October 23, 2024: In a significant legal development, the Supreme Court of India has ruled that state governments have the authority to legislate on the sale of 'industrial alcohol', also known as 'denatured spirits', categorizing it under 'intoxicating liquor' in the State List. This landmark decision emerged from a ruling by a nine-judge Constitution Bench, led by Chief Justice DY Chandrachud, with a majority of eight judges in favor of the petitioning states, including Uttar Pradesh, Maharashtra, West Bengal, and Kerala.

The court's decision challenges the interpretation of 'intoxicating liquor' as only those substances fit for human consumption, clarifying that it encompasses all alcoholic liquids, irrespective of their intended use. This ruling overturns a 34-year-old precedent set in the case of Synthetics and Chemicals Pvt Ltd vs State of Uttar Pradesh, which had previously limited state jurisdiction over industrial alcohol.

Justice BV Nagarathna was the sole dissenter, arguing that 'industrial alcohol' is inherently unsuitable for human consumption and that states lack the legislative competence to regulate it. She contended that the earlier decision in the Synthetics case was correctly decided and cautioned against stretching the State List's definitions to include industrial alcohol.

During the six-day hearing preceding the ruling, petitioning states expressed concerns that if the regulation of industrial alcohol remained with the central government, it would hinder their ability to tackle illegal consumption effectively. Conversely, Justice Nagarathna maintained that the potential for illegal use should not expand state powers beyond their constitutional limits.

The central government had argued that regulation of industrial alcohol was its prerogative under the Industries (Development and Regulation) Act of 1951. The court was asked to clarify two critical issues: whether industrial alcohol qualifies as intoxicating liquor and if states can exercise control over it akin to intoxicating alcohol.