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jurisdiction in this field. However, in the alternative, the industry i.e. the production and manufacture of alcohols used in industries, would be governed by the general entry, Entry 24 of List II, which can be taken over by the Union upon a declaration under Entry 52, List I. The product of the industry would be governed by Entries 26 and 27 of List II and would require a declaration under Entry 33 of List III for the Union to occupy the field. He argued that only the production and manufacture of industrial alcohol would be governed by the Union List even if the requirement of a declaration under Entry 52 of List I is met by Section 2 of the IDRA read with Entry 26 of the First Schedule to the IDRA. However, no corresponding declaration is made under Section 18G of the IDRA to satisfy the requirements of Entry 33, List III. The Central government would be required to issue a notified order under Section 18G of the IDRA to claim control over the product. No such order has been issued and therefore the product remains in the exclusive domain of the State. Therefore, the Union has not occupied the field under Entry 33, List III.

29Copy pinpoint29. Mr Arvind Datar, learned senior counsel took us through the process of making denatured alcohol and potable liquor from molasses or grains. He argued that a license is required to make ENA and another license is required to make denatured spirit out of ENA. The process of denaturation is done before a State Excise Officer and the excise or duty payable against ENA and denatured spirit changes drastically. He argued that States can regulate potable alcohol as well as denatured spirits because the process of denaturing takes place within the same premises.

30Copy pinpoint30. Mr Datar argued that the Synthetics (7J) (supra) must be overruled because: a. In para 74 of the judgment, this Court erred in assuming that industrial alcohol and rectified spirit are the same substance. Rectified spirit or ethyl alcohol, which is per se for human consumption, cannot be used interchangeably with industrial alcohol which has undergone denaturation. Ethyl alcohol or rectified spirit usually undergoes denaturation for the purpose of their use in industries. This would involve payment of fees and obtaining of licenses for the process; b. The expression ‘alcoholic liquor for human consumption’ in Entry 51 of List II was mistakenly read as ‘alcoholic liquor

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fit for human consumption’ which has a widely different meaning.60 For example, molasses despite not being capable of final consumption, as it is, would be alcohol for human consumption. It would undergo a process for making it fit for human consumption. However, that does not take away from the fact that molasses is intended for human consumption and is susceptible to excise. Alcoholic liquor for human consumption means that the alcoholic liquor is capable of being consumed by humans. It would fall under Entry 51, List II while denatured alcohol would fall under Entry 84, List I; c. Everything except denatured spirit is alcohol for human consumption because it has the potential to be consumed by humans. The process of denaturation is carried out only to make the alcohol sufficiently disagreeable for human consumption to avoid its misuse. ENA and rectified spirit may therefore be for human consumption and cease to be such upon undergoing denaturation. Mr Datar emphasized that the State does not have the power to levy tax on ENA in terms of Synthetics (7J) (supra) despite being for human consumption. Such an interpretation has drastically reduced the ability of States to levy tax under Entry 51 of List II; d. Unlike what was held in Synthetics (7J) (supra), there are no licenses to manufacture industrial alcohol because what is manufactured is only the ENA. ENA can be denatured for the purpose of alcohol used in industries. However, it does not require separate manufacturing units; e. The 158th Report of the Law Commission of India sought to address the practical problems which arose from the judgment of this Court in Synthetics (7J) (supra). It noted that the excise laws in force across different States in the country made no distinction between liquors used for human consumption or for other purposes. These pre-Constitution laws closely regulated and controlled the manufacture, possession, sale and transport of all alcohol and the Union government had no say in the matter. The Report clarified that there is no such thing as ‘industrial alcohol’ and that rectified spirit which has 95% alcohol may be

60 Paras 52, 54, Synthetics (supra).

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used for industrial and non-industrial purposes. Accordingly, the report opined that litigation on the issue be avoided by bringing an amendment to the IDRA, namely, the substitution of item 26 in the First Schedule to the IDRA with the phrase “Fermentation Industries but not including alcohol.” This was to enable the States to levy excise duties on alcohol which had been the case for over a century prior to the judgment of this Court in Synthetics (supra). Parliament did not amend the IDRA as suggested by the Law Commission but instead only excluded potable alcohol from the purview of the Union with retrospective effect from the commencement of the IDRA; and f. Synthetics (7J) (supra) must be overruled because it suffers from inconsistency in holding that the States have nothing to do with alcohol as well as holding that they can levy a regulatory fee.61

31Copy pinpoint31. Mr Datar submitted that the phrase ‘that is to say’ featuring in Entry 8 of List II of the Seventh Schedule connotes that the entry is exhaustive. Such a reading would mean that the entire journey of intoxicating liquor – from production to purchase and sale will fall within the remit of Entry 8 of List II. Since Entry 8 of List II is exhaustive and is not subject to any other entry in List I or List III, it cannot be transgressed by a law made by Parliament.

32Copy pinpoint32. Relying on the State of Madras v. Gannon Dunkerley,62 Mr Datar argued that to understand the meaning of ‘intoxicating liquors’, which has not been defined in the Constitution, the Court may identify if the expression is nomen juris and adopt the meaning which the word has obtained over a passage of time. The British law i.e. the Spirits Act 1880 includes denatured alcohol. Similarly, this Court in India Mica (supra) and FN Balsara (supra) held that intoxicating liquor includes denatured spirits. Mr Datar also presented a list of legislation enacted at around the same time which included denatured alcohol in the same category as liquor. Mr Datar relied on the judgment of this Court in SIEL Ltd v. Union of India63 to argue that the subjects enumerated in Entry 33, List III are excluded from Entry 52, List I.

61 Para 86. Synthetics (supra) 62 [1959] SCR 379 63 [1998] Supp. 1 SCR 560 : (1998) 7 SCC 26

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Lastly, he urged that since Section 18G of the IDRA does not specify that it extends to ‘production’, even the issuance of a notified order would not result in the occupation of the field by the Union with respect to production.

33Copy pinpoint33. Mr Jaideep Gupta, learned senior counsel, supplemented the case of the appellants. He submitted that if this Court were not inclined to hold that all alcohol falls under Entry 8 of List II then, in the alternative, the judgment of this Court in Synthetics (7J) (supra) must be overruled on the ground that the three-fold classification of Tika Ramji (supra) has not been followed. This Court in Tika Ramji (supra) devised a threefold classification as pre-production, production and post-production. It held that only the second category i.e. production would be covered by the word ‘industry’. He submitted that the State therefore has the power to regulate the manufacture of ENA which would fall under the pre-production category. The State would also have the power to regulate the distribution of denatured alcohol. Buttressing this point, Mr Jaideep Gupta argued that it becomes imperative for the State to regulate the distribution of denatured alcohol because it may be renatured and distributed as potable alcohol which will lead to tragedies. He argued that it becomes imperative for the State to regulate such instances under Entry 8 of List II as well as Entry 6 of List II which deals with public health.

34Copy pinpoint34. Mr V Giri, learned senior counsel, differed from other counsel for the appellants and submitted that denatured alcohol would be excluded from the ambit of the term ‘intoxicating liquors’ and would therefore fall under Entry 24 of List II. However, he supported the arguments of the other counsel on a notified order under Section 18G of the IDRA being a prerequisite for Parliament to occupy the field under Entry 33 of List III.

35Copy pinpoint35. Mr Balbir Singh, learned senior counsel, and Mr Shadan Farasat and Dr. Vivek Sharma, learned counsel, have supported the above arguments on behalf of the appellants.

ii. Respondent’s submissions

36Copy pinpoint36. Mr R Venkataramani, learned Attorney General for India appearing for the Union of India submitted that:

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a. The production, manufacture, trade and commerce, supply and distribution constitute a chain of economic activity and may not be looked at separately. Therefore, the process of production necessarily includes the series of actions of trade, commerce, supply and distribution. This implies that there is a symbiotic relationship between Entry 52 of List I and Entry of 33 List III and they may not be looked at separately. Entry 52 of List I and Entry 33 of List III are a family of entries which are interconnected. Entry 52 of List I can also include and touch upon all matters relating to an industry that is brought under the control of the Union. These matters can be production, trade, commerce, supply and distribution, etc.; b. Entry 52 of List I is a special entry uncontrolled by any other entry including Entry 8 of List II. It envisages the possibility of uniform control at the federal level of any declared industry by removing it from the individual jurisdiction of the States. Such uniform control serves the purpose of subserving the common good, equitable distribution, fair prices, utility of the products of an industry for serving the interests of all the States, etc.; c. To the extent that Parliament legislates with respect to an industry, the powers of the States under Entries 26 and 27 of List II are denuded. Similarly, the powers of the States under Entry 33 of List III are denuded if Parliament has occupied the field. Merely because a notified order is not issued would not leave the subject to be legislated upon by the States. This is because the lack of regulation or notification may be to serve the interest of the industry. The principle elucidated in Tika Ramji (supra) is not a principle of universal application i.e., in the absence of a notified order under Section 18G, the IDRA will not be a dormant law and the States will not derive their competence to deal with all or any matters otherwise exhaustively dealt with by Section 18G; d. The observations in SIEL (supra) and Tika Ramji (supra) are incorrect in completely separating Entry 52 of List I from Entry 33 of List III. It is open to Parliament to enact laws in respect of trade and commerce, production, supply, distribution. The fact that the IDRA touches upon a certain field is enough to oust the jurisdiction of the State completely;

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e. All uses of liquids containing alcohol, other than those meant for human consumption, would fall under one category which is non-potable alcohol. Non-potable alcohol must fall outside Entry 8 of List II. Accordingly, the 2016 amendment to Entry 26 of Schedule I of the IDRA must be taken to have validly taken over non-potable alcohol; f. The focus of the framers while drafting the provisions concerning alcohol in the Constitution was temperance, regulation of trade and commerce in consumable alcohol preparations and to raise revenue; g. Entry 8 of List II cannot be interpreted to carve anything out of Entry 52, List I and Entry 33, List III. The judgment of this Court in ITC Ltd v. Agricultural Produce Market Committee,64 is inapplicable to the present case because ITC (supra) was determined in the context of overlapping entries. The ‘fermentation industry’ has been dealt with under the IDRA, which is a self-contained legislation; h. The term ‘intoxicating liquors’ in Entry 8 of List II does not include all classes of alcoholic liquids. The use of the phrase ‘that is to say’ occurring in Entry 8 of List II only refers to the range of activities concerning one class of alcohol, namely potable alcohol, and is not referable to other classes of liquor; i. The framers of the Constitution may not have been aware of many industrial uses of alcohol and that all alcohol is neither consumable by humans nor intoxicating in nature; and j. The Report of the Industrial Alcohol Committee in 1920 observed that it was difficult to define ‘intoxicating liquors’ since there was no intrinsic difference between alcohol intended for potable and non-potable purposes.

