The Union Cabinet on 9 September 2015 gave nod to transfer regulatory authority on potable alcohol to state governments.
It will ensure that industries engaged in manufacturing alcohol meant for Potable purposes shall be under the total and exclusive control of States in all respects.
To operationalise the Cabinet’s decision, an amendment to the first schedule of the Industries (Development and Regulation) Act, 1951 will be introduced in the Parliament by replacing 26 Fermentation Industries with 26 Fermentation Industries (other than potable alcohol).
The decision to transfer regulatory authority was necessitated due to the judgment delivered by the Supreme Court in 1997 in the case pertaining to Bihar Distillery Vs Union of India.
In the judgment, the court ordered that industries engaged in manufacturing alcohol meant for potable purpose shall be under the control of the State and controls concerning Industrial Alcohol shall be under the jurisdiction of the Central Government.
Further, the Law Commission of India, in its 158th report, also recommended for similar arrangement to avoid jurisdictional tension arising out of contradicting legal provisions related to potable alcohol industry.
Why jurisdictional tension between the Union and States?
The Lists I and II of the Schedule VII of the Constitution of India clearly specifies that duties of excise related to alcoholic liquors for human consumption (potable alcohol) are in the State Governments’ domain and medicinal and toilet preparations containing alcohol (industrial alcohol) come under the Union jurisdiction.
However, the first schedule of the Industries (Development and Regulation) Act, 1951 mandates that alcohol industries as a whole come under the Union Government’s purview.
Though the 1951 Act is not related to taxation issues, it created confusion among enforcement agencies that finally led to abuse of law and misuse of alcohol.
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