Supreme Court Case on Industrial Alcohol Excise Duty: 5 April 2024

Background:

• Kerala has declared the issue of whether state governments can regulate and levy excise duty on ‘industrial’ alcohol as a state-specific disaster. Industrial alcohol, unlike consumable alcohol, is used in manufacturing and not for drinking.

The Legal Debate: 

• The debate centers on whether the power to regulate industrial alcohol falls under state jurisdiction, given their authority over “intoxicating liquors,” or if it is exclusively controlled by the central government due to its industrial application.

Previous Supreme Court Rulings:

• 1956: Allowed states some regulatory powers over the sugar industry, closely related to industrial alcohol.
• 1989: The Supreme Court ruled that states could not levy taxes on industrial alcohol since it falls outside the scope of “intoxicating liquors.”
• 1999: Uttar Pradesh notification introduced a fee on industrial alcohol sales, leading to a legal challenge. The Allahabad High Court struck down the fee. This decision is now under Supreme Court review by a nine-judge bench due to conflicting earlier rulings.

Implications:

• The upcoming SC decision will clarify the division of regulatory powers between the state and central governments over industrial alcohol, impacting state revenues and central regulatory authority.

Why in News:

• The Nine-Judge Constitutional Bench of the Supreme Court is set to hear a case regarding states’ power to regulate industrial alcohol.