37Copy pinpoint37. Mr Tushar Mehta, learned Solicitor General of India, argued that the adjudication on the interplay of Sections 2 and 18G of the IDRA with Entry 52 of List I and Entry 33 of List III will have a bearing on other legislation and therefore the ruling in this case may not be restricted to the industry of alcohol. The division of legislative

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powers has undergone four stages: (a) the devolution of powers to the Federal legislature and the Provincial legislatures under the Devolution Rules, Government of India Act 1919;65 (b) the division of subjects between the Centre and the Provinces under the 1935 Act; (c) the draft Constitution which was placed before the Constituent Assembly; and (d) the entries as they were finally adopted in the Constitution. The Solicitor General submitted that: a. Some industries have always been considered as necessarily under Union control. This may be because it is in national interest, requires uniform regulation throughout the country, or when the industry or its products are sought to be equitably distributed. Entry 52 of List I is in furtherance of the federal principle; b. Entry 20 of the Central Subject List in the Devolution Rules framed under the 1919 Act which corresponds to Entry 52 of List I of the Seventh Schedule to the Constitution used the term ‘development’. A similar provision was inserted as Entry 34, List I of the Seventh Schedule to the 1935 Act which also used the term ‘development’. This entry was further retained as Entry 64 of List I of the Seventh Schedule to the draft Constitution. However, after debates in the Constituent Assembly the entry gained the form in which it appears today in Entry 52 of List I. The word ‘development’ was dropped from the entry but the word ‘control’ was retained. Therefore, the term ‘control’ must have been intended to connote a wider meaning than its earlier versions; c. This is borne out by the Constituent Assembly debates where Dr BR Ambedkar responded to amendments which sought to introduce the term ‘development and control’ in draft Entry 64, List I. He stated that the intention of the Drafting Committee was not merely to allow the Union to take over the development of an industry but also other aspects; d. Tika Ramji (supra) must be overruled because: i. It did not consider the Constituent Assembly debates and wrongly restricted the meaning of industry to manufacturing and production only;

65 “1919 Act”

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ii. All aspects from the sourcing of raw materials to the distribution of products must fall within the powers of the Union to take control of an industry under Entry 52 of List I; iii. Article 366(12) did not define the term ‘goods’ to include raw materials in particular; iv. Entry 27 of List II is subject to Entry 33 of List III. The implication of this aspect was not sufficiently dealt with by the Court in Tika Ramji (supra); and v. It is expedient in public interest that alcohol is regulated by a Central legislation. Currently, the IDRA occupies the field, and any State law on alcohol, other than potable alcohol, will be repugnant to the IDRA. The holding in Tika Ramji (supra), that there must be a notified order in force pursuant to Section 18G for there to be repugnancy is not correct. Further, it was obiter dicta; e. Synthetics (7J) (supra) rightly did not consider the observations in Tika Ramji (supra) regarding the absence of a notified order by the Union government; f. The debates in the Constituent Assembly would show that the framers of the Constitution intended the Union to have some control over the trade and commerce, production, supply and distribution which led to the introduction of a concurrent list entry which is identifiable as Entry 33 of List III; g. The power of taxation over potable alcohol has always been with the States and the power of taxation over non-potable alcohol has always been with the Union. This is borne out by the evolution of Entry 84 of List I and Entry 52 of List II of the Seventh Schedule to the Constitution. The control and the taxing power were cumulatively given to the provinces under Entry 16 of the provincial subject list of the Devolution Rules under the 1919 Act. Under the 1935 Act, Entry 45 of List I specifically excluded ‘alcoholic liquor for human consumption’ from the domain of the Union and correspondingly included it under the State list as Entry 40 of List II; h. The term ‘intoxicating liquors’ in Entry 8 of List II means a beverage which has the effect of intoxication upon consumption.

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The term is not used elsewhere in the Seventh Schedule and instead the term ‘alcoholic liquor for human consumption’ is used in taxing entries. The terminological variation is because the incidence of tax is relevant in a taxing entry. Accordingly, since intoxication is not the incidence of taxation but the effect of consuming alcoholic liquor, it is not used in the taxing entries; i. Similarly, in Article 47, the term ‘intoxicating drinks’ is used to connote all drinks which have the effect of intoxication regardless of its alcoholic content, for example, Indian hemp; j. This Court, in Synthetics (7J) (supra), held that ‘intoxicating liquors’ is limited to ‘alcoholic liquor fit for human consumption’. FN Balsara (supra) defined liquor in a different context and did not deal with legislative competence; and k. Industrial alcohol is a subject which affects the entire nation and requires a uniform approach. This is evidenced by national laws and policies such as the Indian Power Alcohol Act 1948, Ethyl Alcohol (Price Control) Order 1966 and the National Biofuel Policy 2018.

38Copy pinpoint38. Mr Dhruv Agrawal, learned senior counsel; Mr Abhimanyu Bhandari; Mr Omar Ahmad; Ms Tahira Karanjawala; Ms Sansriti Pathak; Mr Pawan Shree Agarwal; Mr S Nandakumar; and Mr Akash Bajaj, learned counsel, have supported the above arguments on behalf of the respondent.

C. The distinction between potable and non-potable alcohol

39Copy pinpoint39. Before delineating the issues that fall for the consideration of this Court, certain preliminary remarks on the process of preparation of potable alcohol, that is, alcohol that is used as a beverage must be made. The raw material for potable alcohol is generally molasses and grain,66 which is fermented and distilled to produce rectified spirit. Rectified spirit, also known as ethyl alcohol, contains about 95% alcohol and some impurities which can affect flavour and aroma. Rectified spirit is used as a solvent in pharmaceutical and cosmetic products. Though rectified spirit is not generally used in

66 See FB Wright, Distillation of Alcohol and De-Naturing (2nd ed. 1907)

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the preparation of alcoholic beverages, it may be used to produce home-made liqueurs.⁶⁷ Extra Neutral Alcohol is a highly purified form of ethanol which contains more than 96% alcohol. ENA has a neutral taste and smell and is mostly used as a base for the preparation of premium beverages. Additionally, it is also used in the production of products like perfumes and mouthwashes. Absolute alcohol is ethanol that contains less than 1% water and more than 99% alcohol. 68 The high purity of the alcohol makes it ideal for the preparation of pharmaceutical products, cosmetics and chemical manufacturing that require a water-free solvent.⁶⁹

40Copy pinpoint40. ‘Industrial alcohol’ is a common term that is used to denote the alcohol that is used in industries. As indicated above, all the above three variants of ethanol are used in various industrial preparations. While ENA is usually used for the preparation of alcoholic beverages, rectified spirit is also used to prepare certain alcoholic beverages. Denaturation is a process by which ethanol is deliberately made undrinkable by adding chemicals known as ‘denaturants’ to make it poisonous or foul smelling and unsuited for ingestion by humans. Denaturants can be added to any of the three forms of ethanol (ENA, rectified spirit and absolute alcohol). Denatured alcohol is also further classified into ‘Completely Denatured Alcohol’ and ‘Specially Denatured Alcohol’. Both these formulations contain denaturants making it unconsumable. However, in completely denatured alcohol, the denaturants cannot be easily removed while in ‘specially denatured alcohol’, they can be easily removed.⁷⁰ In view of this complexity, where the materials for the preparation of potable alcohol are also used for the preparation of other products, a simplistic classification of ‘potable’ and ‘non-potable’ alcohol cannot be made for the purposes of this judgment.

41Copy pinpoint41. This is also evident from the submissions by counsel on the scope of Entry 8 of List II. The counsel made the following submissions:

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a. Entry 8 only includes the final product of potable alcohol, that is alcoholic beverages for human consumption. Entry 8 does not include ENA which is a raw material for the preparation of beverage;71 b. Entry 8 includes ENA and potable alcohol;72 c. Entry 8 includes ENA, potable alcohol and the process of ‘denaturing’ ENA;73 and d. Entry 8 includes ENA, potable alcohol and denatured alcohol.⁷⁴

D. Issues

42Copy pinpoint42. With the above preliminary observations, we have formulated the following issues: a. Whether Entry 52 of List I of the Seventh Schedule to the Constitution overrides Entry 8 of List II; b. Whether the expression ‘intoxicating liquors’ in Entry 8 of List II of the Seventh Schedule to the Constitution includes alcohol other than potable alcohol; and c. Whether a notified order under Section 18G of the IDRA is necessary for Parliament to occupy the field under Entry 33 of List III of the Seventh Schedule to the Constitution.

E. Analysis

i. The constitutional distribution of legislative power

43Copy pinpoint43. One of the prominent features of a federal Constitution is the distribution of legislative powers between the Union and the States. Article 246 provides for the distribution of legislative powers between Parliament and the State Legislatures. Clause (1) of Article 246 stipulates that Parliament has exclusive power to make laws with respect to any matter enumerated in the Union List (List I to the Seventh Schedule) notwithstanding anything in the State or the

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Concurrent Lists. Clause (2) stipulates that Parliament and the State Legislatures have the power to legislate on any matter enumerated in the Concurrent List (List III of the Seventh Schedule) subject to the power of Parliament under Clause (1) but notwithstanding the power of the State Legislatures under Clause (3). Clause (3) provides that subject to clauses (1) and (2), the State Legislatures have the power to legislate on any matter enumerated in the State List (List II of the Seventh Schedule) of the Seventh Schedule. Further, Clause (4) provides for the power of Parliament to enact laws for Union Territories. It states that Parliament may enact laws for any part of the territory of India which is not included in a State. This power includes the power of Parliament to make laws with respect to entries enumerated in the State list, for Union Territories.

