• In an 8:1 majority ruling, the Supreme Court overturned a seven-judge bench verdict and held that states have regulatory power over production, manufacture and supply of industrial alcohol.

• In 1997, the seven-judge bench ruled that the Centre had the regulatory power over the production of industrial alcohol. 

• The case was referred to a nine-judge Constitution Bench in 2007, focusing on Section 18G of the Industries (Development and Regulation) Act, 1951, which allows the central government to regulate certain industry aspects. 

• The Supreme Court found that previous judgments did not adequately consider states’ concurrent powers under the Constitution.

Key points of the verdict:

• States’ Authority Affirmed: The Supreme Court, with an 8:1 majority, confirmed that states have the right to regulate and impose taxes on industrial alcohol, classifying it as “intoxicating liquor” under Entry 8 of List II (State List) of the Constitution.

• Overruling Previous Judgment: This ruling effectively overruled the 1990 judgment in Synthetics & Chemicals vs State of Uttar Pradesh, which restricted the definition of “intoxicating liquor” to only potable alcohol, thereby limiting states’ regulatory powers over industrial alcohol.

• Broad Interpretation of Intoxicating Liquor: The court emphasized that the definition of intoxicating liquor is not limited to alcoholic beverages for human consumption but encompasses all types of alcohol that can adversely affect public health. 

• This broad interpretation allows states to regulate various forms of alcohol, including industrial variants.

• Public Health Considerations: The judgment acknowledges the public health risks associated with industrial alcohol and supports increased state regulation to prevent illegal consumption and misuse. It underscores the need for states to legislate measures to prevent industrial alcohol from being diverted for intoxicating purposes.

• Legislative Powers Reconciled: The ruling addresses the overlap between Entry 8 of the State List and Entry 52 of the Union List, which pertains to the central government’s powers to regulate industries. The court asserted that both entries should be interpreted in a manner that allows for cooperative federalism without redundancy.

• Dissenting Opinion: Justice B.V. Nagarathna, in her dissent, pointed out that while states have the authority over intoxicating liquors, they must balance this with the need to promote economic growth while protecting social rights. She emphasized the responsibility of states to prevent the misuse of industrial alcohol.

• Implications for Industry: Entities involved in the industrial alcohol sector will need to adapt to potential regulatory changes and increased scrutiny from state governments. The ruling may lead to more comprehensive regulations regarding the production, sale, and distribution of industrial alcohol.

What is industrial alcohol?

• Industrial alcohol refers to impure alcohol, primarily ethanol, that has been denatured to render it unfit for human consumption. 

• Denaturation is achieved by mixing ethanol with various chemicals, such as benzene, pyridine, or gasoline, which significantly lowers its cost and makes it unsuitable for drinking.  This process allows industries to use alcohol as a solvent in various manufacturing processes.

Uses in industry

Industries utilize industrial alcohol in the production of a wide range of products, including:

• Pharmaceuticals: As a solvent or a preservative in drug formulations. 

• Perfumes and Cosmetics: In the formulation of fragrances and personal care products. 

• Cleaning Agents: As a solvent in cleaning liquids, disinfectants, and sanitizers. 

• Chemical Manufacturing: In the production of various chemicals and industrial products. 

Risks associated with industrial alcohol

• Illicit Liquor Production: The same denatured alcohol can be illegally processed to create cheap and dangerous alcoholic beverages. This practice is prevalent in many regions, especially where access to safe drinking alcohol is limited. 

• Health Hazards: Consumption of illicit liquor made from industrial alcohol can lead to severe health issues, including:

i) Blindness: Methanol, a common component in industrial alcohol, can cause permanent blindness if ingested.

ii) Poisoning: Consumption can lead to acute poisoning, resulting in symptoms such as nausea, vomiting, abdominal pain, and potentially death.

• Addiction and Societal Impact: The availability of cheap illicit liquor can lead to increased addiction rates and associated social issues.

(The author is a trainer for Civil Services aspirants.)