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

Constitution of India – Whether Parliament have the legislative competence to enact a law taking control of the industry of intoxicating liquor covered by Entry 8 of List II in exercise of the power under Article 246 read with Entry 52 of List I: Held: [Per Dr Dhananjaya Y Chandrachud, CJI, for himself and for Hrishikesh Roy, Abhay S Oka, J B Pardiwala, Manoj Misra, Ujjal Bhuyan, Satish Chandra Sharma, Augustine George Masih, JJ.] Parliament does not have the legislative competence to enact a law taking control of the industry of intoxicating liquor covered by Entry 8 of List II in exercise of the power under Article 246 read with Entry 52 of List I. [Para 140(c)] – [Per B.V. Nagarathna, J. (concurring)]. [Para 33(c)]

Constitution of India – Meaning of the expression ‘intoxicating liquor’ by judgments of the Bombay High Court in FN Balsara v. State of Bombay, this Court in FN Balsara and Southern Pharmaceuticals:

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

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

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

Constitution of India – Entry 8 of List II – Scope and ambit: Held: [Per Dr Dhananjaya Y Chandrachud, CJI, for himself and for Hrishikesh Roy, Abhay S Oka, J B Pardiwala, Manoj Misra, Ujjal Bhuyan, Satish Chandra Sharma, Augustine George Masih, JJ.] Entry 8 of List II is based on public interest – It seeks to enhance the scope of the entry beyond potable alcohol – This is inferable from the use of the phrase ‘intoxicating’ and other accompanying words in the Entry – Alcohol is inherently a noxious substance that is prone to misuse affecting public health at large – Entry 8 covers alcohol that could be used noxiously to the detriment of public health – This includes alcohol such as rectified spirit, ENA and denatured spirit which are used as raw materials in the production of potable alcohol and other products – However, it does not include the final product (such as a hand sanitiser) that contains alcohol since such an interpretation will substantially diminish the scope of multiple other legislative entries. [Para 140(g)] – [Per B.V. Nagarathna, J. (dissenting)] The entire controversy cannot be viewed from the point of view of alcohol being used as a raw material and final product such as hand sanitizer containing alcohol – The potential misuse of alcohol cannot be the basis for interpreting an Entry such as Entry 8-List II – Ultimately, the “Fermentation Industries” have to be borne in mind which takes within its canvas only nonpotable /“industrial alcohol” – The aspect of public health having a corelation to Entry 8-List II dealing with “intoxicating liquor” and the misuse of alcohol cannot be a guide while interpreting the content of the said Entry and therefore, its scope and ambit being amplified beyond what it really envisages as a field of legislation for the States to legislate upon. [Para 33(g)] Constitution of India – The judgment in Synthetics (7J) – Overruled:

Held: [Per Dr Dhananjaya Y Chandrachud, CJI, for himself and for Hrishikesh Roy, Abhay S Oka, J B Pardiwala, Manoj Misra, Ujjal Bhuyan, Satish Chandra Sharma, Augustine George Masih, JJ.] The judgment in Synthetics (7J) is overruled in terms of this judgment. [Para 140(h)] – [Per B.V. Nagarathna, J. (dissenting)] The judgment in Synthetics and Chemicals (7J) need not be overruled in relation to Section 18G of the IDRA and it continues to be good law in the context of what is comprised in the expression “industrial alcohol” and “intoxicating liquors” except what has been clarified above in Entry 8-List II.[Para 33(h)] Constitution of India – Entry 8 of List II – Industries (Development and Regulation) Act 1951 – Item 26:

Held: [Per Dr Dhananjaya Y Chandrachud, CJI, for himself and for Hrishikesh Roy, Abhay S Oka, J B Pardiwala, Manoj Misra, Ujjal Bhuyan, Satish Chandra Sharma, Augustine George Masih, JJ.] Item 26 of the First Schedule to the IDRA must be read as excluding the industry “intoxicating liquor”. [Para 140(i)] – [Per B.V. Nagarathna, J. (dissenting)] Item 26 of the First Schedule of the IDRA must be read excluding only what is contained in the expression “intoxicating liquors” as interpreted above in Entry 8-List II. [Para 33(i)]

