Industrial alcohol licensing remains with the Union, while State control is limited to preventing diversion and unlawful interference.

Union control over licensing for industrial alcohol was reaffirmed, and the State could not insist on a PD-2 licence or otherwise obstruct manufacture on that basis; the State's role remains limited to regulating potable liquor and preventing diversion or misuse into potable alcohol. The direction on allotment of molasses was read down so it operated only in accordance with the Molasses Control Order and other governing law, without compelling supply contrary to the applicable regulatory framework. The special leave petition was not entertained, while the allocation of powers between Union and State and the limits of the molasses direction were confirmed.

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Issues: (i) whether the State could insist upon a PD-2 licence or otherwise interfere with manufacture of industrial alcohol where licensing power lay with the Union; (ii) whether the direction regarding allotment of molasses could be read as requiring supply contrary to the governing law.

Issue (i): Whether the State could insist upon a PD-2 licence or otherwise interfere with manufacture of industrial alcohol where licensing power lay with the Union.

Analysis: The decision reiterates the settled position that control over licensing for industrial alcohol vests in the Union, while the State's power remains available to regulate potable liquor and to prevent diversion or misuse of non-potable alcohol into potable alcohol. The State may also levy duties or fees where the legal basis exists, but cannot obstruct manufacture of industrial alcohol on the footing that a PD-2 licence is required for that purpose.

Conclusion: The State could not insist on a PD-2 licence for manufacture of industrial alcohol, and interference with such manufacture was not justified.

Issue (ii): Whether the direction regarding allotment of molasses could be read as requiring supply contrary to the governing law.

Analysis: The direction for allotment of molasses was read down so that it did not compel the Government to act contrary to the Molasses Control Order or any other governing law. The supply was protected only to the extent permitted by law, and the Court expressly preserved compliance with the legal regime regulating molasses distribution.

Conclusion: The molasses direction was confined to supply in accordance with law and did not override the applicable control framework.

Final Conclusion: The special leave petition was not entertained, while the legal position protecting Union control over industrial alcohol and State regulatory power to prevent misuse was affirmed, and the molasses direction was limited by the governing law.

Ratio Decidendi: Licensing authority over industrial alcohol rests with the Union, while the State may regulate only to prevent diversion into potable liquor and may not impose a licence requirement inconsistent with that allocation of power.

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