44Copy pinpoint44. The federal balance of the distribution of legislative powers between the Union and the States rests on the interpretation of the phrase “notwithstanding” in Clause (1) of Article 246 and “subject to” in Clause (3) of Article 246. It is more than clear that the phrases provide predominance to Parliament over State Legislatures. The federal balance lies not on the recognition that the Constitution grants Parliament predominant legislative power but on the identification of the scope of such predominance. The scope of the non-obstante clause in Article 246(1) and the subjugation clause in Article 246(3) must not be interpreted in isolation but along with the substantive provisions of the clauses. Clause (1) of Article 246 grants Parliament the “exclusive power” to enact laws with respect to matters in List I. Similarly, Clause (3) of Article 246 grants the Legislature of States, the “exclusive power” to enact laws with respect to matters in List II. On a holistic interpretation of the provisions, it is clear that the non- obstante clause in Article 246(1) and the subjugation clause in Article 246(3) do not permit Parliament to enact laws with respect to the entries in List II. Each of the legislative bodies are sovereign and supreme within the sphere that is allocated to them in the Seventh Schedule.75 What then is the purpose of the non-obstante and subjugation clause? It is crucial to note that Clause (1) of Article 246 stipulates that the power of Parliament to make laws with respect to entries in List I is ‘notwithstanding’ not just the power to make laws with respect to matters in the Concurrent list but also the power to

75 Jindal Stainless Steel v. State of Haryana (2017) 12 SCC 1 [617]

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make laws with respect to matters in the State List. A combined reading of the non-obstante clause and the subjugation clause along with the use of the phrase “exclusive power” means only one thing, that when there is a conflict between the entries in List I and List II, the power of Parliament supersedes.

45Copy pinpoint45. The judgment of this Court in Hoechst Pharmaceuticals v. State of Bihar76 is the locus classicus on the constitutional scheme of legislative distribution. The decision holds that when there is a conflict between an entry in List I and entry in List II which is not ‘capable of reconciliation’,77 the power of Parliament to legislate with respect to a field covered by List I must supersede the exercise of power by the State legislature to that extent.78 The judgment also proceeded to lay down the manner in which the entries in List I and List II must be reconciled79: a. In case of a seeming conflict between the entries in the two lists, the entries must be read together without giving a narrow and restricted meaning to either of the entries in the Lists; and b. If the entries cannot be reconciled by giving a wide meaning, it must be determined if they can be reconciled by giving the entries a narrower meaning.

46Copy pinpoint46. In State of WB v. Committee for Protection of Democratic Rights,80 a Constitution Bench held that the principle of federal supremacy in Article 246 can be resorted to only when there is an ‘irreconcilable direct conflict’ between the entries in List I and List II.81

ii. Scheme of legislative entries

47Copy pinpoint47. The lists in the Seventh Schedule demarcate the legislative fields between Parliament and the State Legislatures. They do not confer power but stipulate broad fields of legislation.82 The source

76 [1983] 3 SCR 130 : (1983) 4 SCC 45 77 Also see In re Central Provinces and Berar Act 14 of 1938, AIR 1939 FC 1 78 (1983) 4 SCC 45 [38] 79 AIR 1939 FC 1 [41] 80 [2010] 2 SCR 979 : (2010) 3 SCC 571 81 (2010) 3 SCC 571 [27]; Also see In re C.P & Berar Taxation Act, AIR 1939 FC 1 82 See Calcutta Gas Co. (Proprietary) Ltd. v. State of W.B., 1962 SCC OnLine SC 60; Union of India v. HS Dhillon (1971) 2 SCC 779; TMA Pai Foundation v. State of Karnataka (2002) 8 SCC 481.

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of the power of Parliament and State Legislatures emanates from Articles 245 and 246 of the Constitution. These provisions in the Constitution have been borrowed from Sections 99 and 100 of the Government of India Act 193583 with necessary modifications. The demarcation of legislative fields is based on a deliberate design as well as on the principles of federalism. Matters requiring coordination between different regions of the country or of national importance have been placed in the field of Parliament. Matters requiring localized focus and limited or no coordination between States have been placed in the State List. Fields of legislation which may require either uniform legislation for the entire nation or context and region-specific accommodation, depending on the circumstance, are placed in the Concurrent List. Moreover, the three lists make a clear distinction between general entries and taxation entries. The power of taxation cannot be derived from a general entry.84 The entries in the legislative lists do not cast an obligation to legislate or to legislate in a particular manner. Within the confines of an entry, the legislature exercises plenary power subject to the provisions of the Constitution.85

48Copy pinpoint48. Numerous language devices are used in the Seventh Schedule to prevent the conflict of entries and ensure a clear demarcation of the fields of entry. The entries in List II use the following language devices: a. ‘Subject to’ a specific provision of List I or List III: Entries 2,17,22, 24,26,27,33 and 57; b. ‘Subject to’ provisions of an entire list with regard to the subject matter: Entry 13; c. ‘Not specified in’ or ‘other than those specified in’ List I: Entries 13, 32 and 63; and d. ‘Subject to’ law made by Parliament or ‘subject to’ any limitations imposed by Parliament by law: Entries 37 and 50.

83 “1935 Act” 84 State of Karnataka v. State of Meghalaya (2023) 4 SCC 416; Union of India v. HS Dhillon (1971) 2 SCC 779; MPV Sundararamier & Co. v. State of Andhra Pradesh (1958) 9 STC 298; R Abdul Quader & Co. v. STO (1964) 6 SCR 867; HM Seervai, Constitutional Law of India, Volume 3 (4th edn.) [25.57] 2340-2341. 85 United Province v. Atiqa Begum (1940) FCR 110; Constitution of India, Article 13

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49Copy pinpoint49. With respect to category (a) above, where an Entry in List II is subject to an entry or entries in List I or List III, the extent of the legislative field covered by the entry in List II is circumscribed by the domain covered by the entries in Lists I or III to which the entry in List II is subject. For example, Entry 22 of the State List deals with “courts of wards subject to the provisions of Entry 34 of List I”. Entry 34 of List I provides for “Courts of wards for the estates of Rulers of Indian States”. The legislative field in Entry 22 of List II is wider than the field of Entry 34 of List I. Hence the subjection of Entry 22 of List II to Entry 34 of List I indicates that that the field assigned to the States is circumscribed to the extent of the field assigned to Parliament in Entry 34 of List I. Barring the express legislative device of subordination, the States have complete power to enact laws over the fields specified in List II of the Seventh Schedule to the Constitution. The authority of the State Legislature to enact laws on those entries of List II which are not expressly made subject to other entries has maintained the federal balance of legislatures under the Constitution.86

50Copy pinpoint50. The devices of language used in the Seventh Schedule prevent the overlap between entries in various Lists. Now, what of the instances where there is an overlap between provisions in different entries but the Constitution does not use a device to resolve it? It must be recalled that the federal supremacy of Parliament on legislative competence can only be resorted to when there is an ‘irreconcilable direct conflict’ between entries in different lists. It is crucial to note the difference between ‘overlap’ and ‘conflict’. An overlap occurs when two or more things or fields partially intersect. However, a conflict occurs when two or more entries operate in the exactly same field. Courts while dealing with an overlap of legislative entries must endeavour to diminish the overlap and not enhance it by including it in the field of conflict. The federal supremacy accorded to Parliament ticks in at the stage of ‘conflict’.

51Copy pinpoint51. The legislative entries must be given a wide meaning. All incidental and ancillary matters which can be fairly and reasonably comprehended must be brought within them.87 However, if there is an overlap

86 ibid 87 United Provinces v. Atiqa Begum (1940) FCR 110; Western India Theatres Ltd. V. Cantonment Board, Elel Hotels & Investments Ltd. V. Union of India; Godfrey Phillips India Ltd. V. State of UP (2005) 2 SCC 515

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between two entries the Court must endeavour to interpret the entries harmoniously. While interpreting the entries harmoniously, it must be ensured that no entry is rendered redundant. This principle of construction applies equally to entries within the same List and entries within different lists.88 The principle of parliamentary supremacy must be applied only when the attempted reconciliation by the above methods of interpretation fails.

iii. The field covered by Entry 52 of List I and Entry 8 of List II

52Copy pinpoint52. Entry 8 of List II reads as follows: “Intoxicating liquors, that is to say, the production, manufacture, possession, transport, purchase and sale of intoxicating liquors”. (emphasis supplied)

a. The scope of Entry 8

I. The meaning of ‘that is to say’

53Copy pinpoint53. Entry 8 of List II deals with ‘intoxicating liquor’. The Entry specifies the scope of the provision by the usage of the phrase ‘that is to say’. The Entry stipulates that it includes everything from the production to the sale of intoxicating liquor, with the use of the expressions ‘production, manufacture, possession, transport, purchase and sale’. The Entry specifies the breadth of the provision by couching it in over broad terms. There are a few entries which provide such a specification, by the use of the words “that is to say”.89 Otherwise, the general language of the Seventh Schedule is to merely mention the field such as ‘gas and gas-works’,90 or ‘fisheries’,91 or ‘census’,92 or ‘public health and sanitation; hospitals and dispensaries’.93 Entry 25 of List II specifies ‘gas and gas-works’ without clarifying the scope of the provision. Similarly, Entry 21 of List II specifies ‘fisheries’. Even

88 See Harakchand Ratanchand Banthia v. Union of India (1969) 2 SCC 166 89 Seventh Schedule to the Constitution of India; Entry 71 to List I, Entry 5 to List II, Entry 13 of List II, Entry 17 of List II, Entry 18 of List II, Entry 42 of List II 90 Seventh Schedule to the Constitution of India; Entry 25 of List II 91 Seventh Schedule to the Constitution of India; Entry 21 of List II 92 Seventh Schedule to the Constitution of India; Entry 69 of List I 93 Seventh Schedule to the Constitution of India; Entry 6 of List II

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within the entries that provide some specification, there are two kinds. First, entries where the meaning of the field is clarified. For example, Entry 71 of List I deals with the field of ‘Union Pensions’. The phrase ‘that is to say’ is then used to specify the meaning of the phrase ‘Union Pensions’ as pensions payable by the Government of India or out of the Consolidated Fund of India.94 This specification operates more or less as a definition clause. Second, the phrase is used to specify the scope of the provision. For example, Entry 5 of List II reads as “local government, that is to say, the constitution and powers of municipal corporations, improvement trusts…”95 Entry 8 falls in the latter category.