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

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

Constitution of India – Article 246 – Federal balance of the distribution of legislative powers between the Union and the States:

Held: [Per Dr Dhananjaya Y Chandrachud, CJI, for himself and for Hrishikesh Roy, Abhay S Oka, J B Pardiwala, Manoj Misra, Ujjal Bhuyan, Satish Chandra Sharma, Augustine George Masih, JJ.] The federal balance of the distribution of legislative powers between the Union and the States rests on the interpretation of the phrase “notwithstanding” in Clause (1) of Article 246 and “subject to” in Clause (3) of Article 246 – It is more than clear that the phrases provide predominance to Parliament over State Legislatures – The federal balance lies not on the recognition that the Constitution grants Parliament predominant legislative power but on the identification of the scope of such predominance – The scope of the non-obstante clause in Article 246(1) and the subjugation clause in Article 246(3) must not be interpreted in isolation but along with the substantive provisions of the clauses – Clause (1) of Article 246 grants Parliament the “exclusive power” to enact laws with respect to matters in List I – Similarly, Clause (3) of Article 246 grants the Legislature of States, the “exclusive power” to enact laws with respect to matters in List II – On a holistic interpretation of the provisions, it is clear that the non-obstante clause in Article 246(1) and the subjugation clause in Article 246(3) do not permit Parliament to enact laws with respect to the entries in List II – Each of the legislative bodies are sovereign and supreme within the sphere that is allocated to them in the Seventh Schedule – It is crucial to note that Clause (1) of Article 246 stipulates that the power of Parliament to make laws with respect to entries in List I is ‘notwithstanding’ not just the power to make laws with respect to matters in the Concurrent list but also the power to make laws with respect to matters in the State List – A combined reading of the non-obstante clause and the subjugation clause along with the use of the phrase “exclusive power” means only one thing, that when there is a conflict between the entries in List I and List II, the power of Parliament supersedes. [Para 44] Constitution of India – Legislative entries – Interpretation – Overlap between two entries:

Held: [Per Dr Dhananjaya Y Chandrachud, CJI, for himself and for Hrishikesh Roy, Abhay S Oka, J B Pardiwala, Manoj Misra, Ujjal Bhuyan, Satish Chandra Sharma, Augustine George Masih, JJ.] The legislative entries must be given a wide meaning – All incidental and ancillary matters which can be fairly and reasonably comprehended must be brought within them – However, if there is an overlap between two entries the Court must endeavour to interpret the entries harmoniously – While interpreting the entries harmoniously, it must be ensured that no entry is rendered redundant – This principle of construction applies equally to entries within the same List and entries within different lists – The principle of parliamentary supremacy must be applied only when the attempted reconciliation by the above methods of interpretation fails. [Para 51]

Constitution of India – Entry 8 of List II – Usage of phrase “that is to say”:

Held: [Per Dr Dhananjaya Y Chandrachud, CJI, for himself and for Hrishikesh Roy, Abhay S Oka, J B Pardiwala, Manoj Misra, Ujjal Bhuyan, Satish Chandra Sharma, Augustine George Masih, JJ.] The expression ‘that is to say’ in Entry 8 of List II cannot be interpreted to circumscribe the scope of the entry – The words that follow ‘that is to say’ are illustrative and explanatory of the scope of the provision – The expression does not limit the scope of the entry – Thus, the scope of Entry 8 of List II cannot be limited to the ‘production, manufacture, possession, transport, purchase and sale’ of Intoxicating Liquor. [Para 55] Constitution of India – Entry 52 of List I – Whether an implied limitation can be read into Entry 52 of List I in the absence of the expression “to the extent to which”:

