von KARTIK KALRA
In a landmark ruling, a nine-judge bench of the Indian Supreme Court has granted states exclusive regulatory authority over industrial alcohol, ousting federal control. The majority anchored state authority in a legislative entry titled ‘intoxicating liquor’, adopting a forced interpretation that industrial alcohol could intoxicate through misuse, arguably in pursuit of fiscal federalism. Meanwhile, the dissent crafted a concerning new doctrine of ‘anticipated delegable repugnancy’ to support central control absent concrete legislative conflict, undermining the federal balance.
The Seventh Schedule to the Indian Constitution contains lists delineating subject-matters of state legislatures’ and the Parliament’s legislative powers. The meaning and extent of these entries demarcating legislative powers – given the possible regulation of a subject-matter within multiple entries – often causes conflict, and the Supreme Court’s (‘Court’) judgment in Lalta Vaish v. Union of India is the latest attempt at reconciling two entries covering a crucial subject-matter: alcohol for industrial use. In a nine-judge bench verdict, rendered with an 8:1 majority, the Court held that legislative powers over industrial alcohol, and consequently the power to levy fees on its production, lie exclusively with states, not Parliament. In this article, I propose that the judgment’s wholesale conferral of this power on states – as opposed to a coexisting model evolved through three decades of litigation – likely lied in the Court’s growing inclinations towards fiscal federalism, combined with practical challenges with the coexisting model’s continuation. I also analyse the dissenting opinion’s arguments for this power’s centralization, discussing the dangers its doctrines carry for federalism.
Mischievous Interpretations or Mischief with Alcohol? The Majority Judgment’s Conferral of Alcohol Regulatory Powers on States
Two legislative entries are supposedly conflicting in Vaish: Entry 8 of the State List enables states to legislate on ‘intoxicating liquors’, and Entry 52 of the Union List enables Parliament to legislate on industries it declares its desire to legislate on, with this declaration having been issued in favour of ‘fermentation industries’. The issue, therefore, concerned the characterization of industrial alcohol: is it ‘intoxicating’ in nature (and correspondingly, in states’ control), or alternatively, ‘industrial’ in nature (and correspondingly, in Parliament’s)?
The Court, in preferring the former approach, offered three reasons in conferring this power on states. First, it held that legislative entries must be ‘harmoniously constructed’, i.e., interpreted such that no overlap subsists between them. The resolution of the overlapping segment must be done such that neither become redundant. Since the ‘intoxicating liquors’ entry would be substantially diluted if industrial alcohol was placed in the ‘industrial’ category, locating it within the State List was held justified (¶71). Second, since a legislative entry’s width and extent must be maximized, the word ‘intoxicating’ must be construed expansively. Alcohol meant for industrial use, if consumed by a human mischievously, would cause intoxication. This meant that liquor – be it for human consumption or industrial use – was inherently ‘intoxicating’, falling in the State List (¶113). Third, it took cognizance of the alcohol industry’s operational conditions. Since alcohol was produced as a uniform commodity without regard to its eventual uses (industrial or for consumption), attempts at distinguishing processes and stages of production, conferring some powers on states and others on Parliament, would create complications (¶129).
This reasoning presents a few problems. As the dissent proposes, construing the scope of an entry based on alcohol’s misuse – misuse bordering on illegality – is, at the minimum, a questionable choice (¶12.22). Alcohol, after its production as a standalone element, is used both for industry and consumption. Industrial alcohol’s ‘intoxicating’ character, therefore, is premised on its mischievous utilization, and is not an effect it designedly produces. Further, the harmonious construction principle, if applied sincerely, would not result in an outcome either way, for both entries – ‘intoxicating liquor’ (in the State List) and ‘fermentation industries’ (indirectly, in the Union List) – retain sufficient subject-matters within them to avoid redundancy. In case industrial alcohol was held to lie under ‘fermentation industries’, all of states’ regulatory powers on consumable alcohol are intact. In Vaish, it has been held to lie under ‘intoxicating liquor’, and all of the Union’s regulatory powers on non-alcoholic components of fermentation industries are intact. Harmonious construction, therefore, offers little recourse in resolving this conflict.
The pursuit of fiscal federalism, though not expressly cited in Vaish, stands as the decisive principle justifying the judgment. Alcohol has risen to become one of states’ prime revenue source, sometimes even constituting a fifth of their total revenues, and their tax revenues have declined following indirect taxes’ centralization in 2017. In this scenario, the judicial role adapts to maximizing states’ opportunities to earn sufficient sums, for this is essential for states’ ability to ‘discharge their constitutional responsibilities’ – a remark the Court gave in a recent taxation case it resolved in states’ favour (¶51). The degree to which legislative entries (and other legal principles) can be twisted in pursuit of fiscal federalism, however, requires greater consideration. Nevertheless, its reasoning would appear more genuine if Vaish’s primary operative principle was straightforwardly listed.
A Dissent of Mixed Bags: A Novel ‘Anticipated Delegable Repugnancy’
The dissent proposes that the term ‘intoxicating liquor’ excludes alcohol that mistakenly intoxicates, for industrial alcohol is not meant to intoxicate, and that such an effect is irrelevant to its purposes (¶12.20). It had, therefore, have an industrial character, and was outside states’ realm. This was held compatible with the alcohol industry’s business conditions, for they became – through three decades of litigation – well-versed with the lines between industrial and consumable alcohol (¶31).
The dissent’s dangerous part, however, concerns its take on the implications of centralizing regulatory control over alcohol. Once Parliament declares its control over an industry through Entry 52 of the Union List, ‘trade and commerce’ in that industry’s products shifts to the Concurrent List, i.e., both in state legislatures’ and Parliament’s legislative domains (by virtue of its Entry 33). For instance, if Parliament declared its control over the fermentation industry, regulatory control over its products (industrial alcohol) would – instead of lying exclusively with states – lie both with states and Parliament. The dissent, however, proposes that the ‘repugnancy’ tool be activated to consolidate this power with Parliament directly, depriving states from continuing with their pre-existing regulations in this regard. This finding was made in the absence of any existing conflict, for Parliament had made no regulations on industrial alcohol’s trade. The ‘occupied field’ doctrine, which assesses Parliament’s intent to exhaust a legislative entry through detailed legislation, was cited as justification.
Other than a single declaration, however, no legislation – let alone a ‘detailed’ one – existed in the instant case. Repugnancy, therefore, was applied in anticipation of future conflict, undermining the high threshold of real, tangible inconsistencies that the repugnancy doctrine ordinarily poses. Importantly, the dissent enables subordinate legislation (which it anticipates to be enacted) issued by the Union Government to overrule existing plenary legislation enacted by state legislatures. This diminishes state legislative authority, elevating anticipated administrative decision-making over deliberative legislation.
Conclusion
The judgment in Vaish, therefore, signifies competing ideologies on federalism: while the majority undertakes a strained reading of legislative entries to fiscally empower states, the dissent fashions a new doctrine of ‘anticipated delegable repugnancy’ to strip states of their regulatory powers before an actual conflict occurs. The majority judgment, however, will likely have a simplifying effect on alcohol regulation, for the three decades of litigation on this issue – unlike the dissent’s take – indicate little clarity on lines between industrial and consumable alcohol.
Zitiervorschlag: Kalra, Kartik, Alcohol and the Costs of Clarity – On the Indian Supreme Court’s Treatment of ‘Intoxicating Liquor’ in Vaish v. Union of India, JuWissBlog Nr. 10/2025 v. 30.01.2025, https://www.juwiss.de/10-2025/
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