Today, the Supreme Court ruled that 'industrial alcohol' falls under the definition of 'intoxicating liquor' as per Entry 8 of List II in the Constitution, granting States the authority to regulate and impose taxes on it.

A nine-judge Constitution Bench of Chief Justice of India (CJI) DY Chandrachud with Justices Hrishikesh Roy, Abhay S Oka, BV Nagarathna, JB Pardiwala, Manoj Misra, Ujjal Bhuyan, Satish Chandra Sharma and Augustine George Masih ruled that the meaning of intoxicating liquor under Entry 8 List II is beyond the narrow definition of alcoholic beverages.

"Alcoholic liquor and intoxicating liquor is used for consumption but the entry of intoxicating liquor stretches to its manufacturing etc. alcoholic liquor is defined by the ingredient and intoxicating is defined by effect. Thus, alcoholic liquor can be covered by latter if it causes intoxication. The public interest purpose is evident from the construct and evolution of the entry," the Court explained.

Accordingly, the Court overruled the 1990 judgment in *Synthetics & Chemicals Ltd. v. State of Uttar Pradesh*, deeming it incorrect. In that judgment, the Court had held that "intoxicating liquor" referred only to potable alcohol, restricting States from taxing industrial alcohol. However, the Court clarified today that the term "intoxicating liquor" is not confined to potable alcohol but encompasses all alcohol that could pose a risk to public health.

"Entry 8 list 2 cannot be used to exclude raw materials that go into production of intoxicating liquor," the Court held.

Justice Nagarathna delivered a separate judgment, expressing a different view from the majority ruling.

The Bench was addressing whether State governments have the authority to tax and regulate industrial alcohol/denatured spirits, considering Entry 52 of the Union List and Entry 8 of the State List. The States contended that the power to impose such taxes is crucial in the post-GST indirect tax framework, as it is essential for monitoring public health.

For context, the Supreme Court had previously ruled in 1990 in Synthetics & Chemicals Ltd. v. State of Uttar Pradesh that the term "intoxicating liquors" exclusively referred to potable alcohol, thereby prohibiting States from taxing or regulating industrial alcohol.

In October 2007, the Supreme Court, in State of UP v. Lalta Prasad Vaish, determined that the 1990 ruling overlooked a five-judge bench decision from 1956 in Ch. Tika Ramji v. State of Uttar Pradesh. Consequently, the case was referred to a nine-judge Constitution Bench on December 8, 2010. Solicitor General Tushar Mehta, along with advocate Kanu Agrawal, represented the Union government in the proceedings.