54Copy pinpoint54. The next question is whether the phrase ‘that is to say’ used in Entry 8 limits or explains the scope of the entry. The interpretation of the phrase ‘that is to say’ has fallen for the consideration of this Court earlier in numerous cases.96 This Court has adopted both views. Benches have interpreted the expression as a limiting as well as an explanatory device. In Bhola Prasad v. The King Emperor,97 the Federal Court dealt with the meaning of the phrase ‘that is to say’ in Entry 31 of the Provincial List in the 1935 Act. Entry 31 of the Provincial List read as “Intoxicating liquors and narcotic drugs, that is to say, the production, manufacture, possession, transport, purchase and sale of intoxicating liquors, opium and other narcotic drugs.” The issue was whether the Provincial Government had the competence to issue a notification prohibiting the possession of intoxicating liquor. The Federal Court held that the Provincial Government had the competence to prohibit though Entry 31 does not expressly grant the power to ‘prohibit’. The Court noted that the words that follow the phrase ‘that is to say’ were explanatory

94 Other examples include Entry 13 of List II which specifies the meaning of ‘communications’ to mean roads, bridges, ferries and Entry 42 of List II which specifies State pensions to mean pensions payable by the State or out of the Consolidated Fund of the State. 95 Other examples include Entry 17 of List II which reads as “water, that is to say, water supplies, irrigation and canals, drainage and embankments, water storage and water power subject to the provisions of entry 56 of List I” and Entry 18 of List II which reads as ‘Land, that is to say, rights in or over land, land tenures including the relation of landlord and tenant, and the collection of rents; transfer and alienation of agricultural land; land improvement and agricultural loans; and colonization. 96 State of Karnataka v. Balaji Computers; Bansal Wire Industries v. State of UP (2011) 6 SCC 545; Sait Rikaji Furtarnal v. State of AP (1991) Supp (1) SCC 202; CST v. Popular Trading Company (2000) 5 SCC 511; State of Punjab v. Devans Modern Brewaries (2004) 11 SCC 26; State of Bombay v. Bombay Education Society (1954) 2 SCC 152 97 (1942) 4 FCR 17

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or illustrative and not words of either amplification or limitation. However, in other judgments dealing with taxing provisions, this Court has held that the expression ‘that is to say’ is employed to exhaustively enumerate.98 While interpreting the expression ‘that is to say’, it must not be lost that it features in the legislative list which must be interpreted widely and to include all ancillary items. The interpretation of taxing statutes (which must be construed strictly) and legislative entries in the Seventh Schedule(which are required to be construed widely and liberally) cannot be the same. This was noticed by the Constitution Bench in State of Bombay v. Bombay Education Society.99

55Copy pinpoint55. In State of Punjab v. Devans Modern Breweries,100 the levy of tax on the import of potable liquor manufactured in other States was challenged. Justice SB Sinha in his dissenting opinion, considered the scope of the words ‘that is to say’ in Entry 8 of List II. Relying on the decisions in CST v. Popular Trading101 and Indian Aluminium Co. Ltd. v. Assistant Commissioner of Commercial Taxes (Appeals),102 the learned Judge held that the expression ‘that is to say’ in Entry 8 of List II is descriptive, enumerative and exhaustive and circumscribes the scope of the said entry to a great extent.”103 However, the opinion did not consider the decisions in Bhola Prasad (supra) and State

98 State of Karnataka v. Balaji Computers; Bansal Wire Industries v. State of UP (2011) 6 SCC 545 [20]; Sait Rikhaji Furtarnal v. State of AP (1991) Supp (1) SCC 202 [4]; CST v. Popular Trading Company (2005) 5 SCC 511 99 (1954) 2 SCC 152; “12. […] He points out that one of the meanings of the word “namely” as given in Oxford English Dictionary, Vol. VII, p. 16 is “that is to say” and he then refers us to the decision of the Federal Court in Bhola Prasad v. King Emperor [Bhola Prasad v. King Emperor, 1942 SCC OnLine FC 3 : (1942) 4 FCR 17 at p. 25] where it was stated that the words “that is to say” were explanatory or illustrative words and not words either of amplification or limitation. It should, however, be remembered that those observations were made in connection with one of the legislative heads, namely, Entry 31 of the Provincial Legislative List. The fundamental proposition enunciated in R. v. Burah [R. v. Burah (1878) LR 3 AC 889 (PC)] was that Indian Legislatures within their own sphere had plenary powers of legislation as large and of the same nature as those of Parliament itself. In that view of the matter every entry in the legislative list had to be given the widest connotation and it was in that context that the words “that is to say”, relied upon by the learned Attorney General, were interpreted in that way by the Federal Court. To do otherwise would have been to cut down the generality of the legislative head itself. The same reason cannot apply to the construction of the Government Order in the present case for the considerations that applied in the case before the Federal Court have no application here.” [emphasis supplied] 100 (2004) 11 SCC 26 101 [2000] 2 SCR 983 : (2000) 5 SCC 511 102 [2001] 1 SCR 407 : (2001) 2 SCC 201 103 (2001) 2 SCC 201 [158]

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of Bombay v. Bombay Education Society104 and instead referred to the interpretation of the expression in taxing statutes. For the above reasons, the expression ‘that is to say’ in Entry 8 of List II cannot be interpreted to circumscribe the scope of the entry. The words that follow ‘that is to say’ are illustrative and explanatory of the scope of the provision. The expression does not limit the scope of the entry. Thus, the scope of Entry 8 of List II cannot be limited to the ‘production, manufacture, possession, transport, purchase and sale’ of Intoxicating Liquor.

II. Product or industry based entry

56Copy pinpoint56. The Seventh Schedule differentiates between an industry and the product of the industry. Entry 24 of List II deals with industries. Entries 26 and 27 of List II deal with products of industries. Entry 26 deals with “Trade and commerce within the State subject to the provisions of Entry 33 of List III”. Entry 27 provides for “Production, supply and distribution of goods subject to the provisions of Entry 33 of List III”. Entry 33 of List III enables both Parliament and the State Legislature to enact laws with respect to trade and commerce in, and the production, supply and distribution of, inter alia, the products of the industry where control by the Union is declared by Parliament by law to be in the public interest. Thus, if the Union has control over an industry under Entry 52 of List I, both Parliament and the State Legislature will have the competence with respect to the products in terms of Entry 33 of List III. Under Entries 26 and 27 of List II, the State Legislature has the exclusive power to enact laws with respect to the products of the industries covered by Entry 24 of List II. Parliament has the competence to legislate on any ‘industry’ provided that it satisfies the condition stipulated in Entry 52 of List I (control by the Union being declared by a law of Parliament to be in the public interest). The necessary corollary of the enactment of the law under Entry 52 is that the products of the industry are shifted to the Concurrent list from the State List.

57Copy pinpoint57. The scope of Entry 8 must be interpreted in this background. If Entry 8 is a product-based Entry, it will only cover the consumable end-product. However, if it is an industry-based Entry, it would cover

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the production of the product as well.105 Entries 24, 26 and 27 of List II are general entries relating to industry and the products of the industries. A distinction between industry and product is made in List II to give effect to the legislative scheme by which certain industries may be controlled by the Union under Entry 52 of List I but products of those industries which are placed in the Concurrent list under Entry 33. To give effect to this unique demarcation, it was necessary to separate the entries relating to industries and products in List II. However, Entry 8 is a specific entry dealing only with ‘intoxicating liquor’. The distinction made between industry and products in the general entries to give effect to the scheme of legislative distribution on industries is not adopted in Entry 8. We have in the preceding sections emphasised that the primary principle of interpreting entries in the legislative lists is to provide a wide meaning to them. A narrow interpretation must only be adopted when either (a) the scope of the Entry is limited by the use of language devices; or (b) a wide interpretation creates an overlap between entries within the same list or different lists. For example, Entry 25 of List II provides States the competence over “gas and gas-works”. This Court in Calcutta Gas Company (supra) did not interpret the Entry to only include the product of ‘gas and gas works’ but rather interpreted it to include the industry. This is the construction which is in consonance with settled principles of interpretation.

58Copy pinpoint58. Entry 8 in itself indicates that the intent is to ensure that it is read as broadly as possible. The Entry itself covers the ‘production, manufacture, possession, transport, purchase and sale’ of intoxicating liquors. Thus, it is clear that the Entry seeks to regulate everything from the stage of the raw materials to the consumption of ‘intoxicating liquor’. Entry 8 of List II includes both the industry and the product of ‘intoxicating liquor’.

b. Scope of Entry 52 of List I: the absence of “to the extent to which”

59Copy pinpoint59. Entry 24 of List II deals with ‘Industries’. The entry is subject to entries 7 and 52 of List I. Entry 7 of List I deals with industries which are declared by Parliament by law to be necessary for the purpose of defence or for the prosecution of war. Entry 52 of List I

105 See Tika Ramji v. State of UP, AIR 1956 SC 676

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deals with industries, the control of which by the Union is declared by Parliament to be expedient in the public interest. The State Legislature will have the competence to enact laws with respect to ‘industries’. However, Parliament has the power to deal with such industries which are necessary to be in the control of the Union for: (a) public interest; (b) defence; and (c) prosecution of war. Thus, the State Legislature will have the competence to enact laws with respect to all industries, unless Parliament has taken control of the industry under Entries 52 or 7 of List I.

