THE INDUSTRIES
(DEVELOPMENT AND REGULATION) AMENDMENT ACT, 2016 [Act No. 27 of 2016] [14th May, 2016] An Act further to
amend the Industries (Development and Regulation) Act, 1951. Be
it enacted by Parliament in the Sixty-seventh Year of the Republic of India as
follows:-- This
Act may be called the Industries (Development and Regulation) Amendment Act,
2016. In
the Industries (Development and Regulation) Act, 1951 (65 of 1951) (hereinafter
referred to as the principal Act), after section 29D
INDUSTRIES (DEVELOPMENT AND REGULATION) AMENDMENT
ACT, 2016
Preamble - INDUSTRIES (DEVELOPMENT AND
REGULATION) AMENDMENT ACT, 2016PREAMBLE
"29E.
Validation.
Notwithstanding
anything contained in any judgment, decree or order of any court, tribunal or
other authority, any power exercised, or action taken or done or purported to
have been taken or done, by the Central Government or, as the case may be, the
State Government, shall be deemed to be, and shall always deemed to have been,
for all purposes, as validly taken or done or omitted to be done, as if the
amendment made to the First Schedule by the Industries (Development and
Regulation) Amendment Act, 2016 had been in force at all material times and no
suit or claim or other proceedings shall be instituted, maintained or continued
in any court, tribunal or other authority as such.".
Section 3 - Amendment of First Schedule
On
and from the date of commencement of the principal Act, in the First Schedule,
for the heading "26. Fermentation Industries:", the heading "26.
Fermentation Industries (OTHER THAN POTABLE ALCOHOL):" shall be
substituted.
Statement of Objects and Reasons -
INDUSTRIES (DEVELOPMENT AND REGULATION) AMENDMENT ACT, 2016
STATEMENT OF OBJECTS
AND REASONS
1.
The
Industries (Development and Regulation) Act, 1951 was enacted to provide for
the development and regulation of certain industries. Section 2 of the said Act
declares that it is expedient in the public interest that the Union should take
under its control the industries specified in the First Schedule to the Act.
Any industry engaged in the manufacture or production of any of the articles
mentioned under each heading or sub-headings of the First Schedule to the Act
would thus be under the control of the Union. The heading 26 of the First
Schedule to the Act provides for Fermentation Industries which includes Alcohol
and other products of fermentation industries.
2.
According
to the distribution of legislative powers contained in the Seventh Schedule to
the constitution, entry 8 of List II-State List enumerates the subject matter
"Intoxicating liquors, that is to say, the production, manufacture,
possession, transport, purchase and sale of intoxicating liquors" and
entry 24 thereof, enumerates the subject matter "Industries subject to the
provisions of entries 7 and 52 of List I". While entry 7 of List I-Union
List provides for the subject matter "Industries declared by Parliament by
law to be necessary for the purpose of defence or for the prosecution of war",
entry 52 thereof, provides for "Industries, the control of which by the
Union is declared by Parliament by law to be expedient in the public
interest". Thus, the authority to regulate the subject matter
"intoxicating liquors" appears to vest both with the Union and the
States. This has resulted in prolonged litigation.
3.
The
Supreme Court of India, in the case of Bihar Distillery and another versus
Union of India and others (AIR 1997 SC 1208), has held that in the interest of
proper delineation of the spheres of the Union and the States, the line of
demarcation should be drawn at the stage of clearance or removal of the
rectified spirit. Where the removal or clearance is for industrial purposes
(other than the manufacture of potable liquor), the levy of duties of excise and
all other control shall be with the Union and where the removal or clearance is
for obtaining or manufacturing potable liquors, the levy of duties of excise
and all other control shall be with the States.
4.
In
the backdrop of the above judgment of the Supreme Court, the Law Commission of
India had recommended in its 158th Report that the heading 26 of the First
Schedule to the Act be substituted as "Fermentation Industries but not
including Alcohol".
5.
The
recommendation of the Law Commission of India was examined in depth by the
Government. If the subject "Alcohol" is taken out of the First
Schedule to the Act, both industrial alcohol and potable alcohol would come
under the purview of the State Government which is not in consonance with the
judgment of the Supreme Court. Moreover, the effect of implementation of the
recommendation of the Law Commission would be that the subject
"Alcohol" which covers both industrial alcohol and potable alcohol
would no longer be a Central subject.
6.
Therefore,
it is proposed to amend the First Schedule to the Industries (Development and
Regulation) Act, 1951 by substituting the heading 26 thereof, as "26
Fermentation Industries (other than Potable Alcohol)", so that it would be
in conformity with the judgment of the Supreme Court and also ensure that the
industries engaged in the manufacture of alcohol meant for potable purposes
shall be under the total and exclusive control of States in all respects. The
Central Government would continue to be responsible for formulating policy and
regulating foreign collaboration (foreign direct investment and foreign
technology collaboration agreements) for all products of fermentation
industries, including industrial alcohol and potable alcohol.
7.
The
Bill seeks to achieve the above objectives.