Asserting its right to regulate industrial alcohol, the Centre told the Supreme Court on April 4 that legislative power to levy excise duty on alcohol not fit for human consumption but meant for industrial use lies exclusively with Parliament.
Arguing before a nine-judge constitution Bench headed by Chief Justice D Y Chandrachud, Attorney General R Venkataramani submitted that a "conscious decision" was taken to treat alcoholic liquors fit for human consumption and alcoholic liquors not fit for human consumption separately, with the former falling within the domain of provincial legislatures and the latter within the ambit of the federal legislature.
"It is submitted that the legislative power in relation to levy excise duty upon non-potable liquor is exclusively with the Parliament, and upon potable liquor is exclusively with the Legislatures of the States," Mr. Venkataramani told the Bench, also comprising Justices Hrishikesh Roy, Abhay S Oka, B V Nagarathna, J B Pardiwala, Manoj Misra, Ujjal Bhuyan, Satish Chandra Sharma and Augustine George Masih.
The nine-judge constitution Bench is examining the issue of overlapping powers of the Centre and states in production, manufacturing, supply and regulation of industrial alcohol.
A clutch of petitions came before the bench after a seven-judge constitution Bench ruled against the states.
The matter was referred to a nine-judge Bench in 2010 after a seven-judge bench ruled in 1997 that the Centre will have the regulatory power over production of industrial alcohol. The seven-judge Bench had in 1990 observed that through the Industries (Development and Regulation) Act, 1951, the Union had "evinced clear intention to occupy" legislative competence on the subject and hence Entry 33 could not empower a state government.
Dwelling on the constitutional provisions, the top law officer told the apex court that Section 18G of the Industries (Development and Regulation) Act, 1951 (Power of central government to make certain declarations in relation to industrial undertakings) holds the field and there is no scope for states to legislate on this subject.
"Since the 1951 Act was enacted in respect of the entire spectrum of control and regulation and also the details of their working, for instance, as spelt out in Section 18G of the said Act, there is no unoccupied field at all available to the states...
"As a result, the subject matter of the fermentation industry as a whole or otherwise stands within the scope of the 1951 Act and within the details of Section 18G," Mr. Venkataramani said.
The hearing remained inconclusive and will resume on Tuesday when Solicitor General Tushar Mehta is scheduled to argue the matter.
On Wednesday, BJP-ruled Uttar Pradesh and TMC-governed West Bengal were on the same page in the top court where they asserted the legislative power vested in states to regulate industrial alcohol is untrammelled and complete and beyond the Centre's jurisdiction.
Senior advocate Dinesh Dwivedi, appearing for the Uttar Pradesh government, had told the court that liquor has always been within the legislative sphere of states and the Centre does not have any jurisdiction with regard to industrial alcohol.
Excise, liquor and spirit have always been part of state's jurisdiction, including industrial alcohol, he had said.
