 Mr Datar \nargued that to understand the meaning of ‘intoxicating liquors’, which \nhas not been defined in the Constitution, the Court may identify if the \nexpression is nomen juris and adopt the meaning which the word \nhas obtained over a passage of time. The British law i.e. the Spirits \nAct 1880 includes denatured alcohol. Similarly, this Court in India \nMica (supra) and FN Balsara (supra) held that intoxicating liquor \nincludes denatured spirits. Mr Datar also presented a list of legislation \nenacted at around the same time which included denatured alcohol \nin the same category as liquor. Mr Datar relied on the judgment of \nthis Court in SIEL Ltd v. Union of India63 to argue that the subjects \nenumerated in Entry 33, List III are excluded from Entry 52, List I. \n\n61 Para 86. Synthetics (supra)\n\n62 \n\n63 \n\n[1959] SCR 379\n\n[1998] Supp. 1 SCR 560 : (1998) 7 SCC 26\n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n1979\n\nLastly, he urged that since Section 18G of the IDRA does not specify \nthat it extends to ‘production’, even the issuance of a notified order \nwould not result in the occupation of the field by the Union with \nrespect to production. \n\n33. Mr Jaideep Gupta, learned senior counsel, supplemented the case \nof the appellants. He submitted that if this Court were not inclined \nto hold that all alcohol falls under Entry 8 of List II then, in the \nalternative, the judgment of this Court in Synthetics (7J) (supra) \nmust be overruled on the ground that the three-fold classification \nof Tika Ramji (supra) has not been followed. This Court in Tika \nRamji (supra) devised a threefold classification as pre-production, \nproduction and post-production. It held that only the second \ncategory i.e. production would be covered by the word ‘industry’. \nHe submitted that the State therefore has the power to regulate \nthe manufacture of ENA which would fall under the pre-production \ncategory. The State would also have the power to regulate the \ndistribution of denatured alcohol. Buttressing this point, Mr Jaideep \nGupta argued that it becomes imperative for the State to regulate \nthe distribution of denatured alcohol because it may be renatured \nand distributed as potable alcohol which will lead to tragedies. He \nargued that it becomes imperative for the State to regulate such \ninstances under Entry 8 of List II as well as Entry 6 of List II which \ndeals with public health. \n\n34. Mr V Giri, learned senior counsel, differed from other counsel for the \nappellants and submitted that denatured alcohol would be excluded \nfrom the ambit of the term ‘intoxicating liquors’ and would therefore \nfall under Entry 24 of List II. However, he supported the arguments \nof the other counsel on a notified order under Section 18G of the \nIDRA being a prerequisite for Parliament to occupy the field under \nEntry 33 of List III. \n\n35. Mr Balbir Singh, learned senior counsel, and Mr Shadan Farasat \nand Dr. Vivek Sharma, learned counsel, have supported the above \narguments on behalf of the appellants.\n\nii. Respondent’s submissions\n\n36. Mr R Venkataramani, learned Attorney General for India appearing \n\nfor the Union of India submitted that: \n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f1980 \n\n[2024] 10 S.C.R.\n\na. The production, manufacture, trade and commerce, supply \nand distribution constitute a chain of economic activity and \nmay not be looked at separately. Therefore, the process of \nproduction necessarily includes the series of actions of trade, \ncommerce, supply and distribution. This implies that there is a \nsymbiotic relationship between Entry 52 of List I and Entry of \n33 List III and they may not be looked at separately. Entry 52 \nof List I and Entry 33 of List III are a family of entries which are \ninterconnected. Entry 52 of List I can also include and touch \nupon all matters relating to an industry that is brought under the \ncontrol of the Union. These matters can be production, trade, \ncommerce, supply and distribution, etc.;\n\nb. Entry 52 of List I is a special entry uncontrolled by any other \nentry including Entry 8 of List II. It envisages the possibility of \nuniform control at the federal level of any declared industry by \nremoving it from the individual jurisdiction of the States. Such \nuniform control serves the purpose of subserving the common \ngood, equitable distribution, fair prices, utility of the products \nof an industry for serving the interests of all the States, etc.;\n\nc. \n\nTo the extent that Parliament legislates with respect to an \nindustry, the powers of the States under Entries 26 and 27 of List \nII are denuded. Similarly, the powers of the States under Entry \n33 of List III are denuded if Parliament has occupied the field. \nMerely because a notified order is not issued would not leave \nthe subject to be legislated upon by the States. This is because \nthe lack of regulation or notification may be to serve the interest \nof the industry. The principle elucidated in Tika Ramji (supra) \nis not a principle of universal application i.e., in the absence \nof a notified order under Section 18G, the IDRA will not be a \ndormant law and the States will not derive their competence to \ndeal with all or any matters otherwise exhaustively dealt with \nby Section 18G;\n\nd. The observations in SIEL (supra) and Tika Ramji (supra) are \nincorrect in completely separating Entry 52 of List I from Entry \n33 of List III. It is open to Parliament to enact laws in respect \nof trade and commerce, production, supply, distribution. The \nfact that the IDRA touches upon a certain field is enough to \noust the jurisdiction of the State completely;\n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n1981\n\ne. All uses of liquids containing alcohol, other than those meant \nfor human consumption, would fall under one category which \nis non-potable alcohol. Non-potable alcohol must fall outside \nEntry 8 of List II. Accordingly, the 2016 amendment to Entry 26 \nof Schedule I of the IDRA must be taken to have validly taken \nover non-potable alcohol;\n\nf. \n\nThe focus of the framers while drafting the provisions concerning \nalcohol in the Constitution was temperance, regulation of trade \nand commerce in consumable alcohol preparations and to \nraise revenue;\n\ng. Entry 8 of List II cannot be interpreted to carve anything out \nof Entry 52, List I and Entry 33, List III. The judgment of this \nCourt in ITC Ltd v. Agricultural Produce Market Committee,64 \nis inapplicable to the present case because ITC (supra) \nwas determined in the context of overlapping entries. The \n‘fermentation industry’ has been dealt with under the IDRA, \nwhich is a self-contained legislation;\n\nh. The term ‘intoxicating liquors’ in Entry 8 of List II does not \ninclude all classes of alcoholic liquids. The use of the phrase \n‘that is to say’ occurring in Entry 8 of List II only refers to the \nrange of activities concerning one class of alcohol, namely \npotable alcohol, and is not referable to other classes of liquor;\n\ni. \n\nj. \n\nThe framers of the Constitution may not have been aware of \nmany industrial uses of alcohol and that all alcohol is neither \nconsumable by humans nor intoxicating in nature; and\n\nThe Report of the Industrial Alcohol Committee in 1920 observed \nthat it was difficult to define ‘intoxicating liquors’ since there was \nno intrinsic difference between alcohol intended for potable and \nnon-potable purposes.\n\n37. Mr Tushar Mehta, learned Solicitor General of India, argued that \nthe adjudication on the interplay of Sections 2 and 18G of the IDRA \nwith Entry 52 of List I and Entry 33 of List III will have a bearing \non other legislation and therefore the ruling in this case may not \nbe restricted to the industry of alcohol. The division of legislative \n\n64 \n\n[2002] 1 SCR 441 : (2002) 9 SCC 232\n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f1982 \n\n[2024] 10 S.C.R.\n\npowers has undergone four stages: (a) the devolution of powers \nto the Federal legislature and the Provincial legislatures under the \nDevolution Rules, Government of India Act 1919;65 (b) the division of \nsubjects between the Centre and the Provinces under the 1935 Act; \n(c) the draft Constitution which was placed before the Constituent \nAssembly; and (d) the entries as they were finally adopted in the \nConstitution. The Solicitor General submitted that:\n\na. Some industries have always been considered as necessarily \nunder Union control. This may be because it is in national \ninterest, requires uniform regulation throughout the country, or \nwhen the industry or its products are sought to be equitably \ndistributed. Entry 52 of List I is in furtherance of the federal \nprinciple;\n\nb. Entry 20 of the Central Subject List in the Devolution Rules \nframed under the 1919 Act which corresponds to Entry 52 of \nList I of the Seventh Schedule to the Constitution used the term \n‘development’. A similar provision was inserted as Entry 34, List I \nof the Seventh Schedule to the 1935 Act which also used the \nterm ‘development’. This entry was further retained as Entry 64 of \nList I of the Seventh Schedule to the draft Constitution. However, \nafter debates in the Constituent Assembly the entry gained the \nform in which it appears today in Entry 52 of List I. The word \n‘development’ was dropped from the entry but the word ‘control’ \nwas retained. Therefore, the term ‘control’ must have been \nintended to connote a wider meaning than its earlier versions;\n\nc. \n\nThis is borne out by the Constituent Assembly debates where \nDr BR Ambedkar responded to amendments which sought to \nintroduce the term ‘development and control’ in draft Entry 64, \nList I. He stated that the intention of the Drafting Committee \nwas not merely to allow the Union to take over the development \nof an industry but also other aspects; \n\nd. \n\n Tika Ramji (supra) must be overruled because:\n\ni. \n\nIt did not consider the Constituent Assembly debates and \nwrongly restricted the meaning of industry to manufacturing \nand production only;\n\n65 \n\n“1919 Act”\n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n1983\n\nii. All aspects from the sourcing of raw materials to the \ndistribution of products must fall within the powers of the \nUnion to take control of an industry under Entry 52 of List I;\n\niii. Article 366(12) did not define the term ‘goods’ to include \n\nraw materials in particular;\n\niv. Entry 27 of List II is subject to Entry 33 of List III. The \nimplication of this aspect was not sufficiently dealt with by \nthe Court in Tika Ramji (supra); and\n\nv. \n\nIt is expedient in public interest that alcohol is regulated \nby a Central legislation. Currently, the IDRA occupies the \nfield, and any State law on alcohol, other than potable \nalcohol, will be repugnant to the IDRA. The holding in \nTika Ramji (supra), that there must be a notified order in \nforce pursuant to Section 18G for there to be repugnancy \nis not correct. Further, it was obiter dicta;\n\ne. \n\nf. \n\n Synthetics (7J) (supra) rightly did not consider the observations \nin Tika Ramji (supra) regarding the absence of a notified order \nby the Union government;\n\nThe debates in the Constituent Assembly would show that the \nframers of the Constitution intended the Union to have some \ncontrol over the trade and commerce, production, supply and \ndistribution which led to the introduction of a concurrent list \nentry which is identifiable as Entry 33 of List III;\n\ng. The power of taxation over potable alcohol has always been \nwith the States and the power of taxation over non-potable \nalcohol has always been with the Union. This is borne out by \nthe evolution of Entry 84 of List I and Entry 52 of List II of the \nSeventh Schedule to the Constitution. The control and the \ntaxing power were cumulatively given to the provinces under \nEntry 16 of the provincial subject list of the Devolution Rules \nunder the 1919 Act. Under the 1935 Act, Entry 45 of List I \nspecifically excluded ‘alcoholic liquor for human consumption’ \nfrom the domain of the Union and correspondingly included it \nunder the State list as Entry 40 of List II;\n\nh. The term ‘intoxicating liquors’ in Entry 8 of List II means a \nbeverage which has the effect of intoxication upon consumption. \n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f1984 \n\n[2024] 10 S.C.R.\n\nThe term is not used elsewhere in the Seventh Schedule and \ninstead the term ‘alcoholic liquor for human consumption’ is \nused in taxing entries. The terminological variation is because \nthe incidence of tax is relevant in a taxing entry. Accordingly, \nsince intoxication is not the incidence of taxation but the effect \nof consuming alcoholic liquor, it is not used in the taxing entries;\n\nSimilarly, in Article 47, the term ‘intoxicating drinks’ is used to \nconnote all drinks which have the effect of intoxication regardless \nof its alcoholic content, for example, Indian hemp;\n\nThis Court, in Synthetics (7J) (supra), held that ‘intoxicating \nliquors’ is limited to ‘alcoholic liquor fit for human consumption’. \nFN Balsara (supra) defined liquor in a different context and did \nnot deal with legislative competence; and\n\nIndustrial alcohol is a subject which affects the entire nation \nand requires a uniform approach. This is evidenced by national \nlaws and policies such as the Indian Power Alcohol Act 1948, \nEthyl Alcohol (Price Control) Order 1966 and the National \nBiofuel Policy 2018.\n\ni. \n\nj. \n\nk. \n\n38. Mr Dhruv Agrawal, learned senior counsel; Mr Abhimanyu Bhandari; \nMr Omar Ahmad; Ms Tahira Karanjawala; Ms Sansriti Pathak; Mr \nPawan Shree Agarwal; Mr S Nandakumar; and Mr Akash Bajaj, \nlearned counsel, have supported the above arguments on behalf \nof the respondent.\n\nC. The distinction between potable and non-potable alcohol\n\n39. Before delineating the issues that fall for the consideration of this \nCourt, certain preliminary remarks on the process of preparation of \npotable alcohol, that is, alcohol that is used as a beverage must be \nmade. The raw material for potable alcohol is generally molasses \nand grain,66 which is fermented and distilled to produce rectified \nspirit. Rectified spirit, also known as ethyl alcohol, contains about \n95% alcohol and some impurities which can affect flavour and \naroma. Rectified spirit is used as a solvent in pharmaceutical and \ncosmetic products. Though rectified spirit is not generally used in \n\n66 See FB Wright, Distillation of Alcohol and De-Naturing (2nd ed. 1907)\n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n1985\n\n40. \n\nthe preparation of alcoholic beverages, it may be used to produce \nhome-made liqueurs.67 Extra Neutral Alcohol is a highly purified form \nof ethanol which contains more than 96% alcohol. ENA has a neutral \ntaste and smell and is mostly used as a base for the preparation of \npremium beverages. Additionally, it is also used in the production of \nproducts like perfumes and mouthwashes. Absolute alcohol is ethanol \nthat contains less than 1% water and more than 99% alcohol.68 \nThe high purity of the alcohol makes it ideal for the preparation of \npharmaceutical products, cosmetics and chemical manufacturing \nthat require a water-free solvent.69\n\n‘Industrial alcohol’ is a common term that is used to denote the \nalcohol that is used in industries. As indicated above, all the above \nthree variants of ethanol are used in various industrial preparations. \nWhile ENA is usually used for the preparation of alcoholic beverages, \nrectified spirit is also used to prepare certain alcoholic beverages. \nDenaturation is a process by which ethanol is deliberately made \nundrinkable by adding chemicals known as ‘denaturants’ to make \nit poisonous or foul smelling and unsuited for ingestion by humans. \nDenaturants can be added to any of the three forms of ethanol \n(ENA, rectified spirit and absolute alcohol). Denatured alcohol is also \nfurther classified into ‘Completely Denatured Alcohol’ and ‘Specially \nDenatured Alcohol’. Both these formulations contain denaturants \nmaking it unconsumable. However, in completely denatured alcohol, \nthe denaturants cannot be easily removed while in ‘specially denatured \nalcohol’, they can be easily removed.70 In view of this complexity, \nwhere the materials for the preparation of potable alcohol are also \nused for the preparation of other products, a simplistic classification of \n‘potable’ and ‘non-potable’ alcohol cannot be made for the purposes \nof this judgment. \n\n41. This is also evident from the submissions by counsel on the scope \n\nof Entry 8 of List II. The counsel made the following submissions:\n\n67 Stuart Walton, Norma Miller, An Encyclopedia of Spirits & Liqueurs and How to Cook with Them (2000)\n\n68 See FB Wright, Distillation of Alcohol and De-Naturing (2nd ed. 1907)\n\n69 See KA Jacques, TP Lyons, DR Kelsall (ed), The Alcohol Textbook: A reference for the beverage, fuel \n\nand industrial alcohol industries (4th ed. Nottingham University Press)\n\n70 See Alcohol Denaturants-Specification (Second Revision), ICS 71.100.80\n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f1986 \n\n[2024] 10 S.C.R.\n\na. Entry 8 only includes the final product of potable alcohol, that \nis alcoholic beverages for human consumption. Entry 8 does \nnot include ENA which is a raw material for the preparation of \nbeverage;71\n\nb. Entry 8 includes ENA and potable alcohol;72\n\nc. Entry 8 includes ENA, potable alcohol and the process of \n\n‘denaturing’ ENA;73 and\n\nd. Entry 8 includes ENA, potable alcohol and denatured alcohol.74 \n\nD. \n\nIssues \n\n42. With the above preliminary observations, we have formulated the \n\nfollowing issues: \n\na. Whether Entry 52 of List I of the Seventh Schedule to the \n\nConstitution overrides Entry 8 of List II;\n\nb. Whether the expression ‘intoxicating liquors’ in Entry 8 of List II \nof the Seventh Schedule to the Constitution includes alcohol \nother than potable alcohol; and \n\nc. Whether a notified order under Section 18G of the IDRA is \nnecessary for Parliament to occupy the field under Entry 33 of \nList III of the Seventh Schedule to the Constitution.\n\nE. Analysis \n\ni. \n\nThe constitutional distribution of legislative power\n\n43. One of the prominent features of a federal Constitution is the \ndistribution of legislative powers between the Union and the States. \nArticle 246 provides for the distribution of legislative powers between \nParliament and the State Legislatures. Clause (1) of Article 246 \nstipulates that Parliament has exclusive power to make laws with \nrespect to any matter enumerated in the Union List (List I to the \nSeventh Schedule) notwithstanding anything in the State or the \n\n71 See submissions of Mr Tushar Mehta, learned SG.\n\n72 See submissions of V Giri, counsel for petitioner\n\n73 See Vam Organic (II) \n\n74 See submissions of Mr Dwivedi and Mr Datar senior counsel\n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n1987\n\nConcurrent Lists. Clause (2) stipulates that Parliament and the State \nLegislatures have the power to legislate on any matter enumerated \nin the Concurrent List (List III of the Seventh Schedule) subject to \nthe power of Parliament under Clause (1) but notwithstanding the \npower of the State Legislatures under Clause (3). Clause (3) provides \nthat subject to clauses (1) and (2), the State Legislatures have \nthe power to legislate on any matter enumerated in the State List \n(List II of the Seventh Schedule) of the Seventh Schedule. Further, \nClause (4) provides for the power of Parliament to enact laws for \nUnion Territories. It states that Parliament may enact laws for any \npart of the territory of India which is not included in a State. This \npower includes the power of Parliament to make laws with respect \nto entries enumerated in the State list, for Union Territories. \n\n44. The federal balance of the distribution of legislative powers between \nthe Union and the States rests on the interpretation of the phrase \n“notwithstanding” in Clause (1) of Article 246 and “subject to” in \nClause (3) of Article 246. It is more than clear that the phrases \nprovide predominance to Parliament over State Legislatures. The \nfederal balance lies not on the recognition that the Constitution grants \nParliament predominant legislative power but on the identification \nof the scope of such predominance. The scope of the non-obstante \nclause in Article 246(1) and the subjugation clause in Article 246(3) \nmust not be interpreted in isolation but along with the substantive \nprovisions of the clauses. Clause (1) of Article 246 grants Parliament \nthe “exclusive power” to enact laws with respect to matters in List I. \nSimilarly, Clause (3) of Article 246 grants the Legislature of States, \nthe “exclusive power” to enact laws with respect to matters in List II. \nOn a holistic interpretation of the provisions, it is clear that the non-\nobstante clause in Article 246(1) and the subjugation clause in Article \n246(3) do not permit Parliament to enact laws with respect to the \nentries in List II. Each of the legislative bodies are sovereign and \nsupreme within the sphere that is allocated to them in the Seventh \nSchedule.75 What then is the purpose of the non-obstante and \nsubjugation clause? It is crucial to note that Clause (1) of Article 246 \nstipulates that the power of Parliament to make laws with respect to \nentries in List I is ‘notwithstanding’ not just the power to make laws \nwith respect to matters in the Concurrent list but also the power to \n\n75 \n\nJindal Stainless Steel v. State of Haryana (2017) 12 SCC 1 [617]\n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f1988 \n\n[2024] 10 S.C.R.\n\nmake laws with respect to matters in the State List. A combined \nreading of the non-obstante clause and the subjugation clause along \nwith the use of the phrase “exclusive power” means only one thing, \nthat when there is a conflict between the entries in List I and List II, \nthe power of Parliament supersedes. \n\n45. The judgment of this Court in Hoechst Pharmaceuticals v. State \nof Bihar76 is the locus classicus on the constitutional scheme of \nlegislative distribution. The decision holds that when there is a conflict \nbetween an entry in List I and entry in List II which is not ‘capable \nof reconciliation’,77 the power of Parliament to legislate with respect \nto a field covered by List I must supersede the exercise of power by \nthe State legislature to that extent.78 The judgment also proceeded \nto lay down the manner in which the entries in List I and List II must \nbe reconciled79: \n\na. \n\nb. \n\nIn case of a seeming conflict between the entries in the two \nlists, the entries must be read together without giving a narrow \nand restricted meaning to either of the entries in the Lists; and \n\nIf the entries cannot be reconciled by giving a wide meaning, \nit must be determined if they can be reconciled by giving the \nentries a narrower meaning. \n\n46. \n\nIn State of WB v. Committee for Protection of Democratic Rights,80 \na Constitution Bench held that the principle of federal supremacy in \nArticle 246 can be resorted to only when there is an ‘irreconcilable \ndirect conflict’ between the entries in List I and List II.81 \n\nii. Scheme of legislative entries\n\n47. The lists in the Seventh Schedule demarcate the legislative fields \nbetween Parliament and the State Legislatures. They do not \nconfer power but stipulate broad fields of legislation.82 The source \n\n76 \n\n[1983] 3 SCR 130 : (1983) 4 SCC 45\n\n77 Also see In re Central Provinces and Berar Act 14 of 1938, AIR 1939 FC 1\n\n78 \n\n(1983) 4 SCC 45 [38] \n\n79 AIR 1939 FC 1 [41]\n\n80 \n\n81 \n\n[2010] 2 SCR 979 : (2010) 3 SCC 571\n\n(2010) 3 SCC 571 [27]; Also see In re C.P & Berar Taxation Act, AIR 1939 FC 1\n\n82 See Calcutta Gas Co. (Proprietary) Ltd. v. State of W.B., 1962 SCC OnLine SC 60; Union of India v. HS \n\nDhillon (1971) 2 SCC 779; TMA Pai Foundation v. State of Karnataka (2002) 8 SCC 481. \n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n1989\n\nof the power of Parliament and State Legislatures emanates from \nArticles 245 and 246 of the Constitution. These provisions in the \nConstitution have been borrowed from Sections 99 and 100 of \nthe Government of India Act 193583 with necessary modifications. \nThe demarcation of legislative fields is based on a deliberate \ndesign as well as on the principles of federalism. Matters requiring \ncoordination between different regions of the country or of national \nimportance have been placed in the field of Parliament. Matters \nrequiring localized focus and limited or no coordination between \nStates have been placed in the State List. Fields of legislation \nwhich may require either uniform legislation for the entire nation \nor context and region-specific accommodation, depending on the \ncircumstance, are placed in the Concurrent List. Moreover, the \nthree lists make a clear distinction between general entries and \ntaxation entries. The power of taxation cannot be derived from a \ngeneral entry.84 The entries in the legislative lists do not cast an \nobligation to legislate or to legislate in a particular manner. Within \nthe confines of an entry, the legislature exercises plenary power \nsubject to the provisions of the Constitution.85 \n\n48. Numerous language devices are used in the Seventh Schedule to \nprevent the conflict of entries and ensure a clear demarcation of \nthe fields of entry. The entries in List II use the following language \ndevices: \n\na. \n\nb. \n\nc. \n\nd. \n\n‘Subject to’ a specific provision of List I or List III: Entries 2,17,22, \n24,26,27,33 and 57;\n\n‘Subject to’ provisions of an entire list with regard to the subject \nmatter: Entry 13;\n\n‘Not specified in’ or ‘other than those specified in’ List I: Entries \n13, 32 and 63; and\n\n‘Subject to’ law made by Parliament or ‘subject to’ any limitations \nimposed by Parliament by law: Entries 37 and 50.\n\n83 \n\n“1935 Act”\n\n84 State of Karnataka v. State of Meghalaya (2023) 4 SCC 416; Union of India v. HS Dhillon (1971) 2 SCC \n779; MPV Sundararamier & Co. v. State of Andhra Pradesh (1958) 9 STC 298; R Abdul Quader & Co. v. \nSTO (1964) 6 SCR 867; HM Seervai, Constitutional Law of India, Volume 3 (4th edn.) [25.57] 2340-2341.\n\n85 United Province v. Atiqa Begum (1940) FCR 110; Constitution of India, Article 13\n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f1990 \n\n[2024] 10 S.C.R.\n\n49. With respect to category (a) above, where an Entry in List II is subject \nto an entry or entries in List I or List III, the extent of the legislative \nfield covered by the entry in List II is circumscribed by the domain \ncovered by the entries in Lists I or III to which the entry in List II is \nsubject. For example, Entry 22 of the State List deals with “courts \nof wards subject to the provisions of Entry 34 of List I”. Entry 34 \nof List I provides for “Courts of wards for the estates of Rulers of \nIndian States”. The legislative field in Entry 22 of List II is wider \nthan the field of Entry 34 of List I. Hence the subjection of Entry 22 \nof List II to Entry 34 of List I indicates that that the field assigned \nto the States is circumscribed to the extent of the field assigned \nto Parliament in Entry 34 of List I. Barring the express legislative \ndevice of subordination, the States have complete power to enact \nlaws over the fields specified in List II of the Seventh Schedule to \nthe Constitution. The authority of the State Legislature to enact laws \non those entries of List II which are not expressly made subject to \nother entries has maintained the federal balance of legislatures \nunder the Constitution.86 \n\n50. The devices of language used in the Seventh Schedule prevent the \noverlap between entries in various Lists. Now, what of the instances \nwhere there is an overlap between provisions in different entries \nbut the Constitution does not use a device to resolve it? It must \nbe recalled that the federal supremacy of Parliament on legislative \ncompetence can only be resorted to when there is an ‘irreconcilable \ndirect conflict’ between entries in different lists. It is crucial to note \nthe difference between ‘overlap’ and ‘conflict’. An overlap occurs \nwhen two or more things or fields partially intersect. However, a \nconflict occurs when two or more entries operate in the exactly same \nfield. Courts while dealing with an overlap of legislative entries must \nendeavour to diminish the overlap and not enhance it by including it \nin the field of conflict. The federal supremacy accorded to Parliament \nticks in at the stage of ‘conflict’. \n\n51. The legislative entries must be given a wide meaning. All incidental and \nancillary matters which can be fairly and reasonably comprehended \nmust be brought within them.87 However, if there is an overlap \n\n86 \n\nibid\n\n87 United Provinces v. Atiqa Begum (1940) FCR 110; Western India Theatres Ltd. V. Cantonment Board, Elel \n\nHotels & Investments Ltd. V. Union of India; Godfrey Phillips India Ltd. V. State of UP (2005) 2 SCC 515\n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n1991\n\nbetween two entries the Court must endeavour to interpret the \nentries harmoniously. While interpreting the entries harmoniously, it \nmust be ensured that no entry is rendered redundant. This principle \nof construction applies equally to entries within the same List and \nentries within different lists.88 The principle of parliamentary supremacy \nmust be applied only when the attempted reconciliation by the above \nmethods of interpretation fails. \n\niii. The field covered by Entry 52 of List I and Entry 8 of List II\n\n52. Entry 8 of List II reads as follows: \n\n“Intoxicating liquors, that is to say, the production, \nmanufacture, possession, transport, purchase and sale \nof intoxicating liquors”.\n\n(emphasis supplied)\n\na. The scope of Entry 8\n\nI. \n\nThe meaning of ‘that is to say’\n\n53. Entry 8 of List II deals with ‘intoxicating liquor’. The Entry specifies \nthe scope of the provision by the usage of the phrase ‘that is to say’. \nThe Entry stipulates that it includes everything from the production \nto the sale of intoxicating liquor, with the use of the expressions \n‘production, manufacture, possession, transport, purchase and sale’. \nThe Entry specifies the breadth of the provision by couching it in \nover broad terms. There are a few entries which provide such a \nspecification, by the use of the words “that is to say”.89 Otherwise, the \ngeneral language of the Seventh Schedule is to merely mention the \nfield such as ‘gas and gas-works’,90 or ‘fisheries’,91 or ‘census’,92 or \n‘public health and sanitation; hospitals and dispensaries’.93 Entry 25 \nof List II specifies ‘gas and gas-works’ without clarifying the scope of \nthe provision. Similarly, Entry 21 of List II specifies ‘fisheries’. Even \n\n88 See Harakchand Ratanchand Banthia v. Union of India (1969) 2 SCC 166\n\n89 Seventh Schedule to the Constitution of India; Entry 71 to List I, Entry 5 to List II, Entry 13 of List II, Entry \n\n17 of List II, Entry 18 of List II, Entry 42 of List II\n\n90 Seventh Schedule to the Constitution of India; Entry 25 of List II\n\n91 Seventh Schedule to the Constitution of India; Entry 21 of List II\n\n92 Seventh Schedule to the Constitution of India; Entry 69 of List I\n\n93 Seventh Schedule to the Constitution of India; Entry 6 of List II\n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f1992 \n\n[2024] 10 S.C.R.\n\nwithin the entries that provide some specification, there are two \nkinds. First, entries where the meaning of the field is clarified. For \nexample, Entry 71 of List I deals with the field of ‘Union Pensions’. \nThe phrase ‘that is to say’ is then used to specify the meaning of the \nphrase ‘Union Pensions’ as pensions payable by the Government of \nIndia or out of the Consolidated Fund of India.94 This specification \noperates more or less as a definition clause. Second, the phrase is \nused to specify the scope of the provision. For example, Entry 5 of \nList II reads as “local government, that is to say, the constitution and \npowers of municipal corporations, improvement trusts…”95 Entry  8 \nfalls in the latter category.\n\n54. The next question is whether the phrase ‘that is to say’ used in \nEntry 8 limits or explains the scope of the entry. The interpretation \nof the phrase ‘that is to say’ has fallen for the consideration of this \nCourt earlier in numerous cases.96 This Court has adopted both \nviews. Benches have interpreted the expression as a limiting as well \nas an explanatory device. In Bhola Prasad v. The King Emperor,97 \nthe Federal Court dealt with the meaning of the phrase ‘that is to \nsay’ in Entry 31 of the Provincial List in the 1935 Act. Entry 31 of \nthe Provincial List read as “Intoxicating liquors and narcotic drugs, \nthat is to say, the production, manufacture, possession, transport, \npurchase and sale of intoxicating liquors, opium and other narcotic \ndrugs.” The issue was whether the Provincial Government had \nthe competence to issue a notification prohibiting the possession \nof intoxicating liquor. The Federal Court held that the Provincial \nGovernment had the competence to prohibit though Entry 31 does \nnot expressly grant the power to ‘prohibit’. The Court noted that \nthe words that follow the phrase ‘that is to say’ were explanatory \n\n94 Other examples include Entry 13 of List II which specifies the meaning of ‘communications’ to mean \nroads, bridges, ferries and Entry 42 of List II which specifies State pensions to mean pensions payable \nby the State or out of the Consolidated Fund of the State. \n\n95 Other examples include Entry 17 of List II which reads as “water, that is to say, water supplies, irrigation \nand canals, drainage and embankments, water storage and water power subject to the provisions of \nentry 56 of List I” and Entry 18 of List II which reads as ‘Land, that is to say, rights in or over land, land \ntenures including the relation of landlord and tenant, and the collection of rents; transfer and alienation \nof agricultural land; land improvement and agricultural loans; and colonization. \n\n96 State of Karnataka v. Balaji Computers; Bansal Wire Industries v. State of UP (2011) 6 SCC 545; Sait \nRikaji Furtarnal v. State of AP (1991) Supp (1) SCC 202; CST v. Popular Trading Company (2000) 5 \nSCC 511; State of Punjab v. Devans Modern Brewaries (2004) 11 SCC 26; State of Bombay v. Bombay \nEducation Society (1954) 2 SCC 152\n\n97 \n\n(1942) 4 FCR 17 \n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n1993\n\nor illustrative and not words of either amplification or limitation. \nHowever, in other judgments dealing with taxing provisions, this \nCourt has held that the expression ‘that is to say’ is employed to \nexhaustively enumerate.98 While interpreting the expression ‘that is \nto say’, it must not be lost that it features in the legislative list which \nmust be interpreted widely and to include all ancillary items. The \ninterpretation of taxing statutes (which must be construed strictly) \nand legislative entries in the Seventh Schedule(which are required \nto be construed widely and liberally) cannot be the same. This was \nnoticed by the Constitution Bench in State of Bombay v. Bombay \nEducation Society.99\n\nIn State of Punjab v. Devans Modern Breweries,100 the levy of tax \non the import of potable liquor manufactured in other States was \nchallenged. Justice SB Sinha in his dissenting opinion, considered the \nscope of the words ‘that is to say’ in Entry 8 of List II. Relying on the \ndecisions in CST v. Popular Trading101 and Indian Aluminium Co. \nLtd. v. Assistant Commissioner of Commercial Taxes (Appeals),102 \nthe learned Judge held that the expression ‘that is to say’ in Entry 8 \nof List II is descriptive, enumerative and exhaustive and circumscribes \nthe scope of the said entry to a great extent.”103 However, the opinion \ndid not consider the decisions in Bhola Prasad (supra) and State \n\n55. \n\n98 State of Karnataka v. Balaji Computers; Bansal Wire Industries v. State of UP (2011) 6 SCC 545 [20]; Sait \nRikhaji Furtarnal v. State of AP (1991) Supp (1) SCC 202 [4]; CST v. Popular Trading Company (2005) 5 \nSCC 511\n\n99 \n\n(1954) 2 SCC 152; “12. […] He points out that one of the meanings of the word “namely” as given in \nOxford English Dictionary, Vol. VII, p. 16 is “that is to say” and he then refers us to the decision of the \nFederal Court in Bhola Prasad v. King Emperor [Bhola Prasad v. King Emperor, 1942 SCC OnLine \nFC 3 : (1942) 4 FCR 17 at p. 25] where it was stated that the words “that is to say” were explanatory or \nillustrative words and not words either of amplification or limitation. It should, however, be remembered \nthat those observations were made in connection with one of the legislative heads, namely, Entry 31 \nof the Provincial Legislative List. The fundamental proposition enunciated in R. v. Burah [R. v. Burah \n(1878) LR 3 AC 889 (PC)] was that Indian Legislatures within their own sphere had plenary powers of \nlegislation as large and of the same nature as those of Parliament itself. In that view of the matter every \nentry in the legislative list had to be given the widest connotation and it was in that context that the words \n“that is to say”, relied upon by the learned Attorney General, were interpreted in that way by the Federal \nCourt. To do otherwise would have been to cut down the generality of the legislative head itself. \nThe same reason cannot apply to the construction of the Government Order in the present case for the \nconsiderations that applied in the case before the Federal Court have no application here.” [emphasis \nsupplied]\n\n100 (2004) 11 SCC 26\n\n101 \n\n[2000] 2 SCR 983 : (2000) 5 SCC 511\n\n102 \n\n[2001] 1 SCR 407 : (2001) 2 SCC 201\n\n103 (2001) 2 SCC 201 [158]\n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f1994 \n\n[2024] 10 S.C.R.\n\nof Bombay v. Bombay Education Society104 and instead referred \nto the interpretation of the expression in taxing statutes. For the \nabove reasons, the expression ‘that is to say’ in Entry 8 of List II \ncannot be interpreted to circumscribe the scope of the entry. The \nwords that follow ‘that is to say’ are illustrative and explanatory of \nthe scope of the provision. The expression does not limit the scope \nof the entry. Thus, the scope of Entry 8 of List II cannot be limited to \nthe ‘production, manufacture, possession, transport, purchase and \nsale’ of Intoxicating Liquor. \n\nII. Product or industry based entry\n\n56. The Seventh Schedule differentiates between an industry and the \nproduct of the industry. Entry 24 of List II deals with industries. \nEntries 26 and 27 of List II deal with products of industries. Entry \n26 deals with “Trade and commerce within the State subject to the \nprovisions of Entry 33 of List III”. Entry 27 provides for “Production, \nsupply and distribution of goods subject to the provisions of Entry \n33 of List III”. Entry 33 of List III enables both Parliament and the \nState Legislature to enact laws with respect to trade and commerce \nin, and the production, supply and distribution of, inter alia, the \nproducts of the industry where control by the Union is declared by \nParliament by law to be in the public interest. Thus, if the Union has \ncontrol over an industry under Entry 52 of List I, both Parliament and \nthe State Legislature will have the competence with respect to the \nproducts in terms of Entry 33 of List III. Under Entries 26 and 27 of \nList II, the State Legislature has the exclusive power to enact laws \nwith respect to the products of the industries covered by Entry 24 of \nList II. Parliament has the competence to legislate on any ‘industry’ \nprovided that it satisfies the condition stipulated in Entry 52 of List I \n(control by the Union being declared by a law of Parliament to be in \nthe public interest). The necessary corollary of the enactment of the \nlaw under Entry 52 is that the products of the industry are shifted to \nthe Concurrent list from the State List. \n\n57. The scope of Entry 8 must be interpreted in this background. If \nEntry 8 is a product-based Entry, it will only cover the consumable \nend-product. However, if it is an industry-based Entry, it would cover \n\n104 \n\n[1955] 1 SCR 568 : (1954) 2 SCC 152\n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n1995\n\nthe production of the product as well.105 Entries 24, 26 and 27 of \nList II are general entries relating to industry and the products of the \nindustries. A distinction between industry and product is made in List II \nto give effect to the legislative scheme by which certain industries \nmay be controlled by the Union under Entry 52 of List I but products \nof those industries which are placed in the Concurrent list under \nEntry 33. To give effect to this unique demarcation, it was necessary \nto separate the entries relating to industries and products in List II. \nHowever, Entry 8 is a specific entry dealing only with ‘intoxicating \nliquor’. The distinction made between industry and products in the \ngeneral entries to give effect to the scheme of legislative distribution \non industries is not adopted in Entry 8. We have in the preceding \nsections emphasised that the primary principle of interpreting entries \nin the legislative lists is to provide a wide meaning to them. A narrow \ninterpretation must only be adopted when either (a) the scope of \nthe Entry is limited by the use of language devices; or (b) a wide \ninterpretation creates an overlap between entries within the same \nlist or different lists. For example, Entry 25 of List II provides States \nthe competence over “gas and gas-works”. This Court in Calcutta \nGas Company (supra) did not interpret the Entry to only include the \nproduct of ‘gas and gas works’ but rather interpreted it to include the \nindustry. This is the construction which is in consonance with settled \nprinciples of interpretation. \n\n58. Entry 8 in itself indicates that the intent is to ensure that it is read \nas broadly as possible. The Entry itself covers the ‘production, \nmanufacture, possession, transport, purchase and sale’ of intoxicating \nliquors. Thus, it is clear that the Entry seeks to regulate everything \nfrom the stage of the raw materials to the consumption of ‘intoxicating \nliquor’. Entry 8 of List II includes both the industry and the product \nof ‘intoxicating liquor’.\n\nb. Scope of Entry 52 of List I: the absence of “to the extent to which”\n\n59. Entry 24 of List II deals with ‘Industries’. The entry is subject to \nentries  7 and 52 of List I. Entry 7 of List I deals with industries \nwhich are declared by Parliament by law to be necessary for the \npurpose of defence or for the prosecution of war. Entry 52 of List I \n\n105 See Tika Ramji v. State of UP, AIR 1956 SC 676\n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f1996 \n\n[2024] 10 S.C.R.\n\ndeals with industries, the control of which by the Union is declared \nby Parliament to be expedient in the public interest. The State \nLegislature will have the competence to enact laws with respect to \n‘industries’. However, Parliament has the power to deal with such \nindustries which are necessary to be in the control of the Union for: \n(a) public interest; (b) defence; and (c) prosecution of war. Thus, \nthe State Legislature will have the competence to enact laws with \nrespect to all industries, unless Parliament has taken control of the \nindustry under Entries 52 or 7 of List I. \n\n60. A comparison may be drawn to Entry 54 of List I and Entry 23 of \nList II to cull out the scope of Entry 52 of List I. Entry 23 of List II \ndeals with the “regulation of mines and mineral development subject \nto the provisions of List I with respect to regulation and development \nunder the control of the Union.” Entry 54 of List I deals with the \n“regulation of mines and mineral development to the extent to \nwhich such regulation and development under the control of Union \nis declared by Parliament by law to be expedient in public interest.” \nThe expression ‘to the extent to which’ is absent in Entry 52 of List I. \nIn Mineral Area Development Authority v. M/s Steel Authority \nof India,106 a nine-Judge Bench of this Court dealt with the scope \nof Entry 52 of List I and in particular, the purport of the expression \n“to the extent to which”. One of the contentions before the nine-\nJudge Bench was that the State Legislature does not have any \npower under Entry 23 of List II because the Mines and Minerals \n(Development and Regulation) Act 1957107 is a complete code that \noccupies the entire field relating to regulation of mines and mineral \ndevelopment. Rejecting the argument, the majority held that the \nwords “to the extent to which” indicates that “besides declaring that \nit is taking under its control any subject relating to the regulation \nof mines and mineral development, Parliament has to specify the \nextent to which the Parliamentary regulation is deemed expedient \nin the public interest.”108 \n\n61. As opposed to Entry 54, Entry 52 does not use the words “to the \nextent to which”. The question is whether the State Legislature is \n\n106 2024 INSC 554\n\n107 “MMDRA”\n\n108 2024 INSC 554 [158-161]\n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n1997\n\ndenuded from legislating on an industry which is controlled under \nthe IDRA or any other similar legislation enacted under Article 246 \nread with Entry 52. Section 2 of IDRA provides that the Union \ntakes control over the industries specified in the First Schedule. In \nIshwari Khetan Sugar Mills v. State of UP,109 a Constitution Bench \nof this Court dealt with the constitutional validity of the UP Sugar \nUndertakings (Acquisition) Act 1971 which was challenged on the \nground that the State Legislature lacked the legislative competence. \nWhile demarcating the scope of Entry 52 of List I and Entry 24 of \nlist II, Justice D A Desai (writing for himself and two other Judges), \nobserved that the degree and extent of control acquired by Parliament \nupon a declaration under Entry 52 would depend on the legislation \nenacted “spelling out the degree of control assumed”. The relevant \nobservations are extracted below: \n\n“7. […] Entry 52 List I on its own language does not \ncontemplate a bald declaration for assuming control over \nspecified industries, but the declaration has to be by law \nto assume control of specified industries in public interest. \nThe legislation enacted pursuant to the power to legislate \nacquired by declaration must be for assuming control over \nthe industry and the declaration has to be made by law \nenacted, of which declaration would be an integral part. \nLegislation for assuming control containing the declaration \nwill spell out the limit of control so assumed by the \ndeclaration. Therefore, the degree and extent of control \nthat would be acquired by Parliament pursuant to the \ndeclaration would necessarily depend upon the legislation \nenacted spelling out the degree of control assumed. A \nmere declaration unaccompanied by law is incompatible \nwith Entry 52 List I. A declaration for assuming control of \nspecified industries coupled with law assuming control \nis a prerequisite for taking legislative action under Entry \n52 List I. The declaration and the legislation pursuant \nto declaration to that extent denude the power of State \nLegislature to legislate under Entry 24 List II.” \n\n109 \n\n[1980] 3 SCR 331 : (1980) 4 SCC 136\n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f1998 \n\n[2024] 10 S.C.R.\n\n62. The opinion of Justice D A Desai referred to the judgments of this \nCourt in Baijnath Kedia v. State of Bihar110 and State of Haryana v. \nChanan Mal111 “on an identical Entry 54, List I.”112 It was also argued \nthat Section 2 of IDRA,113 unlike Section 2 of MMDRA114 does not \nprovide that the Union shall take control “to the extent herewith \nprovided”, and thus, IDRA takes full control over the scheduled \nindustries. Rejecting the argument, Justice D A Desai noted that the \n“words of limitation on the power to make declaration are ‘by law’”.115 \nJustice R S Pathak, as the learned Chief Justice then was, (writing \nfor himself and Justice Koshal) observed that he would refrain from \nexpressing any opinion on this issue and that the challenge to the \nvalidity of the impugned enactment could be disposed of without a \nreference to Entries 52 of List I and 24 of List II.116 \n\n63. \n\nIn ITC (supra), another Constitution Bench briefly dealt with this issue. \nIt was argued that this Court in Ishwari Khetan (supra) equated Entry \n52 of List I with Entry 54 of List II. Justice Y K Sabharwal, as the \nlearned Chief Justice then was, writing for the majority specifically \nrejected the argument that Entry 54 was equated with Entry 52 and \nobserved that the “decision does not adopt the mines and minerals \ncases for the purposes of considering the scope of Entry 52 of List I.”117 \n\n64. We agree with the opinion of Justice Desai in Ishwari Khetan \n(supra). Entries 52 and 54 of List I (and entries 23 and 24 of List II) \nare unique. Though entries 23 and 24 stipulate that they are subject \n\n110 \n\n[1970] 2 SCR 100\n\n111 \n\n[1976] 3 SCR 688\n\n112 \n\n(1980) 4 SCC 136 [8]\n\n113 \n\n114 \n\n“2. Declaration as to expediency of control by Union: It is hereby declared that it is expedient in the public \ninterest that the Union should take under its control the industries specified in the First Schedule.”\n\n“2. Declaration as to expediency of Union Control.- It is hereby declared that it is expedient in the public \ninterest that the Union should take under its control the regulation of mines and the development of \nminerals to the extent hereinafter provided.” [emphasis supplied]\n\n115 \n\n(1980) 4 SCC 136 [11]\n\n116 \n\n“44.[…] It seems to us that the observations made by this Court in Hingir-Rampur Coal Co. Ltd. v. State of \nOrissa [AIR 1961 SC 459 : (1961) 2 SCR 537] , State of Orissa v. M.A. Tulloch and Co. [AIR 1964 SC 1284 : \n(1964) 4 SCR 461] , Baijnath Kadio v. State of Bihar [(1969) 3 SCC 838, 847-848 : AIR 1970 SC 1436 : \n(1970) 2 SCR 100, 113] and State of Haryana v. Chanan Mal [(1977) 1 SCC 340, 351 : AIR 1976 SC 1654 : \n(1976) 3 SCR 688, 700] cannot be of assistance in this behalf. In each of those cases, the declaration \nmade by Parliament in the concerned enactment limited the control of the mines and the development of \nminerals to the extent provided in the enactment. Whether the terms in which the declaration has been \nframed in Section 2 of the Industries (Development and Regulation) Act — a declaration not expressly \nlimiting control of the specific industries to the extent provided by the Act — can be construed as being so \nlimited is a matter which, we think, we should deal with in some more appropriate case.” \n\n117 \n\n(2002) 9 SCC 232 [31]\n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n1999\n\nto specific entries in List I, they are actually subject to the law made \nby Parliament under the entries. The entries are unique in the sense \nthat the scope of an entry in the State List is not subjected to another \nentry in the Union List but rather by the law made by Parliament. The \nconsequence of this is that when stretched to the extreme, Parliament \nmay by law declare that all industries must be in the control of the \nUnion. This would enable Parliament to render an entry in the State List \notiose. As held in the preceding section of this judgment, the entries \nmust be interpreted to maintain the federal balance. When there are \ntwo possible interpretations of the entries, the Court must choose the \none that maintains the federal balance. Entries 24 of List I and 52 of \nList II maintain the federal balance in a unique way. The members \nof the Constituent Assembly thought it fit to include ‘industries’ as a \nlegislative field in the State List because it requires localized focus. \nIf the draftspersons thought otherwise, they could have included \nthe Entry in the Union List or even the Concurrent List. The unique \nplacement of these entries must be considered and given due effect. \nThe entries must not be interpreted in a manner that would, in effect \nfor all purposes, place the entry in the Concurrent List. \n\n65. The question is whether an implied limitation can be read into Entry \n52 of List I in the absence of the expression “to the extent to which”. If \nan implied limitation is not read into the Entry, Parliament by a simple \ndeclaration may take over the complete industry and subject the power \nof the State Legislature to make any provision with respect to that \nindustry to the power of Parliament. This interpretation diminishes \nthe scope of competence of the State Legislature under Entry 24 of \nList II. Such an interpretation completely tilts the federal balance that \nentries 52 of List I and 24 of List II seek to maintain. The power of \nParliament in Entry 52 of List I is defined by the phrase ‘control’. The \nEntry does not read as “industries, declared by Parliament by law to \nbe expedient in the public interest.” The Entry states “Industries, the \ncontrol of which by the Union is declared by Parliament by law to \nbe expedient in the public interest.” The law enacted by Parliament \nmust not be an abstract declaration but must specify the extent of \ncontrol that is necessary to be taken in public interest. The State \nLegislature will have the competence to legislate with respect to \nthe field which is not the subject matter of control. The legislative \ncompetence of the State Legislature is only denuded to the extent \nof the ‘control’ by the Union declared by the law of Parliament to be \nexpedient in the public interest. \n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f2000 \n\n[2024] 10 S.C.R.\n\nc. Reconciling the potential overlap between Entry 52 of List I \n\nand Entry 8 of List II\n\n66. Having discerned the scope of Entry 52 of List I, it next needs to be \nconsidered if Entry 52 of List I and Entry 8 of List II overlap, and if \nthey overlap, whether they can be reconciled. \n\n67. At this juncture, the decisions of this Court that have dealt with the \ninterplay of Entry 52 of List I and entries of List II need to be referred to. \nIn Calcutta Gas Company v. State of West Bengal,118 a Constitution \nBench dealt with the overlap between Entry 52 of List I and Entry 25 \nof List II. Entry 25 of List II provides for ‘gas and gas works’. The \nLegislature of West Bengal enacted the Oriental Gas Company Act \n1960. The constitutional validity of the enactment was challenged on \nthe ground that Entry 24 of List II which deals with industries is subject \nto Entry 52 of List I and thus, Entry 25 of List II must be confined to \nmatters which are not covered by Entry 24. In short, the submission \nwas that the ‘industry’ of gas and gas works will be covered by Entry \n24 of List II and the other matters relating to gas and gas works will \nbe covered by Entry 25 of List II. Justice Subba Rao writing for the \nConstitution Bench held that the ‘industry’ of gas and gas works will \nbe covered by Entry 25 for the following reasons119: \n\na. Entry 25 of List II will become redundant if Entry 24 of List II \n(read along with Entries 25 and 26 which deal with trade, \ncommerce, production, supply and distribution of products) \ncovers the industry of ‘gas and gas works’;\n\nb. The alternative, allows Entries 24 and 25 to operate fully in \ntheir respective fields. Entry 24 must be interpreted to cover \nthe entire field of industry while Entry 25, the specific industry \nof gas and gas works;120 and\n\n118 \n\n[1962] Supp. 3 SCR 1 : AIR 1962 SC 1044\n\n119 AIR 1962 SC 1044 [9]\n\n120 “9. […] If industry in Entry 24 is interpreted to include gas and gas works, Entry 25 may become \nredundant, and in the context of the succeeding entries, namely Entry 26, dealing with trade and \ncommerce, and Entry 27, dealing with production, supply and distribution of goods it will be \ndeprived of all its contents and reduced to “useless lumber”. If industrial, trade, production and supply \naspect are taken out of Entry 25, the substratum of the said entry would disappear: in that event we \nwould be attributing to the authors of the Constitution ineptitude, want of precision and tautology. On \nthe other hand, the alternative contention enables Entries 24 and 25 to operate fully in their respective \nfields: while Entry 24 covers a very wide field, that is, the field of the entire industry in the State, Entry \n25, dealing with gas and gas-works, can be confined wo a specific industry, that is, the gas industry.” \n[emphasis supplied]\n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n2001\n\n68. \n\nc. Parliament cannot enact laws on the gas industry under Entry \n52 because the meaning of ‘industry’ in Entry 24 of List II and \nEntry 52 of List I is the same. Since Entry 24 does not cover \nthe gas industry, it cannot be included in Entry 52 as well.121 \n\nIn McDowell (supra), the constitutional validity of the Andhra Pradesh \nProhibition Act 1995 was under challenge. The enactment prohibited \nthe selling, buying, consumption and manufacture of liquor. It was \nsubmitted that the State did not have the competence to enact the \nstatute because the manufacture and production of intoxicating liquors \nis an industrial activity covered by Item 26 of the Schedule to IDRA. \nIt may be recalled that Item 26 before the 2016 amendment included \nalcohol and other products of fermentation industry. The three-Judge \nBench of this Court rejected the submission. Justice Jeevan Reddy, \nwriting for the Bench, observed that:\n\na. Entry 8 expressly refers to ‘production and manufacture’ of \nintoxicating liquor. Including the production and manufacture \nof liquor in Entry 24 of List II (and as a consequence in Entry \n52 of List I), would amount deleting the words “production and \nmanufacture” in Entry 8;\n\nb. Entry 24 is a general entry and Entry 8 is a specific entry. On \nthe application of the principle of generalia specialibus non \nderogant (general things do not derogate from specific things), \nthe industry of intoxicating liquor will not fall under the general \nentry (Entry 24) but the special entry (Entry 8); and\n\nc. Entry 52 only governs Entry 24 and not Entry 8. Thus, the \nindustry of intoxicating liquor cannot be taking over by Parliament \nunder Entry 52.122\n\n121 “11. […] As we have indicated earlier, the expression “industry” in Entry 52 of List I bears the same \nmeaning as that in Entry 24 of List II, with the result that the said expression in Entry 52 of List I also does \nnot take in a gas industry.”