60Copy pinpoint60. A comparison may be drawn to Entry 54 of List I and Entry 23 of List II to cull out the scope of Entry 52 of List I. Entry 23 of List II deals with the “regulation of mines and mineral development subject to the provisions of List I with respect to regulation and development under the control of the Union.” Entry 54 of List I deals with the “regulation of mines and mineral development to the extent to which such regulation and development under the control of Union is declared by Parliament by law to be expedient in public interest.” The expression ‘to the extent to which’ is absent in Entry 52 of List I. In Mineral Area Development Authority v. M/s Steel Authority of India,106 a nine-Judge Bench of this Court dealt with the scope of Entry 52 of List I and in particular, the purport of the expression “to the extent to which”. One of the contentions before the nine- Judge Bench was that the State Legislature does not have any power under Entry 23 of List II because the Mines and Minerals (Development and Regulation) Act 1957107 is a complete code that occupies the entire field relating to regulation of mines and mineral development. Rejecting the argument, the majority held that the words “to the extent to which” indicates that “besides declaring that it is taking under its control any subject relating to the regulation of mines and mineral development, Parliament has to specify the extent to which the Parliamentary regulation is deemed expedient in the public interest.”108

61Copy pinpoint61. As opposed to Entry 54, Entry 52 does not use the words “to the extent to which”. The question is whether the State Legislature is

106 2024 INSC 554 107 “MMDRA” 108 2024 INSC 554 [158-161]

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denuded from legislating on an industry which is controlled under the IDRA or any other similar legislation enacted under Article 246 read with Entry 52. Section 2 of IDRA provides that the Union takes control over the industries specified in the First Schedule. In Ishwari Khetan Sugar Mills v. State of UP,109 a Constitution Bench of this Court dealt with the constitutional validity of the UP Sugar Undertakings (Acquisition) Act 1971 which was challenged on the ground that the State Legislature lacked the legislative competence. While demarcating the scope of Entry 52 of List I and Entry 24 of list II, Justice D A Desai (writing for himself and two other Judges), observed that the degree and extent of control acquired by Parliament upon a declaration under Entry 52 would depend on the legislation enacted “spelling out the degree of control assumed”. The relevant observations are extracted below: “7. […] Entry 52 List I on its own language does not contemplate a bald declaration for assuming control over specified industries, but the declaration has to be by law to assume control of specified industries in public interest. The legislation enacted pursuant to the power to legislate acquired by declaration must be for assuming control over the industry and the declaration has to be made by law enacted, of which declaration would be an integral part. Legislation for assuming control containing the declaration will spell out the limit of control so assumed by the declaration. Therefore, the degree and extent of control that would be acquired by Parliament pursuant to the declaration would necessarily depend upon the legislation enacted spelling out the degree of control assumed. A mere declaration unaccompanied by law is incompatible with Entry 52 List I. A declaration for assuming control of specified industries coupled with law assuming control is a prerequisite for taking legislative action under Entry 52 List I. The declaration and the legislation pursuant to declaration to that extent denude the power of State Legislature to legislate under Entry 24 List II.”

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62Copy pinpoint62. The opinion of Justice D A Desai referred to the judgments of this Court in Baijnath Kedia v. State of Bihar110 and State of Haryana v. Chanan Mal111 “on an identical Entry 54, List I.”112 It was also argued that Section 2 of IDRA,113 unlike Section 2 of MMDRA114 does not provide that the Union shall take control “to the extent herewith provided”, and thus, IDRA takes full control over the scheduled industries. Rejecting the argument, Justice D A Desai noted that the “words of limitation on the power to make declaration are ‘by law’”.115 Justice R S Pathak, as the learned Chief Justice then was, (writing for himself and Justice Koshal) observed that he would refrain from expressing any opinion on this issue and that the challenge to the validity of the impugned enactment could be disposed of without a reference to Entries 52 of List I and 24 of List II.116

63Copy pinpoint63. In ITC (supra), another Constitution Bench briefly dealt with this issue. It was argued that this Court in Ishwari Khetan (supra) equated Entry 52 of List I with Entry 54 of List II. Justice Y K Sabharwal, as the learned Chief Justice then was, writing for the majority specifically rejected the argument that Entry 54 was equated with Entry 52 and observed that the “decision does not adopt the mines and minerals cases for the purposes of considering the scope of Entry 52 of List I.”117

64Copy pinpoint64. We agree with the opinion of Justice Desai in Ishwari Khetan (supra). Entries 52 and 54 of List I (and entries 23 and 24 of List II) are unique. Though entries 23 and 24 stipulate that they are subject

110 [1970] 2 SCR 100 111 [1976] 3 SCR 688 112 (1980) 4 SCC 136 [8] 113 “2. Declaration as to expediency of control by Union: It is hereby declared that it is expedient in the public interest that the Union should take under its control the industries specified in the First Schedule.” 114 “2. Declaration as to expediency of Union Control.- It is hereby declared that it is expedient in the public interest that the Union should take under its control the regulation of mines and the development of minerals to the extent hereinafter provided.” [emphasis supplied] 115 (1980) 4 SCC 136 [11] 116 “44.[…] It seems to us that the observations made by this Court in Hingir-Rampur Coal Co. Ltd. v. State of Orissa [AIR 1961 SC 459 : (1961) 2 SCR 537] , State of Orissa v. M.A. Tulloch and Co. [AIR 1964 SC 1284 : (1964) 4 SCR 461] , Baijnath Kadio v. State of Bihar [(1969) 3 SCC 838, 847-848 : AIR 1970 SC 1436 : (1970) 2 SCR 100, 113] and State of Haryana v. Chanan Mal [(1977) 1 SCC 340, 351 : AIR 1976 SC 1654 : (1976) 3 SCR 688, 700] cannot be of assistance in this behalf. In each of those cases, the declaration made by Parliament in the concerned enactment limited the control of the mines and the development of minerals to the extent provided in the enactment. Whether the terms in which the declaration has been framed in Section 2 of the Industries (Development and Regulation) Act — a declaration not expressly limiting control of the specific industries to the extent provided by the Act — can be construed as being so limited is a matter which, we think, we should deal with in some more appropriate case.” 117 (2002) 9 SCC 232 [31]

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to specific entries in List I, they are actually subject to the law made by Parliament under the entries. The entries are unique in the sense that the scope of an entry in the State List is not subjected to another entry in the Union List but rather by the law made by Parliament. The consequence of this is that when stretched to the extreme, Parliament may by law declare that all industries must be in the control of the Union. This would enable Parliament to render an entry in the State List otiose. As held in the preceding section of this judgment, the entries must be interpreted to maintain the federal balance. When there are two possible interpretations of the entries, the Court must choose the one that maintains the federal balance. Entries 24 of List I and 52 of List II maintain the federal balance in a unique way. The members of the Constituent Assembly thought it fit to include ‘industries’ as a legislative field in the State List because it requires localized focus. If the draftspersons thought otherwise, they could have included the Entry in the Union List or even the Concurrent List. The unique placement of these entries must be considered and given due effect. The entries must not be interpreted in a manner that would, in effect for all purposes, place the entry in the Concurrent List.

65Copy pinpoint65. The question is whether an implied limitation can be read into Entry 52 of List I in the absence of the expression “to the extent to which”. If an implied limitation is not read into the Entry, Parliament by a simple declaration may take over the complete industry and subject the power of the State Legislature to make any provision with respect to that industry to the power of Parliament. This interpretation diminishes the scope of competence of the State Legislature under Entry 24 of List II. Such an interpretation completely tilts the federal balance that entries 52 of List I and 24 of List II seek to maintain. The power of Parliament in Entry 52 of List I is defined by the phrase ‘control’. The Entry does not read as “industries, declared by Parliament by law to be expedient in the public interest.” The Entry states “Industries, the control of which by the Union is declared by Parliament by law to be expedient in the public interest.” The law enacted by Parliament must not be an abstract declaration but must specify the extent of control that is necessary to be taken in public interest. The State Legislature will have the competence to legislate with respect to the field which is not the subject matter of control. The legislative competence of the State Legislature is only denuded to the extent of the ‘control’ by the Union declared by the law of Parliament to be expedient in the public interest.

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c. Reconciling the potential overlap between Entry 52 of List I and Entry 8 of List II

66Copy pinpoint66. Having discerned the scope of Entry 52 of List I, it next needs to be considered if Entry 52 of List I and Entry 8 of List II overlap, and if they overlap, whether they can be reconciled.

67Copy pinpoint67. At this juncture, the decisions of this Court that have dealt with the interplay of Entry 52 of List I and entries of List II need to be referred to. In Calcutta Gas Company v. State of West Bengal,118 a Constitution Bench dealt with the overlap between Entry 52 of List I and Entry 25 of List II. Entry 25 of List II provides for ‘gas and gas works’. The Legislature of West Bengal enacted the Oriental Gas Company Act

1960. The constitutional validity of the enactment was challenged on the ground that Entry 24 of List II which deals with industries is subject to Entry 52 of List I and thus, Entry 25 of List II must be confined to matters which are not covered by Entry 24. In short, the submission was that the ‘industry’ of gas and gas works will be covered by Entry 24 of List II and the other matters relating to gas and gas works will be covered by Entry 25 of List II. Justice Subba Rao writing for the Constitution Bench held that the ‘industry’ of gas and gas works will be covered by Entry 25 for the following reasons119: a. Entry 25 of List II will become redundant if Entry 24 of List II (read along with Entries 25 and 26 which deal with trade, commerce, production, supply and distribution of products) covers the industry of ‘gas and gas works’; b. The alternative, allows Entries 24 and 25 to operate fully in their respective fields. Entry 24 must be interpreted to cover the entire field of industry while Entry 25, the specific industry of gas and gas works;120 and

118 [1962] Supp. 3 SCR 1 : AIR 1962 SC 1044 119 AIR 1962 SC 1044 [9] 120 “9. […] If industry in Entry 24 is interpreted to include gas and gas works, Entry 25 may become redundant, and in the context of the succeeding entries, namely Entry 26, dealing with trade and commerce, and Entry 27, dealing with production, supply and distribution of goods it will be deprived of all its contents and reduced to “useless lumber”. If industrial, trade, production and supply aspect are taken out of Entry 25, the substratum of the said entry would disappear: in that event we would be attributing to the authors of the Constitution ineptitude, want of precision and tautology. On the other hand, the alternative contention enables Entries 24 and 25 to operate fully in their respective fields: while Entry 24 covers a very wide field, that is, the field of the entire industry in the State, Entry 25, dealing with gas and gas-works, can be confined wo a specific industry, that is, the gas industry.” [emphasis supplied]

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c. Parliament cannot enact laws on the gas industry under Entry 52 because the meaning of ‘industry’ in Entry 24 of List II and Entry 52 of List I is the same. Since Entry 24 does not cover the gas industry, it cannot be included in Entry 52 as well.121

68Copy pinpoint68. In McDowell (supra), the constitutional validity of the Andhra Pradesh Prohibition Act 1995 was under challenge. The enactment prohibited the selling, buying, consumption and manufacture of liquor. It was submitted that the State did not have the competence to enact the statute because the manufacture and production of intoxicating liquors is an industrial activity covered by Item 26 of the Schedule to IDRA. It may be recalled that Item 26 before the 2016 amendment included alcohol and other products of fermentation industry. The three-Judge Bench of this Court rejected the submission. Justice Jeevan Reddy, writing for the Bench, observed that: a. Entry 8 expressly refers to ‘production and manufacture’ of intoxicating liquor. Including the production and manufacture of liquor in Entry 24 of List II (and as a consequence in Entry 52 of List I), would amount deleting the words “production and manufacture” in Entry 8; b. Entry 24 is a general entry and Entry 8 is a specific entry. On the application of the principle of generalia specialibus non derogant (general things do not derogate from specific things), the industry of intoxicating liquor will not fall under the general entry (Entry 24) but the special entry (Entry 8); and c. Entry 52 only governs Entry 24 and not Entry 8. Thus, the industry of intoxicating liquor cannot be taking over by Parliament under Entry 52.122

121 “11. […] As we have indicated earlier, the expression “industry” in Entry 52 of List I bears the same meaning as that in Entry 24 of List II, with the result that the said expression in Entry 52 of List I also does not take in a gas industry.” 122 “26. […] Entry 24 is a general entry relating to industries whereas Entry 8 is a specific and special entry relating inter alia to industries engaged in production and manufacture of intoxicating liquors. Applying the well-known rule of interpretation applicable to such a situation (special excludes the general), we must hold that the industries engaged in production and manufacture of intoxicating liquors do not have within Entry 24 but do fall within Entry 8. This was the position at the commencement of the Constitution and this is the position today as well. Once this is so, the making of a declaration by Parliament as contemplated by Entry 52 of List I does not have the effect of transferring or transplanting, as it may be called, the industries engaged in production and manufacture of intoxicating liquors from the State list to Union List. As a matter of fact, Parliament cannot take over the control of industries engaged in the production and manufacture of intoxicating liquors by making a declaration under Entry 52 of List I, since the said entry governs only Entry 24 in List II but not Entry 9 in List II.”

