A nine-judge bench of the Supreme Court on Wednesday (October 23) held that the state governments have the power to regulate and tax industrial alcohol. It was an 8:1 majority judgment in favour of the state governments.
Chief Justice DY Chandrachud, who wrote the latest judgment for himself and seven other judges, said the Centre lacks the regulatory power. Justice BV Nagarathna gave a dissenting verdict.
In a lighter vein, Justice Roy said, with a smirk, that since the issue pertains to alcohol, “happy hour” begins now for the winning side adding “do not lose control”. Justice Nagarathna responded alcohol is the panacea for both sides – the winning and the losing side.
It is pertinent to note, however, that the alcoholic beverage industry does not use industrial alcohol as it is unsuitable for human consumption.
The apex court overturned the previous seven-judge Bench judgment that the Centre had regulatory power over the production of industrial alcohol. The case was referred to the nine-judge bench in 2010.
The case dates back to 1999 with the Uttar Pradesh government seeking to levy an ad valorem fee of 50% on sale of industrial alcohol by wholesale vendors. The UP government levy was challenged on the grounds that the state government does not have the power to regulate and tax industrial alcohol.
While the issue dates back to 1999, it was a rare case where Yogi Adityanath-ruled Uttar Pradesh argued against Narendra Modi-ruled Centre. The state government had argued that post-GST, the power to tax industrial alcohol is a key source of income for the states. The UP government had argued against the Centre claiming the exclusive power to regulate and tax industrial alcohol.
The Solicitor General, arguing for the Centre, had urged the top court to consider the impact of an adverse ruling on the power of the Centre over industries.
The state of Kerala was also a co-petitioner seeking the right to regulate and tax industrial alcohol.
Industrial alcohol is generally used for non-consumable industrial applications.
Numerous industries make use of industrial alcohol, such as manufacturing, where it serves as a solvent for paints, coatings, and varnishes. In the pharmaceutical sector, it is used in the production of medications and as a solvent in drug formulations.
The cosmetics and personal care industry incorporates it in products like perfumes, lotions, and sanitisers. In food processing, industrial alcohol is occasionally used as a solvent in extraction processes, though it is subject to strict regulations.
Industrial alcohol is also commonly found in cleaning products, serving as an ingredient in disinfectants and household cleaners. In the automotive industry, it is used in antifreeze and as a fuel additive, while in biotechnology, it is utilised in various laboratory processes.
Source from: https://www.cnbctv18.com/india/supreme-court-upholds-state-power-to-regulate-and-tax-industrial-alcohol-19497431.htm