\n\n122 “26. […] Entry 24 is a general entry relating to industries whereas Entry 8 is a specific and special entry \nrelating inter alia to industries engaged in production and manufacture of intoxicating liquors. Applying \nthe well-known rule of interpretation applicable to such a situation (special excludes the general), we \nmust hold that the industries engaged in production and manufacture of intoxicating liquors do not have \nwithin Entry 24 but do fall within Entry 8. This was the position at the commencement of the Constitution \nand this is the position today as well. Once this is so, the making of a declaration by Parliament as \ncontemplated by Entry 52 of List I does not have the effect of transferring or transplanting, as it may be \ncalled, the industries engaged in production and manufacture of intoxicating liquors from the State list \nto Union List. As a matter of fact, Parliament cannot take over the control of industries engaged in the \nproduction and manufacture of intoxicating liquors by making a declaration under Entry 52 of List I, since \nthe said entry governs only Entry 24 in List II but not Entry 9 in List II.”\n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f2002 \n\n[2024] 10 S.C.R.\n\n69. \n\nReferring to the decision in Calcutta Gas Company (supra), the \nthree-Judge Bench observed that Entry 8 is more specific as compared \nto Entry 24 because the former expressly refers to ‘production and \nmanufacture’, and thus, it is all the more clear that the production \nof liquor cannot be covered by Entry 52.123 \n\nIn Calcutta Gas Company (supra) and McDowell (supra), this Court \nadopted the following established principles of interpretation to resolve \nthe overlap between legislative entries: (a) generalia specialibus \nnon derogant; (b) an interpretation which does not render an entry \nredundant must be adopted; and (c) parliamentary supremacy in \nArticle 246 will only operate if the entries in the State List and the \nUnion List cannot be reconciled. The approach in Calcutta Gas \nCompany (supra) and McDowell (supra) on the issue of reconciling \nthe conflict between the entries varies on one aspect. In Calcutta \nGas Company (supra), the Constitution Bench adopted a three-\nstep analysis: \n\na. On an application of the principle of generalia specialibus non \nderogant, the industry of the specific entry (in this case, the \ngas industry) was traced to Entry 25 and not Entry 24 (which \nis a general entry); \n\nb. Entry 52 is co-extensive with Entry 24. Thus, the scope of Entry \n\n54 is circumscribed by the scope of Entry 24; and \n\nc. \n\nThe gas industry is included in Entry 25 (and not Entry 24) \nwhich is not subject to Entry 52. Thus, Entry 52 cannot cover \nthe gas industry. \n\n70. \n\nIn McDowell (supra), the three-Judge Bench applied the principle \nthat the State Legislature has full competence to enact laws with \nrespect to those entries which are not expressly subject to an entry \nin List I or List III. \n\n71. The question is whether Parliament under Entry 52 of List I takes over \nthe industry of intoxicating liquor covered by Entry 8. The answer is in \nthe negative. Irrespective of whether the term ‘industry’ is interpreted \n\n123 “28. […] Article 246 cannot be invoked to deprive the State Legislatures of the powers inhering in them \nby virtue of entries in List II. To wit, once an enactment, in pith and substance, is relatable to Entry 8 in \nList II or for that matter any other entry in List II, Article 246 cannot be brought into yet hold that State \nLegislature is not competent to enact that law.”\n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n2003\n\nin a narrow or a wide manner (a point that is vehemently contested \nby both sides), the industry of intoxicating liquor cannot be taken \nover by Parliament under Entry 52 of List I for the following reasons: \n\na. The general principle is that legislative lists must be interpreted \nwidely. The question that the Court must pose is whether the two \nentries would overlap when interpreted widely. If they overlap, \nthe Court must reconcile them. But the method of reconciliation \nmust maintain the federal balance. The courts must not apply \nthe principle of legislative supremacy of Parliament at the stage \nof reconciliation. As explained above, such an exercise would \ntilt the federal balance towards the Union;\n\nb. The only limitation in Entry 52 is that the control of the industry \nby the Union must be necessary for public interest. Parliament \ncan legislate on any industry, provided that it satisfies the \ncondition prescribed in the Entry. Thus, Entry 52 when read \nindependent of any other entry of List I, List II and List III does \nnot preclude the inclusion of the industry of intoxicating liquor \n(provided that the Union is able to prove that its control is \nnecessary in public interest). Similarly, Entry 8 of List II, when \nread independently also includes, inter alia, the production and \nmanufacture of intoxicating liquor which is included within the \nmeaning of industry. Thus, Entry 52 of List I and Entry 8 of \nList II overlap on the aspect of ‘industry’ of intoxicating liquor; \n\nc. Entry 8 of List II is not subject to Entry 52 of List I. Thus, the \nState Legislature has the exclusive competence to enact a law \non the field in Entry 8. The Court must distinguish between \nentries that are expressly subject to entries in the Union List \nand entries that are not. When one entry is not subject to the \nother, the Court must harmonise the overlap of the entries;\n\nd. The only way to reconcile the entries is either to exclude the \nindustry of intoxicating entry from Entry 52 of List I or Entry 8 of \nList II. The Court while reconciling the provisions, must ensure \nthat neither of the entries is rendered redundant. The principle of \ngeneralia specialibus non derogant is used by courts to ensure \nthat the harmonisation of the entries does not render an entry \nredundant. In Wavery Jute Mills Co. Ltd. v. Raymon & Co,124 \n\n124 \n\n[1963] 3 SCR 209\n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f2004 \n\n[2024] 10 S.C.R.\n\nthe issue was whether Parliament or the State Legislature \nhad the competence to enact laws with respect to ‘forward \nmarkets’. Applying the principles of generalia specialibus non \nderogant, this Court held that the Union will have competence \nover ‘forward contracts’ in terms of Entry 48 of List I (stock \nexchanges and future markets) and that if it is brought within \nEntry 26 of List II (trade and commerce), Entry 48 will become \nredundant. Similarly, in Jayant Verma v. Union of India,125 \nthis Court applied the principle to resolve the overlap between \nEntry 30 of List II and Entry 45 of List I. A special entry must \nprevail over a general entry, otherwise, the special entry may \nbecome redundant; and\n\ne. Entry 52 of List I is a general entry dealing with industry. Entry 8 \nof List II is a special entry dealing with one particular industry.126 \nThe consequence of interpreting Entry 52 to cover the industry \nof ‘intoxicating liquor’ is two-fold: first, it would amount to deleting \nthe words ‘production, manufacture’ in Entry 8; and second, \nthe State Legislature also loses its exclusive competence to \nlegislate upon the product of the industry, rendering Entry 8 \nfully redundant. This is because the legislative competence on \nproducts of industries covered by Entry 52 of List I is placed \nin Entry 33 of List III.\n\n72. As a consequence, Parliament does not have the legislative \ncompetence to enact a law taking control of the industry of intoxicating \nliquor under Entry 52 of List I. \n\niv. Scope of Entry 8: Meaning of ‘intoxicating liquor’\n\n73. Entry 8 of List II is a general entry and not a taxing entry. However, \nit is a special entry in the sense that it specifically enumerates \n‘intoxicating liquors’ as a legislative field to the exclusion of all other \ngeneral entries under which it may have otherwise been subsumed. \nThe Entry stipulates that intoxicating liquors would fall within the \nlegislative domain of States. The arguments of the counsel on either \nside on the scope of Entry 8 of List II rest on the interpretation of \nthe expression “intoxicating liquor”.\n\n125 (2018) 4 SCC 743\n\n126 Calcutta Gas company (supra) and McDowell (supra)\n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n2005\n\n74. The appellants rely on the meaning of ‘liquor’ in statutes which predate \nthe Constitution to argue that the framers of the Constitution were \naware of the sense in which the phrase was used at the time and, \nthat it included denatured alcohol. In response, the Union argues \nthat the word ‘intoxicating’ occurring in the expression ‘intoxicating \nliquors’ must not be rendered redundant by adopting the interpretation \naccorded to Entry 8 of List II by the appellants. It argues that \n‘intoxicating liquors’ means beverages which are per se meant for \nhuman consumption for the purpose of intoxication without dilution \nor modification by any process. The Union also relies on the legal \nhistory of the division of legislative fields between the Union and the \nStates in support of its argument that only Parliament is competent \nto legislate with regard to denatured alcohol.\n\na. Precedent on the interpretation of ‘intoxicating liquor’: exploring \n\nFN Balsara and Southern Pharmaceuticals\n\n75. The respondents have relied on the interpretation of the phrase \n‘intoxicating liquor’ in the judgment of the Bombay High Court in FN \nBalsara v. State of Bombay.127 The petitioners have strongly relied \non the decision of this Court in FN Balsara (supra) which overturned \nthe judgment of the Bombay High Court. \n\n76. The petitioner in Balsara (supra) had one bottle of whisky, one \nbottle of brandy, one bottle of wine, two bottles of beer, one bottle of \nmedicated wine, one bottle of eau-de-cologne, one bottle of lavender \nwater and some bottles of medicinal preparations. The petitioner \ninvoked the writ jurisdiction of the High Court to challenge the validity \nof the Bombay Prohibition Act 1949.128 As the name suggests, the \nstatute sought to put in place and enforce the policy of prohibition \nof alcohol. It was enacted with reference to Entry 31 of List II of \nthe Seventh Schedule to the 1935 Act, which was similar to Entry \n8 of List II of the Seventh Schedule to the Constitution, in respect \nof intoxicating liquors. The Act defined ‘intoxicant’ as “any liquor, \nintoxicating drug, opium or any other substance which the Provincial \nGovernment may, by notification in the Official Gazette declare to \nbe an intoxicant…”129 ‘Liquor’ was defined to include “all liquids \n\n127 1950 SCC OnLine Bom 57\n\n128 “Bombay Prohibition Act” \n\n129 Bombay Prohibition Act 1949; Section 2(22)\n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f2006 \n\n[2024] 10 S.C.R.\n\ncontaining alcohol”.130 The definition clause was challenged on the \nground that it was beyond the competence of the State Legislature \nunder the entries in List II and List III of the 1935 Act. Chief Justice \nM C Chagla, writing for the Bench, held that the State Legislature \ndid not have the competence to enact laws with respect to the \n“legitimate use of alcoholic preparations which are not beverages” \nand “the use of medicinal and toilet preparations containing alcohol”.131 \nIn short, the High Court held that ‘intoxicating liquor’ in Entry 31 of \nList II of the 1935 Act did not include all liquids with alcohol, and \nthus, the definition was beyond the scope of the State Legislature. \nThe reasons for the interpretation were thus: \n\na. \n\nLiquor ordinarily means a strong drink as opposed to a soft drink. \nIn any event, it must be a beverage which is ordinarily drunk;\n\nb. The difference in the words qualifying ‘liquor’ in entries 31132 and \n40(a)133 of List II in the 1935 Act (the Entry corresponding to \nEntry 51 of List II of the Seventh Schedule to the Constitution) \nis very significant. In Entry 31, the word used is ‘intoxicating’. In \nEntry 40(a), the word used is ‘alcoholic’. In the Whitepaper of \n1933, the entry dealt with ‘alcoholic liquor’ which was substituted \nwith the expression intoxicating liquor. With the substitution, \nnon-intoxicating liquor was excluded from the scope of the \nEntry; and\n\nc. Medicinal and toilet preparations containing alcohol are neither \nliquor nor intoxicating. Thus, they are excluded from the scope \nof the Entry.\n\nThe 18th amendment to the US Constitution prohibits the sale, \nmanufacture and transportation of ‘intoxicating liquor’.134 The \n\n130 Bombay Prohibition Act 1949; Section 2(24)\n\n131 1950 SCC OnLine Bom 57 [36]\n\n132 “31. Intoxicating liquors and narcotic drugs, that is to say, the production, manufacture, possession, \ntransport, purchase and sale of intoxicating liquors, opium and other narcotic drugs, but subject, \nas respects opium, to the provisions of List I and, as respects poisons and dangerous drugs, to the \nprovisions of List III.”\n\n133 “40. Duties of excise on the following goods manufactures or produced in the Province and countervailing \nduties at the same or lower rates on similar goods manufactured or produced elsewhere in India- (a) \nalcoholic liquors for human consumption…”\n\n134 18th Amendment to the US Constitution; Section 1: “After one year from the ratification of this article \nthe manufacture, sale or transportation of intoxicating liquors within, the importation thereof into, or the \nexportation thereof from the United States and all territory subject to the jurisdiction thereof for beverage \npurposes is hereby prohibited.”\n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n2007\n\npetitioners relied on judgments of the US Supreme Court to \nsubstantiate the submission that the State Legislature can legislate \non all liquids containing alcohol. The High Court, upon an analysis \nof judgments noted that they only hold that ‘intoxicating liquor’ could \ncover drinks that contain a small percentage of alcohol, even if it \ndoes not produce an intoxicating effect. The Court further noted \nthat the judgments of the US Courts hold that the State cannot \nregulate the legitimate use of non-beverage, and medicinal and \ntoilet preparations containing alcohol, but only regulate their use \nfor noxious purposes. Upon the analysis of the decisions, the High \nCourt held that the State: (a) has the competence to legislate on \nalcoholic liquids which are not normally consumed as drinks; (b) \ncannot legislate on the “legitimate” use of alcoholic preparations \nwhich are not beverages; and (c) cannot legislate on the use of \nmedicinal and toilet preparations containing alcohol. \n\n77. The appeals against the judgment of the High Court were allowed \nby a Constitution Bench of this Court in FN Balsara (supra). This \nCourt noticed the meaning of the word ‘liquor’ by referring to its \ndictionary meaning and also assessed the meaning assigned to it \nin various enactments including the National Prohibition Act 1919 in \nthe USA, the Licensing (Consolidating) Act 1910 and the Spirits Act \n1880 in England. It also referred to the Indian enactments, namely, \nthe Bombay Abkari Act 1878, the Bengal Excise Act 1909, the \nPunjab Excise Act 1914 and the UP Excise Act 1910. The judgment, \nauthored by Justice Fazl Ali, was careful to clarify that the Court was \nnot suggesting that the definition of ‘liquor’ in the Bombay Prohibition \nAct was borrowed from the statutes in the USA or England but that \nthey were referred to show that the term was “capable of being used \nin a wide sense”.135 Based on its analysis, this Court observed that:\n\na. While ‘liquor’ was commonly understood to mean a drink or \nbeverage produced by fermentation or distillation, the various \nenactments referred to indicated that the phrase extended to \nliquids which were not, strictly speaking, beverages;136 \n\nb. The definitions of ‘liquor’ and ‘intoxicating liquor’ in the provincial \nstatutes consistently included liquids containing alcohol. The \n\n135 (1951) SCC 860 [43] \n\n136 (1951) SCC 860 [41]\n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f2008 \n\n[2024] 10 S.C.R.\n\nframers of the 1935 Act were aware of the ‘accepted sense’ \nof the meaning assigned to the term in the various provincial \nlaws;137 and\n\nc. \n\nTherefore, the term ‘intoxicating liquors’ in Entry 31 of List II \nof the Seventh Schedule to the 1935 Act included not only \nbeverages which intoxicate but also all liquids containing \nalcohol. While this may not have been the meaning attributed \nto ‘intoxicating liquors’ in common parlance, the numerous \nstatutory definitions made it clear that the expression in Entry 31 \nof List II of the 1935 Act was broad and included all liquids \ncontaining alcohol.138 \n\n78. The Constitution Bench also approached the question from the \nperspective of the entries on ‘public health’ and ‘public order’, and \nArticle 47139 of the Constitution. The Bench noted that the word ‘liquor’ \nmust be given a wide meaning to include “all alcoholic liquids which \nmay be used as substitutes for intoxicating drinks, to the detriment of \nhealth.”140 On the consideration of the meaning of the phrase, both \nfrom the perspective of legislative meaning and the constitutional \ndirective of prohibiting intoxicating drinks which are injurious to health, \nthis Court reversed the finding of the High Court.141\n\n79. Though the High Court held that the definition of ‘liquor’ in the Bombay \nProhibition Act is ultra vires and this Court reversed the finding, \nthere is one commonality between both the decisions. Neither of the \ndecisions limited the scope of the phrase to the common parlance \nmeaning of ‘intoxicating beverages’. Both the decisions held that \nthe entry covered liquor which may not produce ‘intoxication’ but \nwhich may be used for noxious purposes. The difference is one of \n\n137 (1951) SCC 860 [44]\n\n138 (1951) SCC 860 [44]\n\n139 “47. Duty of the State to raise the level of nutrition and the standard of living and to improve \npublic health.- The State shall regard the raising of the level of nutrition and the standard of living \nof its people and the improvement of public health as among its primary duties and, in particular, the \nState shall endeavor to being about prohibition of the consumption, except for medicinal purposes of \nintoxicating drinks and of drugs which are injurious to health.”\n\n140 (1951) SCC 860 [45]\n\n141 See Paragraph 48: “… the idea of prohibition is connected with public health, and to enforce prohibition \neffectively the wider definition of the word “liquor” would have to be adopted so as to include all alcoholic \nliquids which may be substitutes for intoxicating drinks, to the detriment of health. On the whole, I \nam unable to agree with the High Court’s finding, and hold that the definition of ‘liquor’ in the Bombay \nprohibition Act is not ultra vires.” [emphasis supplied]\n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n2009\n\n80. \n\ndegree. While the High Court held that all liquids containing alcohol \nwill not be covered by Entry 31 of List II, this Court held otherwise. \nHowever, the conclusion of this Court on the scope of the phrase \ncannot be read detached from observations that a wider definition of \nintoxicating liquor is necessary to cover other products which ‘may \nbe used as substitutes for intoxicating drinks’. \n\nIn Southern Pharmaceuticals and Chemical v. State of Kerala,142 \nthe appellants challenged the constitutional validity of the provisions \nof the Abkari Act, as amended by the Abkari (Amendment) Act 1967 \nand Kerala Rectified Spirit Rules 1972 which regulated the use of \nalcohol for the preparation of medicines. Item 22 of the Schedule \nto IDRA specifies the “drugs and pharmaceuticals” industry. The \ncontention was that the State Legislature did not have the competence \nto enact laws because the field was covered by Parliament through \nIDRA. The issue before the three-Judge Bench of this Court was \nwhether the State Legislature had the competence to enact a law \nrelated to medicinal and toilet preparations containing alcohol under \nEntry 8 of List II of the Seventh Schedule to the Constitution. This \nCourt held that the State had the competence to enact the impugned \nlaws under Entry 8 of List II because the legislations are confined to \nensuring the proper utilisation of rectified spirit in the manufacture of \nmedicinal and toilet preparations.143 After referring to the decision of \nthis Court in FN Balsara (supra), the Bench held that only medicinal \npreparations which are capable of being misused for “noxious” \npurpose can be considered ‘intoxicating liquor’.144 This Court held \nthat the test to determine if it can be misused is whether the article \nin question can be used as a beverage: \n\n“19. The general test for determining what medicinal \npreparations containing alcohol are capable of \nbeing misused and, therefore, must be considered \nintoxicating within the meaning of the term “intoxicating \n\n142 (1981) 4 SCC 391\n\n143 (1981) 4 SCC 391 [14]\n\n144 “18. … The power to legislate with regard to intoxicating liquor carries with it the power to regulate \nthe manufacture, sale and possession of medicinal and toilet preparations containing alcohol, not for \nthe purpose of interfering with the right of citizens in the matter of consumption or use for bona fide \nmedicinal and toilet preparations, but for preventing intoxicating liquors from being passed on \nunder the guise of medicinal and toilet preparations. It was within the competence of the State \nlegislature to prevent the noxious use of such preparations, i.e. their use as a substitute for \nalcoholic beverages.” [emphasis supplied] \n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f2010 \n\n[2024] 10 S.C.R.\n\nliquor”, is the capability of the article in question for \nuse as a beverage. The impugned provisions have been \nenacted to ensure that rectified spirit is not misused \nunder the pretext of being used for medicinal and \ntoilet preparations containing alcohol. It was argued \nthat this definition was therefore ultra vires the powers of \nthe State legislature, which could only make laws related \nto alcoholic beverages.”\n\n(emphasis supplied)\n\n81. The observations of this Court in Southern Pharmaceuticals (supra) \nfollow the precedent in FN Balsara (supra) that preparations which \ncontain alcohol will be covered by the phrase ‘intoxicating liquor’ \nin Entry 8 to prevent its ‘noxious use’. In Indian Mica (supra), the \nappellant challenged the vires of the rule levying licence fee to possess \ndenatured spirit. The Rules were framed under the Bihar and Orissa \nExcise Act 1915. The State would have the competence to enact \na law levying fee on denatured spirit under Entry 66 of List II145 if \nthe spirit was covered by the phrase ‘intoxicating liquor’ in Entry 8 \nof List II. Denatured spirit in this case was used as a raw material \nfor the preparation of another product (micanite). In this case, the \nConstitution Bench held that denatured spirit is ‘intoxicating liquor’ \nand thus, covered by Entry 8 of List II.146 Further it was held that the \nfee charged will be valid if the levy has a reasonable relationship \nwith the services rendered by the Government.147\n\n82. \n\nIt is clear from the analysis of the above judgments that the meaning of \nthe phrase ‘intoxicating liquor’ in Entry 8 of List II has been expanded \nbeyond the narrow definition of alcoholic beverages that produce an \n‘intoxicating effect’ upon consumption. Liquids which contain alcohol \nand which can possibly be used (or misused) as intoxicating liquor \nhave been included within the meaning of the phrase. \n\n83. We will test this proposition in the subsequent sections. In our \nopinion, there are four possible approaches that we can adopt to \ndetermine the meaning of the expression ‘intoxicating liquor’. The \nfirst is through the identification of the ‘legislative meaning’ of the \n\n145 “66. Fees in respect of any of the matters in this List, but not including fees taken in any Court.”\n\n146 (1971) 2 SCC 236 [3]\n\n147 (1971) 2 SCC 236 [11]\n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n2011\n\nphrase intoxicating liquor; the second is through legislative history; \nthe third, is the common parlance test, and the fourth is the principle \nof workability. We will discuss the merits and demerits of each of \nthe above approaches in turn. \n\nb. The legal import of ‘intoxicating liquor’\n\n84. The petitioners submit that the expression ‘intoxicating liquor’ is a term \nof recognised legal import because it has been used in numerous \nstatutes that pre-date the 1935 Act, where the phrase was first \nused in Entry 31 of List II. The principle of ‘legal import’ has been \nused by this Court to interpret entries in the Seventh Schedule. In \nGannon Dunkerley (supra), a Constitution Bench dealt with the \ninterpretation of Entry 48 of List II of the Seventh Schedule to the \n1935 Act which specified the field of ‘taxes on the sale of goods’. \nThis Court was required to interpret the phrase ‘sale of goods’. On \none side it was contended that the term must be given the ‘popular \nmeaning’ and on the other side, it was contended that it must be \ngiven the ‘legal meaning’. This Court chose the latter. The Bench \nlaid down the standard to determine when a phrase has obtained \na legal meaning. This Court laid down a two-prong test: first, the \nphrase should have acquired a well-recognised, definite and precise \nmeaning in law;148 and second, the legal import of the word must be \npractically unanimous.149 It is also crucial to note that in this case, \nthe popular meaning of the phrase was not widely different from the \nlegal meaning150.151\n\n148 “The ratio of the rule of interpretation that words of legal import occurring in a statute should be construed \nin their legal sense is that those words have, in law acquired a definite and precise sense, and that, \naccordingly, the legislature must be taken to have intended that they should be understood in that sense. \nIn interpreting an expression used in a legal sense, therefore, we have only to ascertain the precise \nconnotation which it possesses in law.” [emphasis supplied] \n\n149 “It will be seen from the foregoing that there is practical unanimity of opinion as to the import of the word \n\n“sale” in its legal sense\n\n150 “Now, in its popular sense, a sale is said to take place when the bargain is settled between the parties, \nthough property in the goods may not pass at that stage, as where the contract relates to future or \nunascertained goods, and it is that sense that the learned Judge would appear to have had in his mind \nwhen he spoke of a commercial or business sense. But apart from the fact that these observations were \nobiter, this Court has consistently held that though the word “sale” in its popular sense is not \nrestricted to passing of title, and has a wider connotation as meaning the transaction of sale, and that \nin that sense an agreement to sell would, as one of the essential ingredients of sale, furnish sufficient \nnexus for a State to impose a tax..” [emphasis supplied] \n\n151 The judgement in Gannon Dunkerley’s case (supra) was held to be constitutionally superseded on other \naspects by subsequent cases including Kone Elevator India (P) Ltd. v. State of T.N. (2014) 7 SCC 1. \nHowever, the principle of interpretation referred to in this judgment continues to be good law. \n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f2012 \n\n[2024] 10 S.C.R.\n\n85. The judgment of this Court in Gannon Dunkerley (supra) must be \nread in the context of the settled principle of interpreting legislative \nentries, that the entries must be conferred the widest meaning \npossible. Interpreting a phrase or words in the Legislative Lists based \non the legal import of the phrase is, thus, in many ways an exception \nto the settled principle of interpreting entries. This is for the simple \nreason that the legislative entries delimit the scope of competence \nof the legislative bodies. If the entries are interpreted based on the \nmeanings or definitions in a legislation, the purpose of the Seventh \nSchedule may become redundant. Further, the statute does not \ndefine phrases based on popular or common parlance meaning but \nrather based on the scope of the legislation and the manner in which \nthe provisions are drafted. A deeming fiction is often used to define \nphrases by conferring artificial meanings.152 The interpretation based \non ‘legislative meaning’ elucidated in Gannon Dunkerley (supra), \nwhich narrows the interpretation of entries, thereby creating an \nexception to the rule of wide interpretation should only be employed \nby Courts when the twin tests highlighted above. The tests are (a) \nthe phrase should have acquired a well-recognised, definite and \nprecise meaning in law; and (b) the legal import of the word must \nbe practically unanimous. Additionally, we also are of the view that \nthe legislative meaning interpretation should be adopted only when \nthe deviation from the popular meaning of the phrase is not too \nwide. The legislative meaning cannot be used to artificially narrow \nlegislative entries. We also deem it necessary to note that we must \nbe cognizant that the standard of ‘legislative meaning’ is employed \nto identify the ‘intent’ of the framers of the Constitution and belongs \nto the originalist school of thought, which has been consistently \nopposed by this Court over the years.153 For these reasons, the \nprinciple of interpretation elucidated in Gannon Dunkerley (supra) \nmust be used cautiously by Courts. \n\n152 See Ahmedabad Municipal Corporation v. GTL Infrastructure Limited (2017) 3 SCC 545 [13] “13. “… \nit would be self-defeating to understand the meaning and scope of Entry 49 of List II by reference to \nthe definition clauses in the Gujarat Act. Definitions contained in the statute may at times be broad and \nexpansive; beyond the natural meaning of the words or may even contain deeming provisions. Though \nthe wide meaning that may be ascribed to a particular expression by the definition in a statute will have \nto be given effect to, if the statute is otherwise found to be valid, it will, indeed, be a contradiction in terms \nto test the validity of the statute on the touchstone of it being within the legislative entry, by a reference \nto the definition contained in the statute”\n\n153 See Gannon Dunkerley (supra) : “… Sales tax was not a subject which came into vogue after the \nGovernment of India Act 1935. It was known to the framers of that statute and they made express \nprovision for it under Entry 48.”\n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n2013\n\n86. Let us now proceed to determine if the phrase ‘intoxicating liquor’: \n(a) has a definite and precise meaning in law; (b) is unanimous; and \n(c) has a legal meaning that is not widely different from its popular \nmeaning. We must refer to the pre-constitutional statutes for this \npurpose because the expression ‘intoxicating liquor’ was first used \nin the 1935 Act. The table below indicates the definition of ‘Liquor’, \n‘intoxicating liquor’, and ‘spirits’ in numerous pre-constitutional \nstatutes: \n\nBombay Abkari Act \n1878\n\nMadras Abkari Act \n1886\n\nLiquor is defined in an inclusive manner. It \nincludes “all liquid consisting of or containing \nalcohol…denatured or not.”154\nLiquor includes ….all liquid consisting of or \ncontaining alcohol.155\n\nAbkari Act 1077\n\nBengal Excise Act \n1909158\n\nMadhya Pradesh \nExcise Act 1915162\n\nSpirits means any liquor containing alcohol \nand obtained by distillation, whether it is \ndenatured or not.156\nLiquor includes …. all liquid consisting of or \ncontaining alcohol.157\nIntoxicant means any liquor.159 Liquor means \nliquid consisting and containing alcohol.160 \nSpirit means any liquor containing alcohol, \nwhether denatured or not.161\nLiquor means ‘intoxicating liquor’ and includes \n…. all liquid consisting of or containing \nalcohol.163\n\n154 Bombay Abkari Act 1978; Section 3(7)\n\n155 Madras Abkari Act 1886; Section 3(9)\n\n156 Madras Abkari Act 1886; Section 3(8)\n\n157 Abkari Act 1077; Section 3(10)\n\n158 Similar definitions in Bihar and Orissa Excise Act 1915; Sections 2(14); 2(19)\n\n159 The Bengal Excise Act 1909; Section 2(12a)\n\n160 The Bengal Excise Act 1909; Section 2(14)\n\n161 The Bengal Excise Act 1909; Section 2(19)\n\n162 Similar definitions in The Punjab ‘article’ Excise Act 1914; Section 2(14); The Chhattisgarh Excise Act \n\n1915; Section 2(13); United Province Excise Act 1910; Section 3(11)\n\n163 MP Excise Act 1916; Section 2(13)\n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f2014 \n\n[2024] 10 S.C.R.\n\nNational Prohibition \nAct \n\nT h e L i c e n s i n g \n(Consolidating Act) \n1872\n\nSpirits Act 1880\n\nThe word ‘liquor’ or the phrase ‘intoxicating \nliquor’ shall be construed to include alcohol, \nbrandy, whisky, rum, gin, beer, ale, porter, and \nwine, and in addition thereto any spirituous, \nvinous, malt, or fermented liquor, liquids, and \ncompounds, whether medicating, proprietary, \npatented, or not and by whatever name called, \ncontaining one-half of 1 per centum or more \nof alcohol by volume which are fit for use for \nbeverage purposes.\n\nIntoxicating liquor means (unless inconsistent \nwith the context) spirits, wine, beer, porter, \ncider, perry and sweets, and any fermented, \ndistilled, or spiritous liquor which cannot, \naccording to any law for the time being in \nforce, be legally sold without an excise law.164\nSpirits means spirits of any description, and \nincludes all liquids mixed with spirits, and all \nmixtures, compounds, or preparations made \nwith spirits.165 \n\n87. The Abkari Acts have generally defined the phrase ‘liquor’ to mean \nliquids containing alcohol including denatured alcohol. However, the \nAbkari Acts do not define the phrase ‘intoxicating liquor’. In Excise \nActs, ‘liquor’ was defined to mean ‘intoxicating liquor’ and included \nliquids containing alcohol. Thus, none of the pre-constitutional \nstatutes have defined the phrase ‘intoxicating liquor’ for it to have \nacquired a legal meaning. The phrase was defined in the Licensing \n(Consolidating Act) 1910 which regulated the United Kingdom. It \ncannot be concluded that the phrase used in the Indian Constitution \nhas acquired a legal meaning based on a definition clause in one \nstatute which applied to the United Kingdom. The definition of ‘liquor’ \nin pre-constitutional statutes as liquids containing alcohol cannot be \ntransposed to interpret the legislative entry. The phrase used in the \nlegislative entry is ‘intoxicating liquor’. The definition of one part of the \nexpression in statutes cannot be used to interpret expressions that are \n\n164 The Licensing (Consolidating Act) 1872; Section 74\n\n165 Spirits Act 1880; Section 3\n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n2015\n\nused to indicate a collective meaning, particularly when the common \nparlance definition starkly varies. The common parlance meaning of \n‘intoxicating liquor’ means liquor which causes intoxication, that is, \nwhich causes someone to lose control. Thus, the three-prong test \nto identify if “Intoxicating Liquor” has acquired legislative meaning \nhas not been satisfied. \n\nc. Evolution of the legislative lists on ‘intoxicating liquor’\n\n88. We proceed to consider the evolution of the legislative field relating \nto ‘intoxicating liquor’ to determine the meaning of the expression. \nThe evolution of the legislative entries must be traced from the \nDevolution Rules formulated under the 1919 Act.166 The Devolution \nRules classified legislative subjects for the purpose of distinguishing \nthe functions of the local legislatures from those of the federal \nlegislature. Alcohol was placed in the ‘Provincial List’ of the First \nSchedule to the Devolution Rules (equivalent to List II or the State \nList in the Seventh Schedule to the Constitution). Entry 16 of the \nProvincial List concerned alcohol. It is reproduced below:\n\n“16. Excise, that is to say, the control of production, \nmanufacture, possession, transport, purchase and sale of \nalcoholic liquor and intoxicating drugs, and the levying \nof excise duties and licence fees on or in relation to such \narticles, but excluding, in the case of opium, control of \ncultivation, manufacture and sale for export.”\n\n(emphasis supplied)\n\n89. \n\nInstead of two distinct entries, one which covered taxation and the \nother which covered regulation, the Devolution Rules contained a \nsingle entry in the Provincial List which extended to both aspects. \nThe Entry related to (a) levy of excise duties; (b) levy of fee; and \n(c) general regulation. That it concerned taxation is evident from \nthe term ‘excise’ and the ‘levying of excise duties’. The words “the \ncontrol of production, manufacture, possession, transport, purchase \nand sale” indicate that the Entry extended to regulation as well. \nThe expression used in Entry 16 was ‘alcoholic liquor’ as opposed \n\n166 The Devolution Rules were made by the Governor General in Council with the sanction of the Secretary \nof State in Council in exercise of the powers conferred by Sections 45A and 129A of the Government of \nIndia Act 1919. \n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f2016 \n\n[2024] 10 S.C.R.\n\nto ‘intoxicating liquor’. However, it must be noted that the provision \ndeals with both ‘alcoholic liquor’ and ‘intoxicating drugs’.\n\n90. The approach adopted in the 1935 Act differed from the 1919 Act. \nEntry 45 of List I of the Seventh Schedule to the 1935 Act stipulated \nthe federal domain over duties of excise. It is reproduced below:\n\n“45. Duties of excise on tobacco and other goods \nmanufactured or produced in India except — \n\n(a) alcoholic liquor for human consumption; \n\n(b) opium, Indian hand and other narcotic drugs and \nnarcotics; non-narcotic drugs; \n\n(c) medicinal and toilet preparations containing alcohol or \nany substance included in sub-paragraph (b) of this entry.”\n\n91. Alcoholic liquor for human consumption was among the three \ncategories which was excluded from the ambit of legislative \ncompetence of the Federal legislature. Entries 31 and 40 of List II \nof the Seventh Schedule to the 1935 Act stipulated the Provincial \nlegislative domain over intoxicating liquors and narcotics, and duties \nof excise respectively. They are reproduced below: \n\n“31. Intoxicating liquors and narcotic drugs, that is to \nsay, the production, manufacture, possession, transport, \npurchase and sale of intoxicating liquors, opium and other \nnarcotic drugs, but subject, as respects opium, to the \nprovisions of List I and, as respects poisons and dangerous \ndrugs, to the provisions of List III.\n\n…\n\n40. Duties of excise on the following goods manufactured \nor produced in the Province and countervailing duties at \nthe same or lower rates on similar goods manufactured \nor produced elsewhere in India- \n\n(a) alcoholic liquors for human consumption; \n\n(b) opium, Indian hemp and other narcotic drugs and \nnarcotics; non-narcotic drugs; \n\n(c) medicinal and toilet preparations containing alcohol or \nany substance included in sub-paragraph (b) of this entry.” \n\n(emphasis supplied)\n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n2017\n\n92. The three categories which were excluded from duties of excise \non goods produced or manufactured in India (in Entry 45 of List I) \nwere incorporated in Entry 40 of List II. Thus, duties of excise on \nalcoholic liquors for human consumption was a subject assigned to \nthe Provinces. The following changes on the legislative scope on \n‘alcoholic liquors’ were introduced in the 1935 Act:\n\na. Taxation and regulation were placed in separate entries. Entry \n40 of List II concerned duties of excise, inter alia, on ‘alcoholic \nliquors for human consumption.’ On the other hand, Entry 31 of \nList II covered the regulation of ‘intoxicating liquors’ and other \nsubstances;\n\nb. The Federal legislature could levy duties of excise on tobacco \nand other goods manufactured in India but not on alcoholic \nliquor for human consumption, medicinal and toilet preparations \ncontaining alcohol, and other specified goods;\n\nc. \n\nThe Provincial legislatures could levy duties of excise on \nalcoholic liquor for human consumption, medicinal and toilet \npreparations containing alcohol, and other specified goods \nproduced in the province; and\n\nd. Entry 31 of List II was a regulatory entry covering intoxicating \nliquors and narcotic drugs and the production, manufacture, \npossession, transport, purchase and sale of intoxicating liquors, \nopium and other narcotic drugs. Hence, the regulatory power in \nrelation to intoxicating liquor lay with the Provincial legislatures \nand not the Federal legislature. Where Entry 16 of the Provincial \nList of the Devolution Rules as well as Entries 45 of List I and \n40 of List II of the Seventh Schedule to the 1935 Act used the \nterm ‘alcoholic liquors’, Entry 31 of List II used the expression \n‘intoxicating liquors’. This term was first used in the 1935 Act. \n\n93. The Seventh Schedule to the Constitution also placed the regulatory \npowers and the taxing powers relating to alcohol in separate entries. \nEntry 8 of List II of the Seventh Schedule to the Constitution deals \nwith ‘intoxicating liquors’. Entry 8 of List II of the Seventh Schedule \nto the Constitution varies from Entry 31 of List II of the 1935 Act in \na significant manner. Entry 8 only deals with ‘intoxicating liquor’. It \ndoes not cover narcotic drugs and opium. Entry 31 conferred the \nProvincial Legislature, the competence to legislate with respect to \n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f2018 \n\n[2024] 10 S.C.R.\n\nnarcotic drugs which included opium. It was subject to Entries in \nList I and List II which dealt with opium167 and ‘poison and dangerous \ndrugs’.168 The Seventh Schedule to the Constitution placed opium in \nList I169 and List III,170 completely removing it from List II.\n\n94. Entry 84 of List I deals with duties of excise of goods except a few. \nThe Entry read as follows before the Constitution (One Hundred and \nFirst Amendment) Act 2016:\n\n“84. Duties of excise on tobacco and other goods \nmanufactured or produced in India except-\n\n(a) Alcoholic liquors for human consumption\n\n(b) Opium, Indian hemp and other narcotic drugs and \nnarcotics,\n\nBut including medicinal and toilet preparations containing \nalcohol or any substance included in sub-paragraph (b) \nof this entry.”\n\n(emphasis supplied)\n\n95. Entry 51 of List II deals with duties of excise, inter alia, on alcoholic \n\nliquor:\n\n“51. Duties of excise on the following goods manufactured \nor produced in the State and countervailing duties at the \nsame or lower rates on similar goods manufactured or \nproduced elsewhere in India:-\n\n(a) alcoholic liquors for human consumption;\n\n(b) opium, Indian hemp and other narcotic drugs and \nnarcotics;\n\nbut not including medicinal and toilet preparations \ncontaining alcohol or any substance included in sub-\nparagraph (b) of this entry.”\n\n(emphasis supplied)\n\n167 Government of India Act 1935, Entry 31 of List I\n\n168 Government of India Act 1935, Entry 19 of List III\n\n169 Constitution of India 1950, Entry 59 of List I\n\n170 Constitution of India 1950, Entry 19 of List III\n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n2019\n\n96. The only change with respect to the legislative competence on \nduties of excise from the 1935 Act is that Parliament (and not the \nState Legislature as it was envisaged under the 1935 Act) has \nthe competence to enact laws with respect to medicinal and toilet \npreparations containing alcohol or narcotic substances, opium and \nIndian hemp.171\n\n97. The Constituent Assembly Debates which the Union of India referred \nto ascertain the meaning of the phrase ‘intoxicating liquor’ are not of \nassistance. The phrases ‘alcoholic liquor for human consumption’ and \n‘intoxicating liquor’ were used for the first time in the 1935 Act. Entry \n16 of the Provincial List of the Devolution Rules dealt with ‘alcoholic \nliquor and intoxicating drugs’. The provision dealt both with regulatory \npower and excise power. It is necessary to trace the development \nbetween the 1909 Rules and the 1935 Act to understand the context \nof substituting the expression ‘alcoholic liquor’ with ‘intoxicating liquor’ \nin the regulatory entry but retaining it in the taxing entry. \n\n98. The 1935 Act was based on the White Paper (1931) on the proposals \nfor Indian Constitutional Reform172 and the Report of the Joint \nSelect Committee on Indian Constitutional Reform173 which was \nconstituted to examine and report upon the proposals contained in \nthe White Paper. The White Paper recommended the demarcation \nof regulatory and taxation powers relating to alcohol. However, both \nthe entries used the words ‘alcoholic liquor’.174 The Report of the \nJoint Committee suggested the following two revisions to the entries \n\n171 The reason for providing Parliament the power to enact laws with respect to the excise duty on \nmedicinal and toilet preparations containing alcohol is reflected in the footnote to Entry 86 of List I in \nthe Draft Constitution of India 1948 as follows: “The committee is of the opinion that duties of excise on \nmedicinal and toilet preparation containing alcohol or any substance included in sub-paragraph (b) of \nthis entry should be included in this entry as duties leviable by the Union, as it thinks that uniform rates \nof excise duty should be fixed in respect of these goods in all states for the sake of development of the \npharmaceutical industry. The levy of different rates in different States is likely to lead to discrimination \nin favour of goods imported from foreign countries which would be detrimental to the interest of Indian \nmanufacturers as was pointed out by the Drugs Enquiry Committee in their report in 1931.”; See Shiva \nRao (Vol II) pg. 666\n\n172 “White Paper”; See Command Paper 4268\n\n173 “Joint Committee”; See Report of the Joint Select Committee on Indian Constitutional Reform\n\n174 See Joint Committee on Indian Constitutional Reform (Volume 1 Part I) 369; “26. Control of production, \nmanufacture, possession, transport, purchase and sale of alcoholic liquors, drugs and narcotics.”; \n“27. Imposition and regulation of duties of excise on alcoholic liquors, drugs and narcotics other than \ntobacco.”\n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f2020 \n\n[2024] 10 S.C.R.\n\nrelated to alcohol: (a) the relevant entry in the Federal List provided \nthat the Union did not have the competence to levy excise duty on \n“potable alcoholic liquor”175 and the Provincial List conferred States \nthe competence to levy excise duty on “potable alcoholic liquor”;176 \nand (b) the regulatory provision in List II dealt with the “production, \nmanufacture, possession, transport, purchase and sale of liquors, \nopium and other drugs and narcotics not covered by item 19 of List \nIII.”177 \n\n99. Two revisions were further made to the entries as they appear in the \nGovernment of India Bill 1935 which were subsequently reflected in \nthe Government of India Act 1935. The phrase ‘potable alcoholic liquor’ \nwas substituted with the phrase ‘alcoholic liquor’ in the taxing entry \nand the phrase ‘liquor’ was substituted with the phrase ‘intoxicating \nliquor’ in the regulatory entry. The table below reflects the evolution \nof the Legislative entries relating to alcohol: \n\nEnactment\n\nTaxing Entry\n\nRegulatory Entry\n\nDevolution Rules \n\nWhite Paper \n\nJoint Select Committee \non Indian Constitutional \nReform \n\n‘alcoholic liquor’178\n\n‘alcoholic liquor’179\n‘potable alcoholic \nliquor’181 \n\n‘alcoholic liquor’180\n‘liquor’182\n\n175 List I, Entry 49 of the Revised Lists; See Joint Committee on Indian Constitutional Reform (Volume 1 Part \n\nI) 152 “46. Duties of excise on the manufacture and production of tobacco and other articles except- \n(i) Potable alcoholic liquors; \n(ii) Toilet and medicinal preparations containing alcohol, Indian hemp, opium or other drugs or narcotics;\n(iii) Opium, Indian hemp, and other drugs and narcotics. \n\n176 List II, Entry 19 of the Revised Lists; See Joint Committee on Indian Constitutional Reform (Volume 1 \n\nPart I) 155 “19. Duties of excise on the manufacture and production of –\n(i) Potable alcoholic liquors; \n(ii) Toilet and medicinal preparations containing alcohol, Indian hemp, opium or other drugs and narcotics;\n(iii) Opium, narcotics, hemp and other drugs.\n\n177 List II, Entry 18 of the Revised Lists; See Joint Committee on Indian Constitutional Reform (Volume 1 \nPart I) 155 “18. Production, manufacture, possession, transport, purchase and sale of liquors, opium and \nother drugs and narcotics not covered by item 19 of List III.”\n\n178 Devolution Rules; Entry 16 of the Provincial List\n\n179 Command paper 4268; Entry 26 of List II: “26. Control of production, manufacture, possession, transport, \n\npurchase and sale of alcoholic liquors, drugs and narcotics.” \n\n180 Command paper 4268; Entry 27 of List II: “27. Imposition and regulation of duties of excise on alcoholic \n\nliquors, drugs and narcotics other than tobacco.”\n\n181 Report of the Joint Committee on Indian Constitutional Reform; Entry 49 of List I\n\n182 Report of the Joint Committee on Indian Constitutional Reform; Entry 19 of List II\n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n2021\n\nGovernment of India \nAct 1935\n\nConstitution of India \n\n‘alcoholic liquor \nfor human \nconsumption’183\n‘alcoholic liquor \nfor human \nconsumption’185\n\n‘intoxicating \nliquor’184\n\n‘intoxicating \nliquor’186\n\n100. Before we proceed to lay down our inferences upon a study of the \nevolution of legislative entries, we clarify that the issue before this \nBench is squarely related to the interpretation of the expression \n‘intoxicating liquor’. The meaning of the expression ‘alcoholic liquor \nfor human consumption’ and whether it can be read as ‘alcoholic \nliquor fit for human consumption’ is not before this Bench.\n\n101. The Report of the Joint Committee does not explain why the \nexpression ‘alcoholic liquor’ was substituted with the phrases ‘liquor’ \nin the regulatory entry and ‘potable alcoholic liquor’ in the taxing entry. \nWhile the Report explains the reasons for a few revisions from the \nWhite Paper, the entries relating to alcohol are not one of them.187 \nHowever, the paragraph extracted below provides some clarity: \n\n“241. It would extend this chapter to an unreasonable \nlength if we were to set out in detail all the changes \nwhich a revision of the three Lists has involved. We \nare less willing to do so, because we recognise that \nthe revised Lists themselves will require further expert \nscrutiny before they are finally submitted to Parliament \nas part of the legislative proposals of His Majesty’s \nGovernment. We think, however, that if the revised \nLists are compared with the Lists in the White Paper, \nsuch changes as have been made, in addition to those \nalready mentioned will, for the most part, be found to \nspeak for themselves.” \n\n(emphasis supplied)\n\n183 Government of India Act 1935; Entry 45 of list I\n\n184 Government of India Act 1935; Entry 31 of list II\n\n185 Constitution of India 1950; Entry 84 of List I\n\n186 Constitution of India 1950; Entry 8 of List II\n\n187 Joint Committee on Indian Constitutional Reform (Volume I Part I) 148-149.\n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f2022 \n\n[2024] 10 S.C.R.\n\n102. While the revisions are not accompanied by any reasons, it is clear \nthat the intention of the Joint Committee was to differentiate between \nthe product covered by the regulatory entry and the taxing entry. It is \nalso clear that the Committee was aware of the possibility of alcohol \nnot being understood as just a final ‘consumable product’ but also \nas a raw material in the production of other products. The Report of \nthe Joint Committee specifically conferred the States, competence \nover “toilet and medicinal preparations containing alcohol, Indian \nhelp, opium or other drugs and narcotics.”188 While the taxing entry \nrecognised the distinction between liquor that is used as a beverage \nand is a product in itself by using the words ‘potable alcoholic liquors’, \nand other products that contain alcohol, the regulatory entry does \nnot create that distinction. The regulatory entry only refers to ‘liquor’, \nwhich is a much larger all-encompassing phrase. \n\n103. We are unable to trace the discussions that led to a further revision in \nthe 1935 Act, where the expression ‘potable liquor’ was substituted with \n‘alcoholic liquor for human consumption’, and ‘liquor’ was substituted \nwith the expression ‘intoxicating liquor’. However, it is clear that the \nuse of the phrases as they appear in the relevant entries of the 1935 \nAct and the Constitution of India was a matter well-thought of. \n\n104. Another point that needs to be noted based upon a study of \nthe evolution of legislative entries is that until the 1935 Act, the \nregulatory entry covered narcotic drugs and opium along with \n‘alcoholic liquor’/‘liquor’/‘intoxicating liquor’. There are two possible \ninterpretations of the expression “intoxicating liquor”, as it appeared \nin the 1935 Act, on an application of the principle of noscitur a \nsociss, that is, the principle by which the meaning of an ambiguous \nexpression may be ascertained by reference to the meaning of the \nwords associated with it.189 It could be interpreted to mean liquor that \nhas an intoxicating effect upon consumption since narcotic drugs and \nopium also produce intoxication. The expression ‘intoxicating liquor’ \ncould also mean the regulation of alcohol used in the production of \nother products since opium and narcotic drugs are also used as \nraw materials in the production of other products (like pain relivers)\n\n188 Report of the Joint Committee on Indian Constitutional Reform; Entry 19(ii) of List II\n\n189 See Rainbow Steels v. Sales Tax Commissioner, UP AIR 1981 SC 2010; State of Bombay v. Hospital \nMazdoor Sabha, AIR 1960 SC 610, 613; Rohit Pulp and Paper Mills Ltd v. Collector of Central Excise, \nAIR 1991 SC 754\n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n2023\n\n105. Mr TT Krishnamachari moved an amendment to delete references to \nnarcotic drugs and opium in Entry 40 of List II of the Draft Constitution \n1948 (which correspondes to Entry 31 of List II of the 1935 Act). \nThe amendment was adopted by the Assembly. Mr Krishnamachari \nsubmitted that it was necessary to delete references to opium and \nnarcotic drugs because they were covered by other entries in List \nI and List III:\n\n“This amendment is necessary because we have shifted \npoisons and drugs to the Concurrent List and opium \nhappens to be in the Central List. This entry, therefore, \nwill suffice for the purposes of State Governments.”190\n\n106. An analysis of the evolution of the legislative entries relating to \nalcohol does not provide an unambiguous interpretation. While the \nevolution of the entries does indicate that the drafters were aware \nof the distinction between potable alcohol and alcohol used as a \nraw material in the production of other products, there is no clear \nanswer to whether ‘intoxicating liquor’ includes both. The evolution \nof the entries provides us with some context and background but not \na conclusive answer. We now proceed to apply the third principle of \ninterpretation, the workability or harmonious interpretation principle. \n\nd. The harmonious interpretation \n\n107. The expression ‘intoxicating liquor’ can possibly be interpreted to \n\nmean the following: \n\na. Alcohol which is used as a beverage for human consumption \n\nsuch as beer or gin, that is, potable liquor; \n\nb. \n\nIf liquor means liquid, then Entry 8 of List II includes all liquids \nwhich contain alcohol; and\n\nc. Alcohol which is used as a raw material to prepare other products \nsuch as pharmaceutical products and cosmetic drugs. This could \ninclude denatured alcohol but also other types of alcohol that \nare used in the production of products without denaturing it. \n\n108. A preliminary observation needs to be made. It may be recalled that \nthe State does not have the competence to levy excise duty with \n\n190 Constituent Assembly Debates (2 September 1949) Volume IX\n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f2024 \n\n[2024] 10 S.C.R.\n\nrespect to toilet and medical preparations containing alcohol. However, \nthis cannot influence the interpretation of the phrase ‘intoxicating \nliquor’ in Entry 8 of List II. The Seventh Schedule demarcates the \nlegislative competence on taxes and regulation. It is settled law that the \nLegislature cannot derive taxation powers from a general regulatory \nentry.191 Thus, the lack of competence to levy tax on products other \nthan alcoholic beverage cannot influence the interpretation of the \nregulatory entry. They operate in separate spheres. We now proceed \nto interpret the phrase ‘intoxicating liquor’. \n\n109. The Oxford English Dictionary provides multiple meanings of the \nword ‘Liquor’. They include: (a) alcoholic drinks, especially spirits; \n(b) water used in brewing; (c) liquid that has been produced in or \nused for cooking; and (d) liquid from which a substance has been \ncrystallized or extracted. Liquor thus broadly takes two meanings, \nof an alcoholic beverage or liquid. The word ‘intoxicate’ is defined to \nmean: (a) cause someone to lose control of their senses; (b) poison; \nand (c) excite or exhilarate. \n\n110. The dictionary meanings of the phrases ‘liquor’ and ‘intoxicate’ are \nvariable. If liquor is interpreted to mean ‘liquid’ instead of an alcoholic \nbeverage and intoxication a reference to alcohol, the Entry would \ncover all liquids that contain alcohol. However, if liquor is interpreted \nto mean alcoholic beverage, the Entry would only cover alcoholic \nbeverages for human consumption which causes intoxication, that \nis, potable alcohol. \n\n111. Entry 51 of List II refers to duties of excise on, inter alia, “alcoholic \nliquors for human consumption”. Article 47 which is placed in the \nPart on the Directive Principles of State Policy stipulates that the \nState shall endeavour to bring prohibition of the consumption \nof intoxicating drinks and drugs injurious to health, except for \nmedicinal purposes. The provision lists this as one of the aspects of \nthe duty of the State to improve public health. The phrase liquor is \nalso used in multiple places in the 6th Schedule to the Constitution. \nThe 6th Schedule stipulates provisions on the administration of Tribal \nAreas in the States of Assam, Meghalaya, Tripura and Mizoram. \nParagraphs 12, 12AA and 12B provide for the application of Acts of \nParliament and of the Legislature of the State to the autonomous \n\n191 MPV Sundararamier & Co. v. State of Andhra Pradesh (1958) 9 STC 298\n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n2025\n\ndistricts and regions in the States of Assam, Tripura and Mizoram. \nThe provisions stipulate that the enactments of the Legislature of \nthe State “prohibiting or restricting the consumption of any non-\ndistilled alcoholic liquor” would not apply to the autonomous Districts \nor autonomous regions.192 The expressions in the 6th Schedule will \nnot be of aid to interpret Entry 8 because it refers to a legislation \nenacted by the State Legislature under Entry 8. \n\n112. Thus, the Constitution uses three distinct expressions relating to \nalcohol: “intoxicating liquor”, “alcoholic liquor for human consumption” \nand “intoxicating drinks”. The evolution of the entries in the legislative \nLists indicate that it was a conscious decision to substitute ‘alcoholic \nliquor’ with ‘intoxicating liquor’ in the regulatory provision. It was also \na conscious decision to use different phrases in the taxing entry and \nthe regulatory entry. We do not think that it is necessary for us to lay \ndown the contours of the different phrases used in the Constitution. \nThat is a decision for another day and in another case. However, \nit is still possible to draw some inferences from the different uses. \nThe expressions “alcoholic liquor for human consumption” and \n‘intoxicating drink’ are used in the context of ‘consumption’. However, \nthe provision relating to “intoxicating liquor” is not limited to its \nconsumption. It stretches to its ‘production, manufacture, possession, \ntransport, purchase and sale of intoxicating liquors’ and beyond. The \nsecond difference is the use of the expression ‘intoxicating’ instead \nof ‘alcoholic’ as the adjective to liquor. The following inferences can \nbe drawn from the above differences: \n\na. \n\n‘Alcoholic liquor’ defines the scope of the provision based on \nthe ingredient, that is, ‘alcohol’. In contrast, ‘intoxicating liquor’ \ndefines the scope of the provision based on the effect, that is, \nintoxication. Thus, even liquor which colloquially or traditionally \nis not considered as alcoholic liquor may be covered by the \nphrase ‘intoxicating liquor’ if it produces the effect of intoxication;\n\nb. \n\n“Intoxicate” means the ability of someone to lose control of their \nbehaviour. It could also mean poison. Thus, the purpose of \nsubstituting the adjective which indicates the ingredient (alcohol) \n\n192 Unless the District Council by a public notification directs to give effect to the Act. The District Council \nmay also direct that the Act shall have effect subject to ‘exceptions or modifications’; See Paragraphs 12, \n12AA and 12B of the 6th Schedule. \n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f2026 \n\n[2024] 10 S.C.R.