Held: [Per Dr Dhananjaya Y Chandrachud, CJI, for himself and for Hrishikesh Roy, Abhay S Oka, J B Pardiwala, Manoj Misra, Ujjal Bhuyan, Satish Chandra Sharma, Augustine George Masih, JJ.] If an implied limitation is not read into the Entry, Parliament by a simple declaration may take over the complete industry and subject the power of the State Legislature to make any provision with respect to that industry to the power of Parliament – This interpretation diminishes the scope of competence of the State Legislature under Entry 24 of List II – Such an interpretation completely tilts the federal balance that entries 52 of List I and 24 of List II seek to maintain – The power of Parliament in Entry 52 of List I is defined by the phrase ‘control’ – The Entry does not read as “industries, declared by Parliament by law to be expedient in the public interest” – The Entry states “Industries, the control of which by the Union is declared by Parliament by law to be expedient in the public interest” – The law enacted by Parliament must not be an abstract declaration but must specify the extent of control that is necessary to be taken in public interest – The State Legislature will have the competence to legislate with respect to the field which is not the subject matter of control – The legislative competence of the State Legislature is only denuded to the extent of the ‘control’ by the Union declared by the law of Parliament to be expedient in the public interest. [Para 65]

Constitution of India – Whether Parliament under Entry 52 of List I takes over the industry of intoxicating liquor covered by Entry 8 of List II:

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

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

Words and Phrases – Intoxicating Liquor – Interpretation: Held: [Per Dr Dhananjaya Y Chandrachud, CJI, for himself and for Hrishikesh Roy, Abhay S Oka, J B Pardiwala, Manoj Misra, Ujjal Bhuyan, Satish Chandra Sharma, Augustine George Masih, JJ.] The expression ‘intoxicating liquor’ can possibly be interpreted to mean the following: (a) Alcohol which is used as a beverage for human consumption such as beer or gin, that is, potable liquor; (b) If liquor means liquid, then Entry 8 of List II includes all liquids which contain alcohol; and (c) Alcohol which is used as a raw material to prepare other products such as pharmaceutical products and cosmetic drugs – This could include denatured alcohol but also other types of alcohol that are used in the production of products without denaturing it. [Para 107] Words and Phrases – Alcoholic Liquor – Meaning: Held: [Per Dr Dhananjaya Y Chandrachud, CJI, for himself and for Hrishikesh Roy, Abhay S Oka, J B Pardiwala, Manoj Misra, Ujjal Bhuyan, Satish Chandra Sharma, Augustine George Masih, JJ.] ‘Alcoholic liquor’ defines the scope of the provision based on the ingredient, that is, ‘alcohol’ – In contrast, ‘intoxicating liquor’ defines the scope of the provision based on the effect, that is, intoxication – Thus, even liquor which colloquially or traditionally is not considered as alcoholic liquor may be covered by the phrase ‘intoxicating liquor’ if it produces the effect of intoxication. [Para 112(a)]

Words and Phrases – Intoxicate – Meaning:

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

Constitution of India – Entry 8-List II and Art.47 – Industrial alcohol – Intoxicating liquor:

Held: [Per B.V. Nagarathna, J.] Merely because “industrial alcohol” or non-potable alcohol such as rectified spirit can be converted into “intoxicating liquors” or alcohol fit for human consumption as a beverage (potable alcohol), that would not empower the State Legislature to tax or impose any levy on such “industrial alcohol” – However, since the expression “intoxicating liquors” in Entry 8-List II deals specifically with alcohol used as a beverage and meant for human consumption, it would be within the scope and ambit of the said Entry for the State Legislature to regulate any abuse or conversion of “industrial alcohol” as a beverage, which is, in fact, harmful when consumed – Therefore, having regard to Article 47 of the Constitution, a State Legislature can even prohibit manufacture of “intoxicating liquors” in a State as one of the objects of which would be to negate the conversion or abuse of “industrial alcohol” as alcohol fit for human consumption. [Para 11.2] Constitution of India – Entry 8-List II – Intoxicating liquor – Intoxicating effect – Direct and indirect human consumption: Held: [Per B.V. Nagarathna, J.] What prima facie appears is that the “intoxication” effect is a sine qua non for the legislative competence of States on any liquors potentially coming within the scope of Entry 8-List II – In the absence of an “intoxicating” effect from liquors, a State Legislature cannot legislate on the subject – However, what is required to be seen is the nature of the product which leads to such an intoxicating effect upon human consumption of the same – Here, the expression consumption must be explained – It is not all kinds of human consumption, direct or indirect, which is the determining factor – It is only direct consumption i.e. as an ingestion by the act of drinking as a beverage or a drink – An indirect consumption by use of alcoholic liquors as a raw material for any other product, industrial, medicinal or a toilet item cannot be included as part of Entry 8-List II – Secondly, merely because there can be a potential misuse of “industrial alcohol”, for example, by converting rectified spirit (“industrial alcohol”) as a beverage which has an intoxicating effect, Entry 8-List II cannot be stretched to include such “industrial alcohol” – The prevention of abuse of “industrial alcohol” as a beverage is also covered under Entry 8-List II – Thus, what is carved out of “Fermentation Industries” in Entry 24-List II is only “intoxicating liquors” used as beverage and thus, for direct human consumption the said subject is placed in Entry 8-List II – This would imply that the rest of “Fermentation Industries” would be within the scope and ambit of Entry 24-List II which is subject to Entry 52-List I and is a scheduled industry as per Section 2 read with Item 26 of First Schedule of IDRA. [Para 12.14]