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Referring to the decision in Calcutta Gas Company (supra), the three-Judge Bench observed that Entry 8 is more specific as compared to Entry 24 because the former expressly refers to ‘production and manufacture’, and thus, it is all the more clear that the production of liquor cannot be covered by Entry 52.123

69Copy pinpoint69. In Calcutta Gas Company (supra) and McDowell (supra), this Court adopted the following established principles of interpretation to resolve the overlap between legislative entries: (a) generalia specialibus non derogant; (b) an interpretation which does not render an entry redundant must be adopted; and (c) parliamentary supremacy in Article 246 will only operate if the entries in the State List and the Union List cannot be reconciled. The approach in Calcutta Gas Company (supra) and McDowell (supra) on the issue of reconciling the conflict between the entries varies on one aspect. In Calcutta Gas Company (supra), the Constitution Bench adopted a three- step analysis: a. On an application of the principle of generalia specialibus non derogant, the industry of the specific entry (in this case, the gas industry) was traced to Entry 25 and not Entry 24 (which is a general entry); b. Entry 52 is co-extensive with Entry 24. Thus, the scope of Entry 54 is circumscribed by the scope of Entry 24; and c. The gas industry is included in Entry 25 (and not Entry 24) which is not subject to Entry 52. Thus, Entry 52 cannot cover the gas industry.

70Copy pinpoint70. In McDowell (supra), the three-Judge Bench applied the principle that the State Legislature has full competence to enact laws with respect to those entries which are not expressly subject to an entry in List I or List III.

71Copy pinpoint71. The question is whether Parliament under Entry 52 of List I takes over the industry of intoxicating liquor covered by Entry 8. The answer is in the negative. Irrespective of whether the term ‘industry’ is interpreted

123 “28. […] Article 246 cannot be invoked to deprive the State Legislatures of the powers inhering in them by virtue of entries in List II. To wit, once an enactment, in pith and substance, is relatable to Entry 8 in List II or for that matter any other entry in List II, Article 246 cannot be brought into yet hold that State Legislature is not competent to enact that law.”

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in a narrow or a wide manner (a point that is vehemently contested by both sides), the industry of intoxicating liquor cannot be taken over by Parliament under Entry 52 of List I for the following reasons: a. The general principle is that legislative lists must be interpreted widely. The question that the Court must pose is whether the two entries would overlap when interpreted widely. If they overlap, the Court must reconcile them. But the method of reconciliation must maintain the federal balance. The courts must not apply the principle of legislative supremacy of Parliament at the stage of reconciliation. As explained above, such an exercise would tilt the federal balance towards the Union; b. The only limitation in Entry 52 is that the control of the industry by the Union must be necessary for public interest. Parliament can legislate on any industry, provided that it satisfies the condition prescribed in the Entry. Thus, Entry 52 when read independent of any other entry of List I, List II and List III does not preclude the inclusion of the industry of intoxicating liquor (provided that the Union is able to prove that its control is necessary in public interest). Similarly, Entry 8 of List II, when read independently also includes, inter alia, the production and manufacture of intoxicating liquor which is included within the meaning of industry. Thus, Entry 52 of List I and Entry 8 of List II overlap on the aspect of ‘industry’ of intoxicating liquor; c. Entry 8 of List II is not subject to Entry 52 of List I. Thus, the State Legislature has the exclusive competence to enact a law on the field in Entry 8. The Court must distinguish between entries that are expressly subject to entries in the Union List and entries that are not. When one entry is not subject to the other, the Court must harmonise the overlap of the entries; d. The only way to reconcile the entries is either to exclude the industry of intoxicating entry from Entry 52 of List I or Entry 8 of List II. The Court while reconciling the provisions, must ensure that neither of the entries is rendered redundant. The principle of generalia specialibus non derogant is used by courts to ensure that the harmonisation of the entries does not render an entry redundant. In Wavery Jute Mills Co. Ltd. v. Raymon & Co,124

124 [1963] 3 SCR 209

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the issue was whether Parliament or the State Legislature had the competence to enact laws with respect to ‘forward markets’. Applying the principles of generalia specialibus non derogant, this Court held that the Union will have competence over ‘forward contracts’ in terms of Entry 48 of List I (stock exchanges and future markets) and that if it is brought within Entry 26 of List II (trade and commerce), Entry 48 will become redundant. Similarly, in Jayant Verma v. Union of India,125 this Court applied the principle to resolve the overlap between Entry 30 of List II and Entry 45 of List I. A special entry must prevail over a general entry, otherwise, the special entry may become redundant; and e. Entry 52 of List I is a general entry dealing with industry. Entry 8 of List II is a special entry dealing with one particular industry.126 The consequence of interpreting Entry 52 to cover the industry of ‘intoxicating liquor’ is two-fold: first, it would amount to deleting the words ‘production, manufacture’ in Entry 8; and second, the State Legislature also loses its exclusive competence to legislate upon the product of the industry, rendering Entry 8 fully redundant. This is because the legislative competence on products of industries covered by Entry 52 of List I is placed in Entry 33 of List III.

72Copy pinpoint72. As a consequence, Parliament does not have the legislative competence to enact a law taking control of the industry of intoxicating liquor under Entry 52 of List I.

iv. Scope of Entry 8: Meaning of ‘intoxicating liquor’

73Copy pinpoint73. Entry 8 of List II is a general entry and not a taxing entry. However, it is a special entry in the sense that it specifically enumerates ‘intoxicating liquors’ as a legislative field to the exclusion of all other general entries under which it may have otherwise been subsumed. The Entry stipulates that intoxicating liquors would fall within the legislative domain of States. The arguments of the counsel on either side on the scope of Entry 8 of List II rest on the interpretation of the expression “intoxicating liquor”.

125 (2018) 4 SCC 743 126 Calcutta Gas company (supra) and McDowell (supra)

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74Copy pinpoint74. The appellants rely on the meaning of ‘liquor’ in statutes which predate the Constitution to argue that the framers of the Constitution were aware of the sense in which the phrase was used at the time and, that it included denatured alcohol. In response, the Union argues that the word ‘intoxicating’ occurring in the expression ‘intoxicating liquors’ must not be rendered redundant by adopting the interpretation accorded to Entry 8 of List II by the appellants. It argues that ‘intoxicating liquors’ means beverages which are per se meant for human consumption for the purpose of intoxication without dilution or modification by any process. The Union also relies on the legal history of the division of legislative fields between the Union and the States in support of its argument that only Parliament is competent to legislate with regard to denatured alcohol.

a. Precedent on the interpretation of ‘intoxicating liquor’: exploring FN Balsara and Southern Pharmaceuticals

75Copy pinpoint75. The respondents have relied on the interpretation of the phrase ‘intoxicating liquor’ in the judgment of the Bombay High Court in FN Balsara v. State of Bombay.127 The petitioners have strongly relied on the decision of this Court in FN Balsara (supra) which overturned the judgment of the Bombay High Court.

76Copy pinpoint76. The petitioner in Balsara (supra) had one bottle of whisky, one bottle of brandy, one bottle of wine, two bottles of beer, one bottle of medicated wine, one bottle of eau-de-cologne, one bottle of lavender water and some bottles of medicinal preparations. The petitioner invoked the writ jurisdiction of the High Court to challenge the validity of the Bombay Prohibition Act 1949.128 As the name suggests, the statute sought to put in place and enforce the policy of prohibition of alcohol. It was enacted with reference to Entry 31 of List II of the Seventh Schedule to the 1935 Act, which was similar to Entry 8 of List II of the Seventh Schedule to the Constitution, in respect of intoxicating liquors. The Act defined ‘intoxicant’ as “any liquor, intoxicating drug, opium or any other substance which the Provincial Government may, by notification in the Official Gazette declare to be an intoxicant…”129 ‘Liquor’ was defined to include “all liquids

127 1950 SCC OnLine Bom 57 128 “Bombay Prohibition Act” 129 Bombay Prohibition Act 1949; Section 2(22)

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containing alcohol”.130 The definition clause was challenged on the ground that it was beyond the competence of the State Legislature under the entries in List II and List III of the 1935 Act. Chief Justice M C Chagla, writing for the Bench, held that the State Legislature did not have the competence to enact laws with respect to the “legitimate use of alcoholic preparations which are not beverages” and “the use of medicinal and toilet preparations containing alcohol”.131 In short, the High Court held that ‘intoxicating liquor’ in Entry 31 of List II of the 1935 Act did not include all liquids with alcohol, and thus, the definition was beyond the scope of the State Legislature. The reasons for the interpretation were thus: a. Liquor ordinarily means a strong drink as opposed to a soft drink. In any event, it must be a beverage which is ordinarily drunk; b. The difference in the words qualifying ‘liquor’ in entries 31132 and 40(a)133 of List II in the 1935 Act (the Entry corresponding to Entry 51 of List II of the Seventh Schedule to the Constitution) is very significant. In Entry 31, the word used is ‘intoxicating’. In Entry 40(a), the word used is ‘alcoholic’. In the Whitepaper of 1933, the entry dealt with ‘alcoholic liquor’ which was substituted with the expression intoxicating liquor. With the substitution, non-intoxicating liquor was excluded from the scope of the Entry; and c. Medicinal and toilet preparations containing alcohol are neither liquor nor intoxicating. Thus, they are excluded from the scope of the Entry. The 18th amendment to the US Constitution prohibits the sale, manufacture and transportation of ‘intoxicating liquor’.134 The

130 Bombay Prohibition Act 1949; Section 2(24) 131 1950 SCC OnLine Bom 57 [36] 132 “31. Intoxicating liquors and narcotic drugs, that is to say, the production, manufacture, possession, transport, purchase and sale of intoxicating liquors, opium and other narcotic drugs, but subject, as respects opium, to the provisions of List I and, as respects poisons and dangerous drugs, to the provisions of List III.” 133 “40. Duties of excise on the following goods manufactures or produced in the Province and countervailing duties at the same or lower rates on similar goods manufactured or produced elsewhere in India- (a) alcoholic liquors for human consumption…” 134 18th Amendment to the US Constitution; Section 1: “After one year from the ratification of this article the manufacture, sale or transportation of intoxicating liquors within, the importation thereof into, or the exportation thereof from the United States and all territory subject to the jurisdiction thereof for beverage purposes is hereby prohibited.”