\n\nc. \n\nwith the impact (intoxication) seems to be enhance the scope \nof the Entry to cover liquor which has an impact on health; and\n\nThe public interest purpose of the provision is evident from \nthe accompanying words in the provision which includes every \nstage from its production to consumption within the scope of \nthe Entry. The public interest purpose of the provision is also \nevident from the evolution of the Entry. The relevant entry in \nthe 1935 Act also regulated narcotic drugs and opium along \nwith intoxicating liquor. References to narcotic drugs and opium \nwere deleted to prevent its overlap with entries in the Concurrent \nlist. As highlighted in the previous section, a common thread \nthat runs through alcohol, narcotic drugs and opium is that they \nare products which can be noxiously used because they are \nalso used as raw materials in the production of other products. \n\nIt is clear from the above analysis that the meaning of the phrase \n‘intoxicating liquor’ cannot be restricted to potable alcoholic liquor, \nthat is, alcohol that is sold as a beverage. \n\n113. At this juncture, it is relevant to recall that all entries in the Seventh \nSchedule must be given a wide interpretation and Entry 8 of List II \nwhen interpreted widely covers everything from the raw materials \nrequired for the production to the consumption of ‘intoxicating liquor’. \nIt must also be recalled that a few of the materials that are used to \nprepare potable alcohol (such as rectified spirit and ENA) are also \nused to prepare other pharmaceutical and cosmetic products. For \nexample, ENA and rectified spirit are also used to prepare products \nsuch as varnish and hand sanitizer. Hand sanitizer is a pharmaceutical \nproduct which is covered by Entry 19 of List III of the Concurrent \nList which deals with “drugs”. Since all entries must be interpreted \nwidely, Entry 19 will also include the production and manufacture of \ndrugs and will thus cover the materials (ENA or rectified spirit) used \nfor the preparation. Usually the entries cover the materials used for \nthe purpose of producing the product covered by that Entry. However, \nalcohol is an inherently noxious substance that is prone to misuse \naffecting public health at large. The purpose of Entry 8 is to cover \nalcohol that could be used noxiously to the detriment of public health. \nThe Entry covers all alcohol that could be ‘prone’ to noxious use. It \nalso covers variants of alcohol that are not used for the preparation \nof potable alcohol but which could be misused to harm public health. \n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n2027\n\nThis interpretation is in consonance with the mischief sought to be \ncovered by the Entry. Thus, while the entry covers ENA and rectified \nspirit which are used in the preparation of potable alcohol, it also covers \nvariants of alcohol such as denatured alcohol which though are not \nused in the preparation of potable alcohol, are prone to be misused. \n\n114. It is not disputed that denatured alcohol is prepared by adding \nsubstances which are called denaturants to give the alcohol a foul \nsmell and taste. The very purpose of denaturing ethanol to prepare \ndenatured alcohol is to make it undrinkable. This Court in VAM \nOrganic (II) (supra) held that the State can regulate the process of \npreparing denatured alcohol because it is done to ensure that the \npublic is protected from consuming illicit liquor but not the product of \ndenatured spirit even if it can be renatured and converted to potable \nliquor.193 The petitioners further sought to make a classification \nbetween Specially Denatured Alcohol and Completely Denatured \nAlcohol. It was argued that though Specially Denatured Alcohol is \nnot fit for human consumption, it can be made potable by certain \nrecovery processes while there is no such possibility in Completely \nDenatured Alcohol.194 It was argued that Entry 8 must at the least \ncover Specially Denatured Alcohol. The issue of whether denatured \nalcohol can be renatured to produce potable alcohol is immaterial \nfor the purposes of delineating the field of Entry 8 of List II. As held \nabove, Entry 8 does not only cover potable alcohol but alcohol which \nmay be used noxiously also. Thus, the test to be adopted is not \nwhether the alcohol could be converted and used for the preparation \nof alcoholic beverages but whether it could be mischievously used \nfor its preparation or as a substitute. \n\n115. It was also argued by the petitioners that the phrase ‘intoxicating \nliquor’ must be interpreted to mean liquid containing alcohol. The \nconsequence of this interpretation would be that it would include \nliquid products which may be covered by other entries, thereby, \ncausing an overlap of the entries. For example, if interpreted in the \nabove manner, the product of ‘hand sanitizer’ will be covered by both \n\n193 “43. […] But this power stops with the denaturation of the industrial alcohol. Denatured spirit has been \nheld in Vam Organic-I to be outside the seism of the State Legislature. Assuming that denatured spirit \nmay by whatever process be renatured (a proposition which is seriously disputed by the respondents) \nand then converted into potable liquor, this would not give the State the power to regulate it.[…]”\n\n194 See Alcohol Denaturants-Specification (Second Revision), ICS 71.100.80\n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f2028 \n\n[2024] 10 S.C.R.\n\nEntry 8 of List II (‘intoxicating liquor’) and Entry 19 of List III (‘drugs’). \nSince the Entry must be read widely, it will then cover everything \nrelating to the production of the drug, substantially reducing the \nscope of Entry 19 because other products of the pharmaceutical and \ncosmetic industry will be covered by Entry 8. This interpretation will \nnot be in consonance with the settled principle of interpretation that \nan interpretation that promotes the workability of provisions must \nbe adopted. This interpretation of the phrase is also in consonance \nwith the precedents that we have analysed in section E(iv)(a) of \nthis judgment. \n\nv. \n\nThe correctness of the decision in Synthetics (7J)\n\n116. Having interpreted Entry 8 of List II, we now turn to the decision in \nSynthetics (7J) (supra). This Court in Synthetics (7J) (supra) did \nnot undertake an independent analysis of the meaning of the phrase \n‘intoxicating liquor’. Without any discussion, the seven-Judge Bench \nreadily concluded that the interpretation of the Bombay High Court \nand not this Court in FN Balsara (supra) is the correct approach. The \nonly reasoning that this Court offered was that when the Constitution \nBench in FN Balsara (supra) interpreted the phrase, it was not aware \nof the full potentiality of industrial alcohol: \n\n“74. […] It appears that in the light of the new experience \nand development, it is necessary to state that “intoxicating \nliquor” must mean liquor which is consumable by human \nbeing as it is and as such when the word “liquor” was used \nby Fazl Ali J., they did not have the awareness of full use of \nalcohol as industrial alcohol. It is true that alcohol was used \nfor industrial purposes then also, but the full potentiality \nof that user was not comprehended or understood. With \nthe passage of time, meanings do not change but new \nexperiences give new color to the meaning.”\n\n117. These observations are erroneous for the following reasons: \n\na. The High Court in FN Balsara v. State of Bombay (supra) \ndid not limit the meaning of ‘intoxicating liquor’ to its common \nparlance meaning, that is, potable alcoholic liquor. It also \nincluded alcoholic liquids which are not normally consumed \nas drinks. On appeal, the Constitution Bench held that a wider \ndefinition of intoxicating liquor is necessary to cover other \n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n2029\n\nproducts which may be used as substitutes for intoxicating \ndrinks. [See section E (iv)(a) of this judgment]. This Court held \nthat the expression must be given a wide meaning precisely \nbecause it recognised the potentiality of the wide use of alcohol \nfor industrial purposes and its consequent misuse; and\n\nb. The Constitution itself recognises the industrial use of alcohol. \nEntries 84 of List I (before the amendment in 2016) and 51 \nof List II specifically refer to medicinal and toilet preparations \ncontaining alcohol. \n\nThus, the use of alcohol for industrial preparations was well within \nthe knowledge of this Court in FN Balsara (supra). \n\n118. This Court in Synthetics (7J) (supra) did not determine the meaning \nof the expressions ‘intoxicating’ or ‘liquors’ or ‘intoxicating liquors’ \nindependently. It did not compare the difference in the language used \nto describe alcohol or liquor in different provisions of the Constitution \nto understand the significance of the difference. Only Article 47 was \nreferred to in the following terms: \n\n“77. Article 47 of the Constitution imposes upon the State \nthe duty to endeavour to bring about prohibition of the \nconsumption except for medicinal purpose of intoxicating \ndrinks and products which are injurious to health. If the \nmeaning of the expression “intoxicating liquor” is taken in \nthe wide sense adopted in Balsara case, it would lead to an \nanomalous result. Does Article 47 oblige the State to prohibit \neven such industries as are licensed under the IDR Act \nbut which manufacture industrial alcohol? This was never \nintended by the above judgements or the Constitution.”\n\n119. Although Article 47 was mentioned, the distinction between the \npurpose of a constitutional provision in Part IV and a legislative entry \nwas not appreciated. This leads to an incorrect inference, namely, \nthat holding Entry 8 of List II includes non-potable alcohol would \namount to placing an obligation on the state to prohibit non-potable \nalcohol in terms of Article 47. There is no doubt that Article 47 refers \nonly to intoxicating drinks which means potable alcohol. However, an \nanalysis of the differences in the terminologies without appreciating \nthat the reference in Article 47 is made in the context of consumption \nleads to an erroneous conclusion. \n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f2030 \n\n[2024] 10 S.C.R.\n\n120. Further, in Synthetics (7J) (supra), this Court concluded that the \nimpugned fees are in the nature of a tax. In that case, the only \nentries that this Court ought to have dealt with are Entries 84 of List \nI and Entry 51 of List II. Entry 8 deals with regulatory power and is \nnot a taxing entry. It is a settled principle that a tax cannot be levied \nunder a general entry.195\n\n121. In spite of holding that the fee charged was a tax and that the State \nLegislature does not have the competence to levy tax on industrial \nalcohol, the Bench proceeded to analyse the relationship between \nEntry 52 of List I196 and Entry 8 of List II in paragraph 84 of the \njudgment. The Bench noted that the “levy of impost” is not possible \nin view of the occupation of the field by IDRA and that in view of \nIDRA, the power to issue licences to manufacture both potable and \nnon-potable alcohol is vested in the Central Government.197 These \nobservations are erroneous for the following reasons: \n\na. Under Entry 52 of List I, Parliament has the competence to enact \nlaws with respect to certain industries, the control of which by \nthe Union is necessary in public interest. It is a general entry. It \ndoes not confer any taxing power. Thus, Entry 52 of List I may \nonly impact the entries in List II that deal with the regulatory \naspect of industries as we have explained in the previous \nsection of this judgment. It does not have any impact on taxing \nentries. Thus, the observation in paragraph 84 of Synthetics \n(7J) (supra) is overruled; and \n\nb. We have also held that Parliament in exercise of the power \nunder Article 246 read with Entry 52 of List I cannot legislate with \nrespect to the field covered by Entry 8 of List II. The observations \nin paragraph 85 of Synthetics (7J) (supra) that after the \namendment to IDRA in 1956 bringing fermentation industries \nwithin the scope of the enactment, the Union has competence \nover both potable and non-potable alcohol is overruled. The law \nenacted in terms of Entry 52 of List I cannot render any entry \nof List II (including Entry 8) otiose. Thus, Parliament cannot \ntake over the field covered by Entry 8.\n\n195 See MPV Sundararamier & Co. v. State of AP, AIR 1958 SC 468\n\n196 See Synthetics (7J) [84]\n\n197 See Synthetics (7J) [85]\n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n2031\n\n122. In paragraph 86 of the judgment, this Court in Synthetics (7J) \n(supra) held that after the inclusion of the fermentation industry in \nthe schedule to IDRA, the State only had legislative competence to:\n\na. \n\nb. \n\nc. \n\nd. \n\nenact any legislation in the nature of prohibition of potable \nliquor referable to Entry 6 of List II and regulating powers;\n\nlay down regulation to ensure that non-potable alcohol is not \ndiverted and misused as a substitute for potable alcohol;\n\nlevy excise duty and sales tax on potable alcohol under \nEntry 52 of List II. However, the State cannot levy sales tax \non industrial alcohol because “under the Ethyl Alcohol (Price \nControl) Orders, sales tax cannot be charged by the State on \nindustrial alcohol”; and\n\nin case the State is rendering any service, it may charge fees \nbased on quid pro quo. Reliance was placed on observations \nin Indian Mica (supra). \n\n123. Since this Court in Synthetics (7J) (supra) held that the State lost \nthe competence to enact a legislation on potable alcohol because \nIDRA occupies the field and that it did not have the competence to \nenact a law on non-potable alcohol, it traced regulations relating to \nalcohol to Entry 6 of List II which deals with “public health”. Viewing \nthe consumption of potable alcohol as a public health concern on \na reading of Article 47 along with Entry 6 of List II, this Court held \nthat the State has the competence to deal with (a) and (b) above. \nIn view of our holding that : (a) the expression ‘intoxicating liquor’ \nin Entry 8 is not limited to alcoholic beverages; and (b) Entry 52 \nof List II cannot occupy the field covered by Entry 8 of List II, the \nobservations in Synthetics (7J) (supra) by which alcohol was only \ntraced to the entry on public health is erroneous. It cannot be denied \nthat there is a degree of overlap between Entry 8 and Entry 6 of List \nII. However, Entry 8 of List II cannot be rendered redundant for all \npurposes by a declaration by parliamentary law under Entry 52 of \nList I. Such as interpretation, as held above, would completely tilt \nthe federal balance in the favour of Parliament. \n\n124. Paragraph 86(d) must be read along with paragraph 88 extracted \nin the earlier part of the judgment. The Bench only placed reliance \non the decision in Indian Mica (supra) to arrive at this conclusion. \nIn paragraph 3 of Indian Mica (supra), the Constitution Bench held \nas follows:\n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f2032 \n\n[2024] 10 S.C.R.\n\n“Denatured spirit though an alcoholic liquor is not fit for \nhuman consumption. The power to levy duty on the same \nwas and is given to the Central Legislature. But the same \nbeing intoxicating liquor, the Provincial Legislature under \nthe 1935 Act and at present the State Legislature has \npower to levy fee. The power of any Legislature to levy \nfee is conditioned by the fact that it must be by and large \na quid pro quo for the services rendered.”\n\n(emphasis supplied)\n\n125. The conclusion in Indian Mica (supra) that the State Legislature \nhas the competence to levy fees on denatured alcohol (which \nthis Court in Synthetics (7J) (supra) interchangeably uses with \nindustrial alcohol) is premised on the wide interpretation of the \nphrase intoxicating liquor in Entry 8 of List II to include denatured \nalcohol. However, this Court in Synthetics (7J) (supra) expressly \nrejected this interpretation. The State Legislature would have the \ncompetence to levy fees in terms of Entry 66 of List II in respect \nof any of the matters in the List. Thus, the conclusion in paragraph \n86(d) creates an inherent inconsistency within the judgment. We \nhave overruled the interpretation in Synthetics (7J) (supra) on the \nscope of Entry 8 and the interaction between Entry 8 and Entry 52 \nof List. The phrase ‘intoxicating liquor’ in Entry 8 includes denatured \nalcohol. Thus, the State will have the competence to levy fees with \nrespect to denatured alcohol, but for the reasons in this judgment. \n\n126. Reference may be made to judgments of this Court interpreting \nSynthetics (7J) which are summarised in Section A(iii) of this \njudgment. This Court interpreted Synthetics (7J) (supra) in the \nfollowing manner: \n\na. The State has the competence to legislate upon industrial \nalcohol as a product of the controlled industry under Entry 33 \nof List III;198\n\nb. The State has the competence to legislate upon the process \nof producing denatured spirit but not the product of denatured \nspirit because the process is related to preventing the diversion \nof non-potable liquor to potable liquor;199\n\n198 Shri Bileshwar Khand Udyog Khedut Sahakari Mandali (supra)\n\n199 See VAM Organic(I) (supra) and VAM Organic (II) (supra)\n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n2033\n\nc. \n\nThe State does not have the competence to legislate upon \nrectified spirit;200 and\n\nd. The State has the competence to legislate upon rectified spirit \nthat is used for the purpose of preparing potable alcohol.201\n\n127. Before we proceed to analyse the correctness of these observations \nbased on the law that we have laid down in this judgment, it is \nnecessary to expound upon how this Court in Bihar Distillery (supra) \ndrew a purpose based demarcation of the legislative fields. The heart \nof the reasoning of the Court is reproduced below: \n\n“23. … Take a case where two industries ‘A’ and ‘B’ come \nforward with proposals to manufacture rectified spirit; ‘A’ \nsays that it proposes to manufacture rectified spirit and then \ndenature it immediately and sell it as industrial alcohol while \n‘B’ says that it will manufacture rectified spirit and utilise it \nentirely for obtaining country liquor (arrack or by whatever \nother name, it may be called) or for manufacturing IMFLs \nfrom out of it or to supply it to others for the said purpose. \nAccording to Synthetics [(1990) 1 SCC 109  : 1989 Supp \n(1) SCR 623] , ‘A’ is under the exclusive control of the \nUnion and the only powers of the State are those as are \nenumerated in para 86 quoted above. But what about ‘B’? \nThe rectified spirit manufactured by it is avowedly meant \nonly for potable purposes. Can it yet be called “industrial \nalcohol”? Can it still be said that the State concerned has \nno power or authority to control and regulate industry ‘B’ \nand that the Union alone will control and regulate it until the \npotable liquors are manufactured? The Union is certainly not \ninterested in or concerned with manufacture or process of \nmanufacture of country liquor or IMFLs. Does this situation \nnot leave a large enough room for abuse and misuse of \nrectified spirit? It should be remembered that according to \nmany States before us, bulk of the rectified spirit produced \nin their respective States is meant for and is utilised for \nobtaining or manufacturing potable liquors. Can it be said \n\n200 Deccan Sugar (supra)\n\n201 Bihar Distillery (supra)\n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f2034 \n\n[2024] 10 S.C.R.\n\neven in such a situation that the State should fold its hands \nand wait and watch till the potable stage is reached. … It is \nthese and many other situations which have to be taken into \nconsideration and provided for in the interests of law, public \nhealth, public revenue and also in the interests of proper \ndelineation of the spheres of the Union and the States. The \nline of demarcation can and should be drawn at the \nstage of clearance/removal of the rectified spirit. Where \nthe removal/clearance is for industrial purposes (other than \nthe manufacture of potable liquor), the levy of duties of excise \nand all other control shall be of the Union but where the \nremoval/clearance is for obtaining or manufacturing potable \nliquors, the levy of duties of excise and all other control \nshall be that of the States. This calls for a joint control and \nsupervision of the process of manufacture of rectified spirit \nand its use and disposal.” \n\n(emphasis supplied)\n\n128. This Court in Bihar Distillery (supra) held that where rectified spirit \nis manufactured only for the purpose of converting it into potable \nalcohol, it cannot be termed ‘industrial alcohol’. It was of the opinion \nthat it was ill-conceived to allow for a legal structure where the States \nwould step in only after alcohol was made potable as this would either \nresult in a lacuna in regulation or permit the Union to regulate a field \nwhich it was not empowered to in terms of the Seventh Schedule. \nThe three-Judge Bench held that the line of demarcation should be \ndrawn at the stage of clearance or removal of rectified spirit. Put \ndifferently, the Bench held that the purpose for which the rectified \nspirit was manufactured would determine whether the Union or the \nStates would tax and control it. It elaborated that:\n\na. \n\nIndustries which manufactured rectified spirit exclusively for \nsupply to industries other than those which manufactured \npotable liquor would be under the total and exclusive control \nof the Union including for the purpose of levying excise duty. \nThis extended to denatured alcohol as well. The power of the \nStates with respect to this category was limited to ensuring that \nsuch alcohol was not illegally diverted to create potable alcohol. \nThe States could levy regulatory fees to defray the costs of the \nstaff deployed for this purpose; \n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n2035\n\nb. \n\nc. \n\nIndustries which manufactured rectified spirit exclusively for the \npurpose of manufacturing potable alcohol would be under the \ntotal and exclusive control of the States in all respects and at \nall stages including levying excise duty; and\n\nThe power to permit the establishment of industries which \nmanufactured rectified spirit for both the purposes delineated \nabove as well as the regulation of such industries would be \nexclusively with the Union. The Union could levy excise duty \non rectified spirit which was cleared or removed for supply to \nindustries and the States could levy excise duty on rectified \nspirit which was cleared or removed for manufacturing potable \nalcohol. The removal or clearance of alcohol would be under \nthe joint supervision of the Union and the States to ensure that \nexcise duty was not evaded. \n\n129. In Bihar Distillery (supra), the issue before this Court was whether \nthe State has the competence to regulate raw material (“rectified \nspirit”) for the preparation of “intoxicating liquor” which was interpreted \nto only mean potable liquor. Justice Jeevan Reddy, writing for the \nthree-Judge Bench, saw it fit to draw a purpose based delineation \nbecause rectified spirit could be used to prepare both potable alcohol \nand other products. The shortcoming of this reasoning is evident in \nthe manner in which the Bench deals with composite industries, that \nis, industries which manufacture both rectified spirit for the purpose of \npotable alcohol and the production of other products. The regulation \nof such composite industries was held to be with the Union though \nthere was no constitutional basis for such a division. This Bench, \nhaving expounded on the meaning of “intoxicating liquor” to include \nvariants of alcohol which are prone to be misused, the interpretations \nof Synthetics (7J) summarised in paragraph 126 of this judgment are \noverruled. The classification of alcohol into potable and non-potable (or \nindustrial alcohol) is oversimplistic. Alcohol (such as ENA or rectified \nspirit) which is used to prepare potable alcohol is also used to prepare \nother products of the pharmaceutical industry. An interpretation that \nENA or rectified spirit which is used in the preparation of potable \nliquor is ‘industrial alcohol’ and is thus outside the scope of Entry \n8 limits the field covered by the Entry even if ‘intoxicating liquor’ \nis interpreted to only mean potable liquor. Further, we also see no \n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f2036 \n\n[2024] 10 S.C.R.\n\nmerit in the classification between the process of making denatured \nspirit and the product of denatured spirit since we have held that the \nexpression intoxicating liquor includes denatured spirit. \n\nvi. The impact of the decision on Item 26 of the First Schedule \n\nof IDRA\n\n130. The Law Commission of India in its 158th Report on the amendment \nof the IDRA, released in 1998 noted that the decision in Synthetics \n(7J) (supra) created “several practical problems” and that “there is no \nsuch thing as industrial alcohol ”. The Law Commission recommended \nthat Item 26 of the IDRA which read “Fermentation industries” be \nsubstituted to read “Fermentation industries but not including alcohol”. \nItem 26 was substituted in 2016 to read “Fermentation industries (other \nthan potable alcohol)”.202 While the Law Commission recommended \nremoving alcohol as a whole from the scope of the IDRA, Parliament \nby the 2016 amendment only removed potable alcohol from the scope \nof the enactment. The Statement of Objects and Reasons indicates \nthat the amendment to the IDRA was to harmonise the Act with the \ndecision of this Court in Bihar Distillery (supra). The relevant portion \nof the Statement of Objects and Reasons is reproduced below: \n\n“The Supreme Court of India, in the case of Bihar Distillery \nv. Union of India (AIR 1997 SC 1208), has held that in the \ninterest of proper delineation of the spheres of the Union \nand the States, the line of demarcation should be drawn \nat the stage of clearance or removal of the rectified spirit. \nWhere the removal or clearance is for industrial purposes \n(other than the manufacture of potable liquor), the levy of \nduties of excise and all other control shall be with the Union \nand where the removal or clearance is for obtaining or \nmanufacturing potable liquors, the levy of duties of excise \nand all other control shall be with the States.\n\nIn the backdrop of the above judgment of the Supreme \nCourt, the Law Commission of India had recommended in \nits 158th Report that the Heading 26 of the First Schedule \nto the Act be substituted as “Fermentation Industries but \nnot including Alcohol”.\n\n202 See the Industries (Development and Regulation) Amendment Act 2016.\n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n2037\n\nThe recommendation of the Law Commission of India was \nexamined in depth by the Government. If the subject \n“Alcohol” is taken out of the First Schedule to the \nAct, both industrial alcohol and potable alcohol would \ncome under the purview of the State Government \nwhich is not in consonance with the judgment of the \nSupreme Court. Moreover, the effect of implementation of \nthe recommendation of the Law Commission would be that \nthe subject “Alcohol” which covers both industrial alcohol \nand potable alcohol would no longer be a Central subject.”\n\n(emphasis supplied)\n\n131. The Statement of Objects and Reasons indicates that the \nrecommendation of the Law Commission was not accepted because \nthe effect of accepting the recommendation would be that both \n‘industrial alcohol’ and potable alcohol would be in the domain of the \nStates, and that this would be contrary to Bihar Distillery (supra). \nHence, the IDRA was amended to remove only potable alcohol from \nItem 26 of IDRA.\n\n132. We have held above that Parliament under Entry 52 of List I does \nnot have the legislative competence to enact a law taking control of \nthe industry of intoxicating liquor. The State Legislatures will have \ncontrol over the industry of ‘intoxicating liquor’. Parliament could not \nhave taken control of the field covered by Entry 8 since we have \ninterpreted intoxicating liquor to include alcohol other than potable \nalcohol as well. Therefore, Item 26 of the First Schedule to the IDRA \nmust be read as excluding the industry of “intoxicating liquor”, as \ninterpreted in this judgment. \n\nvii. The (ir)relevance of the decision in Tika Ramji to the dispute\n\n133. In Tika Ramji (supra), sugarcane farmers instituted proceedings \nunder Article 32 of the Constitution challenging the constitutional \nvalidity of the Uttar Pradesh Sugarcane (Regulation of Supply \nand Purchase) Act 1953203 and two notifications issued by the \nState government under the Act. The constitutional validity of the \nUP Sugarcane Act was challenged on the ground that the State \nLegislature did not have the competence because Item 8 of the \n\n203 “UP Sugarcane Act”.\n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f2038 \n\n[2024] 10 S.C.R.\n\nSchedule to the IDRA notified ‘sugar’ as one of the controlled \nindustries, and that the legislation regulating sugarcane was in pith \nand substance related to ‘sugar’. The Constitution Bench, inter alia, \nheld that:\n\na. \n\nIndustry in the wide sense of the term comprises of three \ndifferent aspects: (i) raw materials which are an integral part \nof the industrial process; (ii) the process of manufacture or \nproduction; and (iii) the distribution of the products of the \nentries;204\n\nb. The Seventh Schedule creates a demarcation based on the \nabove three stages. Entry 27 of List II deals with the production, \nsupply and distribution of goods subject to the provisions of Entry \n33 of List III. The term ‘goods’ is defined by Article 366(12) of the \nConstitution and includes materials, commodities and articles. \n‘Materials’ includes raw materials. Thus, the raw materials for \nindustries would be covered by Entry 27 of List II. The products \nwould also fall under Entry 27 of List II, except in the case of \na controlled industry in which case they would be covered by \nEntry 33 of List III. Entry 24 of List II would deal with the process \nof manufacture or production, unless it is a controlled industry \nunder Entry 52 of List I.205 Thus, the phrase ‘industry’ in Entry \n24 of List II and Entry 52 of List I takes the narrow meaning of \nprocess of production and manufacture;\n\nc. Section 18G of the IDRA enables the Union Government to \nregulate supply and distribution, and trade and commerce of \ncertain ‘articles’. It does not extend to the production of articles. \nRaw materials are essential ingredients for manufacture or \nproduction but they are not of the same nature or description \nas the articles produced by the process of manufacture. The \narticles or class of articles relatable to the scheduled industry \ncould only comprise of finished products of a cognate character. \nRaw materials, not being finished products, are not articles \nwhich are relatable to the scheduled industry covered by \nSection 18G;206\n\n204 Tika Ramji (supra) [24]\n\n205 \n\nibid\n\n206 Tika Ramji (supra) 32\n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n2039\n\nd. Sugarcane is a raw material for the production of sugar. \nConsequently, it is not an article relatable to the sugar industry \nand does not fall within the scope of Section 18G. The IDRA \ndid not affect the legislative powers of the State Legislature \nwith respect to sugarcane. Therefore, the UP Sugarcane Act \nwas not repugnant to the IDRA;207 and\n\ne. Even if it were assumed that sugarcane was relatable to the \nsugar industry under Section 18G, the Central Government had \nnot issued a notified order, as required by the provision. The \nmere possibility that a notified order may be issued could not \nlead to repugnancy. Such an order was an essential prerequisite \nfor repugnancy to arise.208\n\n134. The decision in Tika Ramji (supra) was relied upon by this Court \nin Calcutta Gas (supra), Kannan Devan Hills Produce v. State \nof Kerala, 209 Ganga Sugar Corporation v. State of UP, 210 B \nViswanathiah & Co. v. State of Karnataka211 and the majority in \nITC (supra) on the aspect of the meaning of industry covered by \nEntry 24 of List II. The dissenting opinion of Justice Pattanaik for \nhimself and Justice Bharucha in ITC (supra) doubted the correctness \nof Tika Ramji (supra) on that aspect. \n\n135. The Union of India submitted that the inclusion of ‘raw materials’ \nin Entry 27 of List II (and their consequential exclusion from the \ndefinition of ‘industry’ in Entry 24 of List II and Entry 52 of List I) \nin Tika Ramji (supra) must be overruled. It was submitted that \n‘industry’ as it features in the legislative lists includes raw materials \nas well. The learned Solicitor General submitted that if the restrictive \nmeaning in Tika Ramji (supra) is overruled, then the State will not \nhave competence to legislate on ENA used for the preparation of \npotable alcohol under Entry 8.\n\n136. We have in the preceding section held that the industry of intoxicating \nliquor is covered by Entry 8 and not Entry 52. Thus, even if a broad \n\n207 \n\n208 \n\nid\n\nid\n\n209 \n\n[1973] 1 SCR 356 : (1972) 2 SCC 218\n\n210 \n\n[1980] 1 SCR 769 : (1980) 1 SCC 223\n\n211 \n\n[1991] 1 SCR 305 : (1991) 3 SCC 258\n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f2040 \n\n[2024] 10 S.C.R.\n\nmeaning is given to the word ‘industry’ in Entry 52, it will not impact \nthe decision in this case because Entry 8 is the specific entry which \napplies to the industry of intoxicating liquor.\n\n137. The meaning of the phrase ‘industry’ in Entry 52 will only impact \nthis decision if (a) Entry 52 of List I includes raw materials \nnecessary for the industry; and (b) Entry 8 of List II includes the \nprocess of manufacture but does not include the stage anterior to \nit (that is, raw materials). If an expansive meaning is given to the \nword ‘industry’, the raw materials to an industry will be covered \nby Entry  24 of List  II and Entry 52 of List I (if it is a controlled \nindustry). It will not be covered by Entry 27 of List II. If Entry 8 \nof List II does not include raw material but only the process to \nmanufacture and final product, it is only then that the competence \nto enact laws on the raw material for the industry (in this case, \nENA) will lie with Parliament.\n\n138. We are of the opinion that the holding in Tika Ramji (supra) is not \n\nrelevant to the dispute for the following reasons: \n\na. We have interpreted the phrase ‘intoxicating liquor’ in Entry 8 \n\nto include ENA since it could be noxiously used; and\n\nb. Notwithstanding the above, if the ground for overruling the \nholding in Tika Ramji (supra) is that manufacture/production \ncannot be disconnected from raw materials, it would equally \napply to the industry of intoxicating liquor covered by Entry 8 \nof List II. In Section C (iii)(a) of this judgment, we have \nconcluded that the words ‘that is to say’ are illustrative. They \nare not exhaustive of the contents of the Entry. Thus, Entry 8 \ncannot be interpreted to exclude raw materials used for the \nproduction of intoxicating liquor merely because the Entry \ndoes not expressly provide for them. On an application of the \nprinciple that entries ought to be interpreted widely, the raw \nmaterials for the production and manufacture of intoxicating \nliquor, as interpreted in this judgment will be covered by \nEntry 8.\n\nviii. Section 18G of IDRA and Entry 33 of List III\n\n139. To recall, this Court in Synthetics (7J) (supra) held that the State \ncannot regulate ‘industrial alcohol’ as a product of the controlled \n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n2041\n\nindustry because the Union has occupied the field by Section 18G of \nIDRA.212 The questions referred by the three-Judge Bench in Lalta \nPrasad (supra) all relate to the issue of whether Section 18G of the \nIDRA occupies the field in Entry 33 of List III or whether the field is \noccupied only when an order is notified under Section 18G. There is \nno necessity to determine the correctness of this observation in this \nreference since the Legislature of the State will have the competence \nto regulate denatured alcohol in view of our interpretation of the \nexpression ‘intoxicating liquor’ in Entry 8 of List II. \n\nF. Conclusion \n\n140. In view of the discussion above, the following conclusions emerge:\n\na. Entry 8 of List II of the Seventh Schedule to the Constitution is \nboth an industry-based entry and a product-based entry. The \nwords that follow the expression “that is to say” in the Entry \nare not exhaustive of its contents. It includes the regulation \nof everything from the raw materials to the consumption of \n‘intoxicating liquor’; \n\nb. Parliament cannot occupy the field of the entire industry merely \nby issuing a declaration under Entry 52 of List I. The State \nLegislature’s competence under Entry 24 of List II is denuded \nonly to the extent of the field covered by the law of Parliament \nunder Entry 52 of List I;\n\nc. Parliament does not have the legislative competence to enact a \nlaw taking control of the industry of intoxicating liquor covered \nby Entry 8 of List II in exercise of the power under Article 246 \nread with Entry 52 of List I;\n\nd. The judgments of the Bombay High Court in FN Balsara v. \nState of Bombay (supra), this Court in FN Balsara (supra) and \nSouthern Pharmaceuticals (supra) did not limit the meaning \nof the expression ‘intoxicating liquor’ to its popular meaning, \nthat is, alcoholic beverages that produce intoxication. All the \nthree judgments interpreted the expression to cover alcohol that \ncould be noxiously used to the detriment of health;\n\n212 Synthetics (7J) [85]\n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f2042 \n\n[2024] 10 S.C.R.\n\ne. The expression ‘intoxicating liquor’ in Entry 8 has not acquired \na legislative meaning on an application of the test laid down in \nGanon Dunkerley (supra);\n\nf. \n\nThe study of the evolution of the legislative entries on alcohol \nindicates that the use of the expressions “intoxicating liquor” \nand “alcoholic liquor for human consumption” in the Seventh \nSchedule to the Constitution was a matter well-thought of. It \nalso indicates that the members of the Constituent Assembly \nwere aware of use of the variants of alcohol as a raw material \nin the production of multiple products;\n\ng. Entry 8 of List II is based on public interest. It seeks to enhance \nthe scope of the entry beyond potable alcohol. This is inferable \nfrom the use of the phrase ‘intoxicating’ and other accompanying \nwords in the Entry. Alcohol is inherently a noxious substance \nthat is prone to misuse affecting public health at large. Entry 8 \ncovers alcohol that could be used noxiously to the detriment of \npublic health. This includes alcohol such as rectified spirit, ENA \nand denatured spirit which are used as raw materials in the \nproduction of potable alcohol and other products. However, it \ndoes not include the final product (such as a hand sanitiser) that \ncontains alcohol since such an interpretation will substantially \ndiminish the scope of other legislative entries;\n\nh. The judgment in Synthetics (7J) (supra) is overruled in terms \n\nof this judgment;\n\ni. \n\nj. \n\nk. \n\nItem 26 of the First Schedule to the IDRA must be read as \nexcluding the industry of “intoxicating liquor”, as interpreted in \nthis judgment;\n\nThe correctness of the judgment in Tika Ramji (supra) on the \ninterpretation of word ‘industry’ as it occurs in the legislative \nentries does not fall for determination in this reference; and\n\nThe issue of whether Section 18G of the IDRA covers the field \nunder Entry 33 of List III does not arise for adjudication in view \nof the finding that denatured alcohol is covered by Entry 8 of \nList II. \n\n141. The reference is answered in the above terms. \n\n142. The Registry is directed to obtain administrative instructions from the \nChief Justice for placing the matters before an appropriate Bench.\n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n2043\n\nORDER ON REFERENCE\n\nNagarathna, J.\n\nS. \nNo.\n\nTable of Contents*\n\nParticulars\n\nPage \nNo.\n\n1. Opening Paragraphs\n\n2. Genesis of the controversy\n\n3. Conclusions arrived at by the learned Chief Justice\n\n4. Submissions\n\n5. Relevant Constitutional Framework\n\n6.\n\nInterpretation of Legislative Entries\n\na.\n\nb.\nc.\nd.\ne.\nf.\n\nPrafulla Kumar Mukherjee\n\nFN Balsara\nAtiqa Begum\nCalcutta Gas Company\nRMDC\nMPV Sundararamier\n\n7. Scheme of IDRA\n8. Article 47: Directive Principle of State Policy\n\na.\nb.\nc.\nd.\ne.\nf.\ng.\nh.\ni.\n\nCooverjee B. Bharucha\nSristikar Dowerah\nFN Balsara\nNagendra Nath\nAmar Chandra Chakraborty\nHarinarayan Jaiswal\nNashirwar\nHar Shankar\nKhoday Distilleries\n\n9. Survey of Judicial Precedents\n\na.\nb.\n\nSynthetics and Chemicals (7J)\nSynthetics and Chemicals (2J)\n\n* Ed. Note: Pagination as per the original Judgment.\n\n5\n\n6\n\n9\n\n12\n\n18\n\n22\n\n24\n\n24\n24\n25\n26\n27\n30\n37\n38\n39\n40\n43\n43\n43\n44\n44\n48\n51\n51\n65\n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f2044 \n\n[2024] 10 S.C.R.\n\nc.\n\nd.\n\nBileshwar Khand Udyog\n\nGujchem Distillers\n\ne. Modi Distillery\n\nf.\n\ng.\n\nShree Krishna Gyanoday Sugar Ltd.\n\nBihar Distillery\n\nh. McDowell\n\ni.\n\nj.\n\nk.\n\nl.\n\nVam Organic I\n\nHaryana Brewery Ltd.\n\nIndustrial Corporation (P) Ltd.\n\nVam Organic II\n\n10. Analysis of Judicial Dicta\n\na.\n\nb.\n\nc.\n\nd.\n\ne.\n\nf.\n\ng.\n\nh.\n\ni.\n\nIndian Mica\n\nSouthern Pharmaceuticals\n\nSynthetics and Chemicals (7J)\n\nSynthetics and Chemicals (2J)\n\nBileshwar Khand Udyog\n\nShree Krishna Gyanoday Sugar Ltd\n\nBihar Distillery\n\nVam Organic I\n\nVam Organic II\n\n11. Further Analysis\n\n12. Meaning of “intoxicating liquors”\n\n13. A Historical Perspective\n\n14. Constituent Assembly Debates\n\n15. Analysis of relevant Entries in the three Lists\n\na.\n\nIshwari Khetan\n\nb. Meaning of “subject to”\n\nc.\n\nd.\n\ne.\n\nf.\n\ng.\n\nHingir Rampur\n\nShri Krishna\n\nSouth India Corporation\n\nAshok Leyland Ltd.\n\nCalcutta Gas Company\n\n69\n\n70\n\n71\n\n73\n\n76\n\n90\n\n92\n\n96\n\n98\n\n100\n\n103\n\n103\n\n104\n\n105\n\n107\n\n109\n\n110\n\n111\n\n113\n\n114\n\n115\n\n119\n\n122\n\n124\n\n138\n\n139\n\n147\n\n148\n\n148\n\n149\n\n150\n\n152\n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n2045\n\n16. Entry 33(a) – List III vs. Entry 52 - List I: Observations \n\n172\n\nin Synthetics and Chemicals (7J)\n\n17. Article 254, Repugnancy and Doctrine of Occupied Field 183\n195\n18. Mineral Area and Development Authority\n204\n19. Mar Appraem Kuri Company\n213\n20.\n\nImportance of “Industrial Alcohol” to the Indian \nEconomy\n\n221\n21. Conclusion on interplay of legislative Entries\n224\n22. Effect of overruling Synthetics and Chemicals (7J)\n23. My answers to the questions formulated\n231\n24. My answers to the conclusions of learned Chief Justice 235\n\nI have perused the comprehensive and erudite opinion authored by \nHon’ble the Chief Justice of India Dr. Dhananjaya Y. Chandrachud \non the questions referred to this nine-Judge Bench. I respectfully \ndissent on certain aspects of the said opinion and express my \nreasons therefor.\n\n1.1 The sum and substance of all the questions referred to this Bench \ncould be crystallised on the short point for consideration, namely, \nwhether the expression “intoxicating liquors” in Entry 8 -List II \nof the Seventh Schedule of the Constitution of India includes \nwithin its scope and ambit “industrial alcohol” and consequently, \nwhether a State Legislature has the competence to legislate \non “industrial alcohol”. My short answer is that there is a lack \nof legislative competence in the State Legislature when viewed \nfrom the constitutional framework and statutory framework of \nthe Industries (Development and Regulation) Act, 1951 (for \nshort, “IDRA”) passed by the Parliament on the strength of \nEntry 52 – List I of the Seventh Schedule of the Constitution of \nIndia and having regard to Section 2 of the said Act read with its \nvarious provisions and the First Schedule thereto, particularly, \nItem 26 which deals with “Fermentation Industries” (other \nthan potable alcohol). However, the discussion on scope and \nambit of Entry 33(a) – List III of the Seventh Schedule of the \nConstitution is distinct and shall be discussed later. Therefore, \nSynthetics and Chemicals Ltd. vs. State of Uttar Pradesh, \n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f2046 \n\n[2024] 10 S.C.R.\n\nAIR 1990 SC 1927 (“Synthetics and Chemicals (7J)”), has \nbeen correctly decided by the seven-Judge Bench of this Court. \nOn the aspect of Section 18G of the IDRA occupying the field \nand consequently, whether the State Legislatures are denuded \nof their powers on the content of the subject matter of the said \nSection in the context of Entry 33(a) – List III as per first part \nof Article 254(1) shall be adverted to later. I propose to discuss \nthe reasons for aforesaid view.\n\n1.2 Since the Entries under discussion are in their respective Lists \nof the “Seventh Schedule of the Constitution”, it would be \nunnecessary to refer to them as being part of “Seventh Schedule \nof the Constitution” in the following discussion.\n\nGenesis of the controversy:\n\n2. The genesis of this present controversy insofar as the reference to \nthe nine-Judge Bench is concerned, emanates from the judgment of \nthe seven-Judge Bench of this Court in Synthetics and Chemicals \n(7J). The said judgment authored by Sabyasachi Mukharji, J. (as His \nLordship then was) held that the scope of the expression “intoxicating \nliquors” in Entry 8 – List II did not extend to “industrial alcohol” and \nregulation of the same by State Legislature is impermissible in law \nhaving regard to the constitutional framework, particularly the relevant \nEntries of Lists I and II of the Seventh Schedule to the Constitution \nof India. The said dictum of the seven-Judge Bench was doubted \nby a three-Judge Bench of this Court in State of UP vs. M/s Lalta \nPrasad Vaish vide order dated 25.10.2007 and the following questions \nwere formulated for consideration by a larger Bench:\n\n“Q. 1. Does Section 2 of the Industries (Development and \nRegulation) Act, 1951, have any impact on the field covered \nby Section 18-G of the said Act or Entry 33 of List III of \nthe Seventh Schedule of the Constitution?\n\nQ. 2. Does Section 18-G of the aforesaid Act fall under Entry \n52 of List I of the Seventh Schedule of the Constitution, \nor is it covered by Entry 33 of List III thereof?\n\nQ. 3. In the absence of any notified order by the Central \nGovernment under Section 18-G of the above Act, is \nthe power of the State to legislate in respect of matters \nenumerated in Entry 33 of List III ousted?\n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n2047\n\nQ. 4. Does the mere enactment of Section 18-G of the \nabove Act, give rise to a presumption that it was the \nintention of the Central Government to cover the entire \nfield in respect of Entry 33 of List III so as to oust the \nStates’ competence to legislate in respect of matters \nrelating thereto?\n\nQ. 5. Does the mere presence of Section 18-G of the \nabove Act, oust the State’s power to legislate in regard \nto matters falling under Entry 33(a) of List III?\n\nQ. 6. Does the interpretation given in Synthetics and \nChemicals case (1990) 1 SCC 109 in respect of Section \n18-G of the Industries (Development and Regulation) Act, \n1951, correctly state the law regarding the States’ power \nto regulate industrial alcohol as a product of the scheduled \nindustry under Entry 33 of List III of the Seventh Schedule \nof the Constitution in view of Clause (a) thereof?”\n\n2.1 A similar view was expressed by a five-Judge Bench in very \nsame case wherein this Court was of the view that the matter \nhas to be considered by a Bench of nine-Judges. \n\n2.2 \n\nIn view of the nature of questions raised by the three-Judge \nBench as well as the five-Judge Bench of this Court, the \ncorrectness or otherwise of judgment of this Court in Synthetics \nand Chemicals (7J) is being considered by this nine-Judge \nBench.\n\nConclusions arrived at by the learned Chief Justice:\n\n3. His Lordship, the Chief Justice has overruled the judgment in \nSynthetics and Chemicals (7J) and has arrived at the following \nconclusions: \n\n“In view of the discussion above, the following conclusions \nemerge:\n\na. Entry 8 of list II of the Seventh Schedule to the \nConstitution is both an industry-based entry and \na product-based entry. The words that follow the \nexpression “that is to say” in the Entry are not \n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f2048 \n\n[2024] 10 S.C.R.\n\nexhaustive of its contents. It includes the regulation of \neverything from the raw materials to the consumption \nof ‘intoxicating liquor’;\n\nb. Parliament cannot occupy the field of the entire \nindustry merely by issuing a declaration under Entry \n52 of List I. The State Legislature’s competence under \nEntry 24 of List II is denuded only to the extent of the \nfield covered by the law of Parliament under Entry \n52 of List I;\n\nc. Parliament does not have the legislative competence \nto enact a law taking control of the industry of \nintoxicating liquor covered by Entry 8 of List II in \nexercise of the power under Article 246 read with \nEntry 52 of List I;\n\nd. The judgments of the Bombay High Court in FN \nBalsara v. State of Bombay (supra), this Court in \nFN Balsara (supra) and Southern Pharmaceuticals \n(supra) did not limit the meaning of the expression \n‘intoxicating liquor’ to its popular meaning, that is, \nalcoholic beverages that produce intoxication. All \nthe three judgments interpreted the expression to \ncover alcohol that could be noxiously used to the \ndetriment of health;\n\ne. The expression ‘intoxicating liquor’ in Entry 8 has \nnot acquired a legislative meaning on an application \nof the test laid down in Ganon Dunkerley (supra);\n\nf. \n\nThe study of the evolution of the legislative entries \non alcohol indicates that the use of the expressions \n“intoxicating liquor” and “alcoholic liquor for human \nconsumption” in the Seventh Schedule was a matter \nwell-thought of. It also indicates that the members of \nthe Constituent Assembly were aware of use of the \nvariants of alcohol as a raw material in the production \nof multiple products;\n\ng. Entry 8 of List II is based on public interest. It seeks \nto enhance the scope of the entry beyond potable \nalcohol. This is inferable from the use of the phrase \n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n2049\n\n‘intoxicating’ and other accompanying words in the \nEntry. Alcohol is inherently a noxious substance that is \nprone to misuse affecting public health at large. Entry \n8 covers alcohol that could be used noxiously to the \ndetriment of public health. This includes alcohol such \nas rectified spirit, ENA and denatured spirit which are \nused as raw materials in the production of potable \nalcohol and other products. However, it does not \ninclude the final product (such as a hand sanitiser) \nthat contains alcohol since such an interpretation \nwill substantially diminish the scope of multiple other \nlegislative entries;\n\nh. The judgment in Synthetics (7J) (supra) is overruled \n\nin terms of this judgment;\n\ni. \n\nj. \n\nk. \n\nItem 26 of the First Schedule to the IDRA must be \nread as excluding the industry “intoxicating liquor”, \nas interpreted in this judgement;\n\nThe correctness of the judgment in Tika Ramji \n(supra) on the interpretation of word ‘industry’ as \nit occurs in the Legislative entries does not fall for \ndetermination in this reference; and\n\nThe issue of whether Section 18G of the IDRA covers \nthe field under Entry 33 of List III does not arise for \nadjudication in view of the finding that denatured \nalcohol is covered by Entry 8 of List II.”\n\n3.1 While coming to the aforesaid conclusions, His Lordship, \nthe Chief Justice of India has held that the entire industry of \n“intoxicating liquors” including raw materials is covered by \nEntry 8 – List II and is completely out of Entry 52 – List I; that \nthe scope and ambit of Entry 8 – List II covers both potable \nand non-potable alcohol and therefore, only State Legislatures \nhave the power to regulate the subject. I respectfully disagree.\n\n3.2 While coming to the aforesaid conclusions, significant judgments \nof this Court in State of Bombay vs. FN Balsara, AIR 1951 \nSC 318 (“FN Balsara”); Ch. Tika Ramji vs. State of Uttar \nPradesh, AIR 1956 SC 676 (“Tika Ramji”); Calcutta Gas \nCompany (Proprietary) Ltd. vs. State of West Bengal, AIR \n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f2050 \n\n[2024] 10 S.C.R.\n\n1962 SC 1044 (“Calcutta Gas Company”); Indian Mica \nand Micanite Industries vs. State of Bihar (1971) 2 SCC \n236 (“Indian Mica”); Ishwari Khetan Sugar Mills (P) Ltd. \nvs. State of Uttar Pradesh, AIR 1980 SC 1955 (“Ishwari \nKhetan”); State of AP vs. McDowell & Co. (1996) 3 SCC 709 \n(“McDowell”); Bihar Distillery vs. Union of India (1997) 2 \nSCC 727 (“Bihar Distillery”); Vam Organic Chemicals Ltd. \nvs. State of U.P. (1997) 2 SCC 715, (“Vam Organic I”); and \nState of UP vs. Vam Organic Chemicals Ltd. (2004) 1 SCC \n225 (“Vam Organic II”), amongst others, have been discussed.\n\nSubmissions:\n\n4. As the learned Chief Justice has recorded the submissions of the \nrespective parties in detail, I need not be repetitive except highlighting \nthe submissions of the learned senior counsel Sri Rakesh Dwivedi, Sri \nDatar and Sri Jaideep Gupta and other counsel for the appellants. The \nmain contention of the appellants is that the States have jurisdiction \nover “industrial alcohol” and therefore the judgment of this Court \nin Synthetics and Chemicals (7J) is incorrect. The expression \n“intoxicating liquors” in Entry 8 – List II of the Seventh Schedule of \nthe Constitution cannot be restricted to alcoholic liquors for human \nconsumption by a deduction from a reading of Entry 84 – List I with \nEntry 51 – List II. In other words, “intoxicating liquors” cannot be \nequated with only “alcoholic liquors for human consumption”. On the \nother hand, it is contended that the expression “intoxicating liquors” \nhas attained a specific meaning over the passage of time which is \nmore expansive than “alcoholic liquors for human consumption”. \n\n4.1 The further submission was that only the production and \nmanufacture of “industrial alcohol” would be governed by the \nUnion List even if the requirement of a declaration under Section \n2 of the IDRA read with Item 26 of the First Schedule thereto \nis as per Entry 52 – List I. However, when it comes to Entry \n33 – List III, there is need for a notified order to claim exclusive \njurisdiction on a product of a scheduled industry. If no such order \nhas been issued, the legislative powers of the State would remain \nexclusive. It was further submitted that alcoholic liquors for human \nconsumption means it is capable of being consumed by humans \nand it would fall under Entry 51 – List II, while denatured alcohol \nsuch as ethyl alcohol or rectified spirit which usually undergoes \n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n2051\n\ndenaturation for the purposes of their use in industries would fall \nunder Entry 84 – List I. That everything, except denatured spirit \nis alcohol for human consumption because it has the potential to \nbe consumed by humans. That Extra Neutral Alcohol (‘ENA’, for \nshort) and rectified spirit may therefore be understood to be for \nhuman consumption and ceases to be such only upon undergoing \ndenaturation. But according to the judgment in Synthetics and \nChemicals (7J), the States do not have the power to levy tax \non ENA despite being fit for human consumption. This position \nof law in the aforesaid decision has restricted the competence of \nthe States to levy tax under Entry 51 – List II. That pursuant to \nthe aforesaid decision, the Law Commission in its 158th Report \nsuggested an amendment to the IDRA by which Item 26 in the \nFirst Schedule has been amended to mean that “Fermentation \nIndustries” would not include “potable alcohol” with retrospective \neffect. It was contended that this amendment does not in any \nway clear the confusion created in the aforesaid case and hence, \nSynthetics and Chemicals (7J) may be overruled. It was also \ncontended that in Tika Ramji, this Court has devised a three-fold \nclassification as pre-production, production and post-production \nand it was only in the second category i.e. production which \nwould be covered by the word “industry”.