Constitution of India – Entry 8-List II – Intoxicating liquor – Contours of interpretation:

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

Constitution of India – Entry 52-List I – Industries (Development and Regulation) Act – Item 26 of the First Schedule – s.18G: Held: [Per B.V. Nagarathna, J.] The IDRA is enacted by Parliament under Entry 52-List I taking control of, inter alia, “Fermentation Industries” as noted in Item 26 of the First Schedule to the said Act – Section 18G deals with any article or class of articles relatable to any scheduled industry i.e. “Fermentation Industries” in the instant cases – The Explanation to Section 18G states that the expression “article or class of articles” relatable to any scheduled industry i.e. “Fermentation Industries” herein includes any article or class of articles imported into India which is of the same nature or description as the article or class of articles, manufactured or produced in the scheduled industry – The explanation is inclusive and not an exhaustive one – For immediate reference Item 26 of the First Schedule of the IDRA pursuant to the 2016 amendment is “The fermentation industries (other than potable alcohol): (i) Alcohol; (ii) other products of fermentation industries” – The Item 26 w.e.f. 14.05.2016, has been amended to clarify that “Fermentation Industries” refers to industries others than potable alcohol – This is for the reason that “intoxicating liquors” in Entry 8-List II is equated to only potable alcohol and rest of the industry of the “Fermentation Industries” other than potable alcohol is a scheduled industry – Once an industry is a scheduled industry under the provisions of IDRA, in the context of Section 18G the Central Government may notwithstanding anything contained in any other provision of IDRA by a notified order provide for regulating the supply and distribution thereof and trade and commerce therein of a product of scheduled industry. [Paras 15.7, 15.8]

Constitution of India – Art.254 – Doctrine of repugnancy in the context of the legislative subjects which are enumerated in List III or the Concurrent List:

Held: [Per B.V. Nagarathna, J.] Article 254 of the Constitution applies the doctrine of repugnancy in the context of the legislative subjects which are enumerated in List III or the Concurrent List – While applying the principles of repugnancy under Article 254, a sine qua non is to identify the conflict between the laws made by the Parliament and the laws made by the State Legislature – The conflict between the said laws is the basis for the application of Article 254 – The conflict could be direct when both the laws cannot operate together or it could be indirect when the State law entrenches upon a Parliamentary or Central law – But when laws made by the Parliament or the State Legislature can be implemented without there being any conflict, the principle of repugnancy would not apply inasmuch as there would be no contrary results owing to the applicability of both sets of laws – In other words, there cannot be a situation where obeying the State laws would result in disobeying the Parliamentary laws – Thus, when laws are made under an Entry in List III or the Concurrent List by both the Parliament as well as by the State Legislature, the Court must first ascertain whether the two sets of laws can operate harmoniously, if not, whether harmonious interpretation could be given to the said laws so as to avoid a conflict between the two – It is only when there is a conflict between the two sets of laws inasmuch as the State laws would be abridging the Parliamentary law, in such a case, the doctrine of Parliamentary supremacy would apply i.e. when a harmonious interpretation is not possible – Even if the two laws overlap, if they are complimentary to each other, in such a case, there would be no application of the principle of Parliamentary supremacy – Thus, when there is absolute inconsistency between the two sets of laws, and they are not reconcilable then, the principle of Parliamentary supremacy would apply in the context of repugnancy. [Para 16.2] Principles/Doctrines – Doctrine of occupied field: Held: [Per B.V. Nagarathna, J.] The application of the doctrine of occupied field is a technique adopted by the constitutional courts in order to ensure that there is no potential conflict that could arise between the State laws and the existing Parliamentary law having regard to the nature of the legislative powers, their importance in the socio-economic sphere of governance in the country and such other considerations. [Para 16.6]