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petitioners relied on judgments of the US Supreme Court to substantiate the submission that the State Legislature can legislate on all liquids containing alcohol. The High Court, upon an analysis of judgments noted that they only hold that ‘intoxicating liquor’ could cover drinks that contain a small percentage of alcohol, even if it does not produce an intoxicating effect. The Court further noted that the judgments of the US Courts hold that the State cannot regulate the legitimate use of non-beverage, and medicinal and toilet preparations containing alcohol, but only regulate their use for noxious purposes. Upon the analysis of the decisions, the High Court held that the State: (a) has the competence to legislate on alcoholic liquids which are not normally consumed as drinks; (b) cannot legislate on the “legitimate” use of alcoholic preparations which are not beverages; and (c) cannot legislate on the use of medicinal and toilet preparations containing alcohol.

77Copy pinpoint77. The appeals against the judgment of the High Court were allowed by a Constitution Bench of this Court in FN Balsara (supra). This Court noticed the meaning of the word ‘liquor’ by referring to its dictionary meaning and also assessed the meaning assigned to it in various enactments including the National Prohibition Act 1919 in the USA, the Licensing (Consolidating) Act 1910 and the Spirits Act 1880 in England. It also referred to the Indian enactments, namely, the Bombay Abkari Act 1878, the Bengal Excise Act 1909, the Punjab Excise Act 1914 and the UP Excise Act 1910. The judgment, authored by Justice Fazl Ali, was careful to clarify that the Court was not suggesting that the definition of ‘liquor’ in the Bombay Prohibition Act was borrowed from the statutes in the USA or England but that they were referred to show that the term was “capable of being used in a wide sense”.135 Based on its analysis, this Court observed that: a. While ‘liquor’ was commonly understood to mean a drink or beverage produced by fermentation or distillation, the various enactments referred to indicated that the phrase extended to liquids which were not, strictly speaking, beverages;136 b. The definitions of ‘liquor’ and ‘intoxicating liquor’ in the provincial statutes consistently included liquids containing alcohol. The

135 (1951) SCC 860 [43] 136 (1951) SCC 860 [41]

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framers of the 1935 Act were aware of the ‘accepted sense’ of the meaning assigned to the term in the various provincial laws;137 and c. Therefore, the term ‘intoxicating liquors’ in Entry 31 of List II of the Seventh Schedule to the 1935 Act included not only beverages which intoxicate but also all liquids containing alcohol. While this may not have been the meaning attributed to ‘intoxicating liquors’ in common parlance, the numerous statutory definitions made it clear that the expression in Entry 31 of List II of the 1935 Act was broad and included all liquids containing alcohol.138

78Copy pinpoint78. The Constitution Bench also approached the question from the perspective of the entries on ‘public health’ and ‘public order’, and Article 47139 of the Constitution. The Bench noted that the word ‘liquor’ must be given a wide meaning to include “all alcoholic liquids which may be used as substitutes for intoxicating drinks, to the detriment of health.” 140 On the consideration of the meaning of the phrase, both from the perspective of legislative meaning and the constitutional directive of prohibiting intoxicating drinks which are injurious to health, this Court reversed the finding of the High Court.141

79Copy pinpoint79. Though the High Court held that the definition of ‘liquor’ in the Bombay Prohibition Act is ultra vires and this Court reversed the finding, there is one commonality between both the decisions. Neither of the decisions limited the scope of the phrase to the common parlance meaning of ‘intoxicating beverages’. Both the decisions held that the entry covered liquor which may not produce ‘intoxication’ but which may be used for noxious purposes. The difference is one of

137 (1951) SCC 860 [44] 138 (1951) SCC 860 [44] 139 “47. Duty of the State to raise the level of nutrition and the standard of living and to improve public health.- The State shall regard the raising of the level of nutrition and the standard of living of its people and the improvement of public health as among its primary duties and, in particular, the State shall endeavor to being about prohibition of the consumption, except for medicinal purposes of intoxicating drinks and of drugs which are injurious to health.” 140 (1951) SCC 860 [45] 141 See Paragraph 48: “… the idea of prohibition is connected with public health, and to enforce prohibition effectively the wider definition of the word “liquor” would have to be adopted so as to include all alcoholic liquids which may be substitutes for intoxicating drinks, to the detriment of health. On the whole, I am unable to agree with the High Court’s finding, and hold that the definition of ‘liquor’ in the Bombay prohibition Act is not ultra vires.” [emphasis supplied]

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degree. While the High Court held that all liquids containing alcohol will not be covered by Entry 31 of List II, this Court held otherwise. However, the conclusion of this Court on the scope of the phrase cannot be read detached from observations that a wider definition of intoxicating liquor is necessary to cover other products which ‘may be used as substitutes for intoxicating drinks’.

80Copy pinpoint80. In Southern Pharmaceuticals and Chemical v. State of Kerala,142 the appellants challenged the constitutional validity of the provisions of the Abkari Act, as amended by the Abkari (Amendment) Act 1967 and Kerala Rectified Spirit Rules 1972 which regulated the use of alcohol for the preparation of medicines. Item 22 of the Schedule to IDRA specifies the “drugs and pharmaceuticals” industry. The contention was that the State Legislature did not have the competence to enact laws because the field was covered by Parliament through IDRA. The issue before the three-Judge Bench of this Court was whether the State Legislature had the competence to enact a law related to medicinal and toilet preparations containing alcohol under Entry 8 of List II of the Seventh Schedule to the Constitution. This Court held that the State had the competence to enact the impugned laws under Entry 8 of List II because the legislations are confined to ensuring the proper utilisation of rectified spirit in the manufacture of medicinal and toilet preparations.143 After referring to the decision of this Court in FN Balsara (supra), the Bench held that only medicinal preparations which are capable of being misused for “noxious” purpose can be considered ‘intoxicating liquor’.144 This Court held that the test to determine if it can be misused is whether the article in question can be used as a beverage: “19. The general test for determining what medicinal preparations containing alcohol are capable of being misused and, therefore, must be considered intoxicating within the meaning of the term “intoxicating

142 (1981) 4 SCC 391 143 (1981) 4 SCC 391 [14] 144 “18. … The power to legislate with regard to intoxicating liquor carries with it the power to regulate the manufacture, sale and possession of medicinal and toilet preparations containing alcohol, not for the purpose of interfering with the right of citizens in the matter of consumption or use for bona fide medicinal and toilet preparations, but for preventing intoxicating liquors from being passed on under the guise of medicinal and toilet preparations. It was within the competence of the State legislature to prevent the noxious use of such preparations, i.e. their use as a substitute for alcoholic beverages.” [emphasis supplied]

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liquor”, is the capability of the article in question for use as a beverage. The impugned provisions have been enacted to ensure that rectified spirit is not misused under the pretext of being used for medicinal and toilet preparations containing alcohol. It was argued that this definition was therefore ultra vires the powers of the State legislature, which could only make laws related to alcoholic beverages.” (emphasis supplied)

81Copy pinpoint81. The observations of this Court in Southern Pharmaceuticals (supra) follow the precedent in FN Balsara (supra) that preparations which contain alcohol will be covered by the phrase ‘intoxicating liquor’ in Entry 8 to prevent its ‘noxious use’. In Indian Mica (supra), the appellant challenged the vires of the rule levying licence fee to possess denatured spirit. The Rules were framed under the Bihar and Orissa Excise Act 1915. The State would have the competence to enact a law levying fee on denatured spirit under Entry 66 of List II145 if the spirit was covered by the phrase ‘intoxicating liquor’ in Entry 8 of List II. Denatured spirit in this case was used as a raw material for the preparation of another product (micanite). In this case, the Constitution Bench held that denatured spirit is ‘intoxicating liquor’ and thus, covered by Entry 8 of List II.146 Further it was held that the fee charged will be valid if the levy has a reasonable relationship with the services rendered by the Government.147

82Copy pinpoint82. It is clear from the analysis of the above judgments that the meaning of the phrase ‘intoxicating liquor’ in Entry 8 of List II has been expanded beyond the narrow definition of alcoholic beverages that produce an ‘intoxicating effect’ upon consumption. Liquids which contain alcohol and which can possibly be used (or misused) as intoxicating liquor have been included within the meaning of the phrase.