\n\n4.2 Taking a different stance, Sri V. Giri submitted that denatured \nalcohol is excluded from the scope of the term “intoxicating \nliquors” in Entry 8 – List II and is covered under Entry 24 – \nList II. Further, unless a notified order under Section 18G of the \nIDRA is issued, the Parliament cannot occupy the field under \nEntry 33 – List III merely on the strength of the said provision \nbeing brought on the statute book. \n\n4.3 On the other hand, Sri R. Venkataramani, learned Attorney \nGeneral, leading the arguments for the Union of India and other \nrespondents contended that Entry 52 – List I and Entry 33 – \nList III are interrelated as they touch upon matters relating to \na scheduled industry under the provisions of the IDRA, whose \ncontrol is with the Union. It was contended that Entry 52 – List I \nis provided in order to ensure a uniform control and development \nof an industry throughout the length and breadth of the country. \nThis is not only in the interest of the scheduled industry but \nalso to achieve equitable distribution of the products of such \n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f2052 \n\n[2024] 10 S.C.R.\n\nindustry and as an economic measure. As a result, in respect of \na scheduled industry, the powers of the State under Entries 26 \nand 27 - List II are denuded. Also, if the field is occupied by the \nParliament (Union) and the States are denuded of their powers \nunder Entry 33 – List III. Therefore, the judgment in Synthetics \nand Chemicals (7J) would not call for a reconsideration as it \nwas correctly decided. It was further contended that all liquids \ncontaining alcohol would fall under two categories, namely, \nthose meant for human consumption (potable alcohol) and \nnon-potable alcohol. Entry 8 – List II deals with only potable \nalcohol meant for human consumption as a beverage. Thus, \nnon-potable alcohol is outside the scope of Entry 8 – List II. The \namendment to Item 26 of First Schedule of IDRA has clarified \nthis position. Further, the use of the expression “that is to say” \nin Entry 8 – List II refers to the various activities concerning \npotable alcohol and does not refer to any other class of liquor. \n\n4.4 Learned Solicitor General of India submitted that the controversy \nin this case must be tread carefully as it would have a bearing \non other legislation. That having regard to national interest, \nthere is a requirement for a uniform development throughout \nthe country in respect of the products of an industry that are \nsought to be equally distributed, and, therefore, the control of \nsuch industries is taken over by the Union exercising powers \nin relation to Entry 52 – List I. That the IDRA is an instance \nof such legislation. It was contended that the judgment in \nTika Ramji insofar as it held that there must be a notified \norder in force pursuant to Section 18G for the doctrine of \nrepugnancy to apply is not correct and in Synthetics and \nChemicals (7J), the judgment in Tika Ramji was rightly not \nconsidered. The expression “intoxicating liquors” in Entry 8- List \nII means a beverage which has the effect of intoxication upon \nconsumption. In Synthetics and Chemicals (7J), this Court \nheld that “intoxicating liquors” is “alcoholic liquors fit for human \nconsumption”. Other learned counsel for the respondents have \nadopted the above arguments. \n\n5. On enumerating the questions for opinion of this nine-Judge Bench, \nthe following issues have been crystallised for consideration in \nparagraph 42 of the judgment of the learned Chief Justice of India \nwhich read as under:\n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n2053\n\n“42. With the above preliminary observations, we have \nformulated the following issues:\n\na. Whether Entry 52 of List I of the Seventh Schedule \nto the Constitution overrides Entry 8 of List II;\n\nb. Whether the expression ‘intoxicating liquors’ in Entry 8 \nof List II of the Seventh Schedule to the Constitution \nincludes alcohol other than potable alcohol; and\n\nc. Whether a notified order under Section 18G of the \nIDRA is necessary for Parliament to occupy the field \nunder Entry 33 of List III of the Seventh Schedule to \nthe Constitution.”\n\nRelevant Constitutional Framework:\n\n6. Article 265 of the Constitution mandates that no tax shall be levied or \ncollected except by authority of law. Article 366 is a definition clause \nand it states that in the Constitution, unless the context otherwise \nrequires, the expressions mentioned therein have the meanings \nthereby respectively assigned to them. For the purpose of this case, \nArticle 366(12) and (28) are relevant and the same read as under:\n\n“Article 366. Definitions.- In this Constitution, unless \nthe context otherwise requires, the following expressions \nhave the meanings hereby respectively assigned to them, \nthat is to say –\n\nxxx\n\n(12) “goods” includes all materials, commodities and \narticles;\n\nxxx\n\n(28) “taxation” includes the imposition of any tax or impost, \nwhether general or local or special and “tax” shall be \nconstrued accordingly;”\n\nThe aforesaid definition of ‘taxation’ is not exhaustive but inclusive \nin nature to include not only any tax in the usual understanding of \nthe said expression or tax stricto senso but also any levy akin to a \ntax. There can be no cavil to the proposition that before any tax or \nimpost could be levied or collected, it must have the authority of law \nvide Article 265 including legislative competence. \n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f2054 \n\n[2024] 10 S.C.R.\n\n6.1 Article 246 of the Constitution deals with distribution of legislative \npowers between the Parliament and State Legislature, while \nArticle 254 speaks of inconsistency between the laws made \nby Parliament and laws made by the Legislatures of States. \nThey read as under:\n\n“ 2 4 6 . S u b j e c t - m a t t e r o f l a w s m a d e b y \nParliament and by the Legislatures of States. — \n(1) Notwithstanding anything in clauses (2) and \n(3), Parliament has exclusive power to make laws \nwith respect to any of the matters enumerated in \nList 1 in the Seventh Schedule (in this Constitution \nreferred to as the “Union List”).\n\n(2) Notwithstanding anything in clause (3), Parliament \nand subject to clause (1), the Legislature of any State \nalso, have power to make laws with respect to any \nof the matters enumerated in List III in the Seventh \nSchedule (in this Constitution referred to as the \n“Concurrent List”).\n\n(3) Subject to clauses (1) and (2), the Legislature of \nany State has exclusive power to make laws for such \nState or any part thereof with respect to any of the \nmatters enumerated in List II in the Seventh Schedule \n(in this Constitution referred to as the ‘State List’).\n\n(4) Parliament has power to make laws with respect \nto any matter for any part of the territory of India not \nincluded in a State notwithstanding that such matter \nis a matter enumerated in the State List.\n\nxxx\n\n254. Inconsistency between laws made by \nParliament and laws made by the Legislatures of \nStates.—(1) If any provision of a law made by the \nLegislature of a State is repugnant to any provision \nof a law made by Parliament which Parliament is \ncompetent to enact, or to any provision of an existing \nlaw with respect to one of the matters enumerated in \nthe Concurrent List, then, subject to the provisions \nof clause (2), the law made by Parliament, whether \npassed before or after the law made by the Legislature \n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n2055\n\nof such State, or, as the case may be, the existing law, \nshall prevail and the law made by the Legislature of the \nState shall, to the extent of the repugnancy, be void.\n\n(2) Where a law made by the Legislature of a State \nwith respect to one of the matters enumerated in the \nConcurrent List contains any provision repugnant to \nthe provisions of an earlier law made by Parliament \nor an existing law with respect to that matter, then, \nthe law so made by the Legislature of such State \nshall, if it has been reserved for the consideration of \nthe President and has received his assent, prevail \nin that State: \n\nProvided that nothing in this clause shall prevent \nParliament from enacting at any time any law with \nrespect to the same matter including a law adding \nto, amending, varying or repealing the law so made \nby the Legislature of the State.”\n\n6.2 With regard to the allocation of subjects under the three Lists, \nnamely, List I - Union List; List II - State List and List III - Concurrent \nList, it may be useful to refer to the Devolution Rules drawn \nunder the Government of India Act, 1919 and the Government \nof India Act, 1935 which are the precursors to the distribution \nof legislative powers between the Union and the States under \nthe Seventh Schedule of the Constitution of India. Some of the \nsalient aspects concerning the distribution of the legislative powers \nbetween Parliament and State Legislature as per the three Lists \nin the backdrop of the provisions could be alluded to. \n\n6.3 Article 246 of the Constitution deals with the distribution of \nlegislative powers between the Union and the States. The said \nArticle has to be read along with the three Lists, namely, the \nUnion List, the State List and the Concurrent List. The taxing \npowers of the Union as well as the States are also demarcated \nas separate Entries in the Union List as well as the State List \ni.e. List I and List II respectively. The Entries in the Lists are \nfields of legislative powers conferred under Article 246 of the \nConstitution. In other words, the Entries define the areas of \nlegislative competence of the Union and the State Legislature. \n(vide: State of Karnataka vs. State of Meghalaya (2023) 4 \nSCC 416 para 56), (“State of Karnataka”). \n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f2056 \n\n[2024] 10 S.C.R.\n\nInterpretation of Legislative Entries:\n\n6.4 On the aspect of interpretation of legislative Entries in the \nthree Lists, the following principles are apposite as discussed \nin State of Karnataka: \n\n(i) The power to legislate, which is dealt with under Article \n246 has to be read in conjunction with the Entries in the \nthree Lists which define the respective areas of legislative \ncompetence of the Union and State Legislatures. While \ninterpreting these Entries, they should not be viewed \nin a narrow or myopic manner but by giving the widest \nscope to their meaning, particularly, when the vires of a \nprovision of a statute is assailed. In such circumstances, a \nliberal construction must be given to the Entry by looking \nat the substance of the legislation and not its mere form. \nHowever, while interpreting the Entries in the case of an \napparent conflict, every attempt must be made by the \nCourt to harmonise or reconcile them. Where there is an \napparent overlapping between two Entries, the doctrine of \npith and substance is applied to find out the true character \nof the enactment and the Entry within which it would fall. \nThe doctrine of pith and substance, in short, means, if an \nenactment substantially falls within the powers expressly \nconferred by the Constitution upon the Legislature which \nenacted it, the same cannot be held to be invalid merely \nbecause it incidentally encroaches on matters assigned \nto another Legislature. Also, in a situation where there is \noverlapping, the doctrine has to be applied to determine \nto which Entry, a piece of legislation could be related to. In \norder to examine the true character of an enactment or a \nprovision thereof, due regard must be had to the enactment \nas a whole and to its scope and object. It is said that the \nquestion of invasion into another legislative territory has \nto be determined by substance and not by degree.\n\n(ii) \n\nIn case of any conflict between Entries in List I and List \nII, the power of Parliament to legislate under List I will \nsupersede when, on an interpretation, the two powers \ncannot be reconciled. But if a legislation in pith and \nsubstance squarely falls within any of the Entries of List II, \nthe State Legislature’s competence cannot be questioned \n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n2057\n\non the ground that the field is covered by the Union list or \nthe Concurrent list vide Prafulla Kumar Mukherjee vs. \nBank of Commerce Limited, Khulna, AIR 1947 P.C. 60 \n(“Prafulla Kumar Mukherjee”). According to the pith and \nsubstance doctrine, if a law is, in its pith and substance \nwithin the competence of the Legislature which has made \nit, it will not be invalid because it incidentally touches \nupon the subject lying within the competence of another \nLegislature vide FN Balsara.\n\n(iii) Once the legislation is found to be ‘with respect to’ the \nlegislative Entry in question, unless there are other \nconstitutional prohibitions, the power would be unfettered. \nIt would also extend to all ancillary and subsidiary \nmatters which can fairly and reasonably be said to be \ncomprehended in that topic or category of legislation vide \nUnited Provinces vs. Atiqa Begum, AIR 1941 FC 16 \n(“Atiqa Begum”). \n\n(iv) Another important aspect while construing the Entries in the \nrespective Lists is that every attempt should be made to \nharmonise the contents of the Entries so that interpretation \nof one Entry should not render the entire content of another \nEntry nugatory vide Calcutta Gas Company. This is \nespecially so when some of the Entries in a different List \nor in the same List may overlap or may appear to be in \ndirect conflict with each other. In such a situation, a duty \nis cast on the Court to reconcile the Entries and bring \nabout a harmonious construction. Thus, an effort must be \nmade to give effect to both Entries and thereby arrive at \na reconciliation or harmonious construction of the same. \n\n(v) \n\nIn short, the Entries in the different Lists should be read \ntogether without giving a narrow meaning to any of them. \nThe powers of the Union and the State Legislature are \nexpressed in precise and definite terms. Hence, there can \nbe no broader interpretation given to one Entry than to \nthe other. Even where an Entry is worded in wide terms, it \ncannot be so interpreted as to negate or override another \nEntry or make another Entry meaningless. In case of an \napparent conflict between different Entries, it is the duty \nof the Court to reconcile them in the first instance. \n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f2058 \n\n[2024] 10 S.C.R.\n\n(vi) Further, where one Entry is made “subject to” another \nEntry, all that it means is that out of the scope of the \nformer Entry, a field of legislation covered by the latter \nEntry has been reserved to be specially dealt with by the \nappropriate Legislature. \n\n(vii) Also, when one Entry is general and another is specific, \nnormally, the latter will exclude the former on a subject \nof legislation. \n\n6.5 The sequitur to the aforesaid discussion is that if the Legislature \npasses a law which is beyond its legislative competence, it is \na nullity ab-initio. The Legislation is rendered null and void for \nwant of jurisdiction or legislative competence vide RMDC vs \nUnion of India, AIR 1957 SC 628 (“RMDC”).\n\n6.6 On a close perusal of the Entries in the three Lists, it is discerned \nthat the Constitution has divided the topics of legislation into \nthe following three broad categories: \n\n(i) Entries enabling laws to be made;\n\n(ii) Entries enabling taxes to be imposed; and\n\n(iii) Entries enabling fees and stamp duties to be collected.\n\n6.7 Thus, the Entries on levy of taxes are specifically mentioned. \nTherefore, as such, there cannot be a conflict of taxation \npower of the Union and the State. In substance, the taxing \npower can be derived only from a specific taxing Entry in an \nappropriate List. Such a power has to be determined by the \nnature of the tax and not the measure or machinery set up by \nthe statute. In this context, reliance could be placed on MPV \nSundararamier vs. State of Andhra Pradesh, AIR 1958 SC \n468 (“MPV Sundararamier”), wherein at paragraph 51 it was \nobserved as under:\n\n“51. In List I Entries 1 to 81 mention the several \nmatters over which Parliament has authority to \nlegislate. Entries 82 to 92 enumerate the taxes \nwhich could be imposed by a law of Parliament. An \nexamination of these two groups of entries shows \nthat while the main subject of legislation figures in \nthe first group, a tax in relation thereto is separately \n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n2059\n\nmentioned in the second. Thus, Entry 22 in List I is \n“Railways”, and Entry 89 is “Terminal taxes on goods \nor passengers, carried by railway, sea or air; taxes \non railway fares and freights”. If Entry 22 is to be \nconstrued as involving taxes to be imposed, then \nEntry 89 would be superfluous. Entry 41 mentions \n“Trade and commerce with foreign countries; import \nand export across customs frontiers”. If these \nexpressions are to be interpreted as including duties \nto be levied in respect of that trade and commerce, \nthen Entry 83 which is “Duties of customs including \nexport duties” would be wholly redundant. Entries 43 \nand 44 relate to incorporation, regulation and winding \nup of corporations. Entry 85 provides separately for \ncorporation tax. Turning to List II, Entries 1 to 44 \nform one group mentioning the subjects on which \nthe States could legislate. Entries 45 to 63 in that \nList form another group, and they deal with taxes. \nEntry 18, for example, is “Land” and Entry 45 is \n“Land revenue”. Entry 23 is “Regulation of mines” \nand Entry 50 is “Taxes on mineral rights”. The above \nanalysis—and it is not exhaustive of the entries in \nthe Lists—leads to the inference that taxation is \nnot intended to be comprised in the main subject \nin which it might on an extended construction be \nregarded as included, but is treated as a distinct \nmatter for purposes of legislative competence. And \nthis distinction is also manifest in the language of \nArticle 248 clauses (1) and (2) and of Entry 97 in \nList I of the Constitution. Construing Entry 42 in the \nlight of the above scheme, it is difficult to resist the \nconclusion that the power of Parliament to legislate \non inter-State trade and commerce under Entry 42 \ndoes not include a power to impose a tax on sales \nin the course of such trade and commerce.”\n\n6.8 What falls for interpretation in these cases is the content, \ninterplay and meaning of Entries 52 and 84 – List I, Entries 8, \n24, 26, 27, 51 – List II and Entry 33 – List III. The aforesaid \nEntries read as under:\n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f2060 \n\n[2024] 10 S.C.R.\n\n“List – I\n\n52. Industries, the control of which by the Union is \ndeclared by Parliament by law to be expedient in the \npublic interest.\n\nxxx\n\n84. Duties of excise on tobacco and other goods \nmanufactured or produced in India except:— \n\n(a) alcoholic liquors for human consumption; \n\n(b) opium, Indian hemp and other narcotic drugs \n\nand narcotics, \n\nbut including medicinal and toilet preparations \ncontaining alcohol or any substance included in sub-\nparagraph (b) of this entry.\n\nList – II\n\n8. Intoxicating liquors, that is to say, the production, \nmanufacture, possession, transport, purchase and \nsale of intoxicating liquors.\n\nxxx\n\n24. Industries subject to the provisions of Entries 7 \nand 52 of List I.\n\nxxx\n\n26. Trade and commerce within the State subject to \nthe provisions of entry 33 of List III. \n\n27. Production, supply and distribution of goods \nsubject to the provisions of entry 33 of List III. \n\nxxx\n\n51. Duties of excise on the following goods \nmanufactured or produced in the State and \ncountervailing duties at the same or lower rates on \nsimilar goods manufactured or produced elsewhere \nin India:—\n\n(a) alcoholic liquors for human consumption; \n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n2061\n\n(b) opium, Indian hemp and other narcotic drugs \n\nand narcotics,\n\nbut not including medicinal and toilet preparations \ncontaining alcohol or any substance included in sub-\nparagraph (b) of this entry.\n\nList – III\n\n33. Trade and commerce in, and the production, \nsupply and distribution of,— \n\n(a) \n\nthe products of any industry where the control \nof such industry by the Union is declared by \nParliament by law to be expedient in the public \ninterest, and imported goods of the same kind \nas such products; \n\n(b) \n\nfoodstuffs, including edible oilseeds and oils; \n\n(c) cattle fodder, including oilcakes and other \n\nconcentrates; \n\n(d) \n\nraw cotton, whether ginned or unginned, and \ncotton seed; and\n\n(e) \n\nraw jute.”\n\nFor a better understanding of the discussion to follow, it would \nbe relevant to refer to the scheme of the IDRA.\n\nScheme of IDRA:\n\n7. The Preamble of the IDRA states that it is an Act to provide for the \ndevelopment and regulation of certain industries. Section 2 declares \nthat it is expedient in the public interest that the Union should take \nunder its control the industries specified in the First Schedule to the \nsaid Act. Hence, the question would be, whether, the Parliament \nby law has declared it expedient in public interest that the Union \nshould take control of certain industries. Section 2 of the IDRA, for \nimmediate reference, reads as under:\n\n“2. Declaration as to expediency of control by the \nUnion.- It is hereby declared that it is expedient in the \npublic interest that the Union should take under its control \nthe industries specified in the First Schedule.”\n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f2062 \n\n[2024] 10 S.C.R.\n\nIn the First Schedule to the said Act, Item 26 reads as under:\n\n“26. Fermentation Industries:\n\n(1) Alcohol.\n\n(2) Other products of fermentation industries.”\n\nItem 26 of the First Schedule to the Act was amended on \n14.05.2016 by Act 27 of 2016 with retrospective effect from \n08.05.1952 and it reads as under:\n\n“26. Fermentation Industries (Other than Potable \nAlcohol):\n\n(1) Alcohol.\n\n(2) Other products of fermentation industries.”\n\n7.1 Section 3 of the IDRA is the definition clause and the relevant \n\ndefinitions read as under:\n\n“3. Definitions. – In this Act, unless the context \notherwise requires,-\n\nxxx\n\n(d) “industrial undertaking” means any undertaking \npertaining to a scheduled industry carried on in one \nor more factories by any person or authority including \nGovernment; \n\n(dd) “new article”, in relation to an industrial \nundertaking which is registered or in respect of which \na licence or permission has been issued under this \nAct, means—\n\n(a) any article which falls under an item in the \nFirst Schedule other than the item under which \narticles ordinarily manufactured or produced \nin the industrial undertaking at the date of \nregistration or issue of the licence or permission, \nas the case may be, fall; \n\n(b) any article which bears a mark as defined \nin the Trade Marks Act, 1940 (5 of 1940), or \nwhich is the subject of a patent, if at the date of \nregistration or issue of the licence or permission, \n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n2063\n\nas the case may be, the industrial undertaking \nwas not manufacturing or producing such article \nbearing that mark or which is the subject of \nthat patent; \n\n(e) “notified order” means an order notified in the \nOfficial Gazette;\n\nxxx\n\n(g) “prescribed” means prescribed by rules made \nunder this Act;\n\n(h) “Schedule” means a Schedule to this Act; \n\n(i) “scheduled industry” means any of the industries \nspecified in the First Schedule; \n\nxxx\n\n(k) words and expressions used herein but not defined \nin this Act and defined in the Companies Act, 1956 (1 \nof 1956), have the meanings respectively assigned \nto them in that Act.”\n\n7.2 Chapter II of the Act deals with the Central Advisory Council and \nDevelopment Councils while Chapter III speaks of regulation \nof scheduled industries. The headings of Sections 10 to 18 \nare noted within Chapter III. The said provisions deal with, \ninter alia, registration of existing industries, issuance of licence \nfor producing or manufacturing of new articles, conducting \ninvestigation to be made into scheduled industries. Chapter IIIA \nspeaks of direct management or control of industrial undertakings \nby Central Government in certain cases while Chapter IIIAA \nspeaks of management or control of industrial undertakings \nowned by companies in liquidation. Chapter IIIAB deals with \nthe power to provide relief to certain industrial undertakings \nwhile Chapter IIIAC speaks of liquidation or reconstruction of \ncompanies. Chapter IIIB deals with control of supply, distribution, \nprice, etc., of certain articles was inserted by Act 26 of 1953. \n\n7.3 Section 18G which is in the said Chapter is relevant for the \n\npurpose of this case, reads as under:\n\n“18G. Power to control supply, distribution, \nprice, etc., of certain articles.—(1) The Central \n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f2064 \n\n[2024] 10 S.C.R.\n\nGovernment, so far as it appears to it to be necessary \nor expedient for securing the equitable distribution \nand availability at fair prices or any article or class \nof articles relatable to any scheduled industry, may, \nnotwithstanding anything contained in any other \nprovisions of this Act, by notified order, provide of \nregulating the supply and distribution thereof and \ntrade and commerce therein. \n\n(2) Without prejudice to the generality of the powers \nconferred by sub-section (1), a notified order made \nthereunder may provide—\n\n(a) \n\n(b) \n\n(c) \n\n(d) \n\n(e) \n\n(f) \n\nfor controlling the prices at which any such \narticle or class thereof may be bought or sold;\n\nfor regulating by licences, permits or otherwise \nthe distribution, transport, disposal, acquisition, \npossession, use or consumption of any such \narticle or class thereof; \n\nfor prohibiting the withholding from sale of any \nsuch article or class thereof ordinarily kept for sale; \n\nfor requiring any person manufacturing, \nproducing or holding in stock any such article \nor class thereof to sell the whole or part of the \narticles so manufactured or produced during a \nspecified period or to sell the whole or a part \nof the articles so held in stock to such person \nor class of persons and in such circumstances \nas may be specified in the order; \n\nfor regulating or prohibiting any class of \ncommercial or financial transactions relating \nto such article or class thereof which in the \nopinion of the authority making the order are, \nor if unregulated are likely to be, detrimental to \npublic interest; \n\nfor requiring persons engaged in the distribution \nand trade and commerce in any such article \nor class thereof to mark the articles exposed \nor intended for sale with the sale price or to \nexhibit at some easily accessible place on the \n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n2065\n\npremises the price-lists of articles held for sale \nand also to similarly exhibit on the first day of \nevery month, or at such other time as may be \nprescribed, a statement of the total quantities \nof any such articles in stock; \n\nfor collecting any information or statistics with \na view to regulating or prohibiting any of the \naforesaid matters; and \n\nfor any incidental or supplementary matters, \nincluding, in particular, the grant or issue of \nlicences, permits or other documents and the \ncharging of fees therefor. \n\n(g) \n\n(h) \n\n(3) Where, in pursuance of any order made with \nreference to clause (d) of sub-section (2), any person \nsells any article, there shall be paid to him the price \ntherefor— \n\n(a) where the price can consistently with the \ncontrolled price, if any, be fixed by agreement, \nthe price so agreed upon; \n\n(b) where no such agreement can be reached, the \nprice calculated with reference to the controlled \nprice, if any, fixed under this section; \n\n(c) where neither clause (a) nor clause (b) applies, \nthe price calculated at the market rate prevailing \nin the locality at the date of sale. \n\n(4) No order made in exercise of any power conferred \nby this section shall be called in question in any court. \n\n(5) Where an order purports to have been made \nand signed by an authority in exercise of any power \nconferred by this section, a court shall, within the \nmeaning of the Indian Evidence Act, 1872 (1 of \n1872), presume that such order was so made by \nthat authority.\n\nExplanation.— In this section, the expression “article \nor class of articles” relatable to any scheduled industry \nincludes any article or class of articles imported into \nIndia which is of the same nature or description as the \n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f2066 \n\n[2024] 10 S.C.R.\n\narticle or class of articles manufactured or produced \nin the scheduled industry.”\n\n7.4 The reason as to why Section 18G was inserted to the IDRA \nmust be noted. In paragraph 3 of the Statement of Objects and \nReasons, it has been stated as under:\n\n“At present, the power to control prices and distribution \nof various goods under this Act is confined to industrial \nundertakings registered or licensed under the Act. \nIn all other cases, it is necessary to have recourse \nto powers derived from the Essential Supplies \n(Temporary Powers) Act, 1946 and the Supply and \nPrices of Goods Act, 1950. Both these enactments \nhave a limited period of life. It is proposed to add a \nchapter taking power to control the distribution and \nprice of goods produced in scheduled industries \nand of similar goods even, though they may be of \nimported origin.”\n\nThe aforesaid reflects that the IDRA has brought under Central \ncontrol the development and regulation of a number of important \nindustries, the activities of which affect the country as a whole and \nthe development of which must be governed by economic factors \nof all-India import. \n\nSimilarly, in the Statement of Objects and Reasons of Amendment \nAct 72 of 1971, it has been stated as under:\n\n“The industries included in the First Schedule to the \nIndustries (Development and Regulation) Act, 1951 \nare those the control of which by the Union has been \nconsidered to be expedient in the public interest. The \nproper development of these industries is vital to the \neconomic development of the country. These industries \nnot only substantially contribute to the Gross National \nProduct of the country, but also afford gainful employment \nto millions of people.”\n\n7.5 Section 29E was inserted with effect from 14.05.2016 by Act \n27 of 2016. As already noted, Item 26 of the First Schedule \ndeals with “Fermentation Industries” and after amendment \nby Act 27 of 2016 with retrospective effect from 08.05.1952, \n“Fermentation Industries” have been clarified as “other than \n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n2067\n\npotable alcohol”. Therefore, alcohol and other products of \n“Fermentation Industries” would refer to products which are \n“other than potable alcohol”.\n\nArticle 47: Directive Principle of State Policy: \n\n8. Since we are trying to ascertain the true meaning of “intoxicating \nliquors” in Entry 8 – List II, Article 47 of the Constitution of India, \nwhich is a Directive Principle of the State Policy, is relevant as the \nsaid Article deals, inter alia, with intoxicating drinks. The same reads \nas under: \n\n“47. Duty of the State to raise the level of nutrition and \nthe standard of living and to improve public health\n\nThe State shall regard the raising of the level of nutrition and \nthe standard of living of its people and the improvement of \npublic health as among its primary duties and, in particular, \nthe State shall endeavour to bring about prohibition of the \nconsumption except for medicinal purposes of intoxicating \ndrinks and of drugs which are injurious to health.”\n\nWhat is significant are the words “the State shall endeavour to \nbring about prohibition of the consumption, except for medicinal \npurposes of intoxicating drinks which are injurious to health”. It is on \nthe basis of the said Directive Principle that several prohibition and \nexcise laws have been enacted in several States as a constitutional \ngoal to improve the health of the people of India in the context of \nprevention and prohibition of consumption of “intoxicating liquors”. \nThe manufacture, export, import, transport or sale of “intoxicating \nliquors” is prohibited except in accordance with a licence, permit or \npass granted in that behalf. The State legislations confer power on \nState Governments in matters concerning liquor licensing and also \nwith regard to imposition of excise duty. \n\n8.1 The following decisions of this Court could be considered at \nthis stage as they are of relevance to the controversy under \nconsideration: \n\na) \n\nIn Cooverjee B. Bharucha vs. Excise Commissioner \nand the Chief Commissioner, Ajmer, AIR 1954 SC \n220 (“Cooverjee B. Bharucha”), the right of a citizen to \ncarry on trade and business in liquor under Article 19(1)\n(g) of the Constitution was considered. The impact of \n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f2068 \n\n[2024] 10 S.C.R.\n\nliquor on a person who consumes it as well as on the \nsociety was discussed. With reference to an American \ndecision in Crowley vs. Christensen (1890) 34 Law Ed. \n620 (“Crowley”) at p. 623, it was observed that when \nliquor is consumed, first of all it affects the person who \nconsumes it, and subsequently, it affects those who are \nimmediately connected and dependent upon him. Hence, \nthere is a need to regulate the business of manufacture \nand trade in liquor. It was observed that no citizen has an \ninherent right to sell “intoxicating liquors” in retail. This is \nbecause the business of liquor is attended with danger to \nthe community. It can, therefore, be entirely prohibited or \nregulated as per the discretion of the Government and the \nAuthority concerned. It was held that Regulation could also \nbe in the form of issuance of licences to eligible persons \nunder a particular legislation. The provisions of regulation \nof liquor, which permit certain eligible persons to carry on \nthe trade to the exclusion of the general public and thereby \npossibly create a monopoly, is also permissible in law. \n\nb) \n\nIn State of Assam vs. Sristikar Dowerah, AIR 1957 SC \n414 (“Sristikar Dowerah”), it was observed as under:\n\n“no person has any absolute right to sell liquor \nand that the purpose of the Act and the rules \nis to control and restrict the consumption of \nintoxicating liquors, such control and restriction \nbeing obviously necessary for the preservation of \npublic health and morals, and to raise revenue.”\n\nThe above observation is in line with Article 47 of the \nConstitution of India which is a Directive Principle. \n\nc) The constitutional validity of the Bombay Prohibition Act, \n1949 was challenged in FN Balsara. One of the arguments \nraised was that the said Act could be justified under \nEntry I -List II which relates to public order. This was by \nplacing reliance on a tendency in Europe and America \nwith regard to alcoholism as a menace to public order. \nHowever, the said submission was not pursued further \nbefore this Court as there were other express provisions \nunder the pertinent Entry which dealt with “intoxicating \nliquors”. The short question considered was whether the \n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n2069\n\nBombay Prohibition Act, 1949 in pith and substance was \na law relating to possession and sale, etc. of “intoxicating \nliquors” or whether it related to import and export of \n“intoxicating liquors”. Dealing with the validity of the \naforesaid Act, this Court noted the word “liquor” ordinarily \nmeans “a strong drink as opposed to soft drink” but it must \nin any event be a beverage which is ordinarily drunk as \nnoted by the Bombay High Court. The High Court further \nnoted that although the State Legislature may prevent \nthe consumption of non-intoxicating beverages and also \nprevent the use as drinks of alcoholic liquids which are \nnot normally consumed as drinks, it cannot prevent the \nlegitimate use of alcoholic preparations which are not \nbeverages nor the use of medicinal and toilet preparations \ncontaining alcohol. This view was challenged before this \nCourt. Noting the several meanings of “liquor” from the \nOxford English Dictionary, it was observed that as a \ngeneral meaning it is a liquid but as a special meaning it \nmeans a drink or beverage produced by fermentation or \ndistillation. It was observed that this is the popular and \nmost widely accepted meaning and the basic idea of \nbeverage prominently ran through the main provisions of \nthe various Acts of this country as well as America and \nEngland, relating to “intoxicating liquor”. Reference was \nmade to the definition of “intoxicating liquors” in various \noverseas jurisdiction and also Bombay Abkari Act, 1878 as \nwell as other provincial Acts such as the Punjab Excise Act, \n1914; the UP Excise Act, 1910; Madras Abkari Act, 1886, \netc. It was observed that the framers of the Government \nof India Act, 1935 could not have been entirely ignorant \nof the acceptance in which the word “liquor” covers not \nonly those alcoholic liquids which are generally used for \nbeverage purposes and produce intoxication, but also all \nliquids containing alcohol. It may be that the latter meaning \nis not the meaning which is attributed to the word “liquor” \nin common parlance especially when that word is prefixed \nby the qualifying word “intoxicating”, but in my opinion \nhaving regard to the numerous statutory definitions of that \nword, such a meaning could not have been intended to be \nexcluded from the scope of the term “intoxicating liquor” \nas used in Entry 31 – List II. Consequently, on analysing \n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f2070 \n\n[2024] 10 S.C.R.\n\nthe provisions of the impugned Act, it was observed that \nonly those provisions which affected the possession, selling \nand consumption of any medicinal and toilet preparations \nand commendation of any intoxicant or hemp were invalid.\n\nd) \n\nIn Nagendra Nath vs. Commissioner of Hills Division, \nAIR 1958 SC 398 (“Nagendra Nath”), it was reiterated \nthat there is no inherent right in a citizen to sell liquor and \nthat the control and restriction over the consumption of \n“intoxicating liquors” was necessary for the preservation \nof public health and morals and to raise revenue.\n\ne) The question, whether Section 43 of the Bengal Excise Act, \n1909, under which the licence of a liquor contractor was \nwithdrawn, violated Articles 14 and 19 of the Constitution \nof India was considered in Amar Chandra Chakraborty \nvs. Collector of Excise, Government of Tripura, AIR \n1972 SC 1863 (“Amar Chandra Chakraborty”). It was \nobserved that in view of the injurious effect of excessive \nconsumption of liquor on health, the trade or business must \nbe treated as a class by itself and it cannot be treated \non par with other trades while testing the matter from the \nangle of Article 14 of the Constitution. \n\nf) \n\nIn State of Orissa vs. Harinarayan Jaiswal, AIR 1972 \nSC 1816 (“Harinarayan Jaiswal”), it was observed that \none of the important purposes of selling the exclusive \nright to vend liquor was to raise revenue and since the \nGovernment had the power to sell exclusive privileges, \nthere was no basis for contending that the owner of the \nprivileges could not decline to accept the highest bid if it \nthought that the price offered was inadequate. \n\ng) Similarly, in Nashirwar vs. State of Madhya Pradesh, \nAIR 1975 SC 360 (“Nashirwar”), it was observed that \nthere was no fundamental right of citizens to carry on \ntrade or to do business in liquor. It was observed in the \nsaid case as under: \n\n“There are three principal reasons to hold that \nthere is no fundamental right of citizens to \ncarry on trade or to do business in liquor. First, \nthere is the police power of the State to enforce \npublic morality to prohibit trades in noxious or \n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n2071\n\nh) \n\ndangerous goods. Second, there is power of \nthe State to enforce an absolute prohibition of \nmanufacture or sale of intoxicating liquor. Article \n47 states that the State shall endeavour to bring \nabout prohibition of the consumption except for \nmedicinal purposes of intoxicating drinks and of \ndrugs which are injurious to health. Third, the \nhistory of excise law shows that the State has \nthe exclusive right or privilege of manufacture \nor sale of liquor.”\n\nIn Har Shankar vs. The Deputy Excise and Taxation \nCommissioner, AIR 1975 SC 1121 (“Har Shankar”), this \nCourt, speaking through Y.V. Chandrachud, C.J, observed \nthat the State has the power to prohibit trades which \nare injurious to the health and welfare of the public, that \nelimination and exclusion from business is inherent in the \nnature of liquor business as no person has an absolute \nright to deal in liquor. Also, all forms of dealings in liquor \nhave, due to their inherent nature, been treated as a class \nby themselves by all civilized communities. Therefore, the \ncontention that the persons who carry on trade or business \nin liquor have an unrestricted fundamental right as such \nwas rejected. Thus, it was observed that while a citizen \nhas a right to do business in liquor, the State can make \nlaw imposing reasonable restrictions on the said right in \npublic interest.\n\nSummarising the aforesaid judgments in Har Shankar, it \nwas observed that there is no fundamental right to carry \nout trade or business in intoxicants. The State, under its \nregulatory powers, has the right to prohibit absolutely every \nform of activity in relation to intoxicants, its manufacture, \nstorage, export, import, sale and possession. In all their \nmanifestations, these rights are vested in the State and \nindeed without such vesting there can be no effective \nregulation of various forms of activities in relation to \nintoxicants. Therefore, the States’ right to regulate activities \nin relation to intoxicants to the extent of prohibiting would \nimply that even when permission to deal with intoxicants \nis granted, the same can be regulated. This is because \nthe rights in regard to intoxicants belong to the State and \n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f2072 \n\n[2024] 10 S.C.R.\n\nit is open to the Government to part with those rights for a \nconsideration. The power of the Government to charge a \nprice for parting with its rights and not the mode of fixing \nthat price is what constitutes the essence of the matter. \nIt was also held that neither does the label affixed to the \nprice determine the true nature of the charge levied by the \nGovernment nor its right to levy the same. By use of the \nexpression “licence fee” or “fixed fee”, what is meant is \nthe price or consideration which the Government charges \nto the licencees for parting with its privileges and granting \nthem the licences. That the object of imposing licence \nfee is for the purpose of regulation so that the number \nof persons who wish to engage in liquor trade are kept \nunder check and within reasonable limits. It was also \nobserved that the Government can, on its own, trade in its \nown rights or privileges and can deal with liquor or grant \nleases of its rights and issue requisite permits or licences \nor passes on payment of such fees as may be prescribed. \nUltimately, it was observed that the amount payable by \nthe licencees on the basis of the bids offered by them in \nauctions is neither a fee in the technical sense, nor a tax, \nbut is in the nature of the price of a privilege. It was also \nheld that the State has the power to grant liquor licences \non payment of such fees as the consideration for parting \nwith the privileges that the State has. That the payment \ndemanded is in the form of excise revenue, which could \nbe in the form of any payment, duty, fee, tax or fine \nordered under the provisions of a particular enactment or \nRules made thereunder relating to liquor or intoxicating \ndrugs but would not include a fine imposed by a Court of \nlaw. That such an imposition could be recovered in the \nmanner authorised by law. Consequently, in Har Shankar, \nthis Court repelled the contention of the retailed vendors \nof country liquor holding licences for the sale of liquor in \nspecified vends. \n\ni) \n\nIn Khoday Distilleries Ltd. vs. State of Karnataka (1995) \n1 SCC 574 (“Khoday Distilleries”), the Constitution \nBench of this Court summarised the law on the subject \nrelating to right to carry on trade or business in “potable \nliquor” as under:\n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n2073\n\n“(a) The rights protected by Article 19(1) are not \nabsolute but qualified. The qualifications are \nstated in clauses (2) to (6) of Article 19. The \nfundamental rights guaranteed in Article 19(1)(a) \nto (g) are, therefore, to be read along with the \nsaid qualifications. Even the rights guaranteed \nunder the Constitutions of the other civilized \ncountries are not absolute but are read subject \nto the implied limitations on them. Those implied \nlimitations are made explicit by clauses (2) to \n(6) of Article 19 of our Constitution.\n\n(b) The right to practise any profession or to \ncarry on any occupation, trade or business \ndoes not extend to practising a profession or \ncarrying on an occupation, trade or business \nwhich is inherently vicious and pernicious, and \nis condemned by all civilised societies. It does \nnot entitle citizens to carry on trade or business \nin activities which are immoral and criminal \nand in articles or goods which are obnoxious \nand injurious to health, safety and welfare of \nthe general public, i.e., res extra commercium, \n(outside commerce). There cannot be business \nin crime.\n\n(c) Potable liquor as a beverage is an intoxicating \nand depressant drink which is dangerous and \ninjurious to health and is, therefore, an article \nwhich is res extra commercium being inherently \nharmful. A citizen has, therefore, no fundamental \nright to do trade or business in liquor. Hence the \ntrade or business in liquor can be completely \nprohibited.\n\n(d) Article 47 of the Constitution considers \nintoxicating drinks and drugs as injurious \nto health and impeding the raising of level \nof nutrition and the standard of living of the \npeople and improvement of the public health. \nIt, therefore, ordains the State to bring about \nprohibition of the consumption of intoxicating \n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f2074 \n\n[2024] 10 S.C.R.\n\ndrinks which obviously include liquor, except \nfor medicinal purposes. Article 47 is one of \nthe directive principles which is fundamental in \nthe governance of the country. The State has, \ntherefore, the power to completely prohibit the \nmanufacture, sale, possession, distribution and \nconsumption of potable liquor as a beverage, \nboth because it is inherently a dangerous article \nof consumption and also because of the directive \nprinciple contained in Article 47, except when it \nis used and consumed for medicinal purposes.\n\n(e) For the same reason, the State can create \na monopoly either in itself or in the agency \ncreated by it for the manufacture, possession, \nsale and distribution of the liquor as a beverage \nand also sell the licences to the citizens for the \nsaid purpose by charging fees. This can be done \nunder Article 19(6) or even otherwise.\n\n(f) For the same reason, again, the State can \nimpose limitations and restrictions on the trade or \nbusiness in potable liquor as a beverage which \nrestrictions are in nature different from those \nimposed on the trade or business in legitimate \nactivities and goods and articles which are res \ncommercium. The restrictions and limitations \non the trade or business in potable liquor can \nagain be both under Article 19(6) or otherwise. \nThe restrictions and limitations can extend to the \nState carrying on the trade or business itself to \nthe exclusion of and elimination of others and/\nor to preserving to itself the right to sell licences \nto do trade or business in the same, to others.\n\n(g) When the State permits trade or business \nin the potable liquor with or without limitation, \nthe citizen has the right to carry on trade or \nbusiness subject to the limitations, if any, and \nthe State cannot make discrimination between \nthe citizens who are qualified to carry on the \ntrade or business.\n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n2075\n\n(h) The State can adopt any mode of selling \nthe licences for trade or business with a view \nto maximise its revenue so long as the method \nadopted is not discriminatory.\n\n(i) The State can carry on trade or business \nin potable liquor notwithstanding that it is an \nintoxicating drink and Article 47 enjoins it to \nprohibit its consumption. When the State carries \non such business, it does so to restrict and \nregulate production, supply and consumption \nof liquor which is also an aspect of reasonable \nrestriction in the interest of general public. The \nState cannot on that account be said to be \ncarrying on an illegitimate business.\n\n(j) The mere fact that the State levies taxes or \nfees on the production, sale and income derived \nfrom potable liquor whether the production, sale \nor income is legitimate or illegitimate, does not \nmake the State a party to the said activities. The \npower of the State to raise revenue by levying \ntaxes and fees should not be confused with \nthe power of the State to prohibit or regulate \nthe trade or business in question. The State \nexercises its two different powers on such \noccasions. Hence the mere fact that the State \nlevies taxes and fees on trade or business in \nliquor or income derived from it, does not make \nthe right to carry on trade or business in liquor \na fundamental right, or even a legal right when \nsuch trade or business is completely prohibited.\n\n(k) The State cannot prohibit trade or business \nin medicinal and toilet preparations containing \nliquor or alcohol. The State can, however, under \nArticle 19(6) place reasonable restrictions on \nthe right to trade or business in the same in \nthe interests of general public.\n\n(l) Likewise, the State cannot prohibit trade \nor business in industrial alcohol which is not \nused as a beverage but used legitimately for \n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f2076 \n\n[2024] 10 S.C.R.\n\nindustrial purposes. The State, however, can \nplace reasonable restrictions on the said trade \nor business in the interests of the general public \nunder Article 19(6) of the Constitution.\n\n(m) The restrictions placed on the trade or \nbusiness in industrial alcohol or in medicinal and \ntoilet preparations containing liquor or alcohol \nmay also be for the purposes of preventing their \nabuse or diversion for use as or in beverage.”\n\n(underlining by me)\n\nSurvey of Judicial Precedents:\n\nSynthetics and Chemicals (7J):\n\n9. Since the main controversy in this case turns on the correctness of \nthe decision in Synthetics and Chemicals (7J), it is necessary to \nadvert to the same in some detail. \n\n9.1 \n\nIn the said case, the main contour of the controversy was \nwhether vend fee in respect of “industrial alcohol” under different \nlegislations and rules in different States was valid. In this context, \nthe following three questions were considered:\n\n\"(i) whether the power to levy excise duty in case of \nindustrial alcohol was with the State Legislature \nor the Central Legislature?\n\n(ii) what is the scope and ambit of Entry 8 of List \nII of the Seventh Schedule of the Constitution?\n\n(iii) whether, the State Government has exclusive \nright or privilege of manufacturing, selling, \ndistributing, etc. of alcohols including industrial \nalcohol. In this connection, the extent, scope \nand ambit of such right or privilege has also to \nbe examined.”\n\n9.1.1 \n\nIn this background, the expressions “intoxicating liquors” \nand “alcoholic liquors for human consumption” were \nconsidered and also Article 47 of the Constitution which \ndeals with the State’s duty regarding the improvement \nof public health and to bring about prohibition of \nthe consumption except for medicinal purposes of \n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n2077\n\n9.1.2 \n\nintoxicating drinks and of drugs which are injurious to \nhealth. Reference was also made to Entry 52 – List I \nwhich deals with industries, the control of which by the \nUnion is declared by Parliament by law to be expedient \nin public interest. \n\nIt was the contention of the petitioners therein that \nthe IDRA was enacted with a view to developing and \ncontrolling various important industries. Section 2 of the \nIDRA declares that it is expedient in the public interest \nthat Union should take under its control the industries \nspecified in the First Schedule. \n\n9.1.3 The said case did not concern primarily with potable \nalcohol for the purpose of human consumption but \nwith ethyl alcohol (rectified spirit) as an industrial raw \nmaterial for manufacture of downstream products. This \nCourt concerned itself with the taxing power of the \nStates to impose and levy excise duty on “industrial \nalcohol” and/or imposts such as vend fees. “Power \nAlcohol” was defined as ethyl alcohol containing not \nless than 95.5 per cent volume of ethanol measured at \n60°F, corresponding to 74.4 over proof strength. That \nrectified spirit was ethyl alcohol or ethanol with 96 per \ncent alcohol. On dehydration, ethyl alcohol with 99.5 \nper cent volume of ethanol is produced. \n\n9.1.4 This Court noted that on 08.05.1952, the Parliament \nenforced the IDRA which contains, inter alia, Section \n18G which was inserted w.e.f. 01.10.1953, whereby \nthe Central Government was empowered for securing \nequitable distribution and availability at fair prices of any \narticle or class of articles relatable to any scheduled \nindustry to provide for regulating the supply and \ndistribution thereof, and trade and commerce therein by \na notified order. The notified order was also to provide \nfor controlling the prices at which such article or class \nof articles could be bought or sold. The said Act was \namended in 1956. Item 26 was inserted in the First \nSchedule to the said Act and empowered the Central \nGovernment to control the “Fermentation Industries” \nincluding alcohol industries. \n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f2078 \n\n[2024] 10 S.C.R.\n\nUnder the UP Licences for the Possession of Denatured \nSpirit and Specially Denatured Spirit Rules, 1976, \nspecial licence for possession of denatured spirit for \nindustrial purposes was required. “Special denatured \nspirit” was defined as spirit rendered “unfit for human \nconsumption”. As per the Rules, licences for possession \nof denatured spirit including specially denatured spirit \nfor industrial purposes were to be of three kinds – (i) \nForm FL 39; (ii) Form FL 40; and (iii) Form FL 41.\n\nIn that background, it was submitted on behalf of the \nUnion of India that the legislative competence of the \nState enactments in various States will have to be \ndetermined with reference to following Entries in List I – \n7, 52, 59, 84, 96, 97 and Entries in List II - 8, 24, 26, \n27, 51, 52, 54, 56, 62 and Entries in List III - 19 and \n33. That there is a dichotomy between Entry 84 – List I \nand Entry 51 – List II but this would not control the \ninterpretation of other Entries. It was urged that there \nwas no such dichotomy as regards Entry 8 – List II \nas it is not subject to Entry 52 – List I as the subject \nmatters of these two Entries are different. That Entry \n52 – List I deals with industries while Entry 8 – List II \ndeals with “intoxicating liquors”. The power to levy \ntaxes is to be read from the Entry relating to taxes \nand not from the general Entry. That industry is a topic \nof legislation left to the Parliament and to the State. \nIdentifying of Entries is by reference to a declaration \nunder Entry 7 – List I and Entry 52 – List I. The aspect \nof legislation with regard to subject matter of Entries \nis the topic “industry”. On the other hand, the subject \nmatter of legislation under Entry 8 – List II is the topic \n“intoxicating liquors”. Therefore, according to the Union \nof India, there was no conflict.\n\nIn view of the above submission on behalf of the Union \nof India, the only question which was to be determined \nwas, whether, “intoxicating liquors” in Entry 8 – List \nII is confined to potable liquor or includes all liquors. \nThat the State Legislature had no power to levy excise \nduty on “industrial alcohol” as the latter is “not fit for \nhuman consumption” and the State Legislature will have \n\n9.1.5 \n\n9.1.6 \n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n2079\n\npower to levy fee in respect of all alcohol (see Entry \n66 read with Entry 6 - List II). The State Legislature \nhas power to legislate on the topic “intoxicating liquors” \nunder Entry 8 - List II. It being a general Entry, will not \ncomprehend a power of taxation but will comprehend \na power to levy fee read with Entry 66 – List II. \n\n9.1.7 According to the Union of India, with regard to industries \nthe control of which by the Union is declared by \nParliament by law to be expedient in public interest, \nParliament will have exclusive legislative competence \nvide Entry 52 - List I. This power includes the power \nto declare by Parliament that control by the Union of \nindustries relating to all types of alcohol is expedient \nin public interest. Once Parliament makes such a \ndeclaration, the State Legislature will be denuded of its \npower under Entry 24 - List II on the aspect “industry” \nwith respect to all subject matters. \n\n9.1.8 \n\nIt was also contended that the power to collect the lump \nsum amount by way of auction by any right or otherwise \nconferring the right to sell alcohol is neither a power \nto levy tax nor a power to levy fee but it will fall within \nthe legislative competence of the State Legislature \nunder Entry 8 – List II. But this power will extend only \nto alcohol for human consumption. Also, there can be \na complete prohibition with regard to manufacture and \nsale of alcohol fit for human consumption because there \nis no fundamental right to carry on business in alcohol \neven for human consumption (see Article 47 of the \nConstitution and other judgments already discussed). \nThe State can, therefore, collect an amount called \nvend fee, shop rent etc. for conferring on a citizen \nthe right to manufacture and sell alcoholic liquors if \nit is fit for human consumption. This power cannot \nextend to “industrial alcohol” or “alcohol contained in \nthe medicinal or toilet preparations”. According to the \nUnion of India, there was no power to levy such rent \nor fee with regard to “industrial alcohol” because (a) \n“industrial alcohol” and “alcoholic liquors for medicinal \nand toilet preparations” cannot be completely prohibited; \n(b) as there is a right to carry on business in “industrial \n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f2080 \n\n[2024] 10 S.C.R.