NEW DELHI: While upholding the Kerala government ’s decision to render all hotels except five-star ones dry, the Supreme Court also ruled that the states could ban public consumption of cigarettes and liquor even if they had not taken steps to curb production of these intoxicants.

“Consumption of tobacco as well as liquor is undeniably deleterious to the health of mankind. Advertising either of these intoxicants has been banned in most parts of the world, the avowed purpose being to insulate persons who may not have partaken of this habit from being seduced to start. Banning public consumption of either of these inebriants cannot be constrained,” said a bench of Justices Vikramajit Sen and S K Singh.

The court had said ban on public consumption of intoxicants was a positive step since “vulnerable persons, either because of age or proclivity towards intoxication or as a feature of peer pressure, more often than not, succumb to this temptation”.

In giving this complete control to the state over trade in intoxicants, the court had ‘public welfare’ in mind and relied heavily on a 1995 judgment in Khoday Distilleries case. But the states have generally seen this court-sanctioned complete control over trade in intoxicants, especially liquor, as a tool to shore up their revenues.

In 2014-15, the excise duty and sales tax on liquor and cigarettes accounted for nearly 20% and 10% of the total revenue earned by the state governments.

In Khoday Distilleries case, the SC had said: “The state can carry on trade or business in bottled liquor notwithstanding that it is an intoxicating drink and Article 47 of the Constitution enjoins it to prohibit its consumption.

“When the state carries on such business, it does so to restrict and regulate production, supply and consumption of liquor which is also an aspect of reasonable restriction in the interest of general public. The state cannot on that account be said to be carrying on an illegitimate business.”

This carte blanch in liquor trading has yielded great dividend for many states. The consumption of liquor has increased steadily in India and a study conducted by Associated Chambers of Commerce had pegged the total consumption of intoxicants for the year at 20 billion litres costing Rs 1.5 lakh crore. Half of this, which means Rs 75,000 crore, would be earned by the states through excise duty and sales tax.

Tamil Nadu earns around Rs 18,000 crore as revenue every year from its monopoly over sale of liquor. Karnataka gets approximately Rs 12,000 crore, AP Rs 10,000 crore and Delhi earns around Rs 3,200 crore from sale of liquor.

Though tobacco products are in the private sector, sale of cigarettes alone contributes Rs 20,000 crore to the state exchequer through various taxes and levies.

Thus, the Supreme Court’s interpretation of Article 47 has given the states the licence to dictate terms over trade of liquor and cigarettes to nurture these two cash cows though the apex court had intended that state control over trade of intoxicants would help gradually reduce the levels of consumption.