sale and distribution of "intoxicating liquors" under Entry 8 of List II, but in Synthetics & Chemicals v. State of U.P. (1989), the Supreme Court held that "intoxicating liquor" covers only potable alcohol. Therefore, states could not regulate industrial alcohol, which fell under the Parliament’s control via the Industries (Development and Regulation) Act, 1951 (IDRA), particularly Section 18G, for equitable distribution. Later, the State of U.P. imposed a license fee on denatured spirits (alcohol unfit for consumption), which was challenged. The Allahabad High Court struck down the fee, prompting the state’s appeal to the Supreme Court.

Supreme Court Decision

In an 8:1 decision, the Supreme Court overruled Synthetics, upholding the states’ power to regulate industrial alcohol. Chief Justice Chandrachud wrote for the majority, with Justice Nagarathna dissenting.

Majority Opinion:

• Scope of "Intoxicating Liquors": The Court ruled that “intoxicating liquors” under Entry 8 includes all alcohol potentially harmful to health, covering denatured spirits and other industrial alcohol that might be illegally processed for drinking purposes.

• Legislative Competence: The Court held that since Entry 8 in the State List is a specific entry covering all aspects of "intoxicating liquors," it supersedes Entry 52 of the Union List, which covers industries in general.

• Harmonious Interpretation: Emphasizing federal harmony, the Court stated that Parliament’s power under Entry 52 does not extend to regulating “intoxicating liquors” since the state has a distinct mandate under Entry 8.

• Effect of IDRA Section 18G: The majority held that Section 18G did not preclude states from regulating industrial alcohol because it falls within their constitutional authority over "intoxicating liquors."

Dissenting Opinion (Justice Nagarathna):

• Industrial Alcohol Distinction: Justice Nagarathna argued that industrial alcohol, designed for non-consumable uses, does not fall under “intoxicating liquors” and thus is outside state jurisdiction.

• Application of IDRA Section 18G: She reasoned that IDRA's provisions, particularly Section 18G, intended to regulate industrial alcohol entirely under Union control, which would prevent states from imposing taxes or regulations.

• Legislative Intent and Definition: Emphasizing the 2016 IDRA amendment, which excluded potable alcohol from "Fermentation Industries," she concluded that industrial alcohol, intended for industrial use, should not be conflated with consumable alcohol merely due to misuse potential.

Conclusion

The Supreme Court's majority decision grants states the legislative authority to regulate industrial alcohol under the "intoxicating liquors" category, overruling prior judgments. Justice Nagarathna’s dissent holds that only Parliament has jurisdiction over industrial alcohol. This landmark ruling redefines legislative boundaries on alcohol regulation, affirming the states' power to address potential misuse of industrial alcohol within their borders