Constitution of India – Entry 8-List II and Art.254 – Industries (Development and Regulation) Act – s.18G, Item 26 of First Schedule – Whether Item 26 which speaks of “Fermentation Industries” to include “industrial alcohol” or non-potable alcohol as a product of such industry which has been taken control of by the Union under the provisions of IDRA (and which is excluded from the scope and ambit of Entry 8-List II), falls within the scope and ambit of a scheduled industry, and thereby Section 18G would apply on the said aspects: Held: [Per B.V. Nagarathna, J.] The answer is in the affirmative for the following reasons: firstly, insofar as the potable or “intoxicating liquors” is concerned, the legislative field is exclusively with the State Legislature – However, in respect of the scheduled industry which is “Fermentation Industries” (which does not take within its scope and ambit potable alcohol) vide Item 26 of the First Schedule, all other types of alcohol including “industrial alcohol” can be regulated only by the Parliamentary law and the Central Government – Any other interpretation would imply that even in the face of Section 18G being incorporated into the IDRA and in the absence of any notified order being issued, the States Legislatures and the State Governments would have the legislative competence to make laws on what is the subject matter of Section 18G of IDRA under Entry 33(a)-List III – Then, each State could make its own law on the said subject matter covered under Section 18G of IDRA pertaining to a scheduled industry – If in respect of the products of a scheduled industry, the States make laws and there are a variety of laws made by the individual States which are in force in respect of the subject under Section 18G of IDRA then when a notified order is issued, the Central Government’s notified order would apply if there is a direct conflict between the State laws or legal regime in place and the notified order that is issued – This would result in a legal quagmire vis-à-vis a scheduled industry – It cannot then be said that it is necessary to ascertain whether there is a direct conflict between the State law and the notified order made by the Central Government at every instance such an order is issued and if there is such a direct conflict then, the Parliamentary law would apply on the strength of Article 254 of the Constitution. [Paras 16.7 and 16.8]

Constitution of India – Entry 33(a)-List III – Industries (Development and Regulation) Act – s.18G, Item 26 of First Schedule – Whether, under Entry 33(a)-List III, the States have been denuded of their powers by virtue of insertion of Section 18G to the IDRA, i.e., Section 18G having occupied the field to the extent of control as mentioned and the States would not have the competence to pass any law relating to Entry 33(a)-List III:

Held: [Per B.V. Nagarathna, J.] Answer is in affirmative – This is because Section 18G has been inserted by Parliament to the IDRA which is an enactment made pursuant to Entry 52-List I – Entry 52List I speaks of the Union by declaration made by Parliament by law taking control of such scheduled industry (Section 2 of the IDRA) such as the “Fermentation Industries” herein – The industries which are controlled of by the Union are specified in the First Schedule to the IDRA – “Fermentation Industries” is a scheduled industry – Therefore, the Union has taken control of “Fermentation Industries” – For the sake of clarification, in the year 2016 an amendment was made to expressly exclude potable alcohol from “Fermentation Industries” and it includes only non-potable alcohol such as “industrial alcohol” – The detailed discussion made is in regard to only “industrial alcohol” being non-potable alcohol – “Intoxicating liquors” being potable alcohol is not within the scheduled industry – Therefore, the said products of “Fermentation Industries” which have been taken control of by the Union by virtue of insertion of the Section 18G of the IDRA would come within the scope and ambit of the said Section. [Para 16.10]

Constitution of India – Importance of “Industrial Alcohol” to the Indian Economy – Discussed. [B.V. Nagarathna, J.]