STATE OF U.P. vs M/S. LALTA PRASAD VAISH AND SONS, 2024
Case Title and Citation: State of U.P. v. M/S. Lalta Prasad Vaish and Sons 2024 INSC 812 (23 October 2024)
Factual Background
In 1990, a previous Seven-Judge Bench of the Supreme Court, in Synthetics & Chemicals v. State of U.P., determined that “intoxicating liquor” under Entry 8 of List II (State List) encompassed only potable liquor (drinkable). Based on this interpretation, the Court held that the State Legislature lacked the power to make laws concerning industrial alcohol. Following this judgment, the Government of Uttar Pradesh issued a notification in May 1999 imposing a 15% license fee on the sale of specially denatured spirits (alcohol rendered unsuitable for consumption). The Respondent challenged this notification, arguing the State lacked regulatory power over denatured spirits due to the Union Government’s comprehensive control under Section 18G of the Industries (Development and Regulation) Act 1951 (IDRA). In 2004, the Allahabad High Court invalidated the State’s notification, leading the State of U.P. to appeal to the Supreme Court. Subsequently, the matter was referred to a Nine-Judge Bench for reconsideration of the Synthetics judgment.
Issue(s)
- Whether the phrase “intoxicating liquors” in Entry 8 of List II of the Seventh Schedule of the Constitution includes industrial alcohol (non-potable alcohol).
- Whether a State Legislature possesses the competence to enact laws regulating industrial alcohol.
- Whether Parliament’s control over certain industries under Entry 52 of List I (Union List) overrides the State’s exclusive power under Entry 8 of List II.
- Whether a formal, notified order under Section 18G of the IDRA is essential for Parliament to occupy the field concerning the regulation of products of scheduled industries under Entry 33 of List III (Concurrent List).
Decision of the Supreme Court The Nine-Judge Bench of the Supreme Court, by an 8:1 majority, upheld the legislative authority of the State Legislature to regulate industrial alcohol. The Court explicitly overruled the earlier seven-judge judgment in Synthetics & Chemicals v. State of U.P. The majority opinion was authored by Chief Justice Chandrachud.
Reason for the Decision
The majority opinion primarily focused on the necessity of a wide and harmonious interpretation of the legislative entries to preserve the federal balance and the public interest aspects inherent in regulating all forms of alcohol.
- Scope of “Intoxicating Liquors” (Entry 8, List II): The Court held that the expression “intoxicating liquors” in Entry 8 is inclusive of all types of alcohol detrimental to health. It found that the expression is not limited to potable liquor but extends to denatured spirits and alcohol variants (such as rectified spirit and Extra Neutral Alcohol (ENA)) that could be used or misused noxiously to harm public health. The rationale is that alcohol is an inherently noxious substance prone to misuse, and Entry 8 is based on the public interest to prevent such misuse across every stage, from raw materials to possession.
- Harmonious Interpretation and Federal Supremacy: While acknowledging that Parliament’s power prevails in an irreconcilable conflict between List I and List II, the Court stressed that such supremacy applies only at the point of “conflict,” not mere “overlap”. Entry 8 (Intoxicating Liquors) is a special entry covering the industry and product of alcohol, while Entry 52 (Industries) is a general entry. Applying the principle of generalia specialibus non derogant (special prevails over general), the specific subject of “intoxicating liquor” must prevail and is excluded from the general subject of “Industries” in Entry 52 of List I.
- Legislative Competence of Parliament (Entry 52, List I): Because Entry 8 covers the industry of intoxicating liquor, the Court held that Parliament lacks the legislative competence to take control of this industry under Entry 52 of List I. Consequently, Item 26 (Fermentation Industries) in the First Schedule to the IDRA (the Parliamentary Act under Entry 52) must be read as excluding the industry of “intoxicating liquor,” as defined by the judgment.
- Section 18G and Entry 33 (Concurrent List): Given the finding that denatured alcohol and other non-potable variants fall under the States’ exclusive regulatory domain (Entry 8, List II), the question of whether Section 18G of the IDRA occupies the field under the Concurrent List (Entry 33, List III) does not require adjudication.
Conclusion
The Supreme Court reversed the long-standing precedent set by the 1990 Synthetics judgment, holding that the State Legislature holds the exclusive competence to regulate and legislate upon all forms of alcohol, including industrial alcohol (rectified spirit, ENA, and denatured spirit), due to its potential for “noxious use” affecting public health. This authority stems from Entry 8 of the State List, which is not overridden by Parliament’s general power over industries. The ruling effectively reinforces the States’ exclusive control over the entire alcohol industry.