\n\nalcohol”, any prohibition on manufacture of “industrial \nalcohol”, would be violative of Article 19(1)(g) of the \nConstitution. Therefore, in the absence of a power to \ncompletely prohibit, there will be no power to collect \nsums for conferring rights to manufacture or sell except \nthe levy of taxes and fees.\n\n9.1.9 On behalf of the State of UP, it was submitted that in \norder to appreciate the controversy, it was necessary \nto realise that the real problem arises from the fact \nthat the denaturants can be converted into renaturants \nthrough an illicit process. Therefore, they supported the \nlevy. It was submitted that the vend fee on denatured \nalcohol or denatured spirit or what is known as “industrial \nalcohol” has been challenged on mainly two grounds, \nnamely, (a) States lack legislative competence, and (b) \nafter the enactment of the IDRA, the States’ power is \ncompletely lost.\n\n9.1.10 The contention of the State was that there is no dichotomy \nbetween ethyl alcohol to be used for beverages and to \nbe used for “industrial purposes”. The levy, in any case, \nwas on manufacture of ethyl alcohol and not on its use. \nThe levy was stipulated jointly or severally both under \nEntries 8 and 51 - List II; Entry 33 - List III, and as per \npolice powers, regulatory and other incidental charges \nwere collected. That levy was a regulatory power under \nArticles 19(6) and 19(6)(ii) of the Constitution. \n\n9.1.11 According to the State, Parliament has no power to \nlegislate on “industrial alcohol”, since “industrial alcohol” \nwas also “alcoholic liquors for human consumption”. It \nwas contended that Entry 84 - List I expressly excludes \nalcoholic liquors for human consumption and therefore, \nthe residuary Entry 97 - List I will not operate as against \nits own legislative interest. The aforesaid submissions \nwere made on the assumption that “industrial liquor” or \n“ethyl alcohol” is fit for human consumption. \n\n9.1.12 This Court stated that the expression must be \nunderstood in its common and normal sense. “Industrial \nalcohol” as it is, is incapable of being consumed by a \nnormal human being. The expression ‘consumption’ \n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n2081\n\nmust also be understood in the sense of direct physical \nintake by human beings in this context. That utilisation \nin some form or the other is consumption for the benefit \nof human beings if “industrial alcohol” is utilised for \nproduction of rubber tyres, etc. It was held that the \nutilisation of those tyres in the vehicles used by human \nbeings cannot, in the context in which the expression \nhas been used in the Constitution, be understood to \nmean that alcohol has been for human consumption.\n\n9.1.13 This Court observed that when the framers of the \nConstitution used the expression “alcoholic liquors \nfor human consumption”, they meant and still \nthe expression means, that “liquor which as it is \nconsumable in the sense capable of being taken by \nhuman beings as such as a beverage or a drink” and \nEntry 84 - List I must be understood in that sense. It \nwas contended that denatured spirit could also be by \nappropriate cultivation or application or admixture with \nwater etc., transformed into ‘alcoholic liquors for human \nconsumption’ and as such, transformation would not \nentail any process of manufacture as such. There is no \norganic or fundamental change in this transformation. \nHowever, this aspect was not examined, the reason \nbeing that the Constitutional provisions specially \ndealing with the delimitation of powers in a federal polity \nmust be understood in a broad commonsense point \nof view as understood by common people for whom \nthe Constitution is made. Alcoholic or “intoxicating \nliquors” must be understood as these are, not what \nthese are capable of or able to become. Consequently, \nin paragraph 86 it was concluded as follows:\n\n“86. The position with regard to the control of \nalcohol industry has undergone material and \nsignificant change after the amendment of 1956 \nto the IDR Act. After the amendment, the State \nis left with only the following powers to legislate \nin respect of alcohol:\n\n(a) \n\nIt may pass any legislation in the nature of \nprohibition of potable liquor referable to Entry \n6 of List II and regulating powers.\n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f2082 \n\n[2024] 10 S.C.R.\n\n(b) \n\nIt may lay down regulations to ensure that \nnon-potable alcohol is not diverted and \nmisused as a substitute for potable alcohol.\n\n(c) The State may charge excise duty on potable \nalcohol and sales tax under Entry 52 of List \nII. However, sales tax cannot be charged \non industrial alcohol in the present case, \nbecause under the Ethyl Alcohol (Price \nControl) Orders, sales tax cannot be charged \nby the State on industrial alcohol.\n\n(d) However, in case State is rendering any \nservice, as distinct from its claim of so-called \ngrant of privilege, it may charge fees based \non quid pro quo. See in this connection, the \nobservations of Indian Mica case [(1971) \n2 SCC 236 : 1971 Supp SCR 319 : AIR \n1971 SC 1182].”\n\n9.1.14 Oza, J. gave a concurring separate opinion wherein \nhe considered the question relating to validity of the \nlevies made by the States on alcohol which is utilised \nby the industries for manufacturing the products where \nalcohol is a raw material. Some of these industries \nthemselves (i) manufacture alcohol as they have \ntheir own distilleries and from their distilleries through \npipelines it goes to their industrial units where this is \nused as a raw material (ii) whereas some are industries \nwhich purchase alcohol or denatured spirit on being \nallotted by the Government. \n\n9.1.15 On a comparison of the language of Entry 84 – List I \nand Entry 51 – List II, it was observed by Oza, J. that \nthe powers of taxation on alcoholic liquors have been \nbased on the way in which they are used, as admittedly \nalcoholic liquors is a very wide term and may include \nvariety of types of alcoholic liquors but the Constitution-\nmakers distributed them into two heads:\n\n(a) \n\nfor human consumption\n\n(b) other than for human consumption\n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n2083\n\n9.1.16 Alcoholic liquors which are for human consumption were \nput in Entry 51 - List II authorising the State Legislature \nto levy tax on them whereas alcoholic liquors other than \nfor human consumption have been left to the Central \nLegislature under Entry 84 – List I for levy of duty of \nexcise. This scheme of the Entries in two Lists clearly \nindicates the line of demarcation for purposes of taxation \nof alcoholic liquors. What has been excluded in Entry \n84 has specifically been put within the authority of the \nState for purposes of taxation.\n\n9.1.17 Speaking about Entry 8 – List II, it was observed that \nthis Entry talks about “intoxicating liquors” and further \nit refers to production, manufacture, possession, \ntransport, purchase and sale of “intoxicating liquors”. \nFrom the scheme of Entries in the three Lists, it is \nclear that taxing Entries have been specifically enacted \nconferring powers of taxation whereas other Entries \npertain to the authority of the Legislature to enact \nlaws for purposes of regulation. That the declaration is \nmade by the Parliament and this industry, i.e., industry \nbased on fermentation and alcohol has been declared \nto be an industry under the IDRA and, therefore, is \ndirectly under the control of the Centre, and in respect \nof regulation the authority of the State Legislature in \nEntry 8 - List II could only be subject to the IDRA or \nRules made thereunder by the Centre.\n\n9.1.18 \n\nIt was observed that high concentration of ethyl alcohol \nwhich is a product of distillation after fermentation is \nextracted in various concentrations and can also be \nextracted in a very high concentration above 90 per \ncent which is generally termed as rectified spirit. It is \nused as raw material for various industries. It is often \nsupplied after being mixed with methylated alcohol or \nbeing denatured by other processes only to safeguard \nagainst its use for conversion into alcoholic beverages \nfor human consumption. Ethyl alcohol is diluted by water \nand its percentage is brought to 40 or 45 or below then \nit becomes fit for human consumption. \n\n9.1.19 The contention of the States was that various duties \nfor purposes of regulation were imposed to prevent \n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f2084 \n\n[2024] 10 S.C.R.\n\nthe conversion of rectified spirit or methylated alcohol \nto be diverted from industrial to potable use. In other \nwords, the contention was that these levies had been \nimposed in order to prevent the conversion of alcoholic \nliquors which are not fit for human consumption to those \nwhich are fit for human consumption. Therefore, the \nlevies could be justified as regulatory fees.\n\n9.1.20 The said contention was repelled and it was concluded \nthat Entry 8 – List II could not be invoked to justify the \nlevy by the State in respect of alcoholic liquors which \nare not made for human consumption. Thus, the Court \nheld that alcoholic liquors which are made for human \nconsumption would not include alcoholic liquors not \nmade for human consumption or “industrial alcohol”.\n\nSynthetics and Chemicals (2J):\n\n9.2 \n\nIn State of U.P. vs. Synthetics and Chemicals Ltd. (1991) \n4 SCC 139 (“Synthetics and Chemicals (2J)”), a two-Judge \nBench of this Court (speaking through Sahai J. who also wrote \nthe concurring judgment along with Thommen, J.) observed \nthat the High Court relied upon the observations in paragraph \n86 of the judgment of the Constitution Bench in Synthetics \nand Chemicals (7J), namely, “sales tax cannot be charged on \n“industrial alcohol” and, therefore, held that due to operation of \nthe Ethyl Alcohol (Price Control) Orders, sales tax cannot be \ncharged by the State on “industrial alcohol” and struck down \nthe levy. \n\n9.2.1 \n\nIn Synthetics and Chemicals (2J), it was categorically \nargued by the learned Advocate General appearing for \nthe State of Uttar Pradesh that the reference to “sales \ntax” in the judgment of this Court between the same \nparties (before seven-Judge Bench) was accidental \nand did not arise from the judgment. This was because \nthe levy of sales tax was not in question at any stage \nof the arguments nor was the question considered as \nit was not in issue. In fact, the question which arose \nfor consideration in the earlier litigation was in regard \nto the validity of “vend fee and other fees” charged by \nthe States. This Court held that vend fee or transport \n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n2085\n\nfee and similar fees, unless supported by quid pro quo, \ninterfered with the control exercised by the Central \nGovernment under IDRA and the various orders made \nthereunder with respect to prices, licences, permits, \ndistribution, transport, disposal, acquisition, possession, \nuse, consumption, etc., of articles related to a controlled \nindustry, “industrial alcohol” being one of them. The \ncasual reference to sales tax in the concluding portion \nof the judgment was accidental and per incuriam was \nthe submission. \n\n9.2.2 While considering the said plea, this Court observed that, \nthe only question which had to be determined between \nthe same parties in Synthetics and Chemicals (7J) \nwas, “whether “intoxicating liquors” in Entry 8 - List II \nwas confined to potable liquor or includes all liquors.” \nAnswering this question, this Court categorically held \nthat “intoxicating liquors” within the meaning of Entry \n8 - List II was confined to “potable liquor” and did not \ninclude “industrial liquor”. \n\n9.2.3 Therefore, the only question that was considered by \nthe seven-Judge Bench of this Court was whether the \nState could levy “excise duty” or “vend fee” or “transport \nfee” and the like by recourse to Entry 51 or 8 - List \nII in respect of “industrial alcohol”. This Court by a \ndetailed discussion in the seven-Judge Bench decision \nhad observed that the impugned statutory provisions \npurportedly levying fees or enforcing restrictions in \nrespect of “industrial alcohol” were impermissible in view \nof the control assumed by the Central Government in \nexercise of its power under Section 18G of the IDRA \nin respect of a declared industry falling under Entry \n52 - List I, read with Entry 33 - List III.\n\n9.2.4 \n\nIn this decision, it was observed that the aforesaid \ndecision of this Court was not an authority for the \nproposition canvassed by the assessee in challenging \nthe provision. This Court could not have intended to \nsay that the Price Control Orders made by the Central \nGovernment under the IDRA imposed a fetter on the \nlegislative power of the State under Entry 54 - List II \n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f2086 \n\n[2024] 10 S.C.R.\n\n9.2.5 \n\nto levy taxes on the sale or purchase of goods. The \nreference to sales tax in paragraph 86 of that judgment \nwas merely accidental or per incuriam and therefore, \nhad no effect.\n\nIn the earlier litigation of Synthetics and Chemicals \n(7J), the question was whether the State Legislature \ncould levy vend fee or excise duty on “industrial alcohol”. \nThe seven-Judge Bench answered in the negative as \n“industrial alcohol” being unfit for human consumption, \nthe State Legislature was incompetent to levy any duty \nof excise either under Entry 51 or Entry 8 - List II of \nthe Seventh Schedule. \n\nThe judgment of this Court in Synthetics and Chemicals \n(7J) has been considered in later decisions and they could be \nadverted to at this stage itself.\n\nBileshwar Khand Udyog:\n\n9.3 \n\nIn Shri Bileshwar Khand Udyog Khedut Sahakari Mandali \nLtd. vs. State of Gujarat (1992) 2 SCC 42 (“Bileshwar Khand \nUdyog”), it was observed that Synthetics and Chemicals (7J) \nfinally brought down the curtain in respect of “industrial alcohol” \nby taking it out of the purview of both Entry 8 and Entry 51 - \nList II and the competency of the State to frame any legislation \nto levy any tax or duty was excluded. But by that a provision \nenacted by the State for supervision which is squarely covered \nunder Entry 33 – List III which deals with production, supply \nand distribution which includes regulation cannot be assailed. \nIt was further observed as under:\n\n“4. …The Bench in Synthetic & Chemical’s case \nmade it clear that even though the power to levy tax \nor duty on industrial alcohol vested in the Central \nGovernment the State was still left with power to \nlay down regulations to ensure that non-potable \nalcohol, that is, industrial alcohol, was not diverted \nand misused as substitute for potable alcohol. … \nIn paragraph 88 of the decision it was observed \nthat in respect of industrial alcohol the States, were \nnot authorised to impose the impost as they have \npurported to do in that case but that did not effect \n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n2087\n\nany imposition of fee where there were circumstance, \nto establish that there was quid pro quo for the fee \nnor it will affect any regulatory measure.”\n\n9.4 \n\nIt was further observed that the principle of occupied field \nprecluded States from trenching on any power which was \nalready covered by a Central legislation. But in absence of any \nprovision in IDRA touching upon regulation or ensuring that \n“industrial alcohol” was not diverted the State was competent \nto legislate on it under Entry 33 – List III.\n\nGujchem Distillers:\n\n9.5 \n\nIn Gujchem Distillers India Ltd. vs. State of Gujarat (1992) 2 \nSCC 399 (“Gujchem Distillers”), the judgment in Synthetics \nand Chemicals (7J) was followed and the fee of 7 paise per litre \nwas held to be a regulatory measure, namely, for denaturation \nof spirit and supervision of the said process.\n\nModi Distillery:\n\n9.6 \n\nIn State of UP vs. Modi Distillery (1995) 5 SCC 753 (“Modi \nDistillery”), the facts were that the Allahabad High Court had \nallowed the writ petitions filed by the respondents therein who \nare manufacturers of Indian-made foreign liquor and quashed the \norders impugned demanding excise duty from them. Referring \nto the provisions of the UP Excise Act, 1910 and the definitions \ntherein on the different types of liquor, this Court speaking \nthrough Bharucha, J. (as he then was) observed in paragraphs \n9, 10 and 11 as under:\n\n“9. It is convenient now to note the judgment of \na Bench of seven learned Judges of this Court in \nSynthetics and Chemicals Ltd. v. State of U.P. \n[(1990) 1 SCC 109] This Court stated that it had \nno doubt that the framers of the Constitution, when \nthey used the expression “alcoholic liquors for \nhuman consumption”, meant, and the expression \nstill means, that liquor which, as it is, is consumable \nin the sense that it is capable of being taken \nby human beings as such as a beverage or \ndrink. Alcoholic or intoxicating liquors had to be \nunderstood as they were, not what they were \n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f2088 \n\n[2024] 10 S.C.R.\n\ncapable of or able to become. Entry 51 of List II was \nthe counterpart of Entry 84 of List I. It authorised \nthe State to impose duties of excise on alcoholic \nliquors for human consumption manufactured or \nproduced in the State. It was clear that all duties \nof excise save and except the items specifically \nexcepted in Entry 84 of List I were generally within \nthe taxing power of the Central Legislature. The \nState Legislature had limited power to impose \nexcise duties. That power was circumscribed \nunder Entry 51 of List II. It had to be borne in \nmind that, by common standards, ethyl alcohol \n(which had 95 per cent strength) was an industrial \nalcohol and was not fit for human consumption. \nThe ISI specifications had divided ethyl alcohol \n(as known in the trade) into several kinds of \nalcohol. Beverages and industrial alcohols were \nclearly and differently treated. Rectified spirit for \nindustrial purposes was defined as spirit purified by \ndistillation having a strength not less than 95 per \ncent by volume of ethyl alcohol. Dictionaries and \ntechnical books showed that rectified spirit (95 per \ncent) was an industrial alcohol and not potable as \nsuch. It appeared, therefore, that industrial alcohol, \nwhich was ethyl alcohol (95 per cent), by itself \nwas not only non-potable but was highly toxic. \nThe range of potable alcohol varied from country \nspirit to whisky and the ethyl alcohol content \nthereof varied between 19 to about 43 per cent, \naccording to the ISI specifications. In other words, \nethyl alcohol (95 per cent) was not an alcoholic \nliquor for human consumption but could be used \nas a raw material or input, after processing and \nsubstantial dilution, in the production of whisky, \ngin, country liquor, etc. In the light of experience \nand development, it was necessary to state that \n“intoxicating liquor” meant only that liquor which \nwas consumable by human beings as it was.\n\n10. What the State seeks to levy excise duty upon \nin the Group ‘B’ cases is the wastage of liquor \n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n2089\n\nafter distillation, but before dilution; and, in the \nGroup ‘D’ cases, the pipeline loss of liquor during \nthe process of manufacture, before dilution. It is \nclear, therefore, that what the State seeks to levy \nexcise duty upon is not alcoholic liquor for human \nconsumption but the raw material or input still in \nprocess of being rendered fit for consumption by \nhuman beings. The State is not empowered to \nlevy excise duty on the raw material or input that \nis in the process of being made into alcoholic \nliquor for human consumption.\n\n11. That the measure of excise duty upon alcoholic \nliquor for human consumption is the alcoholic \nstrength thereof does not make any difference in \nthis behalf. It is only the alcoholic strength of the \nfinal product which is relevant.”\n\nIn paragraph 14, it was further observed as under:\n\n14. … The demand for excise duty is not a regulatory \nmeasure. The power of the State to levy excise duty \ncannot be expanded with reference to its power \nto regulate manufacture. We are not required to \nand do not express any opinion in regard to the \npower of the State to regulate the manufacture of \nalcoholic liquors for human consumption.\n\n9.6.1 Consequently, the appeals were allowed with regard to \nlevy of excise duty upon wastage of Indian-made foreign \nliquor exported outside the State of Uttar Pradesh. Rest \nof the appeals were dismissed.\n\nShree Krishna Gyanoday Sugar Ltd.:\n\n9.7 \n\nIn Shree Krishna Gyanoday Sugar Ltd. vs. State of Bihar \n(1996) 10 SCC 11, (“Shree Krishna Gyanoday Sugar Ltd.”), \nthe question was whether Rule 9 of the Bihar & Orissa Excise \nRules, 1990, framed under the Bihar and Orissa Excise Act, \n1915, was ultra vires the said Act. In the alternative, the question \nwas whether the said Rule covered the appellants’ distilleries \nwhich were manufacturing not only denatured spirit but also \npotable liquor. \n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f2090 \n\n[2024] 10 S.C.R.\n\n9.7.1 \n\n9.7.2 \n\nIt was contended that the distilleries of the appellants \ntherein were having composite licences to manufacture \nnot only denatured spirit and other spirits for industrial \nuse but were also manufacturing potable spirit or country \nliquor and that for these distilleries the State had no \npower or jurisdiction to invoke Rule 9 of the Rules. The \nHigh Court repelled the contention of the appellants \ntherein. It was held that Rule 9 was not ultra vires \nthe provisions of the aforesaid Act. It was cautioned \nthat if a distillery which manufactures denatured spirit \nattempts to alter any denatured spirit with the intention \nthat such spirit may be used for human consumption, \nwhether as a beverage or internally as a medicine, it \nwould be committing an offence which is punishable \nunder Section 49 of the aforesaid Act. Therefore, it \nwas permissible for the Excise Authorities under the \nAct to supervise the working of such distilleries so that \nthey may not commit such offences and to oversee \ntheir manufacturing activities. This was because the \ndenatured spirit, if illegally altered and made fit for \nhuman consumption, would have a devastating effect \non the health of consumers and may even result in fatal \nconsequences or loss of vision and other pernicious \nphysical handicaps. Therefore, supervision was \nprovided at the cost of distilleries and the licencees of \nthe distilleries will have to bear the cost of maintenance \nof such supervision. The same would squarely fall \nwithin the regulatory powers for framing Rules with a \nview to see that the provisions of the aforesaid Act are \nnot stifled or tinkered with by such licencee distilleries. \n\nIt was observed that the expression “commercial” \nwould fall in the same category as denatured spirit, \nmeaning thereby those spirits which are not fit for human \nconsumption. They would not cover potable spirits even \nassuming that they are commercial spirits. That, the \nexpression “other commercial spirits” as contemplated \nby the Rule are those spirits which are unfit for human \nconsumption and they do not cover potable liquor which \ncannot fall in line with denatured spirit. Thus, it was \nobserved that the expression “or any other commercial \n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n2091\n\nspirit” must mean those spirits which fall in the category \nof spirits unfit for human consumption like denatured \nspirits which are used for “industrial purposes” or any \nother purpose other than for human consumption. It \nwas held that Rule 9 of the aforesaid Rule would apply \nto only those distilleries which were licenced solely \nand wholly for the purpose of manufacturing either \ndenatured spirit or any other commercial spirit unfit \nfor human consumption but would not include those \ndistilleries which are licenced for manufacturing along \nwith denatured spirit or other industrial spirits unfit for \nhuman consumption, also potable liquor which is fit \nfor human consumption. Hence, it was observed that \nthe appellant therein, who had composite and multiple \nlicences to manufacture potable liquor, was outside \nthe sweep of second part of Rule 9 of the aforesaid \nRules. That to such distilleries the first part of the Rule \nmay apply wherein the State will have to bear the cost \nof providing supervisors and establishments for that \npurpose but the cost of such establishment cannot be \nfoisted on such distilleries. \n\nBihar Distillery:\n\n9.8 \n\nIn Bihar Distillery, narrating the history with regard to the \nlegislations on rectified spirit and in the context of the IDRA, \nand the incorporation of Item 26 in the First Schedule of the \nsaid Act which deals with “Fermentation Industries”: (i) Alcohol, \n(ii) other products of “Fermentation Industries”, this Court, \nspeaking through Jeevan Reddy, J., noted that the decision in \nSynthetics and Chemicals (7J) called for demarcation of the \nspheres of the Union and the States, particularly in the matter \nof alcoholic liquors.\n\n9.8.1 This Court observed that insofar as “intoxicating \nliquors”/potable liquors are concerned, it is the \nexclusive province of the States. But for manufacturing \n“intoxicating liquors”, or for manufacturing “industrial \nalcohol”, as the case may be, one must have to \nmanufacture or purchase alcohol. It is only thereafter \nthat the alcohol is either converted into “industrial \nalcohol” (by denaturing it) or into “potable liquors” by \n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f2092 \n\n[2024] 10 S.C.R.\n\n9.8.2 \n\nreducing the strength of alcohol (which is normally of \n95% purity or above). Alcohol can however be used \nfor industrial purposes even without denaturing it. To \nsay that the States step in only when alcohol becomes \npotable and not before it, creates a doubt and enough \nroom for abuse apart from difficulties of supervision \nand regulation, such as, in the matter of licensing such \nindustries — whether the Centre alone or the States \nor both should do it. Therefore, notices were issued \nto all the State Governments as well as Union of India \nand the interplay between the Entries of Lists I, II and \nIII which are under consideration here and which are \nextracted above, were discussed. \n\nIt was opined that Entry 51 - List II and Entry 84 - List \nI complement each other inasmuch as both provide for \nduties of excise. However, Entry 51 - List II empowers \nthe State to levy duties of excise on alcoholic liquors \nfor human consumption, which is expressly excluded \nfrom Entry 84 - List I. Therefore, alcoholic liquors may \nbe used for several purposes, one of which is meant \nfor human consumption. It was further observed that \nEntry 8 – List II does not use the expression “alcoholic \nliquors for human consumption” but employs the \nexpression “intoxicating liquors” and significantly, the \nwords “for human consumption” is conspicuous by its \nabsence. According to Jeevan Reddy, J., this is for \nthe obvious reason that the very word “intoxicating” \nsignifies “for human consumption”. Thus, Entry 8 - \nList II emphasizes all aspects of “intoxicating liquors” \nwithin the State’s sphere, i.e., to say production, \nmanufacture, possession, transport, purchase and \nsale of “intoxicating liquors”. In this context, Entry \n6 - List  II was relied upon to observe that the said \nEntry, which, inter alia, deals with “public health”, has \na close nexus to prohibiting or regulating consumption \nof “intoxicating liquors”. \n\n9.8.3 \n\nIt was next opined that clause (a) in Entry 33 – List III \nis also significant. That though the control of certain \nindustries may have been taken over by the Union by \nvirtue of a declaration made by Parliament in terms of \n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n2093\n\n9.8.4 \n\nEntry 52 - List I, yet the “trade and commerce in, and \nthe production, supply and distribution of the products \nof such industry” is placed in the Concurrent List. \nAccording to Jeevan Reddy, J., this would mean that \nit could be regulated by both by the Union as well as \nby the States, subject, of course, to Article 254 of the \nConstitution. \n\nIt was observed that insofar as the field is not occupied \nby the laws made by the Union, the States are free \nto legislate. It was further observed that Entry 24 - \nList II is in the nature of a general Entry. It deals with \nindustries but is made expressly subject to Entries 7 \nand 52 - List I. That by making a declaration in terms \nof Entry 52 - List I in Section 2 of the IDRA, the Union \nhas taken control of the several industries mentioned \nin the Schedule to the Act. As a result, the States have \nbeen denuded of their power to legislate with respect to \nthose industries on that account. It was further observed \nthat a three-Judge Bench in McDowell had held that \nEntry 52 overrides only Entry 24 - List II and no other \nEntry in List II. That Entry 8 – List II is not overborne \nin any manner by Entry 52 – List I, which means that \nso far as “intoxicating liquors” are concerned, they are \nwithin the exclusive sphere of the States. \n\n9.8.5 Referring to the judgment of Sabyasachi Mukharji, \nJ. ( as he then was) in Synthetics and Chemicals \n(7J), particularly paragraph 85, it was observed that \nthe expression “both potable and” is an accidental \nerror as the judgment in its earlier paragraphs had \nstated that so far as potable alcohol is concerned, they \nare governed by Entry 8 – List II and are within the \nexclusive domain of the States. The said judgment did \nnot intend to convey that the industries engaged in the \nmanufacture or production of potable liquors have been \ncontrolled by the Union by virtue of Item 26 of the First \nSchedule to the IDRA. So far as potable liquors are \nconcerned, their manufacture, production, possession, \ntransport, purchase and sale are within the exclusive \ndomain of the States and the Union of India has no \nsay in the matter.\n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f2094 \n\n[2024] 10 S.C.R.\n\n9.8.6 \n\nIn this case, the Court further noted the contentions \nurged on behalf of the State to the effect that rectified \nspirit is “intoxicating liquors” within the meaning of Entry \n8 - List II and hence outside the purview of Entry 24 - \nList II, which would in turn mean that the Union cannot \ntake over its control by making a declaration in terms \nof Entry 52 - List I. Further Item 26 of the Schedule to \nthe IDRA is ineffective and invalid insofar as it seeks \nto regulate the production and manufacture, etc. of \nrectified spirit. The State submitted that the decision \nto the contrary in Synthetics and Chemicals (7J) is \nnot correct and requires reconsideration. \n\n9.8.7 The State next contended that Entry 51 - List II and \nEntry 84 - List I speak of “alcoholic liquors for human \nconsumption” and not “alcoholic liquors “fit” for human \nconsumption”. That the judgment in Synthetics and \nChemicals (7J), read the word “fit” in the Entries and \nthus curtailed the legislative power of the States. It \nwas further contended that rectified spirit is really and \nessentially “intoxicating liquors” and by the process \nof “reduction of liquor” by adding water and spices \n(optional) does not cease it to be “intoxicating liquors”. \nIn the State of U.P., bulk of the rectified spirit is used \nfor the purpose of obtaining country liquor or IMFLs \nand a small quantity is used for industrial purposes. \nTherefore, the expression “intoxicating liquors” must \ninclude rectified spirit. It was further submitted that \nduring the course of manufacture of rectified spirit, \npotable liquor comes into existence and the main raw \nmaterial for rectified spirit is molasses. \n\n9.8.8 However, on behalf of the distilleries, it was contended \nthat there is no good reason for doubting the correctness \nof the decision in Synthetics and Chemicals (7J) or \nfor referring the issue to a larger Constitution Bench of \nnine or more Judges. This was because if the States’ \nsubmission were to be accepted, then Item 26 in the \nSchedule to the IDRA would become superfluous and \nmeaningless. Therefore, this Court in Synthetics and \nChemicals (7J) speaking through Sabyasachi Mukharji, \nJ., drew a line between the respective spheres of the \n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n2095\n\nUnion and the States. It was also contended that despite \nthe insertion of Item 26 in the IDRA, the State was not \ntotally denuded of any power to make a law with respect \nto rectified spirit or for that matter “industrial alcohol”. \nIn this regard, Entry 33 - List III and Section 18G read \nwith other provisions of the IDRA were considered and \nby placing reliance on Tika Ramji, it was observed that \n“the possibility of an order under Section 18G being \nissued by the Central Government would not be enough. \nThe existence of such an order would be the essential \nprerequisite before any repugnancy could ever arise”. \n\n9.8.9 On a conspectus consideration, this Court held that \nthe decision in Synthetics and Chemicals (7J), did \nnot deal with the aspects which arose for consideration \nin this case and that it was mainly concerned with \n“industrial alcohol”, i.e., denatured rectified spirit. \nWhile holding that rectified spirit is “industrial alcohol”, \nit recognised at the same time that it can be utilised \nfor obtaining country liquor (by diluting it) or for \nmanufacturing Indian Made Foreign Liquor (“IMFL”). \nWhen the decision says that rectified spirit with 95% \nalcohol content v/v is “toxic”, what it meant was that if \ntaken as it is, it is harmful and injurious to health. By \nsaying “toxic”, it did not mean that it cannot be utilised \nfor potable purposes either by diluting it or by blending \nit with other items. The Court in Bihar Distillery noted \nthat the undeniable fact is, that rectified spirit is both \n“industrial alcohol” as well as a liquor which can be \nconverted into country liquor just by adding water. \nIt is also the basic substance from which IMFL are \nmade. Denatured rectified spirit, of course, is wholly \nand exclusively “industrial alcohol”. It was observed \nthat this basic factual premise which was not and \ncould not be denied by any one raised certain aspects \nfor consideration therein which were not raised or \nconsidered in Synthetics and Chemicals (7J).\n\n9.8.10 \n\nIt was noted that Synthetics and Chemicals (7J) did \nnot deal with rectified spirit which could be converted \ninto potable alcohol and was merely concerned with \n“industrial alcohol” which could not be so converted, \n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f2096 \n\n[2024] 10 S.C.R.\n\n9.8.11 \n\ni.e., denatured rectified spirit. A distinction was drawn \nbetween industries engaged in manufacturing rectified \nspirit meant exclusively for supply to industries \n(industries other than those engaged in obtaining \nor manufacturing of potable liquor), whether after \ndenaturing it or without denaturing it, and industries \nengaged in manufacturing rectified spirit exclusively for \nthe purpose of obtaining or manufacturing potable liquor. \nIn the first case, the industry was to be under “the total \nand exclusive control of the Union and be governed \nby the IDRA and the rules and regulations made \nthereunder”. As far as the second case is concerned, \nit was noted that “they shall be under the total and \nexclusive control of the States in all respects and at \nall stages including the establishment of the distillery”.\n\nIt was thus noted that Synthetics and Chemicals \n(7J) was mainly concerned with “industrial alcohol”, \ni.e., denatured rectified spirit. This Court raised \nseveral questions with regard to the supervision of the \nmanufacture of country liquor or IMFL, which is not \nthe concern of the Union but the bulk of the rectified \nspirit produced in many States is meant for and is \nutilised for obtaining or manufacturing potable liquors. \nThe question was then at what stage, would the State \nintervene in the process of manufacture of potable \nliquor - whether until the stage of potable liquor is \nreached, or whether there has to be supervision even \nat a stage prior thereto by the States. This Court took \ninto consideration the fact that under Entry 33(a) - List \nIII, the States do have the power to legislate on this \nfield, provided the field is not occupied by any law \nmade by the Union. Further, in the interests of law, \npublic health, public revenue and also in the interests of \nproper delineation of the spheres of the Union and the \nStates, it was noted that there has to be a clear line of \ndemarcation drawn at the stage of clearance or removal \nof rectified spirit. In the matter of the levies, when the \nremoval or clearance is for industrial purpose, the levy \nof duties of excise and all other control is with the \nUnion but when the removal/clearance is for obtaining \n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n2097\n\nor manufacturing potable liquors, the levy of duties and \nall other control is with the States. It was observed that \nthere is a need for joint control and supervision of the \nprocess of manufacture of rectified spirit and its use \nand disposal. Hence, certain observations were made \nby way of elaboration by taking into consideration the \nnature of the product and its use, namely supply for \nindustries or “industrial alcohol” or use for potable \npurposes and the circumstances of misuse of rectified \nspirit (for industrial purposes) by diverting it for potable \npurposes, which are as under: \n\n(1) \n\n(a) So far as industries engaged in manufacturing \nrectified spirit meant exclusively for supply to \nindustries (industries other than those engaged \nin obtaining or manufacture of potable liquors), \nwhether after denaturing it or without denaturing \nit, are concerned, they shall be under the total and \nexclusive control of the Union and be governed \nby the IDR Act and the rules and regulations \nmade thereunder. In other words, where the \nentire rectified spirit is supplied for such industrial \npurposes, or to the extent it is so supplied, as the \ncase may be, the levy of excise duties and all \nother control including establishment of distillery \nshall be that of the Union. \n\n(b) The power of the States in the case of such \nan industry is only to see and ensure that rectified \nspirit, whether in the course of its manufacture or \nafter its manufacture, is not diverted or misused \nfor potable purposes. They can make necessary \nregulations requiring the industry to submit \nperiodical statements of raw material and the \nfinished product (rectified spirit) and are entitled \nto verify their correctness. For this purpose, the \nStates will also be entitled to post their staff in \nthe distilleries and levy  reasonable regulatory \nfees to defray the cost of such staff.\n\n(2) So far as industries engaged in the manufacture \nof rectified spirit exclusively for the purpose of \n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f2098 \n\n[2024] 10 S.C.R.\n\nobtaining or manufacturing potable liquors — or \nsupplying the same to the State Government or its \nnominees for the said purpose — are concerned, \nthey shall be under the total and exclusive control \nof the States in all respects and at all stages \nincluding the establishment of the distillery. In other \nwords, where the entire rectified spirit produced is \nsupplied for potable purposes — or to the extent \nit is so supplied, as the case may be — the levy \nof excise duties and all other control shall be that \nof the States. \n\n(3) So far as industries engaged in the manufacture \nof rectified spirit, both for the purpose of (a) \nsupplying it to industries (other than industries \nengaged in obtaining or manufacturing potable \nliquors/ intoxicating liquors) and (b) for obtaining \nor manufacturing or supplying it to Governments/ \npersons for obtaining or manufacturing potable \nliquors are concerned, the following is the position: \n\n(a) The power to permit the establishment and \nregulation of the functioning of the distillery is \nconcerned, it shall be the exclusive domain of the \nUnion. But so far as the levy of excise duties is \nconcerned, the duties on rectified spirit removed/ \ncleared for supply to industries (other than \nindustries engaged in obtaining or manufacturing \npotable liquors), shall be levied by the Union; \n\nb) the duties of excise on rectified spirit cleared/\nremoved for the purposes of obtaining or \nmanufacturing potable liquors shall be levied by \nthe State Government concerned. The disposal, \ni.e., clearance and removal of rectified spirit in the \ncase of such an industry shall be under the joint \ncontrol of the Union and the State concerned to \nensure evasion of excise duties on rectified spirit \nremoved/cleared from the distillery. \n\nc) It is obvious that in respect of these industries \ntoo, the power of the States to take necessary \nsteps to ensure against the misuse or diversion of \n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n2099\n\nrectified spirit meant for industrial purposes (supply \nto industries other than those engaged in obtaining \nor manufacturing potable liquors) to potable \npurposes, both during and after the manufacture \nof rectified spirit, continues unaffected. \n\nd) Any rectified spirit supplied, diverted or \nutilised for potable purposes, i.e., for obtaining or \nmanufacturing potable liquors shall be supplied to \nand/or utilised, as the case may be, in accordance \nwith the State excise enactment concerned and \nthe rules and regulations made thereunder. If the \nState is so advised, it is equally competent to \nprohibit the use, diversion or supply of rectified \nspirit for potable purposes.\n\nIt is advisable and necessary that the Union \nGovernment makes necessary rules/regulations \nunder the IDR Act directing that no rectified \nspirit shall be supplied to industries except after \ndenaturing it save those few industries (other than \nthose industries which are engaged in obtaining or \nmanufacturing potable liquors) where denatured \nspirit cannot be used for manufacturing purposes.\n\n(4) \n\n(5) So far as rectified spirit meant for being supplied \nto or utilised for potable purposes is concerned, it \nshall be under the exclusive control of the States \nfrom the moment it is cleared/removed for that \npurpose from the distillery — apart from other \npowers referred to above.\n\n(6) The power to permit the establishment of any \nindustry engaged in the manufacture of potable \nliquors including IMFLs, beer, country liquor and \nother intoxicating drinks is exclusively vested in \nthe States. The power to prohibit and/or regulate \nthe manufacture, production, sale, transport or \nconsumption of such intoxicating liquors is equally \nthat of the States.\n\n9.8.12 The aforesaid decision in Bihar Distillery was \ndoubted in Deccan Sugar and Abkari Co. Ltd. vs. \n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f2100 \n\n[2024] 10 S.C.R.\n\nCommissioner of Excise (1998) 3 SCC 272 (“Deccan \nSugar and Abkari Co. Ltd.”), and the appeals were \nreferred to a larger Bench which followed Synthetics \nand Chemicals (7J) and Modi Distillery without \nexpressly overruling the decision in Bihar Distillery. \nOpining that Synthetics and Chemicals (7J) continued \nto hold the field, it was noted that the State’s power \nwas limited to regulation of non-potable alcohol for \nthe limited purpose of preventing its use as alcoholic \nliquors. Ultimately, the appeal filed by the state was \ndismissed as the levies could not be treated as a \nregulatory measure.\n\nMcDowell:\n\n9.9 \n\nIn McDowell, the State of Andhra Pradesh had prohibited \nthe manufacture of liquor by an amendment in the Andhra \nPradesh Prohibition Act, 1995. The appellants therein who were \nmanufactures of “intoxicating liquors” challenged the constitutional \nvalidity of the Act by which the Prohibition Act was amended to \ninclude Section 7-A by which the manufacture of liquor came to be \nprohibited. This was owing to the lack of legislative competence \nin view of Item 26 in the First Schedule of the IDRA, which \naccording to the writ petitioners therein, vested the control of \nalcohol industries exclusively in the Union and denuded the State \nLegislature of its power to licence or regulate the manufacture \nof liquor. This argument was further based on the fact that \n“Fermentation Industries” were included in the Schedule of the \nIDRA and hence the State was denuded of its power to licence \nand regulate manufacture of liquor which industry and its product \nwere within the exclusive province of the Union and hence the \nState lost its competence to grant, refuse or renew the licences \nThe position of law was reiterated as under: -\n\n“It follows from the above discussion that the \npower to make a law with respect to manufacture \nand production and its prohibition (among other \nmatters mentioned in Entry 8 in List-II) belongs \nexclusively to the State Legislatures. Item 26 in \nthe First Schedule to the IDR Act must be read \nsubject to Entry 8 and for that matter, Entry 6 in \nList II. So read, the said item does not and cannot, \n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n2101\n\ndeal with manufacture, production of intoxicating \nliquors. All the petitioners before us are engaged in \nthe manufacture of intoxicating liquors. The State \nLegislature is, therefore, perfectly competent to make \na law prohibiting their manufacture and production \nin addition to their sale, consumption, possession \nand transport with reference to Entries 8 and 6 in \nList-II of the Seventh Schedule to the Constitution \nread with Article 47 thereof.”\n\nThe Civil Appeals were dismissed by this Court.\n\nVam Organic I:\n\n9.10 In Vam Organic I, the Notification dated 18.05.1990 issued by \nthe Excise Commissioner, Uttar Pradesh, was assailed before \nthe High Court and the writ petition was dismissed. By the \nsaid Notification, certain amendments were made to the Rules \npublished vide Notification dated 26.09.1910. Section 41 of the \nUP Excise Act, 1910 gave power to the Excise Commissioner \nto make Rules, inter alia, for regulating the manufacture, \nsupply, storage or sale of any intoxicant. The earlier Rule 2 was \nsubstituted by a new Rule 2 titled “Denaturation of Spirit”. The \namended Rule provided for a new licence for denaturation of \nspirit in a prescribed form to be issued by the Collector to all \ndistilleries situated within his district holding licence PD-1 or PD-2 \nand persons holding licences FL-16, FL-39, FL-40 and FL-41 to \ndenature the spirit. A licence fee for denaturation of spirit at the \nrate of 7 paise per litre was levied in advance. The appellants \nin this case who were manufacturers of vinyl acetate monomer \n(a basic organic chemical for which “industrial alcohol” was the \nmain feed stock being produced in the distillery) contended \nthat the entire “industrial alcohol” produced was denatured as \nper the method approved by the State Excise Authorities and \nwas being used in their factory for manufacturing vinyl acetate \nmonomer. The appellants held licences in the form of FL-39 \nto enable them to use the “industrial alcohol” as the main raw \nmaterial for their product. The notification was challenged on two \ngrounds: firstly, that the State of Uttar Pradesh has no power \nto legislate in respect of “industrial alcohol” or to levy taxes in \nrespect thereof. Secondly, that the levy being not based on \nquid pro quo was otherwise bad. \n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f2102 \n\n[2024] 10 S.C.R.\n\n9.10.1 \n\n9.10.2 \n\nIn this case, before considering the legal contentions, \nthis Court highlighted the difference between “industrial \nalcohol”, denatured spirit and potable liquor. Ethyl \nalcohol was noted to be rectified spirit of 95% v/v in \nstrength. Rectified spirit was highly toxic and unfit for \nhuman consumption. However, rectified spirit diluted \nwith water was noted to be country liquor. Rectified spirit, \nas it was, can be used for manufacture of various other \nproducts like chemicals, etc. Rectified spirit, produced \nfor industrial use was required by a Notification issued \nunder the Act to be denatured in order to prevent the \nspirit from being directed to human consumption. \nRectified spirit was denatured by adding denaturants \nwhich made the spirit unpalatable and nauseating. \nAs such rectified spirit could be converted to potable \nliquor but once denatured it could be used only as \n“industrial alcohol”.\n\nIt was observed that in Synthetics and Chemicals \n(7J) the question of legislative competence of the \nState to impose tax or levy on “industrial alcohol” \nwas ruled in the negative, so far as ethyl alcohol/\nrectified spirit is concerned. Further, even if the \nState had the regulatory power to prevent misuse of \n“industrial alcohol” for potable purposes, such power \ndid not include power to levy any impost. It was further \nobserved that denaturation is a statutory duty imposed \nby a notification under the U.P. Excise Act and as no \nservice by the State was being provided for the same, \nno fee could be charged and even if the State had to \nincur any expenses for enforcement of the requirement \nof denaturation, there is no quid pro quo between the \nexpenses incurred and the fees charged. This Court \nnoted that the term “industrial alcohol” is not used in \nany of the Lists and whether alcoholic liquors other \nthan “alcoholic liquors for human consumption” or \n“intoxicating liquors” was a State subject or a Union \nsubject should be the real controversy. It was with a \nview to describing that particular kind of liquor the \nterm “industrial alcohol” is used. It was observed that \nafter an analysis of all the provisions of law giving the \n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n2103\n\nUnion Parliament and the State Legislature jurisdiction \nto legislate on alcohol, this Court in Synthetics and \nChemicals (7J) held that the impugned notifications \ntherein, imposing certain fees as vend fee or transport \nfee, etc. were within the legislative competence of the \nState. That this Court was fully aware of the fact that \nrectified spirit was the ingredient for “intoxicating liquors” \nor alcoholic liquors for human consumption although \nrectified spirit/ethyl alcohol as well as denatured spirit \nare referred to as “industrial alcohol” in that judgment. \nThis Court did not hold that the State will have no \npower whatsoever in relation to “industrial alcohol”. In \nfact, in the judgment in Synthetics and Chemicals \n(7J), the Court has enumerated the various areas \nrelating to “industrial alcohol” in which the State could \nstill legislate or make rules. In that regard paragraph \n86 of the judgment in Synthetics and Chemicals (7J) \nwas quoted. Of course, the same has been explained \nin Synthetics and Chemicals (2J), discussed above. \nThis Court observed in this case that denaturation \nof spirit meant for industrial use is meant to prevent \nmisuse of non-potable alcohol for human consumption \nand as such was specifically mentioned by the Court \nto be within the legislative competence of the State. \nThis Court observed in para 14 as under:\n\n“14. It is to be noticed that the States under \nEntries 8 and 51 of List II read with Entry 84 \nof List I have exclusive privilege to legislate \non intoxicating liquor or alcoholic liquor for \nhuman consumption. Hence, so long as \nany alcoholic preparation can be diverted to \nhuman consumption, the States shall have \nthe power to legislate as also to impose taxes \netc. In this view, denaturation of spirit is not \nonly an obligation on the States but also within \nthe competence of the States to enforce.”\n\nHaryana Brewery Ltd.:\n\n9.11 In Government of Haryana vs. Haryana Brewery Ltd. (2002) \n4 SCC 547 (“Haryana Brewery Ltd.”), the controversy related \n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f2104 \n\n[2024] 10 S.C.R.\n\nto levy of excise duty on beer brewed by the respondent therein. \nRule 35 of the Punjab Brewery Rules, 1956 and Section 32 of \nthe Punjab Excise Act, 1914 were considered. It was observed \nby this Court that the said Rule was only an enabling provision \nwhich would help the Excise Authorities in calculating what \nwould be the quantity of beer manufactured and fit for human \nconsumption on which excise duty could be imposed. The said \nRule was declared valid and it did not require any reading down \nas had been done by the High Court. It was observed that the \ntax was on the end product and not on the raw material. Rule \n35 indicated that in order to determine what was the quantity \nof beer manufactured which was fit for human consumption, \nafter all the processes were completed, one had to see what \nwas the quantity of raw materials which were utilised for the \nmanufacture of beer and then allowance for wastage of seven \nper cent had to be made and thereafter the quantity of beer \nmanufactured was determined. That the figure taken for the \npurpose of calculating the excise duty was only on the end \nproduct, namely the beer produced, and not the quantity of \nthe raw material used in manufacture of beer, during which \nloss of some quantity as wastage would have occurred and \nthere could not be a deduction of any sum or proportion as \nwastage from the quantity of end product in order to arrive at \nthat quantity. In such a case, the question of determining any \nallowance of seven per cent for wastage did not arise. Therefore, \nthe Excise Authorities could levy excise duty only on the beer \nafter it had been manufactured and the levy was on the quantity \nmanufactured. How this quantity had to be arrived was to be \ndetermined according to Section 32 read with Rule 35 of the \naforementioned Act and Rules. Hence, Rule 35 was sustained \nas valid and it did not require any reading down.\n\nIndustrial Corporation (P) Ltd.:\n\n9.12 In the State of Bihar vs. Industrial Corporation (P) Ltd. \n(2003) 11 SCC 465 (“Industrial Corporation (P) Ltd.”), the \nrespondent companies were engaged in the manufacture of \nrectified spirit from molasses allotted to them by the Controller \nof Molasses in terms of the Bihar Molasses (Control) Act, 1947 \nand they had been granted licences under various provisions of \nthe Bihar and Orissa Excise Act, 1915. It was found that certain \n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n2105\n\nquantity of rectified spirit had to be produced but instead there \nwas a shortfall and therefore, notice was issued and penalty \nwas imposed on the premise that the respondents therein had \ndiverted the molasses towards manufacturing either country \nliquor or liquor which was fit for human consumption. Assailing \nthe same, writ petitions were filed before the High Court which \nhad allowed the said writ petitions. Therefore, the State had \nappealed before this Court.\n\n9.13 This Court noted that molasses is a by-product of sugar \nand mainly used as raw material for manufacture of spirit, \nincluding alcohol for human consumption. The respondents \nin the said case were engaged in the manufacture of rectified \nspirit from molasses and penalty was imposed owing to a loss \nof revenue by reason of loss of wastage of molasses while \ncarrying on manufacture of such rectified spirit. One of the \ncontentions raised was that the State has power to impose \nduty only on the spirit which is for human consumption and \nthe respondents therein had not carried out any activities in \nrelation to manufacture of potable liquor from the molasses. It \nwas observed that the judgment in Modi Distillery applied to \nthe said case and therefore, no penal duty could be imposed \non rectified spirit. Reliance placed on Bihar Distillery was not \ngone into inasmuch as it was observed that it was unnecessary \nto go into the question of the correctness of the observations \nmade in Bihar Distillery. However, the observations of the High \nCourt therein were that in view of the judgment of this Court in \nSynthetics and Chemicals (7J), the State had no legislative \ncompetence even in relation to potable liquor, (which is fit for \nhuman consumption), was not correct.\n\nVam Organic II:\n\n9.14 In Vam Organic II, a notification dated 13.01.1990 whereby \nlicence fee of 15 paise per litre was sought to be imposed on \nthe quantity of specially denatured spirit (STS) obtained from \ndistilleries in the State of Uttar Pradesh under Rule 3(a) of \nthe UP Licences for the Possession of Denatured Spirit and \nSpecially Denatured Spirit Rules, 1976 was assailed before the \nAllahabad High Court. The writ petitions were allowed, and the \nState had filed appeals before this Court. Section 3 (13) of the \nUP Excise Act, 1910 (for short, “1910 Act”) had defined the word \n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f2106 \n\n[2024] 10 S.C.R.\n\n“intoxicant” as meaning “any liquor or intoxicating drug”. The \nword “liquor” in turn was defined in Section 3(11) as meaning \n“intoxicating liquors and includes spirits of wine, spirit, wine, \ntari, pachwai, beer and all liquid consisting of or containing \nalcohol, also any substance which the State Government may \nby notification declare to be liquor for the purposes of the Act.” \nIn paragraph 6 of the judgment, it was observed that “industrial \nalcohol” is not liquor nor is it potable as such. However, it \nmay be utilized to produce a kind of liquor if it is denatured. \n“Denatured” in Section 3(9) of the Act was defined to mean \n“rendered unfit for human consumption in such manner as \nmay be prescribed by the State Government by notification in \nthis behalf”. Thus, the State Act equated “industrial alcohol” \nto non-potable alcohol and not fit for human consumption. To \nensure the denaturation of “industrial alcohol” under Section \n41 of the 1910 Act, Rules were made in the year 1976. It was \ncontended by the appellant State that the word “industry” has \nbeen construed by the Constitution Bench of this Court in ITC \nLtd. vs. Agricultural Produce Market Committee (2002) \n9 SCC 232 (“ITC Ltd.”) to mean only manufacture and \nproduction. Therefore, the State was competent under Entry 33 - \nList III to regulate the products of an industry which was declared \nto be a controlled industry under Entry 52 - List I. Since there \nwas no Central legislation occupying the field, the State law \nmust be held to be valid. \n\n9.14.1 Referring to Synthetics and Chemicals (7J), it was \nobserved that since the coming into force of the IDRA on \n08.05.1952, the State Legislatures are constitutionally \nincompetent to levy tax on “industrial alcohol”. This \nprinciple was reiterated in Modi Distillery wherein it \nwas held that the State’s power to levy excise duty \nwas limited to alcoholic liquors for human consumption \nwhich means, that liquor which, as it is, is consumable \nin the sense that it is capable of being taken by human \nbeings as such as a beverage or drink. Therefore, \neven if ethyl alcohol (95 per cent) could be used as a \nraw material or input, after processing and substantial \ndilution, in the production of whisky, gin, country liquor \netc. nevertheless, it was not “intoxicating liquors” \nwhich expression meant only that liquor which was \n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n2107\n\nconsumable by human beings as it was. Therefore, \nthe State could not legislate on “industrial alcohol” \ndespite the fact that such “industrial alcohol” has the \npotential to be used to manufacture alcoholic liquors \nfor human consumption. \n\n9.14.2 Ultimately, in paragraph 43 of the judgment, it was \n\npithily observed as under:\n\n“43. Considering the various authorities \ncited, we are of the view that the State \nGovernment is competent to levy fee for the \npurpose of ensuring that industrial alcohol \nis not surreptitiously converted into potable \nalcohol so that the State is deprived of \nrevenue on the sale of such potable alcohol \nand the public is protected from consuming \nsuch illicit liquor. But this power stops with \nthe denaturation of the industrial alcohol. \nDenatured spirit has been held in Vam \nOrganics I to be outside the seisin of the \nState Legislature. Assuming that denatured \nspirit may by whatever process be renatured \n(a proposition which is seriously disputed by \nthe respondents) and then converted into \npotable liquor, this would not give the State \nthe power to regulate it. Even according to \nthe demarcation of the fields of legislative \ncompetence as envisaged in Bihar Distillery \nindustrial alcohol for industrial purposes falls \nwithin the exclusive control of the Union and \naccording to Bihar Distillery “denatured \nrectified spirit, of course, is wholly and \nexclusively industrial alcohol” (SCC p. 742, \npara 23).”