83Copy pinpoint83. We will test this proposition in the subsequent sections. In our opinion, there are four possible approaches that we can adopt to determine the meaning of the expression ‘intoxicating liquor’. The first is through the identification of the ‘legislative meaning’ of the

145 “66. Fees in respect of any of the matters in this List, but not including fees taken in any Court.” 146 (1971) 2 SCC 236 [3] 147 (1971) 2 SCC 236 [11]

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phrase intoxicating liquor; the second is through legislative history; the third, is the common parlance test, and the fourth is the principle of workability. We will discuss the merits and demerits of each of the above approaches in turn.

b. The legal import of ‘intoxicating liquor’

84Copy pinpoint84. The petitioners submit that the expression ‘intoxicating liquor’ is a term of recognised legal import because it has been used in numerous statutes that pre-date the 1935 Act, where the phrase was first used in Entry 31 of List II. The principle of ‘legal import’ has been used by this Court to interpret entries in the Seventh Schedule. In Gannon Dunkerley (supra), a Constitution Bench dealt with the interpretation of Entry 48 of List II of the Seventh Schedule to the 1935 Act which specified the field of ‘taxes on the sale of goods’. This Court was required to interpret the phrase ‘sale of goods’. On one side it was contended that the term must be given the ‘popular meaning’ and on the other side, it was contended that it must be given the ‘legal meaning’. This Court chose the latter. The Bench laid down the standard to determine when a phrase has obtained a legal meaning. This Court laid down a two-prong test: first, the phrase should have acquired a well-recognised, definite and precise meaning in law;148 and second, the legal import of the word must be practically unanimous.149 It is also crucial to note that in this case, the popular meaning of the phrase was not widely different from the legal meaning150.151

148 “The ratio of the rule of interpretation that words of legal import occurring in a statute should be construed in their legal sense is that those words have, in law acquired a definite and precise sense, and that, accordingly, the legislature must be taken to have intended that they should be understood in that sense. In interpreting an expression used in a legal sense, therefore, we have only to ascertain the precise connotation which it possesses in law.” [emphasis supplied] 149 “It will be seen from the foregoing that there is practical unanimity of opinion as to the import of the word “sale” in its legal sense 150 “Now, in its popular sense, a sale is said to take place when the bargain is settled between the parties, though property in the goods may not pass at that stage, as where the contract relates to future or unascertained goods, and it is that sense that the learned Judge would appear to have had in his mind when he spoke of a commercial or business sense. But apart from the fact that these observations were obiter, this Court has consistently held that though the word “sale” in its popular sense is not restricted to passing of title, and has a wider connotation as meaning the transaction of sale, and that in that sense an agreement to sell would, as one of the essential ingredients of sale, furnish sufficient nexus for a State to impose a tax..” [emphasis supplied] 151 The judgement in Gannon Dunkerley’s case (supra) was held to be constitutionally superseded on other aspects by subsequent cases including Kone Elevator India (P) Ltd. v. State of T.N. (2014) 7 SCC 1. However, the principle of interpretation referred to in this judgment continues to be good law.

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85Copy pinpoint85. The judgment of this Court in Gannon Dunkerley (supra) must be read in the context of the settled principle of interpreting legislative entries, that the entries must be conferred the widest meaning possible. Interpreting a phrase or words in the Legislative Lists based on the legal import of the phrase is, thus, in many ways an exception to the settled principle of interpreting entries. This is for the simple reason that the legislative entries delimit the scope of competence of the legislative bodies. If the entries are interpreted based on the meanings or definitions in a legislation, the purpose of the Seventh Schedule may become redundant. Further, the statute does not define phrases based on popular or common parlance meaning but rather based on the scope of the legislation and the manner in which the provisions are drafted. A deeming fiction is often used to define phrases by conferring artificial meanings.152 The interpretation based on ‘legislative meaning’ elucidated in Gannon Dunkerley (supra), which narrows the interpretation of entries, thereby creating an exception to the rule of wide interpretation should only be employed by Courts when the twin tests highlighted above. The tests are (a) the phrase should have acquired a well-recognised, definite and precise meaning in law; and (b) the legal import of the word must be practically unanimous. Additionally, we also are of the view that the legislative meaning interpretation should be adopted only when the deviation from the popular meaning of the phrase is not too wide. The legislative meaning cannot be used to artificially narrow legislative entries. We also deem it necessary to note that we must be cognizant that the standard of ‘legislative meaning’ is employed to identify the ‘intent’ of the framers of the Constitution and belongs to the originalist school of thought, which has been consistently opposed by this Court over the years.153 For these reasons, the principle of interpretation elucidated in Gannon Dunkerley (supra) must be used cautiously by Courts.

152 See Ahmedabad Municipal Corporation v. GTL Infrastructure Limited (2017) 3 SCC 545 [13] “13. “… it would be self-defeating to understand the meaning and scope of Entry 49 of List II by reference to the definition clauses in the Gujarat Act. Definitions contained in the statute may at times be broad and expansive; beyond the natural meaning of the words or may even contain deeming provisions. Though the wide meaning that may be ascribed to a particular expression by the definition in a statute will have to be given effect to, if the statute is otherwise found to be valid, it will, indeed, be a contradiction in terms to test the validity of the statute on the touchstone of it being within the legislative entry, by a reference to the definition contained in the statute” 153 See Gannon Dunkerley (supra) : “… Sales tax was not a subject which came into vogue after the Government of India Act 1935. It was known to the framers of that statute and they made express provision for it under Entry 48.”

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86Copy pinpoint86. Let us now proceed to determine if the phrase ‘intoxicating liquor’: (a) has a definite and precise meaning in law; (b) is unanimous; and (c) has a legal meaning that is not widely different from its popular meaning. We must refer to the pre-constitutional statutes for this purpose because the expression ‘intoxicating liquor’ was first used in the 1935 Act. The table below indicates the definition of ‘Liquor’, ‘intoxicating liquor’, and ‘spirits’ in numerous pre-constitutional statutes:

Bombay Abkari Act Liquor is defined in an inclusive manner. It 1878 includes “all liquid consisting of or containing alcohol…denatured or not.”154 Madras Abkari Act Liquor includes ….all liquid consisting of or 1886 containing alcohol.155 Spirits means any liquor containing alcohol and obtained by distillation, whether it is denatured or not.156 Abkari Act 1077 Liquor includes …. all liquid consisting of or containing alcohol.157 Bengal Excise Act Intoxicant means any liquor.159 Liquor means 1909158 liquid consisting and containing alcohol.160 Spirit means any liquor containing alcohol, whether denatured or not.161 Madhya Pradesh Liquor means ‘intoxicating liquor’ and includes Excise Act 1915162 …. all liquid consisting of or containing alcohol.163

154 Bombay Abkari Act 1978; Section 3(7) 155 Madras Abkari Act 1886; Section 3(9) 156 Madras Abkari Act 1886; Section 3(8) 157 Abkari Act 1077; Section 3(10) 158 Similar definitions in Bihar and Orissa Excise Act 1915; Sections 2(14); 2(19) 159 The Bengal Excise Act 1909; Section 2(12a) 160 The Bengal Excise Act 1909; Section 2(14) 161 The Bengal Excise Act 1909; Section 2(19) 162 Similar definitions in The Punjab ‘article’ Excise Act 1914; Section 2(14); The Chhattisgarh Excise Act 1915; Section 2(13); United Province Excise Act 1910; Section 3(11) 163 MP Excise Act 1916; Section 2(13)

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National Prohibition The word ‘liquor’ or the phrase ‘intoxicating Act liquor’ shall be construed to include alcohol, brandy, whisky, rum, gin, beer, ale, porter, and wine, and in addition thereto any spirituous, vinous, malt, or fermented liquor, liquids, and compounds, whether medicating, proprietary, patented, or not and by whatever name called, containing one-half of 1 per centum or more of alcohol by volume which are fit for use for beverage purposes. T h e L i c e n s i n g Intoxicating liquor means (unless inconsistent (Consolidating Act) with the context) spirits, wine, beer, porter, 1872 cider, perry and sweets, and any fermented, distilled, or spiritous liquor which cannot, according to any law for the time being in force, be legally sold without an excise law.164 Spirits Act 1880 Spirits means spirits of any description, and includes all liquids mixed with spirits, and all mixtures, compounds, or preparations made with spirits.165

87Copy pinpoint87. The Abkari Acts have generally defined the phrase ‘liquor’ to mean liquids containing alcohol including denatured alcohol. However, the Abkari Acts do not define the phrase ‘intoxicating liquor’. In Excise Acts, ‘liquor’ was defined to mean ‘intoxicating liquor’ and included liquids containing alcohol. Thus, none of the pre-constitutional statutes have defined the phrase ‘intoxicating liquor’ for it to have acquired a legal meaning. The phrase was defined in the Licensing (Consolidating Act) 1910 which regulated the United Kingdom. It cannot be concluded that the phrase used in the Indian Constitution has acquired a legal meaning based on a definition clause in one statute which applied to the United Kingdom. The definition of ‘liquor’ in pre-constitutional statutes as liquids containing alcohol cannot be transposed to interpret the legislative entry. The phrase used in the legislative entry is ‘intoxicating liquor’. The definition of one part of the expression in statutes cannot be used to interpret expressions that are

164 The Licensing (Consolidating Act) 1872; Section 74 165 Spirits Act 1880; Section 3

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used to indicate a collective meaning, particularly when the common parlance definition starkly varies. The common parlance meaning of ‘intoxicating liquor’ means liquor which causes intoxication, that is, which causes someone to lose control. Thus, the three-prong test to identify if “Intoxicating Liquor” has acquired legislative meaning has not been satisfied.

c. Evolution of the legislative lists on ‘intoxicating liquor’

88Copy pinpoint88. We proceed to consider the evolution of the legislative field relating to ‘intoxicating liquor’ to determine the meaning of the expression. The evolution of the legislative entries must be traced from the Devolution Rules formulated under the 1919 Act.166 The Devolution Rules classified legislative subjects for the purpose of distinguishing the functions of the local legislatures from those of the federal legislature. Alcohol was placed in the ‘Provincial List’ of the First Schedule to the Devolution Rules (equivalent to List II or the State List in the Seventh Schedule to the Constitution). Entry 16 of the Provincial List concerned alcohol. It is reproduced below: “16. Excise, that is to say, the control of production, manufacture, possession, transport, purchase and sale of alcoholic liquor and intoxicating drugs, and the levying of excise duties and licence fees on or in relation to such articles, but excluding, in the case of opium, control of cultivation, manufacture and sale for export.” (emphasis supplied)

89Copy pinpoint89. Instead of two distinct entries, one which covered taxation and the other which covered regulation, the Devolution Rules contained a single entry in the Provincial List which extended to both aspects. The Entry related to (a) levy of excise duties; (b) levy of fee; and (c) general regulation. That it concerned taxation is evident from the term ‘excise’ and the ‘levying of excise duties’. The words “the control of production, manufacture, possession, transport, purchase and sale” indicate that the Entry extended to regulation as well. The expression used in Entry 16 was ‘alcoholic liquor’ as opposed

166 The Devolution Rules were made by the Governor General in Council with the sanction of the Secretary of State in Council in exercise of the powers conferred by Sections 45A and 129A of the Government of India Act 1919.

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