Supreme Court Upholds State Power to Regulate and Tax Industrial Alcohol in Landmark 8:1 Ruling

In a historic ruling on October 23, 2024, the Supreme Court ruled in favor of state governments’ power to regulate and tax industrial alcohol. The nine-judge bench delivered an 8:1 majority judgment, with Chief Justice DY Chandrachud writing the decision for the majority. Justice BV Nagarathna dissented.

Key Judgment Insights:

Regulatory Power: The Supreme Court overturned a previous judgment, stating that the Centre lacks authority to regulate industrial alcohol, granting this power to the states.

State Taxation: The judgment allows state governments, such as Uttar Pradesh and Kerala, to tax industrial alcohol, which is crucial for revenue post-GST.

Dissenting Opinion: Justice Nagarathna gave a dissenting view, emphasizing the balance between Centre and state powers.

Industrial Alcohol’s Role:

Industrial alcohol, primarily used in manufacturing, pharmaceuticals, cosmetics, and automotive industries, is non-consumable and unsuitable for human use. Its applications include solvents in paints, varnishes, drugs, cleaning products, and even fuel additives.

This ruling is a significant victory for state governments as they seek to safeguard their taxation rights over industrial alcohol.

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