\n\nAnalysis of Judicial Dicta:\n\n10. \n\nI shall now analyse the judgments of this Court on the points in \ncontroversy.\n\n10.1 In Indian Mica, the question which came up was whether the \nfee levied under Rule 111 of the Bihar and Orissa Excise Rules \n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f2108 \n\n[2024] 10 S.C.R.\n\nframed under Section 90 of the Bihar and Orissa Excise Act, \n1915 on denatured spirit used and possessed by the appellants \ntherein had sufficient quid pro quo for the levy. This Court struck \ndown the levy as being unjustified and excessive as there was \nno co-relationship between the levy and the services rendered.\n\n10.2 In Southern Pharmaceuticals and Chemicals vs. State of \nKerala, AIR 1981 SC 1863 (“Southern Pharmaceuticals”), \nbeing aggrieved by the dismissal of their writ petitions and \nupholding the constitutional validity of Section 12-A and other \nsections of the Kerala Abkari Act, and Rules 13 and 16 of \nthe Kerala Rectified Spirit Rules, 1972, the manufacturers \nof medicinal and toilet preparations containing alcohol had \nfiled the appeal before this Court questioning the legislative \ncompetence of State to enact a law relating to medicinal and \ntoilet preparations containing alcohol under Entry 8 - List II. \nRepelling the said contention in light of the scheme of legislation \nand its history, it was observed that impugned Act was relatable \nto Entry 8 - List II. Reference was also made to the judgment \nof this Court in FN Balsara and it was held that the main \npurpose of the impugned Act was to consolidate the law relating \nto manufacture, sale and possession of “intoxicating liquors” \nwhich squarely fell under Entry 8 - List II, while the main object \nof the Central Act was to provide for the levy and collection of \nduties of excise on medicinal and toilet preparations containing \nalcohol falling under Entry 84 - List I. According to this Court \nwhen the framework of the two enactments was examined, \nit was apparent that the Central and the State legislations \noperated in two different and distinct fields. It was held that in \nthe matter of making rules or detailed provisions to achieve \nthe object and purpose of a legislation, there may be some \nprovisions seemingly overlapping or encroaching upon the \nforbidden field, but that does not warrant the striking down of \nthe impugned Act as ultra vires the State Legislature.\n\n10.3 In Synthetics and Chemicals (7J), the question for \nconsideration was whether different legislations and rules \nin respect of “industrial alcohol” enacted by the States were \nvalid. In my view, this Court was clear about the concept of \n“industrial alcohol” and “intoxicating liquors” and therefore, the \nState Legislatures’ competence to levy excise duty on “industrial \nalcohol” was considered as the seminal issue. In that context, \n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n2109\n\nthe scope and ambit of Entry 8 - List II was also considered. \nIt is in the context of the taxing power of the States, i.e., to \nlevy excise duty on “industrial alcohol” and/or impost(s) such \nas vend fees which was the point of controversy. \n\nIn the above backdrop, the question was crystallised to whether \nthe expression “intoxicating liquors” in Entry 8 - List II is confined \nto potable liquor or includes all liquors. It was observed that \nthe expression “alcoholic liquors for human consumption” \nused by the framers of the Constitution in Entry 51 – List II \nand Entry 84 – List I meant that liquor which is consumed by \nhuman beings directly as a beverage or as a drink. It was \nobserved that alcoholic liquor or “intoxicating liquors” must be \nunderstood as common people would understand it and not what \ncertain alcoholic products are capable of being transformed or \nconverted into. That when excise duty was being levied under \nEntry 84 - List I, it did not include alcoholic liquors for human \nconsumption but included denatured spirit which is “industrial \nalcohol”. It was observed that merely because the denatured \nspirit could be treated with water and transformed into alcoholic \nliquors into human consumption which did not involve a process \nof manufacture, the States would not have the legislative \ncompetence to levy excise duty under Entry 51 - List II. \n\n10.4 Subsequently, in Synthetics and Chemicals (2J), it was \nclarified that the question which arose for consideration before \nthe seven-Judge Bench was with regard to the validity of “vend \nfee and other fees” charged by the States. The two-Judge \nBench clarified that the seven-Judge Bench had answered \nthe question whether, “intoxicating liquors” in Entry 8 - List II \nwas confined to only potable liquor or other liquors also and it \nwas held that it included only potable liquor and not “industrial \nalcohol”. However, it was clarified that the State has the power \nto levy taxes on sale or purchase of goods under Entry 54 - \nList II and therefore paragraph 86 of the seven-Judge Bench \nin Synthetics and Chemicals (7J) was clarified in those \nterms. It was observed that in paragraph 86 by an accident \n(due to an inadvertence) the prohibition of sales tax being \nlevied by the States on the “industrial alcohol” was adverted to \nwithout there being a discussion on that aspect of the matter \nand, therefore, to that extent the dictum of the seven-Judge \nBench in Synthetics and Chemicals (7J) was per incuriam. \n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f2110 \n\n[2024] 10 S.C.R.\n\nIt was further clarified that the seven-Judge Bench was only \nconcerned with the question whether the State Legislature \ncould levy vend fee or excise duty on “industrial alcohol” and \nthat the said question was answered in the negative by holding \nthat “industrial alcohol” being unfit for human consumption, the \nState Legislature was incompetent to levy any duty of excise \nunder Entry 51 - List II. \n\n10.5 In the above context, it was also observed that alcohol can \nbe divided into two categories, namely, potable and non-\npotable alcohol. That alcohol which is potable is “intoxicating \nliquors” for human consumption directly as a beverage and \ncomes within the scope and ambit of Entry 8 - List II and the \nState Legislature has the power to regulate such “intoxicating \nliquors” by making relevant laws. However, non-potable liquor \nor “industrial alcohol” as it is popularly called, can be diluted \nand consumed as a beverage, and the State has an obligation \nand powers to regulate and ensure that there is no such abuse \nhaving regard to Article 47 of the Constitution being a Directive \nPrinciple of State Policy. Hence, under Entry 8 - List II, the \nState can make laws for prevention of production, possession, \nsale etc. of non-potable alcohol as “intoxicating liquors”. Such \nregulation would be intra vires Entry 8 - List II and would not \nbe in conflict with any other Entry in List I, II or List III. This \nwould also be in line with Article 47 of the Constitution.\n\n10.6 The aforesaid view was affirmed in Bileshwar Khand Udyog \nby holding that clarity was brought about in respect of “industrial \nalcohol” in Synthetics and Chemicals (7J) and the competency \nof the State to frame any legislation to levy any tax or duty \non “industrial alcohol” was excluded. However, under Entry \n33 - List III, there was power vested in the State insofar as \n“industrial alcohol” was concerned as the said product was a \nproduct of a scheduled industry, namely, Item 26 of the First \nSchedule of the IDRA which was enacted pursuant to Entry \n52 - List I. This is subject to the intention of the Parliament to \noccupy the field as per the provisions of the IDRA, in particular, \nunder Section 18G of the said Act. Gujchem Distillers also \nfollowed the aforesaid judgment. Khoday Distilleries also \nemphasised the fact that the State has the power to completely \nprohibit the manufacture, sale, possession, distribution and \nconsumption of potable liquor as a beverage but the State \n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n2111\n\ncannot prohibit trade and business in medicinal and toilet \npreparations containing liquor or alcohol. In the same way, the \nState cannot prohibit trade or business in “industrial alcohol” \nwhich is not used as a beverage but used legitimately for \nindustrial purposes. It was held that restrictions imposed by \nthe States on trade or business in “industrial alcohol” or in \nmedicinal and toilet preparations containing liquor or alcohol \ncould be for the purpose of preventing their abuse or diversion \nfor use as or in beverages. \n\n10.7 In Shree Krishna Gyanoday Sugar Ltd. it was categorically \nobserved that the excise authorities under the concerned \nState Act could supervise the working of the distilleries which \nhad composite licences to manufacture not only denatured \nspirit and other spirits for industrial use but also potable spirit \nor country liquor in order to prevent alteration of denatured \nspirit and make it fit for human consumption. Therefore, at the \ndistilleries of the licencees, supervision had to be provided \nas it was a regulatory measure. In this context also, it was \nclarified that the denatured spirit is a spirit which is not fit for \nhuman consumption and non-potable, and was also called as \n“other commercial spirits” under the rules in question, as they \nare used for industrial purposes or any other purpose other \nthan human consumption as a beverage. This was opposed to \npotable liquor which is fit for human consumption. It was finally \nobserved that in respect of such distilleries having composite \nlicencees, the State will have to provide the cost of supervisors \nand the same could not be foisted on such distilleries. \n\n10.8 Jeevan Reddy, J., in Bihar Distillery, also held that insofar \nas “intoxicating liquors or potable liquors” are concerned, \nthey fall in the exclusive province of the State. However, \nalcohol can be used for the industrial purposes even without \ndenaturing it. Significantly, it was held that Entry 8 - List II uses \nthe expression “intoxicating liquors” which signifies “liquor for \nhuman consumption”. The absence of the words “for human \nconsumption” in Entry 8 – List II is irrelevant as the word \n“intoxicating” signifies human consumption, i.e., as a beverage \nand all aspects of its production, manufacture, possession, \ntransport, sale and purchase of “intoxicating liquors” are covered \nunder the said Entry. Also the accidental error in para 85 of the \nSynthetics and Chemicals (7J) was explained to say that all \n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f2112 \n\n[2024] 10 S.C.R.\n\n10.9 \n\npotable liquor shall be governed by Entry 8 - List II which is \nwithin the exclusive domain of the State. Further, Entry 8 - List II \nis outside the purview of Entry 24 - List II and the Union cannot \ntake control of “intoxicating liquors” by making a declaration in \nterms of Entry 52 - List I. It was further observed that Synthetics \nand Chemicals (7J) mainly dealt with “industrial alcohol”, i.e., \ndenatured rectified spirit. \n\nIn Bihar Distillery, this Court further observed that the States \nhave the power to legislate under Entry 33(a) – List III provided \nthe field is not occupied by the Union. That there was a clear \nline of demarcation at the stage of removal or clearance of \nthe product, i.e., if the clearance is for “industrial” purpose, \nthe duties of excise and all other control is with the Union but \nif the removal or clearance is for obtaining or manufacturing \n“potable liquor”, the levy of duty and other control is with the \nState. It was observed that there was a need for joint control \nand supervision of the process of manufacture of rectified \nliquor and its use and disposal for ensuring that “industrial \nalcohol” was not misused by diverting it for potable purpose \nand consequently certain concrete observations were made \nin the said judgment which is of a binding nature. \n\n10.10 The challenge to the notification issued by the excise \ncommissioner, Uttar Pradesh dated 18.05.1990 was a subject \nmatter of controversy in Vam Organic I, in the context of \nlegislative competence of the State of Uttar Pradesh to \nimpose tax or levy on “industrial alcohol”, ethyl alcohol and \nrectified spirit. It was observed that the expression “industrial \nalcohol” is not used in any of the three Lists of the Seventh \nSchedule of the Constitution. Referring to Synthetics and \nChemicals (7J), this Court observed that the judgment \nin the aforesaid case proceeded to consider that rectified \nspirit was the ingredient for “intoxicating liquors” or alcoholic \nliquors for human consumption. The same was referred to \nas “industrial alcohol” in respect of which the State has no \npower whatsoever under Entries 8 and 51 – List II, while \nthe States have the exclusive competence to legislate \non “intoxicating liquors” or “alcoholic liquors for human \nconsumption” but if any alcoholic preparation is diverted for \nhuman consumption, the States would have the power to \nlegislate under Entry 8 - List II. \n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n2113\n\n10.11 Again, Jeevan Reddy, J. speaking for the Court in Bihar \nDistillery noted that in Synthetics and Chemicals (7J) \na distinction was drawn between rectified spirit meant \nexclusively for industries (“industrial alcohol”) and rectified \nspirit exclusively used for obtaining potable alcohol. The \nsaid judgment did not deal with rectified spirit which could \nbe converted to potable alcohol as such. That insofar as \nthe first category was concerned, it was under the exclusive \ncontrol of the Union and the second category was under the \ncontrol of the State at all stages including the establishment \nof the distillery. \n\n10.12 In Vam Organic II, the history of the legislations on “intoxicating \nliquors” as well the earlier judgments of this Court were \nconsidered and it was observed that the State Legislatures \nare constitutionally not competent to levy tax on “industrial \nalcohol” since the coming into force of the IDRA on 08.05.1952. \nIt was opined that Synthetics and Chemicals (7J) continued \nto hold the field and therefore, the States’ power was limited \nto regulation of non-potable alcohol for the limited purpose \nof preventing its use as alcoholic liquors.\n\nFurther Analysis:\n\n11. The survey of the aforesaid decisions of this Court and their analysis \nclearly indicate the golden thread of continuity in all of them, i.e., this \nCourt has been clear on what is meant by the expression “industrial \nalcohol” as simplified to refer to all alcohol which is “not fit for human \nconsumption as a beverage or non-potable alcohol”. By contrast, \nthe use of the expression “potable alcohol” refers to “intoxicating \nliquors” used for human consumption as a beverage or as a drink. \nHowever, in paragraph 85 of Synthetics and Chemicals (7J) the \nexpression “both potable and” is an inadvertent insertion inasmuch \nas there was no reason to state that licences to manufacture potable \nalcohol was vested in the Central Government. Therefore, to that \nextent the judgment in Synthetics and Chemicals (7J) calls for a \nclarification. Apart from that the following points would emerge from \nparagraph 85:\n\n(i) \n\nThat, on insertion of Item 26 of the First Schedule to IDRA, \nthe control of “Fermentation Industries” has vested exclusively \nin the Union.\n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f2114 \n\n[2024] 10 S.C.R.\n\n(ii) \n\n(iii) \n\nTherefore, even the States cannot themselves manufacture \n“industrial alcohol” without the permission of the Central \nGovernment.\n\n“Industrial alcohol” cannot be amenable to States’ claim to \npossession of exclusive privilege and the States can neither \nrely on Entry 8 – List II nor Entry 33 – List III as a basis for \nsuch claim.\n\n(iv) The States cannot claim that under Entry 33 – List III, it can \nregulate “industrial alcohol” as a product of the scheduled \nindustry as the Union under Section 18G of the IDRA has \nevinced a clear intention to occupy the whole field. The doctrine \nof occupied field under Article 254 has been applied in the said \ncase which shall be adverted to later. \n\n(v) Any exercise of power by the States under Entry 8 – List II is \n\nnot an exercise of power under Entry 33 – List III. \n\n11.1 The aforesaid judgments state that insofar as “intoxicating \nliquors” or potable liquors are concerned, Entry 8 - List II is \nthe regulatory Entry while Entry 51 - List II is the taxation Entry \nwhich provides for imposition of excise duty on potable liquor \nalso called alcoholic liquors for human consumption. Conversely, \ninsofar as “industrial alcohol” is concerned, the control of the \nsaid industry is vested with the Union owing to Section 2 of \nthe IDRA read with the other provisions of the said Act, which \nenactment has been made by virtue of Entry 52 - List I. That \nthe Union has taken under its control “Fermentation Industries” \nas per Item 26 of the First Schedule to the IDRA which has \nbeen enacted by the Parliament in relation to Entry 52 - List I \nexcluding “intoxicating liquors”. “Fermentation Industries” relates \nto various products manufactured, processed, etc. as a result \nof fermentation process. Such products of fermentation are \nbroadly classified as “industrial alcohol” (non-potable alcohol) \nand “intoxicating liquors” (potable alcohol). This classification \nis for the purpose of identifying the nature of the product, its \nuse in the industry and consequently, dividing the subject of the \nlegislation between the Parliament and the State Legislature. \n\n11.2 The aforesaid decisions also indicate that merely because \n“industrial alcohol” or non-potable alcohol such as rectified \nspirit can be converted into “intoxicating liquors” or alcohol fit \n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n2115\n\nfor human consumption as a beverage (potable alcohol), that \nwould not empower the State Legislature to tax or impose any \nlevy on such “industrial alcohol”. However, since the expression \n“intoxicating liquors” in Entry 8 - List II deals specifically with \nalcohol used as a beverage and meant for human consumption, \nit would be within the scope and ambit of the said Entry for \nthe State Legislature to regulate any abuse or conversion of \n“industrial alcohol” as a beverage, which is, in fact, harmful \nwhen consumed. Therefore, having regard to Article 47 of the \nConstitution, a State Legislature can even prohibit manufacture \nof “intoxicating liquors” in a State as one of the objects of \nwhich would be to negate the conversion or abuse of “industrial \nalcohol” as alcohol fit for human consumption. \n\n11.3 The judgment of this Court in Synthetics and Chemicals \n(7J), was also clear about the controversy before it, namely, \nthe competence of the Uttar Pradesh State Legislature to \nimpose vend-fee on “industrial alcohol” when the same is a \nproduct of “Fermentation Industries” and, therefore, under the \ncontrol of the Union.\n\n11.4 However, the sum and substance of the controversy has to \nbe answered by this Court on the premise that, despite there \nbeing clarity in the minds of the authorities under the States \nas well as the Centre, repeated imposition of imposts in the \nform of tax or excise duties etc., have brought several cases \nbefore this Court for adjudication. Ultimately, those who are \nin the business of “industrial alcohol” or “intoxicating liquors”, \nnamely, non-potable and potable liquor respectively are clear \nabout the nature of their business and the products that they \nare dealing with. Hence, I feel that it is incumbent for this \nCourt to enhance the clarity and not create a further legal \nregime which would cause confusion and legal uncertainty \nin the economy. \n\nMeaning of “intoxicating liquors”:\n\n12. Before embarking on an enquiry in this Reference to understand \nthe scope of the expression “intoxicating liquors” as it appears in \nEntry 8 – List II, it would be useful to highlight that this Court has \nrelied on pre-constitutional legislations and the Constitution of India \nwhile interpreting the scope of the expression “intoxicating liquors”.\n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f2116 \n\n[2024] 10 S.C.R.\n\n12.1 At the outset, I may refer to Cooley’s “Constitutional Limitations” \n[2nd ed. Boston : Little, Brown & Company, p.58], wherein it \nis explained as follows:\n\n“In interpreting clauses we must presume that words \nhave been employed in their natural and ordinary \nmeaning. Says Marshall, Ch. J.: “The framers of the \nConstitution, and the people who adopted it, must \nbe understood to have employed words in their \nnatural sense, and to have understood what they \nmeant.” This is but saying that no forced or unnatural \nconstruction is to be put upon their language; and \nit seems so obvious a truism that one expects to \nsee it universally accepted without question; but the \nattempt is so often made by interested subtlety and \ningenious refinement to induce the courts to force \nfrom these instruments a meaning which their framers \nnever held, that it frequently becomes necessary to \nre-declare this fundamental maxim.”\n\n(underlining by me)\n\nTherefore, one task before this Court is to ascertain to what extent \n“intoxicating liquors” had acquired a natural and ordinary meaning \nat the time of the Constitution coming into force. \n\n12.2 I may note another cardinal rule of interpretation explained by \nSir Maurice Gwyer C.J., of the Federal Court of India in In Re: \nthe Central Provinces and Berar Act No. XIV of 1938, 1939 \n1 FCR 80, while discussing the principles of interpretation of \na constitutional provision as under:\n\n“I conceive that a broad and liberal spirit should \ninspire those whose duty it is to interpret it; but I \ndo not imply by this that they are free to stretch \nor pervert the language of the enactment in the \ninterests of any legal or constitutional theory, or \neven for the purpose of supplying omissions or of \ncorrecting supposed errors. A Federal Court will not \nstrengthen, but only derogate from, its position, if it \nseeks to do anything but declare the law; but it may \nrightly reflect that a Constitution of a Government is \na living and organic thing, which of all instruments \n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n2117\n\nhas the greatest claim to be construed ut res magis \nvaleat quam pereat.”\n\n12.3 The learned Chief Justice Dr. Chandrachud, in his opinion has \nconducted an extensive inquiry into identification of legislative \nmeaning of the phrase and its legislative history, but found \nthat no conclusive answer can be reached on the legal import \nof “intoxicating liquors”. With due respect, I view that such \nan enquiry needs to give due primacy to the ordinary and \nnatural meaning of words and also test their connotations in \ncolloquial use by the Constitution makers so as to give it a \nconstitutional flavour. \n\nA Historical Perspective:\n\n12.4 A historical enquiry would show that “intoxicating liquors” \nwas first used in Entry 31 – List II in the Government of India \nAct, 1935. This was a departure from the legislative head in \nDevolution Rules framed under the Government of India Act, \n1919 insofar as the Entry therein was “alcoholic liquor”. The \nrevisions in List II of Government of India Act, 1935 were \npartly the product of a Joint Select Committee chaired by Lord \nLinlithgow. Later, the word “liquors” was also qualified by the \nword “intoxicating”.\n\n12.5 I may briefly refer to the following remarks of Brewer, J. in \nSouth Carolina vs. United States (1905) 199 US 437 (“South \nCarolina”):\n\n“To determine the extent of the grants of power, we \nmust, therefore, place ourselves in the position of \nthe men who framed and adopted the Constitution, \nand inquire what they must have understood to be \nthe meaning and scope of those grants.”\n\n12.6 In this backdrop, it is useful to draw sustenance from certain \ncontemporaneous legislations and Hansard records that go \nto show that the phrase “intoxicating liquors” was used in the \ncontext of consumption. On 30.04.1889, the House of Commons \non a motion moved by Mr. S. Smith to discuss how the fiscal \nsystem of the Government of India led to the establishment \nof spirit distilleries, liquor and opium shops in a large number \nof places where till recently (from the date of question) they \n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f2118 \n\n[2024] 10 S.C.R.\n\nnever existed had several references to “intoxicating liquors” \nexclusively in the context of consumption. On 29.06.1904, Mr. \nHerbert Roberts, a person interested in temperance asked the \nSecretary of State for India whether he was aware that the \nnumber of ‘shops open for the sale of “intoxicating liquors” \nand drugs in India rose from 97,910 in 1901–02 to 99,497 \nin 1902–03’ and whether he was in a position to explain the \nreasons for this increase in the number of shops opened and \nthe consequent increase in consumption. Most interestingly, \non 13.07.1937, in a sitting of the House of Lords, Lord Clwyd \n(formerly Mr. Herbert Roberts) asked the Secretary of State \nfor India the following question:\n\n“To ask His Majesty’s Government what was the \namount in pounds sterling of the net Excise revenue \nof India for the years 1933–1934, 1934–1935 and \n1935–1936 respectively; what was the recorded \nconsumption of country spirits in 1935–1936 in \nBengal, Madras, Bombay, Sind, Bihar and Orissa, the \nUnited Provinces, the Punjab, the North-West Frontier \nProvince, the Central Provinces and Berar, Assam and \nBurma respectively; what was the number of shops \nlicensed for the sale of intoxicating liquor, the net \namount of Excise revenue, and the cost of Excise \nadministration in each Province in 1930–1931 and \n1935–1936; and what was the percentage of Excise \nrevenue compared with the total revenue accruing \nto the Provincial Governments in each case for the \nyear 1935–1936.”\n\n12.7 This enquiry reflects that “intoxicating liquors” has not only been \na term of common parlance but was also used in administration \nfor assessment and regulation of consumption of spirits in \nprovinces in pre-independence India from the point of view of \ncollection of revenue.\n\nConstituent Assembly Debates: \n\n12.8 I might also take persuasive strength from the use of the \nexpression “intoxicating liquors” in Constituent Assembly \nDebates in the context of Article 47. Sri B.G. Kher speaking \non the ruin caused by the consumption of alcohol noted the \nuse of “intoxicating liquors” and drugs as a vice. \n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n2119\n\n12.9 The aforesaid discussion points to the fact that there was \na consumption-oriented meaning attached to “intoxicating \nliquors” that was used for legal and administrative purposes. \nTo ascertain the breadth of the phrase “intoxicating liquors” \nas it was used by the draftsmen of the Constitution and the \nGovernment of India Act, 1935 one cannot be bound by \nonly the definitions provided in legislative enactments, or \nlack thereof. \n\n12.10 The Constitution of India clearly employs three distinct \n\nexpressions relevant to the present controversy:\n\n(a) Entry 51 - List II refers to duties on ‘alcoholic liquors \n\nfor human consumption’;\n\n(b) Article 47 uses the words “consumption of ‘intoxicating \n\ndrinks’”; and\n\n(c) Entry 8 – List II uses the words in question – “intoxicating \n\nliquors”\n\n12.11 I may observe that the expression “alcoholic liquors for \nhuman consumption” as it appears in Entry 51 – List II and \nintoxicating drinks as it appears in Article 47 have been \ncategorically used in the context of human consumption as a \nbeverage, as rightly observed by the learned Chief Justice in \nhis opinion. Herein, I might note that appellants have sought to \ncontend that the expression “intoxicating liquors” as it appears \nin Entry 8 – List II has no explicit neighboring context which \nwould indicate that it is restricted to mean only potable liquor. \n\n12.12 The first interpretive question therefore is, whether the absence \nof the context of consumption expands “intoxicating liquors” \nto also include “industrial alcohol”. In my opinion, the words \n“intoxicating liquors” itself explains that Entry 8 – List II does \nnot seek to travel beyond “intoxicating liquors” meant for \nhuman consumption i.e., potable alcohol. This was also the \nview of Jeevan Reddy, J. in Bihar Distillery.\n\n12.13 Another distinguishing consideration is the use of “intoxicating” \nas an adjective to liquor i.e., as a qualifier whereas elsewhere \nin the Constitution the word “alcoholic” accompanies the word \nliquor. Learned Chief Justice has carefully found following \nthree inferences which are summarized as under: \n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f2120 \n\n[2024] 10 S.C.R.\n\na) \n\nIngredient vs. Effect: “Alcoholic liquor” defines the scope \nof the provision based on the ingredient, that is, alcohol \nwhereas “intoxicating liquors” defines the scope based \non effect i.e. intoxication. Therefore, liquor which is not \ncolloquially considered alcoholic liquor may be covered \nby the phrase “intoxicating liquors”.\n\nb) Broader intent: ‘Intoxicate’ means either the ability of \nsomeone to lose control of their behavior or poison. Thus, \nthe purpose of substituting the adjective which indicates \nthe impact with the ingredient seems to have enhanced \nthe scope of the Entry to cover all liquor which has an \nimpact on health; and\n\nc) Public interest purpose: There is a discernible public \ninterest in covering the entire stage from production to \nsale of “intoxicating liquors”. Additionally, Entry 31 – List II \nin the Government of India Act, 1935 also regulated \nnarcotic drugs and opium along with “intoxicating \nliquors”. However, references to them were deleted to \nprevent overlapping with entries in the Concurrent List. \nIn substance, the inference that is drawn is that all – \nalcohol, narcotic drugs and opium – are products which \ncan be noxiously used because they are also used as \nraw materials in the production of other products.\n\n12.14 What prima facie appears is that the “intoxication” effect is a \nsine qua non for the legislative competence of States on any \nliquors potentially coming within the scope of Entry 8 – List \nII. In the absence of an “intoxicating” effect from liquors, a \nState Legislature cannot legislate on the subject. However, \nin my view, what is required to be seen is the nature of the \nproduct which leads to such an intoxicating effect upon human \nconsumption of the same. Here, the expression consumption \nmust be explained. It is not all kinds of human consumption, \ndirect or indirect, which is the determining factor. It is only direct \nconsumption i.e. as an ingestion by the act of drinking as a \nbeverage or a drink. An indirect consumption by use of alcoholic \nliquors as a raw material for any other product, industrial, \nmedicinal or a toilet item cannot be included as part of Entry \n8 – List II. Secondly, merely because there can be a potential \nmisuse of “industrial alcohol”, for example, by converting \n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n2121\n\nrectified spirit (“industrial alcohol”) as a beverage which has \nan intoxicating effect, Entry 8 – List II cannot be stretched \nto include such “industrial alcohol”. The prevention of abuse \nof “industrial alcohol” as a beverage is also covered under \nEntry 8 – List II. Thus, what is carved out of “Fermentation \nIndustries” in Entry 24 – List II is only “intoxicating liquors” \nused as beverage and thus, for direct human consumption \nthe said subject is placed in Entry 8 – List II. This would imply \nthat the rest of “Fermentation Industries” would be within the \nscope and ambit of Entry 24 – List II which is subject to Entry \n52 – List I and is a scheduled industry as per Section 2 read \nwith Item 26 of First Schedule of IDRA.\n\n12.15 One must also be cognizant of the fact that Entry 8 – List II \nconcerns itself with “intoxicating liquors” even from a historical \nperspective. Constitutional framers were not engaged in a \ntheoretical task of demarcating legislative fields but in their \nutmost wisdom and pragmatism distributed legislate fields \nbetween Parliament and State Legislatures that would continue \nto determine the governance of the nation. One must note \nthat a construction of Entry 8 – List II should not potentially \ngive the States the legislative competence to legislate on \n“industrial alcohol” which is a scheduled industry under IDRA. \nThat Entry 8 – List II which deals with “intoxicating liquors” \ncannot also subsume industries for manufacture of “industrial \nalcohol”, etc. \n\n12.16 Therefore, in deciding on “intoxicating liquors”, the contours \nof interpretation must be concerned only with the very nature \nof the product of “intoxicating liquors” rather than the entire \nindustry concerning alcohol. Entry 8 – List II provides the \nlegislative competence to States to regulate production, \nmanufacture, possession, transport, purchase and sale of \nonly “intoxicating liquors”. It must follow from this that what is \nbeing produced or manufactured or possessed or transported \nor purchased or sold must actually be “intoxicating liquors” \nand not any other alcoholic product. \n\n12.17 Halsbury’s Laws of England (Fourth Edition), Volume 26 \ndefines the meaning of “intoxicating liquors” as discussed in \nthe context of the distinction between wholesale and retail \ntrade. It is stated that “Dealing wholesale” means “the sale at \n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f2122 \n\n[2024] 10 S.C.R.\n\nany one time to any one person of not less than two gallons \nor one case of spirits, wine or made-wine, or not less than \nfour and a half gallons or two cases of beer”. “Selling by \nretail” means “the sale at any one time to any one person \nof not more than two gallons or one case of spirits, wine or \nmade-wine or not more than four and a half gallons or two \ncases of beer or cider”. The following definitions are apposite:\n\n(i) \n\n(ii) \n\n(iii) \n\n“Spirits” is defined to mean spirits of any description and \nincludes all liquors mixed with spirits and all mixtures, \ncompounds and preparations made with spirits, but does \nnot include methylated spirits : Customs and Excise \nAct, 1952. \n\n“Wine” means liquor obtained from the alcoholic \nfermentation of fresh grapes or the must of fresh grapes, \nwhether or not it is fortified with spirits or flavoured with \naromatic extracts. \n\n“Made-wine” means any liquor obtained from the alcoholic \nfermentation of any substance or by mixing a liquor so \nobtained or derived from a liquor so obtained with any \nother liquor or substance, but does not include wine, \nbeer, black beer, spirits or cider. This definition replaced \nan earlier one in different terms of “British wine”.\n\n(iv) The definition of “beer” includes ale, porter, stout and any \nother description of beer and any other liquor which is \nmade or sold as a description of beer or as a substitute \nfor beer which on analysis of a sample at any time is \nfound to be of a strength exceeding two degrees of \nproof, but does not include liquor made elsewhere than \nupon the licenced premises of a brewer for sale which \non analysis of a sample at any time is found to be of \nan original gravity not exceeding 1,016 degrees and to \nbe of a strength not exceeding two degrees of proof : \nCustoms and Excise Act, 1952.\n\n(v) \n\n“Intoxicating liquors” means spirits, wine, beer, cider and \nany fermented, distilled or spiritous liquor but (apart from \ncider) does not include any liquor for the sale of which \nby wholesale no excise licence is required : Licensing \nAct, 1964.\n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n2123\n\n(vi) “Cider” means cider or perry of a strength less than 8.7 \nper cent of alcohol by volume at 20 degrees Centigrade \nobtained from the fermentation of apple or pear juice \nwithout the addition at any time of any alcoholic liquor or \nliquor or substance which communicates colour or flavour \nother than such as the Commissioner of Customs and \nExcise may allow as appearing to them to be necessary \nto make cider or perry : Customs and Excise Act, 1952.\n\n(vii) “Intoxicating liquors other than spirits” includes beer, \n\nwine, made-wine and cider.\n\n12.18 It may also be useful to outline some undisputed elements of \n“industrial alcohol”. It is an undisputed position that “industrial \nalcohol” is not meant to be consumed as a human beverage. In \nother words, it is not produced or manufactured to be meant for \ndirect human consumption as a beverage. However, only when \nmisused, as an intoxicating substance after some treatment, \nhowsoever limited, “industrial alcohol” certainly could cause \nthe “intoxicating” effect on direct human consumption. \n\n12.19 Two distinguished interpretations have been contended before \nus. In effect, the respondents contend that “intoxicating liquors” \nmust be so constructed that it includes only “liquors which are \nmeant to intoxicate” as is. Per contra, the appellants contend \nthat it is a cardinal rule of interpretation that legislative Entries \nbe given the widest possible construction and therefore \nEntry 8 – List II should be read as “liquors which can intoxicate \neven when mischievously used”. The effect of the appellants’ \nconstruction is that Entry 8 – List II will give States the \nlegislative field on “industrial alcohol”, which by design is not \nsought to be intoxicating but rather could intoxicate because \nof its misuse. \n\n12.20 Before proceeding further, I may first note a notable feature \nof the phraseology of Entry 8 – List II of the Constitution \nof India and Entry 40 – List II, as Entry 8 appeared in the \nDraft Constitution. Neither in the Constitution nor in the Draft \nConstitution was there any other Entry in List II that used an \nadjective as a qualifier. Whether use of the word “intoxicating” \nenlarges or limits the scope of “liquors” is something that \nneeds to be answered. Herein, “intoxicating” is an adjective \nthat is adjoined to “liquors” and explains an effect that is \n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f2124 \n\n[2024] 10 S.C.R.\n\ncaused. In this regard, learned Solicitor General contended \nthat “intoxicating” has been used to expand beyond the limits of \n“alcoholic liquors” because States have an interest in regulating \nother “intoxicating liquors” such as bhang. It needs no labour \nthat an “intoxicating” effect can be said to be caused only \nupon actual consumption by human beings. Unlike potable \nalcohol, “industrial alcohol” by its design, intent and purpose \nis neither sought to be consumed and cause an intoxicating \neffect nor is it produced keeping in mind its intoxicating effect \non human beings. If we were to read “industrial alcohol” as \n“intoxicating liquors” which even though by design is neither \nsupposed to be consumed nor have an effect on health but \nhas the constituents that could be “intoxicating” when misused, \nit would enable a cumbersome interpretational plane.\n\n12.21 It is useful to allude to the sine qua non of Entry 8 – List II \ni.e. the intoxicating effect. In my view, the sine qua non of \nEntry 8 – List II i.e. the “intoxicating” effect of liquor has to be \nread as (i) an effect, and (ii) an intended effect of the industry \nand its products. One might argue that even “industrial alcohol” \ndue to its very constituents could cause an intoxicating effect, \nwhen mischievously consumed, albeit with dire consequences. \nHowever, such an argument ignores that the fundamental \nnature of “industrial alcohol” is that it is non-potable i.e. when \nput to its actual use, neither is it intended to be consumed by \nhuman beings as a beverage nor, as a corollary, is sought \nto cause an “intoxicating” effect on human beings. “Industrial \nalcohol” can be said to cause an “intoxicating” effect only \nwhen it is mischievously directed away from its actual purpose \nand use and towards human consumption. To accept such \na rationale for interpreting Entry  8 – List II would lead to \nan anomalous situation wherein the marginal mischievous \nuse of “industrial alcohol” would bring in the whole industry \nof “industrial alcohol” to Entry 8 – List II and take it out of \nEntry 24 – List II viz. “industrial alcohol” which is not always \nmeant to intoxicate a human being but could only sometimes \nwhen used mischievously or abused would wholly become \na legislative field for States to legislate. It is to avoid such \nan abuse that States have the powers to prevent by suitable \nlegislative and administrative measures, as has been held in \nthe aforesaid decisions of this Court. \n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n2125\n\n12.22 Viewed from another perspective, the exception (mischievous \nuse) cannot lead to governing of the norm (original intended \nuse) through such construction of Entry 8 – List II. Put into \npractice, this would translate into legislative regulation of \nproduction, manufacture, possession, transport, purchase \nand sale of the entire industry and product of “industrial \nalcohol” only because of its possible misuse or mischievous \nuse. This reading would be tantamount to attaching to the \nconstitutional intent an absurdity i.e. the part governing the \nwhole or in other words, bringing within the ambit of Entry \n8 – List II something which is an exception as a main aspect \nof the Entry. A careful revisit pertinent at this point would be to \nparagraph 86 of Synthetics and Chemicals (7J), wherein it \nwas held that States continue to have legislative competence \nto ensure that non-potable alcohol is not misdirected to potable \nalcohol. That is different from saying that States have the right \nto regulate “industrial alcohol” or non-potable alcohol. A power \nto legislate as to the principal matter specifically mentioned in \nthe Entry also includes within its expanse, legislation touching \nincidental and ancillary matters. However, ancillary matters \nby a backdoor cannot be included within the Entry, beyond \nwhat is covered as the principal. Herein, the ancillary matter \nbeing prevention of mischievous use of “industrial alcohol” \nwould be within Entry 8 – List II but “industrial alcohol” as \nsuch would not be included.\n\nHence, the analysis of the relevant Entries in the three Lists \nmust be in the backdrop of the aforesaid discussion.\n\nAnalysis of relevant Entries in the three Lists:\n\n13. While analysing Entry 52 – List I which deals with industries, the \ncontrol of which by the Union is declared by Parliament by law to \nbe expedient in public interest, it would be useful to refer to Entries \n7 and 54 – List I. What is common in all these three Entries is that \nthere is a declaration made by the Parliament. Entries 7, 52 and \n54 – List I read as under:\n\n“7. Industries declared by Parliament by law to be necessary \nfor the purpose of defence or for the prosecution of war.\n\nxxx\n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f2126 \n\n[2024] 10 S.C.R.\n\n52. Industries, the control of which by the Union is declared \nby Parliament by law to be expedient in the public interest.\n\nxxx\n\n54. Regulation of mines and mineral development to the \nextent to which such regulation and development under \nthe control of the Union is declared by Parliament by law \nto be expedient in the public interest.”\n\n13.1 What is common between Entry 52 – List I and Entry 54 – \nList I is the fact that control of industries or regulation and \ndevelopment of mines and mineral development respectively \nis to the degree or extent under the control of the Union \nwhich is expressed by a declaration made by Parliament by \nlaw to be expedient in the public interest. Thus, under Entry \n52 – List I, the intent to control an industry: (i) by the Union; \n(ii) by a declaration by Parliament by law; and (iii) which law \nis expedient in the public interest are the key phrases to be \ntaken note of. Thus, if there is a declaration by Parliament \nby law (such as IDRA) to control any of the industries by the \nUnion, such as “Fermentation Industries” which is expedient \nin the public interest then, to the extent of such control, the \nindustries would be covered under Entry 52 – List I. This is \nalso evident on a reading of Entry 24 – List II which also deals \nwith the field of legislation being “industries” subject to the \nprovision of Entries 7 and 52 – List I. As already noted above, \nEntry 7 – List I pertains to industries declared by Parliament \nby law to be necessary for the purpose of defence or for the \nprosecution of war. Entry 52 – List I deals with “industries”, \nthe control of which by the Union is declared by Parliament \nby law to be expedient in the public interest.\n\n13.2 In Ishwari Khetan, the facts were that the Governor of Uttar \nPradesh promulgated an Ordinance on 03.07.1972, styled \nas U.P. Sugar Undertaking (Acquisition) Ordinance, 1971, \nwith a view to transferring and vesting sugar undertakings \nset out in the Schedule to the Ordinance in the U.P. State \nSugar Corporation Limited, a Government Company within \nthe meaning of Section 617 of the Companies Act, 1956. \nSubsequently, the Ordinance was repealed and replaced by \nan Act. The Schedule to the Act enumerated twelve sugar \nundertakings which stood transferred to and vested in the \n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n2127\n\nCorporation w.e.f. 03.07.1971, the date on which the Ordinance \nwas issued. Writ Petitions were filed before the Allahabad High \nCourt challenging the constitutional validity of the Ordinance as \nwell as the Act on various grounds. The Division Bench of the \nHigh Court had repelled the contentions advanced on behalf \nof the petitioners therein and upheld the constitutional validity \nof the Act. Before this Court, the main thrust of the attack was \nthat the U.P. Legislature lacked legislative competence to enact \nthe impugned Act. This was because under Entry 52 – List I \nthe Parliament had made the requisite declaration in Section \n2 of the IDRA and in view of Item 25 of the First Schedule \nto the Act i.e. sugar, being a declared industry therein, that \nindustry was excluded from Entry 24 - List II. Hence U.P. State \nLegislature was denuded of all legislative power to legislate \nin respect of sugar industry and the impugned legislation was \nvoid on account of legislative incompetence. \n\n13.2.1 D.A. Desai, J. for himself and on behalf of V.R. \nKrishna Iyer and S. Murtaza Fazal Ali, JJ. wrote \nfor the majority. This Court analysed the relevant \nEntries keeping in view the legislative perspective \nand historical background through which Entries 7 \nand 52 – List I, Entry 24 - List II and Entry 33 - List \nIII, inter alia, had passed through. Considering Entry \n52 – List I and Entry 24 - List II, it was observed that \n“industry” as a head of legislation is to be found in \nEntry 24 - List II with the limitation that it is subject to \nEntries 7 and 52 - List I. The difference in the language \nin which Entries 7 and 52 - List I is couched has a \nbearing on the interpretation of Entry 52 - List I. The \nsubject “industry” being enumerated in List II, the \nState Legislature has power to legislate in respect to it \nand keeping aside the words “subject to the provision \nof Entries 7 and 52 of List I”, the State Legislature \nalone can legislate in respect of the legislative head \n“industry”. Ipso facto Parliament would have no power \nto legislate in respect of industry as a legislative head. \nUnder Entry 52 - List I, unless and until a declaration \nis made by Parliament by law to assume control over \nspecified industries, the embargo on the power of \nParliament to legislate in respect of industry would \n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f2128 \n\n[2024] 10 S.C.R.\n\nnot be lifted. The declaration has to be made by \nParliament by law to assume control over specified \nindustry in public interest. Thus, the extent of control \nwould be known by the declaration so made by law. \nThis would necessarily depend upon the legislation \nenacted spelling out the degree of control assumed \nwhich is a pre-requisite for assuming control over \na specified industry. As a result to that extent, the \nState Legislature would be denuded of its powers to \nlegislate under Entry 24 - List II. It was contended that \nthe industry in respect of which control is assumed for \nthe purpose of their development and regulation have \nbeen set out in the First Schedule and in the manner \nprovided in the statute i.e. IDRA which also provides \nthe limit of control to the extent mentioned in the said \nAct. It was contended that Section 2 has to be read \nalong with the Act and not read de hors the Act. This \nwould mean the provision of the Act would make the \ncontrol concrete and specific and the manner in which \nexercise has to be laid down and not some abstract \ncontrol. Thus, the control has to be concrete and the \nmode and method of its exercise must be regulated \nby law. That under the IDRA, Sections 3 to 30 set \nout various modes and methodology, power and \nprocedure to effectuate the control which the Union \nacquired by virtue of the declaration contained in \nSection 2 of the IDRA. On these contentions, it was \nobserved that absence of the words “to the extent \nherein provided” in Section 2 of the IDRA would not \nlead to the conclusion that the control assumed was \nto be something in abstract, total and unfettered and \nnot as per the provisions of the IDRA. It was thus held \nthat to the extent Union acquired control by virtue of \ndeclaration in Section 2 of the IDRA as amended from \ntime to time, the power of the State Legislature under \nEntry 24 - List II to enact any legislation in respect \nof declared industry so as to encroach upon the field \nof control occupied by IDRA would be taken away.\n\n13.2.2 \n\nIn this regard, reliance was placed on Baijnath Kedia \nvs. State of Bihar, AIR 1970 SC 1436 (“Baijnath \n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n2129\n\nKedia”). Thus to the extent the provision of the \nIDRA occupies the field, the State Legislature stands \ndenuded of its power to legislate in respect of such \ndeclared industry. Examining the provision of the \nIDRA, it was held that in pith and substance, the \nimpugned Act was one for acquisition of scheduled \nundertakings to the corporation, which would in no \nway come in conflict with any of the provision of the \nIDRA or would not trench upon any control exercise \nby the Union under the various provisions of the IDRA. \nThat the IDRA is not concerned with the ownership of \nindustrial undertaking in declared industry except the \ncontrol over the management of the undertaking by the \nowner. Thus the legislative power of the State under \nEntry 24 - List II is eroded only to the extent control is \nassumed by the Union pursuant to a declaration made \nby the Parliament in respect of a declared industry as \nspelt out by the legislative enactment and the field \noccupied by such enactment is the measure of erosion. \nSubject to such erosion, on the remainder the State \nLegislature will have power to legislate in respect of a \ndeclared industry without in any way trenching upon \nthe occupied field. It was held that State Legislature \nwhich is otherwise competent to deal with industry \nunder Entry 24 – List II can deal with that industry \nin exercise of other powers enabling it to legislate \nunder different heads set out in Lists II and III and \nthis power cannot be denied to a State. The second \nlimb of the submission therein is not related to the \npresent controversy and need not be adverted to. It \nwas finally observed that the impugned Act was not \nintended to take over management or control of any \nindustrial undertaking by the State Government as \nin pith and substance, it was enacted to acquire the \nscheduled undertakings in terms of Entry 42 – List III. \n\n13.2.3 \n\nIn Ishwari Khetan, Pathak, J. (as he then was) for \nhimself and for Koshal, J. (minority view) observed that \nwhile they broadly agreed with the final conclusion, on \nseveral points, reached by Desai, J. in his judgment, \nthey preferred to refrain from expressing any opinion \n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f2130 \n\n[2024] 10 S.C.R.\n\non the question whether the declaration made by \nParliament in Section 2 of the IDRA in respect of the \nindustries specified in the First Schedule to that Act can \nbe regarded as limited to removing from the scope of \nEntry 24 - List II only so much of the legislative field as \nis covered by the subject matter and content of that Act \nor it can be regarded as effecting the removal from that \nEntry of the entire legislative field embracing all matters \npertaining to the industries specified in the declaration. \nIt was further opined that the observations made by \nthis Court in Hingir-Rampur Coal Co., Ltd. vs. The \nState of Orissa, AIR 1961 SC 459 (“Hingir-Rampur”); \nState of Orissa vs. M.A. Tulloch and Co., AIR 1964 \nSC 1284 (“M.A. Tulloch”); Baijnath Kedia vs. State \nof Bihar, AIR 1970 SC 1436 (“Baijnath Kedia”); and \nState of Haryana. vs. Chanan Mal, AIR 1976 SC \n1654 (“Chanan Mal”), would not be of assistance in \nthis behalf. In each of those cases, the declaration \nmade by Parliament in the concerned enactment \nlimited the control of the regulation of the mines and the \ndevelopment of minerals to the extent provided in the \nenactment. Whether the terms in which the declaration \nhas been made in Section 2 of the IDRA, a declaration \nnot expressly limiting control of the specific industries \nto the extent provided by the Act, can be construed as \nbeing so limited was a matter which, they thought, should \nbe dealt with in some more appropriate case. That the \nrange of considerations encompassed within the field \nof enquiry to which the point was amenable had not \nbeen sufficiently covered before the Court. “This was \nfor the good reason and, hence, the provocation was \nlimited.” Therefore, the controversy could be adequately \nanswered on the ground that the legislation impugned \ntherein fell within Entry 42 - List III and would not be \nrelated to Entry 52 - List I or Entry 24 - List II. \n\n13.2.4 Therefore, there was a reluctance to enter upon an \nexamination of the mutually competing claims of Entry \n52 - List I and Entry 24 - List II — Entries which deal \nwith “industries”. Consequently, the appeals were \ndismissed. \n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n2131\n\n13.3 When the expression “subject to” is used in an Entry in List II it \nwould imply that the said Entry is subordinate to the respective \nEntries in List I and has to be read along with the relevant \nEntry in List I. Thus, on a conjoint reading of Entry 24 – List \nII with Entry 52 – List I, it is apparent that Entry 24 – List II is \nsubject to Entry 52 – List I. The expression “subject to” in the \nEntries in List II has been a subject matter of interpretation in \nseveral decisions and is of legal import.\n\n13.3.1 As per Black’s Law Dictionary, 5th Edition, Pg.1278, \n“subject to” means “liable, subordinate, subservient, \ninferior, obedient to, governed or affected by.” \n\n13.3.2 The relevant judgments of this Court on the point are \n\ndiscussed as under:\n\na) \n\nb) \n\nIn Hingir Rampur Coal Company vs. State of \nOrissa (1961) 2 SCR 537 (“Hingir Rampur”), \nwhile interpreting the import of the expression \n“subject to” in Entry 23 – List II and the interplay \nof that Entry with Entry 54 – List I, this Court \nobserved as undisputed the position in law that, \nonce a Central Act containing a declaration by \nParliament covering the field is passed as required \nby Entry 54 – List I, the State Legislature had no \nlegislative competence to enact a legislation on \nthe subject that has already been occupied by a \nCentral legislation – not for reason of repugnancy \nbut rather competence at the very inception. \n\nIn Gujarat University vs. Shri Krishna \nRanganath Mudholkar, AIR 1963 SC 703 \n(“Shri Krishna”), this Court was tasked with \ninterpreting Entry 11 - List II, which, although \nstands omitted now, earlier read as ‘Education \nincluding universities, subject to the provisions \nof Entries 63, 64, 65 and 66 of List I and Entry \n25 of List III’. Therein, it was held that use of the \nexpression “subject to” in Entry 11 - List II clearly \nindicated that legislation in respect of excluded \nmatters cannot be made by the State Legislature. \nBy the Constitution (Forty-Second Amendment), \n1976, Entry 11 – List II was omitted, as noted \n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f2132 \n\n[2024] 10 S.C.R.\n\nabove, and Entry 25 – List III was substituted \nas, ‘Education, including technical education, \nmedical education and universities, subject to \nthe provisions of Entries 63, 64, 65 and 66 of \nList I; vocational and technical training of labour.’ \nIn this context, this Court in Baharul Islam vs. \nThe Indian Medical Association, 2023 SCC \nOnLine SC 79 (“Baharul Islam”), while referring \nto Modern Dental College & Research Centre \nvs. State of Madhya Pradesh (2016) 7 SCC \n353 (“Modern Dental College”), explained that \nwhere one Entry is made ‘subject to’ another \nEntry, it means that out of the scope of the former \nEntry a field of legislation covered by the latter \nEntry has been reserved to be specially dealt \nwith by the appropriate Legislature. \n\nc) Similarly, while interpreting the significance of a \nconstitutional provision being subject to another \nin The South India Corporation (P) Ltd. vs. The \nSecretary, Board of Revenue Trivandrum, AIR \n1964 SC 207 (“South India Corporation”), this \nCourt observed that the expression “subject to” \nconveys the idea of a provision yielding place to \nanother provision or other provisions to which it \nis made subject. \n\nd) Helpful reference may also be made to the import \nof “subject to” in legislative uses. In Ashok \nLeyland Ltd. vs. State of Tamil Nadu (2004) \n3 SCC 1 (“Ashok Leyland Ltd.”) this Court \nheld that “subject to” is an expression whereby \na limitation is expressed.\n\n13.4 Having noted as above, it is also crucial to examine the \ninterplay between Entry 52 – List I, Entry 24 – List II and \nEntry 8 – List II. Entry 24 – List I is a regulatory Entry which \nprovides State Legislatures with the competence to legislate on \n“industries” subject to Entry 7 – List I and Entry 52 – List I. In \neffect, Entry 52 – List I enables the Union to take an industry \nout of the legislative competence of States and bring it within \nEntry 52 – List I. In the instant cases, the primary question is \nwhether there is any overlap between Entry 52 – List I and \n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n2133\n\nEntry 8 – List II. In other words, is there any conflict between \nthe exclusive competence of State Legislatures under Entry 8 – \nList II and the regulation of industries the control of which by \nthe Union is declared by Parliament by law to be expedient \nin the public interest under Entry 52 – List I?\n\n13.4.1 \n\nIt is a settled law that the meaning of “industries” in \nEntry 52 – List I and Entry 24 – List II is coextensive. \nTherefore, what is out of Entry 24 – List II will also \nnot be within Entry 52 – List I. In that context, it has \nbeen contended before us that Entry 8 – List II is a \nunique Entry as it is not limited to only the product of \n“intoxicating liquors” but also takes within its sweep the \n“industry” of “intoxicating liquors”. It was also submitted \nthat Entry 8 – List II unlike Entry 24 – List II is not \nsubject to Entries in List – I and therefore the industry \nof “intoxicating liquors” is the exclusive domain of State \nLegislatures. The import of such a position is that if \nEntry 8 – List II is held to be both an industry-based and \nproduct-based Entry, the Entry would empower States \nto legislate on both the product of “intoxicating liquors” \nand production of the product as well. Furthermore, \nas Entry 8 – List II is not subject to Entry 52 – List I, \nthe industry of “intoxicating liquors” will be out of Entry \n24 – List II, and therefore, coextensively under Entry \n52 – List I the Union would not have the legislative \ncompetence to legislate on what lies exclusively within \nEntry 8 – List II.\n\n13.4.2 Learned Chief Justice Dr. Chandrachud in his proposed \njudgment has observed that the Seventh Schedule \ndifferentiates between the industry and product of \nindustry and, even further, Entry 8 – List II is special \nbecause such a distinction made in the general Entries \nis not adopted in Entry 8 – List II. As rightly pointed \nout, it is the potential overlap between Entry 52 – List I \nand Entry 8 – List II which must be resolved herein. \n\n13.4.3 \n\nIn this regard, reference to the dictum of this Court \nin Calcutta Gas Company is apposite, wherein the \ninterpretation between Entries 24 and 25 – List II in \nrelation to Entry 52 – List I was considered. It was \nobserved that Entry 24 – List II in its widest amplitude \n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f2134 \n\n[2024] 10 S.C.R.\n\ntakes in all industries, including that of “gas and gas-\nworks”. So does Entry 25 – List II which comprehends \ngas industry. There is, therefore, an apparent conflict \nbetween the two Entries and they overlap with each \nother. It was observed that in such a contingency the \ndoctrine of harmonious construction must be invoked. \nWhile Entry 24 – List II covers a very wide field, that is, \nthe field of entire industry being within the legislative \ncompetence of the State, Entry 25 – List II dealing with \n“gas and gas-works”, can be confined to a specific \nindustry, that is, the “gas industry”. This was possibly \nbecause only one or two States are concerned with \n“gas industry” and it was not considered to be of an \nall-India importance and therefore, was carved out of \nEntry 24 – List II and given a separate Entry as Entry \n25 – List II, as otherwise if a declaration by law was \nmade by Parliament within the meaning of Entry 7 or \nEntry 52 - List I, gas and “gas industries” would be \ntaken out of the legislative power of States. Therefore, \nby the doctrine of harmonious construction, “gas and \ngas works” were found to be within the exclusive field \nallotted to the States and outside the legislative field of \nParliament. It was further observed that the expression \n“industry” in Entry 52 - List I bears the same meaning \nas that in Entry 24 - List II, with the result that the said \nexpression in Entry 52 - List I also does not take in \nthe industry of “gas and gas works”. If so, it followed \nthat the IDRA, in so far as it purported to deal with the \n“gas industry” is beyond the legislative competence \nof Parliament. \n\n13.4.4 Keeping the aforesaid dictum in mind, it must be \nobserved that Entry 8 – List II being a special Entry \nprevails over the general Entry 24 – List II. Therefore, \nwhile Entry 52 – List and Entry 8 – List II overlap on \nthe aspect of “industry” of “intoxicating liquors”, Entry \n52 – List I cannot takeover the “industry” of “intoxicating \nliquors”. \n\n13.5 Therefore, the next question is whether Entry 8 – List II which \ndeals with “intoxicating liquors”, that is to say, the production, \nmanufacture, possession, transport, purchase and sale of \n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n2135\n\n“intoxicating liquors” is restricted to only alcoholic liquors \nfor human consumption i.e., potable alcohol or it would also \nextend to non-potable alcohol or “industrial alcohol”. In other \nwords, if “industrial alcohol” is read within the meaning of \nEntry 24 – List II then, whether, on account of the declaration \nmade by the Parliament in Section 2 of the IDRA in terms of \nEntry 52 – List I it would be excluded from Entry 24 – List II \nand included under Entry 52 – List I as per the provisions of \nthe IDRA. In other words, the question is whether Entry 8 – \nList II which deals with “intoxicating liquors” would take within \nits scope and ambit “industrial alcohol”?\n\nOne of the ways of answering these questions would be to \ncompare Entry 84 – List I as it stood prior to 16.09.2016 with \nEntry 51 – List II although both are taxation Entries. Entry \n84 – List I dealt with duties of excise on tobacco and other \ngoods manufactured or produced in India except – (a) alcoholic \nliquors for human consumption; (b) opium, Indian hemp and \nother narcotic drugs and narcotics, but including medicinal and \ntoilet preparations containing alcohol or any substance included \nin sub-paragraph (b) of this Entry. Entry 51 – List II talks of \nduties of excise on the goods manufactured or produced in the \nState and countervailing duties at the same or lower rates on \nsimilar goods manufactured or produced elsewhere in India, \nnamely, - (a) alcoholic liquors for human consumption; (b) \nopium, Indian hemp and other narcotic drugs and narcotics, \nbut not including medicinal and toilet preparations containing \nalcohol or any substance included in sub-paragraph (b) of this \nEntry. Both are taxation entries.\n\n13.6 On a comparative reading of the said two Entries, what is \nevident is that excise duty on goods manufactured as per \nEntry 84 – List I excludes duty of excise on alcoholic liquors \nfor human consumption. This is subject to the further exception \nthat, if, any medicinal and toilet preparations containing alcohol \nor any substance included in sub-paragraph (b) of the said \nEntry, namely, opium, Indian hemp and other narcotic drugs \nand narcotics, then, the excise duty is leviable as per Entry \n84 – List I by the Union or Central Government. Conversely, \nunder Entry 51 – List II, goods manufactured or produced in \nthe State would be subject to excise duty such as on – a) \nalcoholic liquors for human consumption; b) opium, Indian hemp \n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f2136 \n\n[2024] 10 S.C.R.\n\nand other narcotic drugs and narcotics, but does not include \nmedicinal and toilet preparations containing alcohol or any \nsubstance included in sub-paragraph (b) of the said Entry. In \nother words, alcoholic liquors not meant for human consumption \nand medicinal and toilet preparations containing alcohol or any \nsubstance such as opium, Indian hemp and other narcotic \ndrugs and narcotics would be subject to excise duty leviable \nunder Entry 84 – List I by the Central Government. Insofar as \nalcoholic liquors for human consumption is concerned, the \nStates have the power to levy excise duty. \n\n13.7 Therefore, in my view, the framers of the Constitution \nbifurcated alcoholic liquors for human consumption as distinct \nfrom alcohol used for medicinal and toilet preparations or \nany other liquor including “industrial liquor” on which excise \nduty is leviable under Entry 84 – List I. What is the purpose \nof excluding levy of excise duty under Entry 84 – List I on \nalcoholic liquors for human consumption and including the \nsame under Entry 51 – List II and thereby giving the powers \nto the State Legislature to levy excise duty on such alcoholic \nliquors? The intent of the framers of the Constitution was to \ncategorize alcoholic liquors into following two categories and \naccordingly divide the legislative powers between Parliament \nand State Legislature:\n\n(a) alcoholic liquors for human consumption (potable alcoholic \n\nliquors); and \n\n(b) alcoholic liquors not for human consumption such as \n“industrial alcohol” (non-potable alcoholic liquors).\n\nAt this stage itself, it is made clear that if alcoholic liquor, which \nis manufactured for the purpose of using the same as a raw \nmaterial in the manufacture or production of any other “industrial \nproduct” and is subject to a process, would not come within the \nscope and ambit of “alcoholic liquors for human consumption”. \nAs noted, the said product is also known as “industrial alcohol”. \nSuch “alcoholic liquors” or “industrial alcohol” are not used \ndirectly for human consumption as a beverage. On the other \nhand, it would be an abuse of such “industrial alcohol”, if \nconsumed as a beverage. Merely because it can be subjected \nto a process and mischievous human consumption is possible, \ndoes that make “industrial alcohol” “alcoholic liquors for human \n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n2137\n\nconsumption” within the meaning of Entry 84 – List I and Entry \n51 – List II and also “intoxicating liquors” within the scope and \nambit of Entry 8 – List II? \n\n13.8 A person or an entity which is not engaged in the manufacture \nof alcoholic liquors for human consumption as a beverage is \nnot authorised to manufacture “industrial alcohol” and subject \nit to a process and sell it as alcoholic liquors for human \nconsumption. The same is prohibited and has to be dealt with \nhaving regard to the scope and ambit of Entry 8 – List II. On \nthe other hand, it is only “intoxicating liquors” which is directly \nfor human consumption as a beverage and the production, \nmanufacture, possession, transport, purchase and sale of such \n“intoxicating liquors”, as per Entry 8 – List II, which is within \nthe competence of State Legislature i.e. for the purpose of \nregulation of such “intoxicating liquors” which would also entail \nlevy of an excise duty on such “intoxicating liquors” as per \nEntry 51 – List II as alcoholic liquor for human consumption. \nTherefore, on “intoxicating liquors” which is alcoholic liquors \ndirectly for human consumption as a beverage, excise duty is \nlevied by the State Legislature and regulated under Entry 8 – \nList II. Also, under Entry 84 – List I, the Parliament has no \npower to levy any such excise duty on such “intoxicating \nliquors” meant for human consumption as a beverage as \nit is an expressly excluded item. In other words, alcoholic \nliquors for human consumption is thus directly relatable to \n“intoxicating liquors” and the expression “intoxicating liquors” \nin Entry 8 – List II means alcoholic liquors directly for human \nconsumption as a beverage. Thus, no other alcoholic liquors \ncan be regulated as per Entry 8 – List II except to ensure that \nthere is no abuse/misuse of “industrial alcohol” being treated \nfor human consumption by subjecting it to a particular process; \nnor can any excise duty be levied on such liquor by the State \nLegislature. \n\nHence, any “intoxicating liquors” would mean alcoholic liquors \nfor human consumption which is produced, manufactured, \npossessed, transported, purchased or sold and can be \nregulated under Entry 8 – List II by the State Legislature but \nalcoholic liquors which are not for human consumption as a \nbeverage would not come within the scope of the expression \n“intoxicating liquors”, such as “industrial alcohol” which \n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f2138 \n\n[2024] 10 S.C.R.\n\nwould in turn be regulated by Entry 24 – List II which Entry \nis subject to Entry 52 – List I and can be controlled by the \nUnion exclusively. Thus, “industrial alcohol” and medicinal \nand toilet preparations which contain alcohol can be taxed \nas per Entry 84 – List I by the Central Government in the \nform of central excise duty. \n\n13.9 Merely because “industrial alcohol” by a process can be \nconverted to alcohol for human consumption as a beverage \ndoes not entitle the State Legislature to tax or regulate \n“industrial alcohol”. On the other hand, the States as per \nEntry 8 – List II have the power to regulate “intoxicating \nliquors” which is for human consumption as a beverage and \nin that regard have the power to prohibit “industrial alcohol” \nbeing converted to alcohol for human consumption as a \nbeverage. This is in order to protect the health of citizens \nwhich is a Directive Principle of State Policy under Article \n47 of the Constitution and in order to prohibit unauthorised \nuse/misuse of “industrial alcohol” produced in the State from \nbeing converted and sold as “intoxicating liquors” meant for \nhuman consumption as a beverage. \n\n13.10 This interpretation would become clearer on a reading of \nEntry 33(a) – List III which deals with, inter alia, trade and \ncommerce in, and the production, supply and distribution \nof the products of any industry where the control of such \nindustry by the Union is declared by Parliament by law to be \nexpedient in the public interest, and also includes imported \ngoods of the same kind as such products. Therefore, if \nproducts of any industry where the control of such industry \nby the Union has been declared by Parliament by law to \nbe expedient in public interest are manufactured in India or \nimported into India, then as per Entry 33(a) – List III, on the \nproduction, supply and distribution of and trade and commerce \nof such industrial products, the State Legislature would not \nhave any exclusive power to pass a law under Entries 26 \nand 27 – List II as they are subject to Entry 33(a) – List III. \nIn other words, in view of the passing of the IDRA, under \nEntry 52 – List I and the inclusion of, inter alia, products of \n“Fermentation Industries” such as “industrial alcohol” in Item \n26 of the First Schedule of the IDRA, the State Legislatures \nwould be subject to the powers of the Parliament to pass \n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n2139\n\na law in the matter of production, supply, distribution, trade \nand commerce of such industrial product. \n\n13.11 Therefore, if the control of any industry has been declared \nby Parliament by law to be expedient in the public interest, \nthen in such a case, in the matter of production, supply and \ndistribution of products of such industry, Entry 27 – List II \nwould be subject to Entry 33(a) – List III. Thus, the subject \nproduction, supply and distribution of goods found in Entry \n27 – List II as well as in Entry 33(a) – List III regarding any \nproduct of an industry has a nexus with Entry 52 – List I. \n\n13.12 Further, Entry 24 – List II which deals with industries, is \nitself subject to Entry 52 – List I. Therefore, if any industry \nis mentioned in the First Schedule of the IDRA which is a \nlegislation passed by the Parliament by virtue of Entry 52 – \nList I, a reading of the same conjointly with Entry 33(a) – \nList III would mean that particular industry which has been \nmentioned in the First Schedule of IDRA would be under the \ncontrol of the Union. However, as far as the products of such \nindustry are concerned, Entry 33(a) – List III deals with the \naspect of production and supply and distribution as well as \ntrade and commerce. Thus, if any particular industry is not \nmentioned or is deleted from the First Schedule of IDRA, \nthen automatically Entry 33(a) – List III would not apply to \nsuch industrial products and the subject would squarely fall \nwithin the scope and ambit of Entry 24 – List II and Entry \n27 – List II. \n\n14. There is another way of looking at the Entries under consideration. \nAs already noted, Entry 24 - List II which deals with the subject \n“industries”, enables legislative competence to the State Legislature \nto enact laws on the said subject. Therefore, at a first glance the \nsubject “industries” is a State subject. However, Entry 24 - List II \nis subject to Entries 7 and 52 - List I which have been discussed \nabove. In particular, Entry 52 - List I deals with “industries”, the control \nof which is taken over by the Union by a declaration made by the \nParliament by law as it is expedient in public interest. In respect of \n“such industries”, as covered within the scope and ambit of Entry \n52 - List I, it would imply that under Entry 33(a) - List III, insofar as \nthe products of any such industry are concerned where the control \nof such industry by the Union is declared by the Parliament by law to \n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f2140 \n\n[2024] 10 S.C.R.\n\nbe expedient in public interest and import of goods of the same kind \nas such products have to be read in consonance with the scheme of \nthe Entries. It would mean that if any legislation has been made by \nthe Parliament, such as the IDRA and an industry is named in the \nFirst Schedule thereof such as “Fermentation Industries” in the instant \ncases, the State Legislation would be subject to the Parliamentary \nlegislation. The said Entry is in the Concurrent List and the Parliament \nas well as the State Legislature have the competence to pass such \nlaws. Then, the question that would arise, is whether, there would be \nrepugnancy between the laws made by Parliament and laws made \nby a State Legislature and if so, how could it be resolved.\n\n14.1 In this regard, Section 18G which is a part of Chapter IIIB of \nthe IDRA could be considered. The said Section states that the \nCentral Government, so far as it appears to be necessary or \nexpedient for securing the equitable distribution and availability \nat fair prices of any article or class of articles relatable to \nany scheduled industry, i.e. any of the industries specified \nin the First Schedule of IDRA may, notwithstanding anything \ncontained in any other provision of the IDRA by notified order, \nprovide for regulating the supply and distribution thereof and \ntrade and commerce therein. This provision deals particularly \nwith regard to regulation of supply and distribution, trade and \ncommerce of any article relatable to scheduled industry. Sub-\nsection (2) of Section 18G states that without prejudice to \nthe generality of the powers conferred by sub-section (1) of \nSection 18G, a notified order made may provide for various \naspects. Sub-section (4) of Section 18G states that no order \nmade in exercise of any power conferred by this section shall \nbe called in question in any court. \n\n14.2 One of the contentions raised in this batch of cases is with \nregard to whether the Central Government has to, in fact, \nissue a notified order with regard to regulating the supply and \ndistribution and trade and commerce of any article or class of \narticles relatable to any scheduled industry so as to indicate \nthat the State Legislature cannot pass any legislation under \nEntry 33(a) - List III. In my considered view, the fact that an \nindustry is a scheduled industry under the IDRA would imply that \nat any time the Central Government is empowered to issue a \nnotified order providing for regulating the supply and distribution \nand trade and commerce of the products of such a scheduled \n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n2141\n\nindustry. But in the absence of there being an issuance of a \nnotified order as such can the State Legislature be denuded \nof their powers to pass any law under Entry 33(a) - List III? \n\n14.3 Having regard to the emerging situation in the economy in the \nmatter of supply and distribution and trade and commerce of any \narticle or class of articles relatable to any scheduled industry, \nthe Central Government may issue a notified order for the \npurpose of regulating the same so as to secure its equitable \ndistribution and availability at fair prices of the products of \nsuch industry. \n\n14.4 A situation may suddenly arise making it necessary or expedient \nto issue a notified order under Section 18G of the IDRA. One \ncannot envisage the emerging circumstances in an economy \nsuch as the Indian economy where the need for issuance of \nsuch a notified order would arise. It could be for instance to \ncurb hoarding and black marketeering of a particular article \nof a scheduled industry in order to stifle price rise. It could \nbe for ensuring a minimum or maximum price for any article \nrelated to a scheduled industry which is a raw material or \nancillary input for a product/article of another scheduled or \nnon-scheduled industry. Sudden rise in prices of commodities/\narticles relatable to any scheduled industry due to natural \ndisasters, floods, famines, financial emergency or other such \nreasons could necessitate issuance of a notified order under \nSection 18G of the IDRA. Of recent occurrence is the Covid-19 \npandemic which would have necessitated issuance of notified \norders on certain articles related to scheduled industries. The \nfield of legislation must therefore be left open for the Central \nGovernment to act by issuance of a notified order as and \nwhen thought necessary or expedient to secure and achieve \nthe objects stated in the said provision. \n\n14.5 But, can it be held that in the absence of any such notified \norder issued by the Central Government, the States could \npass laws under Entry 33(a) - List III? Would it lead to a \nlegal confusion and an overlapping and contradiction? This \nis because if it is held that in the absence of there being \na notified order actually issued by the Central Government \nunder Section 18G of the IDRA, the States are empowered \nto pass laws under Entry 33(a) - List III and such laws are in \n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f2142 \n\n[2024] 10 S.C.R.\n\nfact made under the aforesaid Entries by the States and the \nCentral Government subsequently decides to issue a notified \norder under Section 18G of the IDRA, the question would be, \nwhat would be the fate of the laws made by the States if they \noverlap with the notified order issued under Section 18G of \nthe IDRA? Obviously, the control of any industry being taken \nover by the Union under the provisions of the IDRA would \nimply that the Central Government is empowered to issue a \nnotified order in terms of Section 18G of the said Act as and \nwhen it is necessary or expedient to secure the equitable \ndistribution and availability at a fair price of any article related \nto any scheduled industry. In such a case, the notified order \nbeing issued under Section 18G of the IDRA, would have an \noverriding effect on the States’ laws if any made under Entry \n33(a) – List III in regard to trade and commerce, supply and \ndistribution of such articles or products of the scheduled industry \nwhich are covered under the notified order and the same would \nno longer be applicable wherever there is a conflict in the laws. \n\n14.6 A law made by the State Legislature under any Entry of List \nIII or Concurrent List is no doubt subject to Article 254 of the \nConstitution. However, Entry 33(a) - List III is in a way unique \ninasmuch as the said Entry would have to be read in the \ncontext of Entry 52 - List I which relates to the IDRA which \nis enacted by Parliament under the said Entry and therefore, \ninter alia, to Section 18G of the IDRA. When Entry 52 - List I \nand any law such as IDRA empowers the Union or Central \nGovernment to take certain steps under the provisions of the \nsaid Act, it would imply that the State Legislature is, per se, \ndenuded of its powers to make any law under Entry 33(a) - List \nIII. Applying the above interpretation, when once the Central \nGovernment has the powers under Section 18G of the IDRA in \nthe matter of regulating supply and distribution and trade and \ncommerce of any article of a scheduled industry so as to secure \nthe equitable distribution and availability at fair price, the field/\ncontours as covered under Section 18 of IDRA is occupied by \nthe Parliament and, consequently by the Central Government \nto issue a notified order as and when the necessity arises. \n\n14.7 The reason for holding so is because List III which is the \nConcurrent List is governed by Article 254 of the Constitution \nwhich deals with inconsistency between laws made by \n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n2143\n\nParliament and laws made by the Legislatures of the States. \nThe same is expressed as the doctrine of repugnancy. Clause \n(1) of Article 254 states that –\n\n(i) \n\nif any provision of a law made by the Legislature of a \nState is repugnant to any provision of a law made by \nParliament which Parliament is competent to enact, or \n\n(ii) \n\nto any provision of an existing law with respect to one of \nthe matters enumerated in the Concurrent List, \n\nthen, subject to clause (2) thereof, the law made by Parliament, \nwhether passed before or after the law made by the Legislature \nof such State, or, as the case may be, the existing law, shall \nprevail and the law made by the Legislature of the State shall, \nto the extent of the repugnancy, be void. \n\nUnder Article 13(3)(a), law includes any ordinance, order, bye-\nlaw, rule, regulation, notification, custom or usage having in \nthe territory of India the force of law. \n\n14.8 Clause (2) of Article 254 is an exception to clause (1). It states \nthat where a law made by the Legislature of a State with respect \nto one of the matters enumerated in the Concurrent List contains \nany provision repugnant to the provisions of an earlier law made \nby Parliament or an existing law with respect to that matter, \nthen, the law so made by the Legislature of such State shall, \nif it has been reserved for the consideration of the President \nand has received his assent, prevail in that State. The proviso \nstates that nothing in clause (2) of Article 254 would prevent \nParliament from enacting at any time any law with respect to \nthe same matter including a law adding to, amending, varying \nor repealing the law so made by the Legislature of the State. \n\n14.9 What is of significance under the second portion of Article \n254(1) is that the law has to be passed by the Parliament \neither before or after the law made by the Legislature of such \na State, secondly, such a law must be with respect to one of \nthe matters enumerated in the Concurrent List. The above is a \ncase of actual repugnancy. There can also be a case of what \ncan be called potential repugnancy, which is also expressed as \nthe doctrine of occupied field which shall be discussed at this \nstage in the context of the observations made in Synthetics \nand Chemicals (7J).\n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f2144 \n\n[2024] 10 S.C.R.\n\nEntry 33(a) – List III vs. Entry 52 - List I: Observations in \nSynthetics and Chemicals (7J): \n\n15. Article 246 of the Constitution deals with the division of legislatives \nsubjects between the Parliament and the Legislatures of the States. \nBoth sub-clauses (1) and (2) begin with a non-obstante clause while \nsub-clause (3) begins with a “subject to” clause. On a holistic reading \nof Article 246, it emerges that the Parliament has exclusive power to \nmake laws with respect to any of the matters enumerated in List I \nand it also has the power to make laws with respect to any of the \nmatters enumerated in List III or the Concurrent List (vide clause \n(2) of Article 246). The non-obstante clauses in clauses (1) and (2) \nof Article 246 in my view, are significant inasmuch as they envisage \nparliamentary supremacy over laws made by the State Legislature \neven in respect of a subject enumerated in List II as clause (3) of \nArticle 246 is subject to clauses (1) and (2) of Article 246. This is \ndespite the State Legislatures having exclusive competence over \nthe subjects mentioned in List II. However, the said position would \napply only when there is a conflict between a State Law and a Union \nLaw which is irreconcilable or cannot be interpreted harmoniously. \n\n15.1 The Parliament as well as the Legislature of any State have \nalso concurrent powers to make laws in respect of any of the \nmatters enumerated in List III. This is notwithstanding anything \nin clause (3) of Article 246 but is subject to clause (1) thereof. \nThis would imply that any law made by the Legislature of a \nState in List III or the Concurrent List is subject to a law made \nby Parliament in List I. This also has a bearing on first part of \nthe clause (1) of Article 254. Therefore, in my view, the doctrine \nof parliamentary supremacy is writ large in Articles 246 and \n254 both in the manner of arrangement of the subjects in the \nthree Lists as well as the extent to which the State Legislatures \nhave competence with regard to the subjects assigned to them \nparticularly in List III or the Concurrent List. \n\n15.2 In this case, we have to consider Entry 33(a) – List III in light \nof Entry 52 - List I and the observations made by this Court \nin Synthetics and Chemicals (7J). Entry 33(a) – List III is \nin the Concurrent List and it speaks of trade and commerce \nin, and production, supply and distribution of the products \nof any industry where the control of such industry by the \nUnion is declared by Parliament by law to be expedient in the \n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n2145\n\npublic interest, and imported goods of the same kind as such \nproducts. A dissection of this Entry would indicate that insofar \nas products of any industry which is a scheduled industry in \nterms of a law made by Parliament by virtue of Entry 52 – \nList I viz. where the control of such scheduled industry has \nbeen assumed by the Union (insofar as trade and commerce \nin, and production, supply and distribution of the products of \nsuch industry), both the Union as well as the States have \nconcurrent powers to enact laws. It must be remembered that \nEntry 33(a) – List III is a field of legislation and therefore, \ndeals with the concurrent legislative competence of both the \nUnion as well as the State Legislature. An enactment under \nsuch an Entry by the State is subject to the application of \nthe principle of repugnancy as envisaged in Article 254 of \nthe Constitution discussed above. \n\n15.3 One cannot lose sight of the fact that the IDRA has been \nenacted by Parliament taking control of certain industries \nsuch as the “Fermentation Industries”, which is the subject \nmatter of controversy in the present cases, on the strength \nof Entry 52 – List I. The degree of control envisaged under \nthe various provisions of the IDRA have been detailed in the \nvarious provisions of the said Act. Section 18G was inserted to \nIDRA w.e.f. 01.10.1953. The said Section in the IDRA is also \na provision which has been inserted pursuant to Entry  52  - \nList I. The said Section empowers the Central Government \nto issue a notified order for securing the equitable distribution \nand availability at fair prices of any article or class of articles \nrelatable to any scheduled industry. The expression “notified \norder” is defined in Section 3(e) of the IDRA to mean the \nissuance of a notification in the official gazette. \n\n15.4 It is necessary to note that Entry 33(a) – List III will apply \nonly when a law such as IDRA has been enacted pursuant \nto Entry 52 – List I, which has enabled the Union to take \ncontrol of certain industries such as “Fermentation Industries”. \nWhile Entry 33(a) – List III is a field of legislation which deals \nwith trade and commerce in, and the production, supply and \ndistribution of, inter alia, the products of the scheduled industry \nunder IDRA, Section 18G thereof deals with securing equitable \ndistribution and availability at fair prices of any article or class \nof articles relatable to any scheduled industry. The Explanation \n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f2146 \n\n[2024] 10 S.C.R.\n\nto Section 18G states that the expression “article or class \nof articles” relatable to any scheduled industry includes any \narticle or class of articles imported into India which is of the \nsame nature or description as the article or class of articles \nmanufactured or produced in the scheduled industry. An \narticle manufactured or produced in the scheduled industry is \nnothing but a product of a scheduled industry. Therefore, the \nexpression “the products of any scheduled industry” comes \nwithin the scope and ambit of the expression “article or class \nof articles” relatable to any scheduled industry. Thus, Section \n18G which pertains to a scheduled industry is also relatable \nto Entry 33(a) – List III though it is a part of IDRA which is a \nParliamentary law enacted on the basis of Entry 52 – List I. \n\n15.5 The question that would then arise is, whether, by the mere \ninsertion of Section 18G to the IDRA with effect from 01.10.1953, \nthe State Legislatures have been denuded of their legislative \ncompetence in the matter of regulation of supply and distribution \nand trade and commerce of products of any scheduled industry. \nThe conundrum which has arisen in this case is on account of \nthe observation in paragraph 85 of Synthetics and Chemicals \n(7J), which, inter alia, reads as under:\n\n“85. … The State cannot claim that under Entry 33 of \nList III, it can regulate industrial alcohol as a product \nof the scheduled industry, because the Union, under \nSection 18-G of the IDR Act, has evinced clear \nintention to occupy the whole field.…”\n\nThe aforesaid observations mean that by the very insertion \nof Section 18G to the IDRA, there is a denudation of the \nState’s legislative competence vis-à-vis Entry 33(a) – List III \nwith respect to a product of a scheduled industry which in the \ninstant cases is the “Fermentation Industries”. \n\n15.6 The aforesaid observation which has led to a reference to \nthis nine-Judge Bench has to be considered in light of Entry \n52 – List I, Entry 33(a) – List III and Section 18G of the IDRA. \nAs already stated, it is pursuant to Entry 52 – List I that the \nIDRA has been enacted by the Parliament declaring the taking \nof control of industries mentioned in the First Schedule to \nthe said Act called a scheduled industry. Entry 33(a) – List III \ndeals with trade and commerce in, and production, supply and \n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n2147\n\ndistribution of the products of any industry where the control of \nsuch industry by the Union is declared by Parliament by law to \nbe expedient in the public interest and imported goods of the \nsame kind as such products i.e. with reference to a scheduled \nindustry. The nexus between Entry 33(a) – List III and Entry \n52 – List I is with regard to the Union taking control of certain \nindustries such as “Fermentation Industries” in the instant \ncases by a declaration made by Parliament by law. Section \n2 of the IDRA has made such a declaration and hence, it is \nin respect of the products of any industry whose control has \nbeen taken by the law i.e. IDRA, pursuant to Entry 52 – List I \nthat Entry 33(a) – List III gives the legislative competence to \nboth the Parliament as well as the State Legislatures. \n\n15.7 As already noted, the IDRA is enacted by Parliament under \nEntry 52 – List I taking control of, inter alia, “Fermentation \nIndustries” as noted in Item 26 of the First Schedule to \nthe said Act. Section 18G deals with any article or class of \narticles relatable to any scheduled industry i.e. “Fermentation \nIndustries” in the instant cases. The Explanation to Section 18G \nstates that the expression “article or class of articles” relatable \nto any scheduled industry i.e. “Fermentation Industries” herein \nincludes any article or class of articles imported into India \nwhich is of the same nature or description as the article or \nclass of articles, manufactured or produced in the scheduled \nindustry. The explanation is inclusive and not an exhaustive \none. For immediate reference Item 26 of the First Schedule \nof the IDRA pursuant to the 2016 amendment is extracted \nas under: \n\n“26. The fermentation industries (other than \npotable alcohol):\n\n(i) Alcohol\n\n(ii) other products of fermentation industries.”\n\nThe said Item 26 was added w.e.f. 08.05.1952 even prior \nto the insertion of Section 18G to the IDRA which is w.e.f. \n01.10.1953. However, w.e.f. 14.05.2016, Item 26 has been \namended to clarify that “Fermentation Industries” refers to \nindustries others than potable alcohol. This is for the reason \nthat “intoxicating liquors” in Entry 8 – List II is equated to only \n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f2148 \n\n[2024] 10 S.C.R.\n\npotable alcohol and rest of the industry of the “Fermentation \nIndustries” other than potable alcohol is a scheduled industry. \n\n15.8 Once an industry is a scheduled industry under the provisions \nof IDRA, in the context of Section 18G the Central Government \nmay notwithstanding anything contained in any other provision \nof IDRA by a notified order provide for regulating the supply \nand distribution thereof and trade and commerce therein of \na product of scheduled industry. A notified order may also \nprovide -\n\n(a) \n\n(b) \n\n(c) \n\n(d) \n\n(e) \n\n(f) \n\nfor the purpose of controlling the prices at which any \nsuch article or class of articles may be bought or sold for; \n\nfor regulating the licences, permits or otherwise the \ndistribution, transport, disposal, acquisition, possession, \nuse or consumption of any such article or class thereof; \n\nfor prohibiting the withholding from sale of any such article \nor class thereof ordinarily kept for sale; \n\nfor requiring any person manufacturing, producing or \nholding in stock any such article or class thereof to sell the \nwhole or part of the articles so manufactured or produced \nduring a specified period or to sell the whole or a part of the \narticles so held in stock to such person or class of persons \nin such circumstances as may be specified in the order;\n\nfor regulating or prohibiting any class of commercial or \nfinancial transactions relating to such article or class \nthereof which in the opinion of the authority making the \norder are, or if unregulated are likely to be, detrimental \nto public interest;\n\nfor requiring persons engaged in the distribution and \ntrade and commerce in any such article or class thereof \nto mark the articles exposed or intended for sale with the \nsale price or to exhibit at some easily accessible place on \nthe premises the price-lists of articles held for sale and \nalso to similarly exhibit on the first day of every month, \nor at such other time as may be prescribed, a statement \nof the total quantities of any such articles in stock;\n\n(g) \n\nfor collecting any information or statistics with a view to \nregulating or prohibiting any of the aforesaid matters; and\n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n2149\n\n(h) \n\nfor any incidental or supplementary matters, including, in \nparticular, the grant or issue of licences, permits or other \ndocuments and the charging of fees therefor.\n\n15.9 Sub-section (4) of Section 18G provides that no order made \nin exercise of any power conferred under Section 18G shall \nbe called in question in any court. Thus, a notified order may \nbe issued by the Central Government bearing in mind the \nsituations and conditions which may arise in the Indian economy \npertaining to a particular scheduled industry.\n\nArticle 254, Repugnancy and Doctrine of Occupied Field:\n\n16. There is also a further angle to the matter in the context of \nconcurrent powers of Parliament and State Legislatures vis-à-vis \nEntry 33(a) – List III and Article 254 of the Constitution. Nicholas \nin his Australian Constitution, 2nd Edition, page 303, refers to three \ntests of inconsistency or repugnancy: \n\n(i) There may inconsistency in the actual terms of the competing \n\nstatutes;\n\n(ii) Though there may be no direct conflict, a State law may be \ninoperative because the commonwealth law; or commonwealth \ncourt is intended to be a complete exhaustive Code; and\n\n(iii) Even in the absence of intention, a conflict may arise when \nboth State and commonwealth seek to exercise their powers \nover the same subject matter.”\n\n16.1 In Tika Ramji, this Court accepted the above three rules evolved \nby Nicholas, among others, as a useful guide to test the question \nof repugnancy. The same was also quoted by this Court in \nM/s. Hoechst Pharmaceuticals Ltd. vs. State of Bihar, AIR \n1983 SC 1019 (“Hoechst Pharmaceuticals Ltd.”). In the said \ncase, it was observed that the question of repugnancy between a \nlaw made by Parliament and a law made by the State Legislature \narises only in case both the legislations occupy the same field \nwith respect to one of the matters enumerated in the Concurrent \nList and there is direct conflict between the two laws. It is only \nwhen both these requirements are fulfilled that the State law \nwill, to the extent of repugnancy, become void. Article 254(1) \nhas no application to cases of repugnancy due to overlapping \nfound between List II on the one hand and Lists I and III on \n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f2150 \n\n[2024] 10 S.C.R.\n\nthe other. If such overlapping exists in any particular case, the \nState law would be ultra vires because of non-obstante clause \nin Article 246(1) read with the opening words “subject” in Article \n246(3). In such a case, the State law will fail not because of \nrepugnance to the Union law but due to want of legislative \ncompetence. Thus, the question of repugnancy arises only when \nboth the Legislatures are competent to legislate in the same \nfield, that is, with respect to one of the matters mentioned in \nthe Concurrent List. Hence, Article 254(1) cannot apply unless \nboth the Union and the State laws relate to a subject specified \nin the Concurrent List and they occupy the same field. \n\n16.2 Thus, Article 254 of the Constitution applies the doctrine of \nrepugnancy in the context of the legislative subjects which are \nenumerated in List III or the Concurrent List. While applying \nthe principles of repugnancy under Article 254, a sine qua \nnon is to identify the conflict between the laws made by the \nParliament and the laws made by the State Legislature. The \nconflict between the said laws is the basis for the application \nof Article 254. The conflict could be direct when both the laws \ncannot operate together or it could be indirect when the State \nlaw entrenches upon a Parliamentary or Central law. But when \nlaws made by the Parliament or the State Legislature can be \nimplemented without there being any conflict, the principle of \nrepugnancy would not apply inasmuch as there would be no \ncontrary results owing to the applicability of both sets of laws. \nIn other words, there cannot be a situation where obeying \nthe State laws would result in disobeying the Parliamentary \nlaws. Thus, when laws are made under an Entry in List III or \nthe Concurrent List by both the Parliament as well as by the \nState Legislature, the Court must first ascertain whether the \ntwo sets of laws can operate harmoniously, if not, whether \nharmonious interpretation could be given to the said laws so \nas to avoid a conflict between the two. It is only when there \nis a conflict between the two sets of laws inasmuch as the \nState laws would be abridging the Parliamentary law, in such \na case, the doctrine of Parliamentary supremacy would apply \ni.e. when a harmonious interpretation is not possible. Even if \nthe two laws overlap, if they are complimentary to each other, \nin such a case, there would be no application of the principle \nof Parliamentary supremacy. Thus, when there is absolute \n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n2151\n\ninconsistency between the two sets of laws, and they are not \nreconcilable then, the principle of Parliamentary supremacy \nwould apply in the context of repugnancy. \n\n16.3 The next question that would arise is, whether, the principle of \nrepugnancy in Article 254 of the Constitution could have a wider \nramification inasmuch as even in the absence of there being \ntwo sets of laws which have been made by the Parliament and \nby the State Legislature but owing to the nature of the law that \nthe Parliament has made, the State Legislature is incompetent \nin making a law on the same subject. In other words, whether \na law enacted by the Parliament can prevent a law being made \nby the State Legislature on the same subject on the premise \nthat the field has been occupied by the Parliamentary law. This \nis expressed in what is known as the doctrine of occupied field. \nBy this, it would mean that the law enacted by the Parliament \nhas occupied the field in its entirety and consequently, the \nStates have no legislative competence to make a law on the \nvery same aspect. In other words, if a law is made by the \nParliament, does it occupy the entire field so as to reduce or \nnegate the legislative competence of the State Legislature to \nmake a similar law? How does one determine whether the \nlegislative field has been occupied? Firstly, there must be a \nParliamentary law in place with an intention to occupy the \nfield. Secondly, the contours of the field must be determined. \nConsequently, the State Legislature would be prevented from \nmaking the law in terms of what has been determined by the \nParliament to occupy the field. Thus, the intention to occupy \nthe field must be explicit and clear and discernible with the \nresult that the State Legislature would have a reduced field or \nthe legislative competence would be one of total prohibition to \nmake a similar law. For instance, whether the Parliamentary law \nintends to put in place a complete and exhaustive regulatory \nscheme, as a result of which the State Legislature is denuded \nof its powers to make any State regulation in the field as a \nwhole. This intention would have to be discerned on a reading \nof the statute as a whole and the particular provisions which \nshould emanate such an intention. Thus, there must be a clear \nintention to occupy the field by a Parliamentary legislation. \nFurther, the extent of the field sought to be occupied must be \nclearly demarcated. In other words, whether the Parliament \n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f2152 \n\n[2024] 10 S.C.R.\n\nhas evinced to exclude the State Legislature from making a \nlaw on a similar subject by virtue of an Entry in List III? \n\n16.4 In order to answer this question, the provisions of the Act made \nby the Parliament have to be examined threadbare in order \nto ascertain a clear intention of the Parliament to occupy the \nfield so as to negate the Legislature of the States to have the \ncompetence to make a similar law. Thus, while a direct conflict \nof a Parliamentary law and a State law could be resolved on \nthe touchstone of a harmonious interpretation of the two laws \n(vide second part of article 254(1)), a potential conflict between \na Parliamentary law which has been enacted and a potential or \nfuture law by a State Legislature is avoided on the touchstone \nof the doctrine of occupied field. \n\n16.5 While applying the occupied field doctrine, Courts must \ndelicately balance the legislative competence of the Parliament \nand the State Legislatures in making laws on a particular subject \nunder the Concurrent List and apply the doctrine of occupied \nfield only having regard to the intention of the Parliament to \noccupy the field and the Parliament defining the contours of \nthe field sought to be occupied by a comparative and coherent \nreading of the other Entries in List I and List II, having bearing \non the concerned Entry in List III of the Constitution. Such \nbalancing need to be done by Courts in order to ascertain \nwhether despite legislative competence being provided to the \nState Legislatures under a particular Entry in the Concurrent \nList but owing to what has been stated in any law made under \nEntry in List I (Union List) having a bearing on an Entry in the \nConcurrent List being made subject to any Entry in the Union \nList, would result in the State Legislatures being denuded \nof legislative competence to make laws on a similar subject \nunder an Entry in List III such as Entry 33(a) – List III which \nis under consideration. \n\n16.6 The application of the doctrine of occupied field is a technique \nadopted by the constitutional courts in order to ensure that \nthere is no potential conflict that could arise between the \nState laws and the existing Parliamentary law having regard \nto the nature of the legislative powers, their importance in the \nsocio-economic sphere of governance in the country and such \nother considerations. \n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n2153\n\n16.7 Applying the aforesaid principles to the cases at hand, the \nquestion is whether by virtue of insertion of Section 18G to \nthe IDRA, the legislative competence of the State Legislatures \nunder Entry 33(a) – List III vis-à-vis products of the scheduled \nindustry namely, “Fermentation Industries” would be governed \nwithin the scope and ambit of Section 18G of the IDRA \nand consequently, the State Legislatures would have no \ncompetence to make a law in regard to the products of a \nscheduled industry in respect of which Section 18G applies. \nThis is by bearing in mind the twin tests referred to above \nnamely, the intention of the Parliament to occupy the field \nand the demarcation of the areas in which the field is sought \nto be occupied. In other words, in the instant case, whether \nItem 26 which speaks of “Fermentation Industries” to include \n“industrial alcohol” or non-potable alcohol as a product of \nsuch industry which has been taken control of by the Union \nunder the provisions of IDRA (and which is excluded from the \nscope and ambit of Entry  8  – List  II), falls within the scope \nand ambit of a scheduled industry, and thereby Section 18G \nwould apply the aspects referred to above. \n\n16.8 The answer is in the affirmative for the following reasons: firstly, \ninsofar as the potable or “intoxicating liquors” is concerned, \nthe legislative field is exclusively with the State Legislature. \nHowever, in respect of the scheduled industry which is \n“Fermentation Industries” (which does not take within its scope \nand ambit potable alcohol) vide Item 26 of the First Schedule, \nall other types of alcohol including “industrial alcohol” can \nbe regulated only by the Parliamentary law and the Central \nGovernment. Any other interpretation would imply that even \nin the face of Section 18G being incorporated into the IDRA \nand in the absence of any notified order being issued, the \nStates Legislatures and the State Governments would have \nthe legislative competence to make laws on what is the subject \nmatter of Section 18G of IDRA under Entry 33(a) – List III. Then, \neach State could make its own law on the said subject matter \ncovered under Section 18G of IDRA pertaining to a scheduled \nindustry. If in respect of the products of a scheduled industry, \nthe States make laws and there are a variety of laws made \nby the individual States which are in force in respect of the \nsubject under Section 18G of IDRA then when a notified order \n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f2154 \n\n[2024] 10 S.C.R.\n\nis issued, the Central Government’s notified order would apply if \nthere is a direct conflict between the State laws or legal regime \nin place and the notified order that is issued. This would result \nin a legal quagmire vis-à-vis a scheduled industry. It cannot \nthen be said that it is necessary to ascertain whether there is \na direct conflict between the State law and the notified order \nmade by the Central Government at every instance such an \norder is issued and if there is such a direct conflict then, the \nParliamentary law would apply on the strength of Article 254 of \nthe Constitution. Such a legal confusion and conundrum would \nnot be conducive to a scheduled industry such as “Fermentation \nIndustries” dealing with “industrial alcohol” which is a commodity \nof critical and significant importance in the Indian economy. \n\n16.9 Sub-section (4) of Section 18G also states that no order in \nexercise of power conferred by the Section shall be called \nin question in any court. Thus, the question of repugnancy \nbetween an existing State law and the notified order of the \nCentral Government cannot be raised before a court of law. \nThen, whether both the State law as well as the notified order \ncan be simultaneously obeyed. If not, what would be the \nremedy. Sub-section (4) of Section 18G also indicates that the \nParliament has intended to occupy the field as demarcated \nunder Section 18G. Such an interpretation has to be given in \norder to avoid a legal uncertainty and quandary in the economy \nin the context of Section 18G of the IDRA.\n\n16.10 Thus, the question, whether, under Entry 33(a) – List III, \nthe States have been denuded of their powers by virtue \nof insertion of Section 18G to the IDRA, i.e., Section 18G \nhaving occupied the field to the extent of control as above \nmentioned and the States would not have the competence to \npass any law relating to Entry 33(a) – List III, in my view, has \nto be answered in the affirmative. This is because Section \n18G has been inserted by Parliament to the IDRA which is \nan enactment made pursuant to Entry 52 – List I. Entry 52 – \nList I speaks of the Union by declaration made by Parliament \nby law taking control of such scheduled industry (Section 2 of \nthe IDRA) such as the “Fermentation Industries” herein. The \nindustries which are controlled of by the Union are specified \nin the First Schedule to the IDRA. “Fermentation Industries” is \na scheduled industry. Therefore, the Union has taken control \n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n2155\n\nof “Fermentation Industries”. For the sake of clarification, in \nthe year 2016 an amendment was made to expressly exclude \npotable alcohol from “Fermentation Industries” and it includes \nonly non-potable alcohol such as “industrial alcohol”. The \ndetailed discussion made above is in regard to only “industrial \nalcohol” being non-potable alcohol. “Intoxicating liquors” being \npotable alcohol is not within the scheduled industry. Therefore, \nthe said products of “Fermentation Industries” which have \nbeen taken control of by the Union by virtue of insertion of \nthe Section 18G of the IDRA would come within the scope \nand ambit of the said Section. \n\n16.11 In this context, by way of analogy, it would be of relevance to \nrefer to my dissenting opinion dated 25.07.2024 in Mineral \nArea Development Authority Etc. vs. M/s. Steel Authority \nof India & Others (Civil Appeal Nos.4056-4064 of 1999) \n(“Mineral Area Development Authority”) wherein the \ninterpretation of Entry 50 – List II vis-à-vis Entry 54 – List I \ncame up for consideration and it was observed by me that \neven a taxation Entry i.e. Entry 50 – List II was subject to the \nlimitation imposed by Parliament by law relating to mineral \ndevelopment in terms of the Entry 54 – List I. Thus, the \ndoctrine of parliamentary supremacy in the context of an Entry \nin List II (State List) with an Entry in List I (Union List) was \nconsidered. For immediate reference the following passage \nfrom said opinion could be extracted: \n\n“8.6 However, what is pertinent to be considered \nin this case is, Entry 50 - List II in juxtaposition \nwith Entry 54 - List I. As already noted, Entry \n50 - List II is a taxation Entry which empowers a \nState Legislature to impose tax on mineral rights. \nHowever, this power of the State Government is not \nan absolute power inasmuch as Entry 50 - List II \nitself states that the power of the State Legislature \nto impose tax on mineral right is “subject to any \nlimitations imposed by Parliament by law relating \nto mineral development”. In other words, if there \nis any limitation imposed by the Parliament by law \nrelating to mineral development then that would \nhave an impact on the legislative competence of \nthe State Legislature to impose a tax on mineral \n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f2156 \n\n[2024] 10 S.C.R.\n\nrights. The key expressions of Entry 50 - List II \nare “taxes on mineral rights” and “subject to any \nlimitations imposed by the Parliament by any law \non mineral development”. Thus, the Parliament \ncan impose any limitation on the State’s right to \nimpose a tax on mineral rights by way of a law \nrelating to mineral development. Thus, while Entry \n50 - List II speaks of taxes on mineral rights and \nis a taxation Entry empowering States to impose \ntaxes on mineral rights, the same is not unbridled \nor absolute but is subject to any limitation to be \nimposed by Parliament by law relating to mineral \ndevelopment. In other words, if Parliament intends \nto regulate mineral development in the country, it \ncan do so by a law made as per Entry 54  - List  I \nand to that extent the taxation Entry in Entry 50  - \nList II could be limited and the State’s right to \nimpose a tax on mineral rights by a law would be \naffected. Thus, a taxation Entry in Entry 50 - List II \ncan be affected by Entry 54 - List I in the interest \nof mineral development by Parliament imposing a \nlimitation on the State’s right to tax mineral rights. \nIn other words, if the Union has by a law taken \ncontrol of, inter alia, mineral development with the \nParliament passing a law, then the State’s power \nto impose any tax on mineral rights would, to that \nextent, be denuded, if the Parliamentary or Central \nlaw creates a limitation to impose such a tax, if it \nrelates to mineral development. It is in the above \nbackdrop that the controversy must be considered.\n\n8.7 Exercise of mineral rights have to be consistent \nwith mineral development in the country, which \nwould embrace, inter alia, uniformity in mineral \ndevelopment throughout the country having regard \nto several factors which would otherwise come in the \nway of such development. Hence, the framers of the \nConstitution introduced Entry 50 - List I enabling a \nlimitation being imposed on Entry 50 - List II although \nthat is a taxation Entry giving powers to the States \nto impose taxes on mineral rights. It is subject to \n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n2157\n\nany limitation imposed by Parliament under Entry \n54 - List I.\n\n8.8 The golden thread which runs through Entry 54 - \nList I and Entry 23 - List II is that the Entries deal \nwith regulation of mines and mineral development. \nThus, any aspect of regulation of mines and mineral \ndevelopment taken under the control of the Union by a \ndeclaration made by the Parliament by a law, denudes \nthe State Legislature of its legislative competence \nto pass any law to that extent. If a Parliamentary \nlaw such as MMDR Act, 1957 is enacted and deals \nwith certain aspects of mineral development, to that \nextent the State Legislature would be denuded of \nits competence to pass any law on the said aspect. \nThe legislative competence vested with the State \nLegislature is, therefore, not an absolute one but is \nsubject to a Parliamentary law enacted as per Entry \n54 - List I dealing with mineral development. \n\nIn the circumstance, the aforesaid observations made in Synthetics \nand Chemicals (7J) are in consonance with the constitutional \nframework of Article 246 read with the Entries in Lists I and III and \nthe doctrine of occupied field applies in the context of Section 18G \nof IDRA enacted under Entry 52 – List I and Entry 33(a) – List III. \n\n17. One of the contentions raised was that so long as the notified order \nhas not been issued by the Central Government which triggers \nthe exercise of powers under Section 18G of the IDRA, the States \nwould have the legislative competence to pass laws under Entry \n33(a) – List III. In my view, the issuance of a notified order under \nSection 18G is only a ministerial act to be performed and to be \ncomplied with by the Central Government by a publication in the \nofficial gazette. The object of publication of a notified order in the \nofficial gazette is to inform the world at large about the contents \nof the said order. This could happen at any point of time having \nregard to the situations and conditions which emerge in the Indian \neconomy with regard to a product of a scheduled industry which \nis also described as an article or class of articles relatable to any \nscheduled industry under Section 18G of IDRA. Thus, when the \nfield is occupied by Section 18G of the IDRA which is an enactment \nmade pursuant to Entry 52 – List I and the State Legislatures are \n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f2158 \n\n[2024] 10 S.C.R.\n\ndenuded of legislative competence for passing any law under Entry \n33(a) – List III in respect of a product of a scheduled industry which \nis read within the definition of article or class of articles relatable to \nany scheduled industry as per the Explanation to Section 18G, the \nissuance of a notified order pales into insignificance in the context \nof repugnancy. The issuance of a notified order has relevance only \nfor the purpose of intimation of action being taken on any particular \narticle or class of article of a scheduled industry by the Central \nGovernment in an occupied field.\n\n17.1 As far as the controversy whether “Fermentation Industries” \nbeing under the control of the Union could enable the State \nLegislature to pass a law by virtue of Entry 33 (a) - List III of \nthe Constitution, in the context of a product of “Fermentation \nIndustries” and in the context of Section 18G of the IDRA, there \nhas been a cleavage of opinion of this Court in the aforesaid \njudgments. While in Synthetics and Chemicals (7J), it was held \nthat mere insertion of Section 18G into the statute of the IDRA, \nwould imply that the field has been occupied by the Union and, \ntherefore, the State has no jurisdiction to exercise its powers \nunder the said Entry and therefore, has been denuded of all \nits powers, the subsequent decisions in Bihar Distillery etc., \nhave opined that the said position may not be correct. In other \nwords, unless action is taken under Section 18G of the IDRA \nby the actual issuance of a notified order and if such a notified \norder is repugnant to an existing State legislation or action being \ninitiated thereto, the question of repugnancy would arise. The \njudgment of this Court in Tika Ramji has been referred to and \nhow far the said judgment would have an application in the \npresent controversy is a matter to be analysed.\n\n17.2 In Tika Ramji, the vires of the Uttar Pradesh Sugarcane \n(Regulation of Supply and Purchase) Act, 1953 (hereinafter \nreferred to as “UP Act”) was assailed by the petitioners therein. \nIt was contented that the State of Uttar Pradesh had no power to \nenact the said Act as the same was with respect to the subject \nof industries, the control of which by the Union was declared by \nParliament by law to be expedient in the public interest within \nthe meaning of Entry 52 – List I and was, therefore, within the \nexclusive province of Parliament. It was further contended that \nthe Act was ultra vires the powers of the State Legislature and \n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n2159\n\nwas a colorable exercise of legislative power by the State. It \nwas further contended that it was repugnant to the IDRA and \nthe Essential Commodities Act, 1955 (Act 10 of 1955) also a \nCentral Act. That in the event of this Court were to hold that \nthe impugned Act was within the legislative competence of the \nState Legislature, it was void by reason of such repugnancy. It \nwas also contended that the impugned Act stood repealed to \nthe extent that it had been repealed by Section 16 of Act 10 \nof 1955 and by clause (7) of the Sugarcane (Control) Order, \n1955, made in exercise of the powers conferred by Section 3 \nof Act 10 of 1955 (a Central Act). \n\n17.3 It was observed that even if it was assumed that sugarcane \nwas an article or class of articles relatable to the sugar \nindustry within the meaning of Section 18G of the IDRA, since \nno order was issued by the Central Government in exercise \nof the powers vested in it under that section, no question of \nrepugnancy could ever arise because repugnancy must exist \nin fact and not depend merely on a possibility. The possibility \nof an order under Section 18G being issued by the Central \nGovernment would not be enough. The existence of such an \norder would be an essential prerequisite before any repugnancy \ncould ever arise.\n\n17.4 Without going into the other aspects of the case, in my view, \nthis Court was not right in holding that since no order was \nissued by the Central Government under Section 18G of the \nIDRA, the legislative field was open to both the Central as well \nas the State Governments to take action. That portion of the \njudgment in Tika Ramji in my view is not correct.\n\n17.5 The judgments of this Court including that of the Constitution \nBench in Tika Ramji; Indian Aluminium company Limited \nvs. Karnataka Electricity Board (1992) 3 SCC 580 (“Indian \nAluminium company”); Shree Krishna Gyanoday Sugar \nLtd.; Belsund Sugar Co. Ltd. vs. State of Bihar (1999) 9 \nSCC 620 (“Belsund Sugar Co. Ltd.”) and SIEL Ltd. vs. \nUnion of India (1998) 7 SCC 26 (“SIEL Ltd.”) have lost sight \nof the fact that when a notified order is issued under Section \n18G of the IDRA it is pursuant to a Central enactment made \nby virtue of Entry 52 – List I and it is not an exercise of power \nunder Entry 33(a) – List III. When once Section 18G has been \n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f2160 \n\n[2024] 10 S.C.R.\n\ninserted to the IDRA in respect of a scheduled industry, the \ncontrol being taken over by the Union in respect of the very \nsame scheduled industry, legislative competence cannot remain \nwith the State Legislature also under Entry 33(a) – List III in \nrespect of the aspects or field covered under Section 18G of \nIDRA which is a Parliamentary enactment. \n\n18. There is another angle to the matter. Article 254 in the normal course \nwould apply when there is a direct conflict between the laws made \nby the Parliament and the State Legislature under an Entry in the \nConcurrent List. But in the instant case, it can also be held that the \nconflict is not between a law or an action taken by the Parliament or \nthe Central Government under Entry 33(a) – List III versus a State \nlaw that could be made or action taken under the very same Entry. \nHere, the conflict arises between action that could be taken by the \nCentral Government under Section 18G of IDRA made by virtue of \nEntry 52 – List I as opposed to a State law or action which could \nbe made under Entry 33(a) – List III. In such case, the doctrine of \nrepugnancy would arise as per the first part of Article 254(1) between \nEntry 52 – List I and Entry 33(a) – List III and not in respect of the \nsecond part of Article 254(1). Thus, when the Central Government \nseeks to exercise power in respect of a scheduled industry under \nSection 18G of the IDRA it is pursuant to the said Act being made \nunder Entry 52 – List I. Hence, any action to be taken by the Central \nGovernment under Section 18G is not really an action that would \nbe taken under Entry 33(a) – List III.\n\n18.1 On this aspect, reference must be made to judgment of this \nCourt in State of Kerala vs. Mar Appraem Kuri Company \nLimited (2012) 7 SCC 106 (“Mar Appraem Kuri Company”). \nThe Constitution Bench of this Court speaking through Kapadia, \nC.J., considered the question - when does repugnancy arise in \nthe context of whether Kerala Chitties Act 23 of 1975 becoming \nrepugnant to the (Central) Chit Funds Act 40 of 1982 under \nArticle 254(1) upon making of the Central Act (i.e. 19.08.1982 \nwhen the President gave his assent) or whether the Kerala \nChitties Act 23 of 1975 would become repugnant to the Central \nAct as and when the notification under Section 1(3) of the \nCentral Act bringing the Central Act into force in the State \nof Kerala is issued. In other words, the question raised was \nwhether making of the law or its commencement brings about \nrepugnancy or inconsistency as envisaged in Article 254(1) of \n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n2161\n\nthe Constitution. In this context, reference was made to Deep \nChand vs. State of UP, AIR 1959 SC 648 (“Deep Chand”) \nand it was observed as under:\n\n“30. That, in Deep Chand v. State of U.P., three \nprinciples were laid down as indicative of repugnancy \nbetween a State law and a Central law, which have to \nbe borne in mind by the State Legislature whenever it \nseeks to enact a law under any entry in the Concurrent \nList. Thus, where there is a Central law which intends \nto override a State law or where there is a Central law \nintending to occupy the field hitherto occupied by the \nState law or where the Central law collides with the \nState law in actual terms, then the State Legislature \nwould have to take into account the possibility of \nrepugnancy within the meaning of Article 254 of the \nConstitution. In this connection, it was submitted that \nTests 1 and 2 enumerated in Deep Chand do not \nrequire the Central law to be actually brought into force \nfor repugnancy between two competing legislations to \narise in the context of Article 254 of the Constitution.”\n\n18.2 In paragraph 40, it was observed that the expression “subject \nto” in clauses (2) and (3) of Article 246 denotes supremacy of \nParliament and the same is extracted as under:\n\n“40. However, the principle of federal supremacy in \nArticle 246(1) cannot be resorted to unless there is \nan “irreconcilable” conflict between the entries in the \nUnion and State Lists. The said conflict has to be \na “real” conflict. The non obstante clause in Article \n246(1) operates only if reconciliation is impossible. As \nstated, the parliamentary legislation has supremacy \nas provided in Articles 246(1) and (2). This is of \nrelevance when the field of legislation is in the \nConcurrent List. The Union and the State Legislatures \nhave concurrent power with respect to the subjects \nenumerated in List III. [See Article 246(2).] Hence, the \nState Legislature has full power to legislate regarding \nsubjects in the Concurrent List, subject to Article \n254(2) i.e. provided the provisions of the State Act \ndo not come in conflict with those of the Central Act \non the subject. [See Amalgamated Electricity Co. \n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f2162 \n\n[2024] 10 S.C.R.\n\n(Belgaum) Ltd. v. Municipal Committee, Ajmer \n[AIR 1969 SC 227 : (1969) 1 SCR 430 ]. Thus, the \nexpression “subject to” in clauses (2) and (3) of Article \n246 denotes supremacy of Parliament.”\n\n18.3 In paragraph 43, it was observed as under:\n\n“43. Our Constitution gives supremacy to Parliament \nin the matter of making of the laws or legislating with \nrespect to matters delineated in the three Lists. The \nprinciple of supremacy of Parliament, the distribution \nof legislative powers, the principle of exhaustive \nenumeration of matters in the three Lists are all to \nbe seen in the context of making of laws and not in \nthe context of commencement of the laws.”\n\n18.4 Dealing with the question of repugnancy and the ways in which \nit would arise between Parliamentary legislation and States’ \nlegislation, it was observed in paragraph 47 as under:\n\n“47. The question of repugnancy between parliamentary \nlegislation and State legislation arises in two ways. \nFirst, where the legislations, though enacted with \nrespect to matters in their allotted spheres, overlap \nand conflict. Second, where the two legislations \nare with respect to matters in the Concurrent List \nand there is a conflict. In both the situations, the \nparliamentary legislation will predominate, in the first, \nby virtue of non obstante clause in Article 246(1); in \nthe second, by reason of Article 254(1).”\n\n18.5 Ultimately, in paragraph 61, it was stated as under:\n\n“61. The entire above discussion on Articles 245, 246, \n250, 251 is only to indicate that the word “made” has \nto be read in the context of the law-making process \nand, if so read, it is clear that to test repugnancy \none has to go by the making of law and not by its \ncommencement.”\n\n18.6 On the facts of the said case, this Court held that on the \nenactment of the (Central) Chit Funds Act, 1982 on 19.08.1982, \nintending to occupy the entire field of chits under Entry 7 - List \nIII, the State Legislature was denuded of its power to enact \nthe Kerala Finance Act 7 of 2002.\n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n2163\n\n18.7 Thus, when the State of Kerala intended to amend the State \nAct in 2002, it was bound to keep in mind the fact that there is \nalready a Central law on the same subject made by Parliament \nin 1982, though not in force in Kerala, whereunder there is a pro \ntanto repeal of the State Act. Therefore, the State Legislature \nought to have followed the procedure in Article 254(2) and \nought to have obtained the assent of the President.\n\n18.8 Ultimately, in paragraph 78, issue was summed up as under:\n\n“78. To sum up, Articles 246(1), (2) and 254(1) \nprovide that to the extent to which a State law is in \nconflict with or repugnant to the Central law, which \nParliament is competent to make, the Central law shall \nprevail and the State law shall be void to the extent \nof its repugnancy. This general rule of repugnancy \nis subject to Article 254(2) which inter alia provides \nthat if a law made by a State Legislature in respect \nof matters in the Concurrent List is reserved for \nconsideration by the President and receives his/her \nassent, then the State law shall prevail in that State \nover an existing law or a law made by Parliament, \nnotwithstanding its repugnancy.”\n\n19. Further, reference could also be made to the Food Safety and \nStandards Act, 2006 (“FSSA, 2006”) which has been enacted pursuant \nto Entry 52 – List I where the Parliament by a declaration made \nunder Section 2 of the said Act has declared that it is expedient in \nthe public interest that the Union should take under its control the \nfood industry. Consequently, clause (b) of Entry 33 – List III which \nspeaks of food stuffs, including edible oils seeds, and oils would be \nimpacted on account of the FSSA, 2006 and the declaration made \ntherein pursuant to Entry 52 – List I to the extent of the control under \nthe said Act. \n\n20. The reason for the aforesaid view would have to be also considered \nfrom the point of view of the fact that when an “industry” is taken \ncontrol of by the Union by specifying it in the First Schedule of the \nIDRA, it becomes a scheduled industry and to the extent of control \nenvisaged as per the Schedule and as per the provisions of IDRA. It \nis only those industries which are critical and of vital significance to \nthe Indian economy which are taken control of by the Union and one \nsuch industry is “Fermentation Industries”, which inter alia comprises \n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f2164 \n\n[2024] 10 S.C.R.\n\nof “industrial alcohol” both as a product and as a raw material for \nother industries.\n\n21. Conversely, if any industry is not a scheduled industry and does not \ncome within the scope and ambit of First Schedule of the IDRA, in \nsuch an event, not only Entry 24 - List II but also Entries 26 and \n27 - List II would fully operate. Then, Entries 26 and 27 - List II would \nnot be subject to the restriction under Entry 33(a) - List III nor to \nEntry 52 - List I. The States would have the liberty to pass laws with \nregard to trade and commerce, production supply and distribution \nof goods of any industry under Entries 26 and/or 27 - List II without \nthere being any restriction in terms of Entry 33(a) - List III. In other \nwords, insofar as a non-scheduled industry is concerned, Entry \n33(a) - List III would not at all apply and Entries 26 and/or 27 - List \nII would apply in the matter of production, supply and distribution \nof goods or trade and commerce of the products of any industry or \nany other specific Entry in List II, as the case may be. \n\n22. \n\nIn the above context, the intention of the Constitution makers in the \nmatter of division of legislative subjects between the Parliament \nand the States have to be clearly understood. In order to achieve \nconsistency of dividing the subjects of legislation not only within the \nparticular Lists, namely, the Union List, State List and Concurrent List \nbut also, inter se, between the three Lists so as to have a clarity in the \nmatter of the Parliament or the State Legislature having competence \nto make laws, the prescription under Article 246 and the mandate \nthereof would give a clue regarding interpretation of the Entries in the \nthree Lists. To reiterate, Articles 246 (1) and (2) of the Constitution \nbegins with a non-obstante clause and Article 24(3) begins with a \n“subject to” clause. On a conspectus reading of aforesaid clauses \nof Article 246, it is evident that the Legislature of a State has the \npower to make laws with respect to any matter enumerated in List III, \ni.e., Concurrent List, subject to List I which deals with Parliament’s \nexclusive powers to make laws in respect of any matter enumerated \nin List I. Therefore, a subject placed in List III, i.e., the Concurrent \nList can also be subject to the exclusive power of Parliament to \nmake laws with respect to any matter enumerated in List I (vide first \npart of Article 254(1)). Thus, the intention of the Constitution makers \nwas to preserve parliamentary supremacy while at the same time \nmaintaining a federal balance in the matter of distribution of the \nfields of legislation vis-à-vis various Entries in the three Lists. This \nis also evident on a reading of Article 246(3) which deals with the \n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n2165\n\nexclusive powers to make laws by State Legislatures in respect of \nmatters enumerated in List II being subject to clauses (1) and (2) \nof Article 246, i.e., subject to the Union List and the Concurrent List \nis in a case of conflict of laws which is irreconcilable. \n\n23. Any other view would result in a situation wherein the State \nLegislatures on the strength of Entry 33(a) – List III would have their \nown legislations on the premise that there is no notified order issued \nby the Central Government in respect of the scheduled industry \nunder Section 18G of the IDRA, and if subsequently in respect of \na product of a scheduled industry, the Central Government is to \nissue a notification under Section 18G of the IDRA, the laws that \nare in operation in the various States would become repugnant if \nthere is a direct conflict between the said State laws with the notified \norder issued by the Central Government under Section 18G of the \nIDRA. This would result in a legal quagmire and uncertainty leading \nto confusion. Therefore, for this reason also States cannot have \nlegislative competence to pass laws or take any action in respect of \nany product of a scheduled industry from the moment Section 18G \nhas been inserted to the IDRA which has been enacted pursuant \nto Entry 52 – List I. As a result, time of insertion of Section 18G to \nthe IDRA, the intention of the Union is to occupy the field insofar as \nan article or articles of scheduled industry is concerned which will \nalso include a product of a scheduled industry. Consequently, the \nStates are denuded of their powers to pass any law insofar as the \nsaid subject-matter is concerned.\n\n24. \n\nIn State of W.B. vs. Union of India, AIR 1963 SC 1241 (“State \nof W.B.”), this Court on a comparative analysis of List I in Seventh \nSchedule to the Constitution with the Seventh Schedule to the \n1935 Act noted that the powers of the Union have been enlarged \nparticularly in the field of economic unity and that this was done as \nit was felt that there should be centralised control and administration \nin certain fields of common interest if rapid economic and industrial \nprogress had to be achieved by the nation. Reference in this regard \nwas also made, inter alia, to the transfer of new Entry 33 – List III \nin the Constitution from List II of the 1935 Act. It was observed that \nthe result of ensuring such economic unity was a departure from \nany traditional pattern of federation and a conscious decision for the \ncommon good. Furthermore, in identifying deviations from traditional \nfeatures of federations, this Court noted a notable feature that is true \nof the Indian constitutional framework:\n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f2166 \n\n[2024] 10 S.C.R.\n\n“26. … (c) Distribution of powers between the Union \nand the regional units each in its sphere coordinate and \nindependent of the other. The basis of such distribution of \npower is that in matters of national importance in which \na uniform policy is desirable in the interest of the units, \nauthority is entrusted to the Union, and matters of local \nconcern remain with the States. …”\n\nImportance of “Industrial Alcohol” to the Indian Economy:\n\n25. \n\nIt is necessary to note the importance of “industrial alcohol” in \nthe Indian economy. “Industrial alcohol” is important to the Indian \neconomy for it is used in at least two sectors: i) as a key feedstock \nfor production of various chemicals in the chemicals industry; and \nii) as liquid fuel to be blended with petrol. \n\n25.1 As regards the chemical industry, the XIIth five-year plan (2012-\n2017) of the Planning Commission (“PC Report”) notes that \n“alcohol-based chemical industry occupies an important place \nin the Indian chemical industry and is a key contributor to the \ngrowth of the sector”. It also notes that several alcohol-based \nchemicals are made using “industrial alcohol” and are used \nas building blocks for various downstream industries such as \n“synthetic fibres and synthetic yarn, drugs and pharmaceuticals, \nagrochemicals, personal care products, dyestuffs, pigments, \nflavours & fragrances etc.” Further, the PC Report notes that \nalcohol based chemical industry “contributes to green chemistry” \nas chemicals are manufactured using ethanol instead of being \nmanufactured through the petro-chemical route. It also notes \nthat they contribute to foreign exchange reserves.\n\n25.2 As regards blending of ethanol with petrol, the contribution \nof Ethanol Blended with Petrol (EBP) programme of the \nGovernment of India appears significant. In this programme, \nfuel-grade ethanol is blended with petrol and is sold by Oil \nMarketing Companies (OMCs) for use as a fuel in automobiles. \nIn response to an Unstarred Question No.2764 answered on 20th \nDecember, 2023, the Minister of State for Ministry of Consumer \nAffairs, Food & Public Distribution had answered that: \n\ni) \n\nThe Government of India has been implementing EBP \nprogramme and has fixed the target of 20% blending of \nethanol with petrol by 2025;\n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n2167\n\nii) \n\nThe supply of ethanol to OMCs has increased by more \nthan 13 times from 38 crore litres in ESY 2013-13 to 502 \ncrore litres in ESY 2022-23;\n\niii) To achieve the target of 20% blending by 2025, about 1016 \ncrore litres of ethanol would be required and for this, about \n1700 crore litres of ethanol producing capacity is required.\n\n25.3 Further, a report of the Ministry of Petroleum and Natural Gas, \nGovernment of India titled “Ethanol Growth Story” suggests \nthat the EBP programme has at least three benefits: first, it \nraises income of farmers which is evident from the observation \nthat OMCs have paid sugar mills nearly Rs.81,796 crore for \nethanol supplies up to 2022. Second, it reduces import bills \nand improves India’s energy security. The report suggests that \nthe cumulative foreign exchange impact is estimated to be over \nRs.53,894 crore between 2014 and 2022. Third, it lowers CO2 \nemissions and promotes a cleaner environment. The report \nestimates that Greenhouse gas emissions were reduced by \n318.2 lac tonnes due to the EBP programme between 2014 \nand 2022.\n\n26. Thus, insofar as “Fermentation Industries” (other than potable alcohol) \nis concerned, both alcohol and other products of “Fermentation \nIndustries” being a scheduled industry under the IDRA passed \nunder Entry 52 – List I it would clearly be within the scope of Union \nlegislation. It is clarified that as far as the concept of “intoxicating \nliquors” versus “industrial alcohol” is concerned, it is clear that Entry \n33(a) – List III does not deal with “intoxicating liquors” which is a \nState subject under Entry 8 – List II. “Fermentation Industries” is a \ncontrolled industry and is a scheduled industry under the IDRA. It \nhas been clarified by the 2016 Amendment that Item 26 dealing with \n“Fermentation Industries” does not include potable alcohol. Therefore, \ninsofar as “intoxicating liquors” which is “potable liquors” is concerned, \nonly the State Legislatures have the legal competence to enact laws \nconcerning the said subject. Therefore, other types of liquor (i.e. \nexcluding “intoxicating liquors”) comes within the nomenclature of \n“Fermentation Industries” which is a scheduled industry under IDRA. \n\n27. Since qua State Legislatures, Article 246(2) is also subject to Article \n246(1), the legislation which could have been made under List III \n(Concurrent List) can also be subject to legislation made under Entry \n52 – List I. This is expressly so having regard to Entry 33(a) – List \n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f2168 \n\n[2024] 10 S.C.R.\n\nIII as any law regarding trade and commerce in, and the production, \nsupply and distribution of the products of any industry where the \ncontrol of such industry by the Union is declared by Parliament by \nlaw to be expedient in the public interest, and imported goods of \nthe same kind as such products, would be subject to a law made \nas per Entry 52 – List I i.e., IDRA. This is because a Parliamentary \nlaw which is made by virtue of an Entry under List I has supremacy \nover any other law in List II or List III when they are irreconcilable \nor when the doctrine of occupied field applies respectively. \n\n28. \n\nIn Mineral Area Development Authority, I have voiced similar \nconcerns as in the present case in the following words:\n\n“36.3 The Government of India Act, 1935 was the first \ncomprehensive blueprint for legislative division of power in \nIndia between federal, provincial and concurrent spheres \nwhich resolved residuary powers to rest with the Federal \nGovernment. Though there are apparent similarities \nbetween the Government of India Act, 1935 and the Indian \nConstitution, yet factors, such as, regulation of economic \ncompetition and the development of twentieth century \nwelfare States guided the constitutional blueprint for a \nmodel of federalism in which provincial initiative should not \npreclude national coordination, particularly, in the fields of \nsocio-economic spheres.\n\n36.4 According to Tillin, “in the case of India, political \neconomy considerations intersect with the accommodation \nof diversity in shaping the resulting forms of federalism”. \nThe question of a desirable balance between Central and \nthe State Governments has to be viewed in the context \nof the country continuing to confront the need to promote \neconomic growth while upholding and expanding social \nrights. \n\nSarkaria Commission Report on Centre-State Relations:\n\n37. Resolved to study and reform the existing arrangements \nbetween the Union and the States in an evolving socio-\neconomic scenario, the Ministry of Home Affairs vide \nOrder dated 09.06.1983 constituted a Commission under \nthe Chairmanship of Justice R.S. Sarkaria with Shri B. \nSivaraman and Dr. S.R. Sen having due regard to the \n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n2169\n\nframework of the Constitution. At this stage, reference to \nSection 5, Chapter II – Legislative Relations of the Report of \nthe Sarkaria Commission (“Sarkaria Commission Report”) \nmay be of assistance:\n\n“2.5.21 In every Constitutional system having \ntwo levels of government with demarcated \njurisdiction, contents respecting power are \ninevitable. A law passed by a State legislature \non a matter assigned to it under the Constitution \nthough otherwise valid, may impinge upon \nthe competence of the Union or vice versa. \nSimultaneous operation side-by-side of two \ninconsistent laws, each of equal validity, will be \nan absurdity. The rule of Federal Supremacy \nis a technique to avoid such absurdity, resolve \nconflicts and ensure harmony between the \nUnion and State laws. This principle, therefore, \nis indispensable for the successful functioning \nof any federal or quasi-federal Constitution. It \nis indeed the kingpin of the federal; system. \n“Draw it out, the entire system falls to pieces”\n\n2.5.22 If the principles of Union Supremacy are \nexcluded from Articles 246 and 254, it is not \ndifficult to imagine its deleterious results. There \nwill be every possibility of our two-tier political \nsystem being stultified by internecine strife, \nlegal chaos and confusion caused by a host \nof conflicting laws, much to the bewilderment \nof the common citizen. Integrated legislative \npolicy and uniformity on basic issues of \ncommon Union-State concern will be stymied. \nThe federal principle of unity in diversity will be \nvery much a casualty. The extreme proposal \nthat the power of Parliament to legislate on a \nConcurrent topic should be subject to the prior \nconcurrence of the States, would, in effect, \ninvert the principle of Union Supremacy and \nconvert it into one of State Supremacy in the \nConcurrent sphere. The very object of putting \n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f2170 \n\n[2024] 10 S.C.R.\n\ncertain matters in the Concurrent List is to enable \nthe Union Legislature to ensure uniformity in \nlaws on their main aspects throughout the \ncountry. The proposal in question will, in effect, \nfrustrate that object. The State Legislatures \nbecause of their territorially limited jurisdictions, \nare inherently incapable of ensuring such \nuniformity. It is only the Union, whose legislative \njurisdiction extends throughout the territory \nof India, which can perform this pre-eminent \nrole. The argument that the States should \nhave legislative paramountcy over the Union \nis basically unsound. It involves a negation of \nthe elementary truth that the ‘whole’ is greater \nthan the ‘part’.”\n\n(emphasis supplied)\n\nAs the paragraphs extracted above elucidate, the \nCommission was of the firm view that the principles of \nUnion Supremacy cannot be undermined from Articles 246 \nand 254. While the immediate paragraph is concerned with \nlegislative actions taken under the List III - Concurrent List, \nthey provide us a beneficial lens to both the importance \nof Union supremacy in matters that demand national \nuniformity and the Commission’s following discussion on \n“Mines and Minerals” in Chapter XIII.”\n\n29. Constitutional law is mainly concerned with the basic features or the \nframework of distribution of powers between the different organs of \nthe State; between the Union and its units and between the State and \nthe citizens. But there is something in a Constitution that is even more \nprimordial than the structure and the features. These are the ideals \non which the founding parents, in their wisdom and sagacity, built \nthe entire edifice of the Constitution itself. It is all important that this \nedifice is not dislodged while attempting to dynamically interpret the \nConstitution. These Constitutional ideals are irreducible and underpin \nthe survival and success of constitutional order and a concordial \nsociety. Federalism is one such ideal where the Constitution defines \na federal structure with a unitary spirit in Article 246 read with the \nthree Lists of the Seventh Schedule of the Constitution. \n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n2171\n\nConclusions on interplay of legislative Entries: \n\n30. \n\nIn view of the aforesaid discussion, my conclusions on the interplay \nof the legislative Entries under consideration are as under:\n\nI. \n\nThe field of legislation comprised in Entry 8 – List II is carved \nout of Entry 24 – List II. \n\nThus, the subject relating to “intoxicating liquors”, that is to say, \nthe production, manufacture, possession, transport, purchase \nand sale of “intoxicating liquors” being a specific subject is taken \nout of the general subject of “industries” under Entry 24 – List II. \n\nII. As a result, Entry 52 – List I or any law made under that Entry \nby the Parliament cannot intrude or trench upon any law made \nby the State Legislatures under Entry 8 – List II. \n\nThus, the Parliament cannot take under its control the subject \npertaining to “intoxicating liquors” under any law, such as, \nIDRA made under Entry 52 – List I. Therefore, the subject \n“intoxicating liquors” falls exclusively within the domain of the \nState Legislatures which also have the obligation to prevent \n“industrial alcohol” being converted into “intoxicating liquors” as \nan abuse and, therefore, pass legislations or take State action \nin that regard having regard to Article 47 of the Constitution \nof India. \n\nIII. Entry 33(a) – List III (Concurrent List) and any law made or \nto be made by the State Legislatures under the said Entry is \nsubject to Parliamentary law made either under Entry 52 – \nList I or under Entry 33(a) – List III in terms of the first part and \nsecond part of Article 254(1) respectively. \n\nThus, if any law has been made by the Parliament by virtue of \nEntry 52 – List I, such as, the IDRA and there is an intention to \noccupy the field, the State law would be subject to the doctrine \nof occupied field. Thus, Section 18G of the IDRA which has \nbeen made by virtue of Entry 52 – List I thereof would prevail \non the basis of the aforesaid doctrine. Consequently, it is held \nthat issuance of a notified order under Section 18G of the IDRA \nis neither a sine qua non nor is it a condition precedent for the \nState Legislatures to restrain exercise of powers under Entry \n33(a) – List III. In other words, the mere insertion of Section \n18G to the IDRA implies that the Parliament has intended to \n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f2172 \n\n[2024] 10 S.C.R.\n\noccupy the field demarcated under the aforesaid provision. \nAlso, a notified order when issued by the Central Government \nunder Section 18G of the IDRA cannot be questioned in any \nCourt of law. This also indicates that the doctrine of occupied \nfield applies to the said Section vis-à-vis a scheduled industry \nunder the IDRA. \n\nIV. \n\nIf the Parliament has made a law under Entry 52 – List I and \nintends to occupy the whole field then the State Legislatures are \ndenuded of their powers and therefore, they would lack legislative \ncompetence to enact a law under Entry 33(a) – List III.\n\nIn the context of “industrial alcohol” and in terms of Item 26 of \nthe First Schedule of the IDRA i.e. “Fermentation Industries”, \nit is only the Central Government which has the powers to act \nunder Section 18G of the said Act. So long as an industry is \na scheduled industry under the IDRA and Section 18G of the \nsaid Act remains on the statute book, the State Legislatures \nare denuded of their powers to pass a legislation or to take \nany action in respect of the products of a scheduled industry \nunder Entry 33(a) – List III.\n\nEffect of overruling Synthetics and Chemicals (7J):\n\n31. The judgment of this Court in Synthetics and Chemicals (7J) \nhas held the field since 1989 for three and a half decades. The \ndoubts which have arisen regarding the said judgment subsequently \nhave led to the reference to a larger Bench. On re-considering \nthe judgment in Synthetics and Chemicals (7J) in light of the \narguments advanced before this nine-Judge bench and in the \nbackdrop of the constitutional Entries in the three Lists, I find that \nexcept for a clarification and deletion of the words “both potable \nand ” in paragraph 84 of AIR version of the Report, the said judgment \nwould not call for any intervention. The reasons for saying so can \nbe stated as under: \n\nFirstly, the judgment has held the field for three and a half \ndecades on certain concrete ideas pertaining to liquors \nas part of “Fermentation Industries”, which is a scheduled \nindustry, and that part which is excluded from the aforesaid \nscheduled industry. This is based on the interplay of Entries \nin Lists I and II. \n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n2173\n\nThe judgment in Synthetics and Chemicals (7J) has \ncrystallised the concepts of “intoxicating liquors” and \n“industrial alcohol” which are clearly distinguished in \nlegislations of the State and in administration or governance \nfor several decades on the basis of constitutional \ndemarcation of legislative entries. Consequently, it held \nthat “Fermentation Industries” is a controlled industry and \nI have now clarified that it does not take within its ambit \n“intoxicating liquors” or potable alcohol. \n\nThe judgment in Synthetics and Chemicals (7J) correctly \nheld on a conspectus reading of Entry 8 – List II, Entry \n6 - List II and Article 47 that State Legislatures have the \ncompetence to ensure that “industrial alcohol” or non-\npotable alcohol is not diverted and misused as a substitute \nfor potable alcohol. \n\nSecondly, the judgment has correctly considered the \nsignificance of insertion of Section 18G to the IDRA which \nis a Parliamentary Law made under Entry 52 – List I and \nthe consequences that follow in light of the doctrine of \noccupied field in the context of “Fermentation Industries”, \na scheduled industry, by bearing in mind the first part of \nArticle 254(1) of the Constitution. \n\nThirdly, the reasons assigned in Synthetics and \nChemicals (7J) for invoking the doctrine of occupied \nfield in the context of “Fermentation Industries” and in the \ncontext of Section 18G of the IDRA would equally apply \nto all other scheduled industries under the said Act. Any \ninterference with the said legal position would have a \ncascading effect on other scheduled industries thereby \ngiving legislative competence in respect of all scheduled \nindustries to the States under Entry 33(a) – List III. This \nwould result in multiple States as well as the Union having \npowers to make laws which would lead to the scheduled \nindustries under IDRA pale into insignificance. This would \ndefeat the purpose of Entry 52 – List I and the laws made \nthereunder; such as IDRA. \n\nFourthly, the critical importance of scheduled industries in \nthe Indian economy must not be lost sight of. The object \nand purpose of Entry 52 – List I and passing of laws on \n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f2174 \n\n[2024] 10 S.C.R.\n\nthe strength of the said Entry by the Parliament taking over \ncontrol of certain industries by a declaration made by law \nas expedient in the public interest, is a factor which cannot \nbe lost sight of while answering the reference made to this \nBench in the form of various questions raised. This aspect \nhas been borne in mind in Synthetics and Chemicals \n(7J) while deciding the issues raised therein. \n\nFifthly, if the judgment in Synthetics and Chemicals \n(7J) is overruled then all State legislatures can also make \nlaws under Entry 33(a) – List III in respect of scheduled \nindustries. This would result in IDRA made under Entry \n52 – List I and Entry 52 – List I itself losing significance \nas the object and purpose of taking control of certain \nindustries by insertion of the said industries as scheduled \nindustries under the said Act would be defeated. \n\nSixthly, if industries of critical importance to the Indian \neconomy which are scheduled industries under the IDRA \nwhich are under the control of the Union by a declaration \nmade by Parliament by law are allowed to be legislated \nupon by the State legislatures, the whole object of taking \ncontrol of such industries by the Union for ensuring \nuniformity in their development and for ensuring the object \nand purpose of the IDRA would be defeated. This would \nresult in a haphazard development of such scheduled \nindustries in the country. For instance, if “industrial alcohol” \nis read as coming within the scope and ambit of Entry \n8 – List II then it would be excluded from the scheduled \nindustry. Such a state of affairs would not be conducive \nto the economy as the scheduled industries such as \n“Fermentation Industries”, minus potable alcohol play a \nsignificant role in the Indian economy. \n\nSeventhly, the interpretation of the constitutional Entries and \nthe provisions of the Constitution must be so made bearing \nin mind the intentions of the framers of the Constitution \nand the nature and structure of the Indian economy and \nthe need for a uniform development throughout the country \nof certain industries which have been taken control of by \nthe Union. This approach has been adopted in Synthetics \nand Chemicals (7J).\n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n2175\n\nEighthly, the principle of federal balance must yield to \nthe doctrine of Parliamentary supremacy in certain areas \nsuch as when laws are made under Entry 52 or Entry \n54 or Entry 7 – List I such as in the present cases. This \nis because of the unique manner in which Article 246 of \nthe Constitution is worded and the division of legislative \nsubjects between the Parliament and the State legislatures, \nhaving regard to the unique federal structure in India with \nthe balance tipping in favour of the Union in certain niche \nareas of legislation and governance. \n\nNinthly, the Amendment Act, 2016 has brought much \nneeded clarity on the issue and is the correct position of \nlaw compatible with the scheme of legislative competence \nas under our Constitution. I have already held that merely \nbecause “industrial alcohol” can be easily manufactured \ninto or misused to become “intoxicating liquors” would \nnot grant States the competence to wholly regulate \n“industrial alcohol”. State legislatures only have legislative \ncompetence over what is “intoxicating liquors” as a \nbeverage. Therefore, the judgment in Synthetics and \nChemicals (7J) is good law and was most correct in \npostulating that State legislatures will only have the \ncompetence to prevent misuse in interest of public health. \n\nFor the aforesaid reasons, I am of the view that although the judgment \nin Synthetics and Chemicals (7J) calls for only a clarification, it \ndoes not require any overruling.\n\nMy answers to the questions formulated:\n\n32. Consequently, the questions formulated are accordingly answered \n\nas under:\n\nQues. 1. Does Section 2 of the Industries (Development and \nRegulation) Act, 1951, have any impact on the field covered \nby Section 18G of the said Act or Entry 33(a) of List III of the \nSeventh Schedule of the Constitution?\n\nAns.: Entry 33(a) – List III has to be read in the context of Entry \n52 – List I. IDRA is relatable to Entry 52 – List I. Section 2 of \nthe IDRA has a nexus and is connected with Section 18G of \nthe said Act. Therefore, Entry 33(a) – List III is impacted by \nSection 2 read with Section 18G of the IDRA.\n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f2176 \n\n[2024] 10 S.C.R.\n\nQues. 2. Does Section 18G of the aforesaid Act fall under Entry 52 \nof List I of the Seventh Schedule of the Constitution, or is it \ncovered by Entry 33(a) of List III thereof?\n\nAns.: Section 18G of the IDRA is directly relatable to Entry 52 – List \nI which has to be read in the context of Section 2 of IDRA. \nThe doctrine of occupied field applies and the legislative field \nunder Entry 33(a) – List III is covered by the said provision \non the basis of doctrine of occupied field under first part of \nArticle 254 of the Constitution.\n\nQues. 3. In the absence of any notified order by the Central \nGovernment under Section 18G of the above Act, is the power \nof the State to legislate in respect of matters enumerated in \nEntry 33 of List III ousted?\n\nAns.: Yes, even in the absence of any notified order by the Central \nGovernment under Section 18G of the IDRA, the power of \nthe States to legislate in respect of matters enumerated in \nEntry 33(a) – List III is ousted on the basis of the doctrine of \noccupied field as aforestated.\n\nOn this aspect, the judgment of this Court in Synthetics and \nChemicals (7J) is correct. \n\nQues. Does the mere enactment of Section 18G of the above Act, \ngive rise to a presumption that it was the intention of the \nCentral Government to cover the entire field in respect of \nEntry 33(a) - List III so as to oust the States’ competence to \nlegislate in respect of matters relating thereto?\n\nAns.: Yes, the mere enactment of section 18G of the IDRA gives \nrise to a presumption that it was the intention of the Parliament \nand Central Government to cover the entire field in respect \nof Entry 33(a) - List III so as to oust the States’ competence \nto legislate in respect of matters relating thereto.\n\nAnswer given to question (3) above is reiterated here.\n\nQues. 5. Does the mere presence of Section 18G of the above Act, \noust the State’s power to legislate in regard to matters falling \nunder Entry 33(a) of List III?\n\nAns.: Yes, the mere presence of Section 18G of the IDRA would oust \nthe State’s power to legislate in regard to matters falling under \nEntry 33(a) - List III. The doctrine of occupied field applies.\n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n2177\n\nQues. 6. Does the interpretation given in Synthetics and Chemicals \ncase (1990) 1 SCC 109 in respect of Section 18G of the \nIndustries (Development and Regulation) Act, 1951, correctly \nstate the law regarding the States’ power to regulate “industrial \nalcohol” as a product of the scheduled industry under Entry \n33(a) of List III of the Seventh Schedule of the Constitution \nin view of Clause (a) thereof?\n\nAns.: Yes, the interpretation given in Synthetics and Chemicals \ncase (1990) 1 SCC 109 in respect of Section 18G of the IDRA \ncorrectly states the law. Even with regard to “industrial alcohol” \nas a product which falls within “Fermentation Industries” \nin respect of which the Union has assumed control, in the \nabsence of a notified order, the competence of the State to \nact under Entry 33 - List III is denuded.\n\nMy answers to the conclusions of learned Chief Justice:\n\n33. His Lordship, the Chief Justice of India has overruled the judgment \nin Synthetics and Chemicals (7J) and has come to the following \nconclusions and my answers to the same are in a tabular form as under:\n\nPoint(s)\n\nConclusions arrived at \nby Hon’ble the CJI\n\nMy Conclusions\n\na.\n\nEntry 8 of List II of the \nSeventh Schedule to the \nConstitution is both an \nindustry-based entry and \na product-based entry. \nThe words that follow the \nexpression “that is to say” in \nthe Entry are not exhaustive \nof its contents. It includes \nthe regulation of everything \nfrom the raw materials to the \nconsumption of ‘intoxicating \nliquor’;\n\nIn my view, Entry 8 – List II deals \nwith “intoxicating liquors”. The \nmisuse, diversion or abuse \nof “industrial alcohol” as \n“intoxicating liquors” can also \nbe controlled and prevented \nunder Entry 8 – List II by the \nState Legislatures having \nregard to Article 47 of the \nConstitution. It is also made \nclear that the IDRA which has \nbeen enacted by the Parliament \nby virtue of Entry 52 – List I has \ntaken control of “Fermentation \nIndustries” as a scheduled \nindustry. Such “Fermentation \nIndustries” would exclude \n“intoxicating liquors”.\n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f2178 \n\n[2024] 10 S.C.R.\n\nb.\n\nc.\n\nd.\n\nParliament cannot occupy \nt h e f i e l d o f t h e e n t i r e \nindustry merely by issuing \na declaration under Entry \n52 of List I. The State \nLegislature’s competence \nunder Entry 24 of List II is \ndenuded only to the extent \nof the field covered by the \nlaw of Parliament under \nEntry 52 of List I;\n\nParliament does not have \nthe legislative competence \nt o e n a c t a l a w t a k i n g \ncontrol of the industry of \nintoxicating liquor covered \nby Entry 8 of List II in \ne x e r c i s e o f t h e p o w e r \nunder Article 246 read with \nEntry 52 of List I;\n\nT h e j u d g m e n t s o f t h e \nBombay High Court in \nFN Balsara v. State of \nB o m b a y ( s u p r a ) , t h i s \nC o u r t i n F N B a l s a r a \n(su pra ) a nd So u t he r n \nPharmaceuticals (supra) \ndid not limit the meaning of \nthe expression ‘intoxicating \nl i q u o r ’ t o i t s p o p u l a r \nmeaning, that is, alcoholic \nbeverages that produce \nintoxication. All the three \njudgments interpreted the \nexpression to cover alcohol \nthat could be noxiously \nused to the detriment of \nhealth;\n\nParliament can occupy the \nfield of the entire industry by \nmerely issuing a declaration \nunder Entry 52 – List I and \nt h e S t a t e L e g i s l a t u r e ’ s \ncompetence under Entry 24 \n– List II is denuded to the \nfield of the entire industry \nand specifically to the extent \nof the field covered by the \nlaw of Parliament under Entry \n52 – List I. \n\nI agree.\n\nThe context of the controversy \nmust be borne in mind in the \nsaid cases. The aforesaid \nd e c i s i o n s i n s u b s t a n c e \nlimited the meaning of the \ne x p r e s s i o n “ i n t o x i c a t i n g \nliquors” to its popular meaning \ni.e. “alcoholic beverages” \nthat produce intoxication. \nTherefore, in the context of \nprohibition of “intoxicating \nl i q u o r ” a s a b e v e r a g e , \nthere could not have been \nprohibition of production of \nalcohol used for medicinal \nand toilet preparation as well \nas “industrial alcohol” or non-\npotable alcohol.\n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n2179\n\ne.\n\nf.\n\nThe expression ‘intoxicating \nliquor’ in Entry 8 has not \na c q u i r e d a l e g i s l a t i v e \nmeaning on an application \nof the test laid down in \nGanon Dunkerley (supra);\n\nThe study of the evolution \nof the legislative entries \non alcohol indicates that \nthe use of the expressions \n“intoxicating liquor” and \n“alcoholic liquor for human \nconsumption” in the Seventh \nSchedule was a matter well-\nthought of. It also indicates \nthat the members of the \nConstituent Assembly were \naware of use of the variants \nof alcohol as a raw material \nin the production of multiple \nproducts;\n\nThe expression “intoxicating \nliquor” in Entry 8 has acquired \na legislative and judicial \nmeaning over the decades as \nper the discussion above.\n\nT h e m e m b e r s o f t h e \nConstituent Assembly were \nclear in what they envisaged \nwithin the scope and ambit of \nthe expression “intoxicating \nliquors” in Entry 8 – List II. \nThis is also evident from \nItem 26 of the First Schedule \nof the IDRA. “Intoxicating \nliquors” is only a segment of \nthe “Fermentation Industries”, \nn a m e l y, p o t a b l e a l c o h o l . \nThere was no intention on \nthe part of the members of \nthe Constituent Assembly to \nread within the expression \n“ i n t o x i c a t i n g l i q u o r s ” \nnon-potable or “industrial \nalcohol”. Further, in order to \nhave a consistency between \nwhat was envisaged under \nEntry 84 – List I and Entry \n51 – List II in the context of \nalcoholic liquors for human \nconsumption, the taxing Entry \nin List II which is within the \nlegislative competence of the \nStates follows the regulatory \nEntry in Entry 8 – List II. \nTherefore, the use of the \nexpression “industrial alcohol” \nor non-potable alcohol in \nSynthetics and Chemicals (7J) \n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f2180 \n\n[2024] 10 S.C.R.\n\nwas only to crystallise all \nvariants of alcohol which \nwere non-potable and to \ndistinguish the same from \npotable alcohol meant only \nfor human consumption as a \nbeverage.\n\nThe entire controversy cannot \nbe viewed from the point of view \nof alcohol being used as a raw \nmaterial and final product such \nas hand sanitizer containing \nalcohol. The potential misuse \nof alcohol cannot be the basis \nfor interpreting an Entry such \nas Entry 8 – List II. Ultimately, \nthe “Fermentation Industries” \nhave to be borne in mind \nwhich takes within its canvas \nonly non-potable / “industrial \nalcohol”. The aspect of public \nhealth having a corelation to \nEntry 8 – List II dealing with \n“intoxicating liquor” and the \nmisuse of alcohol cannot be \na guide while interpreting the \ncontent of the said Entry and \ntherefore, its scope and ambit \nbeing amplified beyond what \nit really envisages as a field \nof legislation for the States to \nlegislate upon.\n\ng.\n\nEntry 8 of List II is based \no n p u b l i c i n t e r e s t . I t \ns e e k s t o e n h a n c e t h e \nscope of the entry beyond \npotable alcohol. This is \ninferable from the use of \nthe phrase ‘intoxicating’ \nand other accompanying \nwords in the Entry. Alcohol \nis inherently a noxious \nsubstance that is prone \nto misuse affecting public \nhealth at large. Entry 8 \ncovers alcohol that could \nbe used noxiously to the \ndetriment of public health. \nT h i s i n c l u d e s a l c o h o l \nsuch as rectified spirit, \nENA and denatured spirit \nwhich are used as raw \nmaterials in the production \nof potable alcohol and \nother products. However, \nit does not include the \nfinal product (such as \na h a n d s a n i t i s e r ) t h a t \ncontains alcohol since \nsuch an interpretation will \nsubstantially diminish the \nscope of multiple other \nlegislative entries;\n\nDigital Supreme Court Reports\f[2024] 10 S.C.R. \n\n2181\n\nh.\n\nThe judgment in Synthetics \n(7J) (supra) is overruled in \nterms of this judgment;\n\ni.\n\nj.\n\nk.\n\nI t e m 2 6 o f t h e F i r s t \nS c h e d u l e t o t h e I D R A \nmust be read as excluding \nthe industry “intoxicating \nliquor”, as interpreted in this \njudgement;\n\nThe correctness of the \njudgment in Tika Ramji \n(supra) on the interpretation \nof word ‘industry’ as it \noccurs in the Legislative \nentries does not fall for \nd e t e r m i n a t i o n i n t h i s \nreference; and\n\nT h e i s s u e o f w h e t h e r \nSection 18G of the IDRA \ncovers the field under Entry \n33(a) of List III does not \narise for adjudication in view \nof the finding that denatured \nalcohol is covered by Entry \n8 of List II.”\n\nThe judgment in Synthetics \nand Chemicals (7J) need not \nbe overruled in relation to \nSection 18G of the IDRA and it \ncontinues to be good law in the \ncontext of what is comprised \nin the expression “industrial \nalcohol” and “intoxicating \nliquors” except what has been \nclarified above in Entry 8 – \nList II.\n\nItem 26 of the First Schedule \nof the IDRA must be read \ne x c l u d i n g o n l y w h a t i s \ncontained in the expression \n“intoxicating liquors” as \ninterpreted above in Entry \n8 – List II.\n\nIn my opinion, Tika Ramji \nis held to be not good law \ninsofar as the requirement of \nissuance of a notified order as \na condition precedent for the \nfield to be occupied, has been \nmandated therein.\n\nDenatured alcohol belongs \nto the family of “industrial \nalcohol” and therefore, Section \n18G of the IDRA has a bearing \non the said product. Section \n18G occupies the field under \nEntry 33(a) – List III and, \nthereby, only Parliament is \ncompetent to legislate on all \narticles or class of articles \nrelated to a scheduled industry \ni.e. “Fermentation Industries”.\n\nState of U.P. & Ors. v. M/s Lalta Prasad Vaish and sons\f2182 \n\n[2024] 10 S.C.R.\n\n34. Reference is answered in the above terms. \n\n35. The Registry to place the matters before Hon’ble the Chief Justice of \nIndia for seeking orders for being listed before the appropriate Bench.\n\n36. \n\nI must place on record my sincere appreciation to the learned Attorney \nGeneral, learned Solicitor General and their teams, learned senior \ncounsel appearing for the respective parties, learned instructing \ncounsel and learned counsel for the respective parties for their \nvaluable assistance to this Bench.\n\nResult of the Case: Reference answered in above terms.\n\n†Headnotes prepared by: Ankit Gyan\n\nDigital Supreme Court Reports\f"}