Unit-III:

Distribution of Powers between

Centre and States

By:
Ms. Sonakshi Kashyap
Assistant Professor, Law
TIPS
 LEGISLATIVE RELATIONS BETWEEN UNION AND THE
STATES
(ART. 245-255)

Territorial Jurisdiction Subject Matter

(Art. 245) Jurisdiction (Art. 246)
Article 245. Extent of laws made by Parliament and by the
Legislatures of States-

(1) Subject to the provisions of this Constitution, Parliament may

make laws for the whole or any part of the territory of India,
and the Legislature of a State may make laws for the whole or
any part of the State.

(2) No law made by Parliament shall be deemed to be invalid on the

ground that it would have extra- territorial operation.

• Doctrine of Territorial Nexus

Wallace Bros, v. CIT, Bombay (1948)
Tata Iron & Steel Co. Ltd. v. State of Bihar (AIR 1958 SC 452)
State of Bombay v. R. M. D. C. (AIR 1957 SC 699)
State of Bihar v. Charusila Dasi (AIR 1959 SC 1002)

• Validity of extra-territorial operation

 Exceptions:
1. Art. 240: The President may make
regulations for the peace, progress and good
government of the Union territory of-
(a) Andaman and Nicobar Islands;
(b) Lakshadweep;
(c) Dadra and Nagar Haveli and Daman and
Diu;
(d) Puducherry

2. Fifth Schedule

3. Sixth Schedule
 SUBJECT MATTER (Art. 246)

(1) Notwithstanding anything in clauses (2) and (3), Parliament has

exclusive power to make laws with respect to any of the matters
enumerated in List I in the Seventh Schedule (in this Constitution referred
to as the Union List).

(2) Notwithstanding anything in clause (3), Parliament, and, subject to

clause (1), the Legislature of any State also, have power to make laws with
respect to any of the matters enumerated in List III in the Seventh
Schedule (in this Constitution referred to as the Concurrent List).

(3) Subject to clauses (1) and (2), the Legislature of any State has
exclusive power to make laws for such State or any part thereof with
respect to any of the matters enumerated in List II in the Seventh Schedule
(in this Constitution referred to as the State List).

(4) Parliament has power to make laws with respect to any matter for
any part of the territory of India not included in a State notwithstanding
that such matter is a matter enumerated in the State List
 Residuary powers of legislation
(Art. 248)

(1) Subject to article 246A, Parliament has exclusive

power to make any law with respect to any matter
not enumerated in the Concurrent List or State List.

(2) Such power shall include the power of making any

law imposing a tax not mentioned in either of those Lists.

Entry 97 of List I: Any other matter not enumerated in

List II or List III including any tax not mentioned in
either of those Lists.

Case: UOI v. H.S. Dhillon ((1971) 2 SCC 779)

 DOCTRINE OF REPUGNANCY

Art. 254. Inconsistency between laws made by Parliament and laws made by
the Legislatures of States-
(1) If any provision of a law made by the Legislature of a State is repugnant to any
provision of a law made by Parliament which Parliament is competent to enact, or to
any provision of an existing law with respect to one of the matters enumerated in
the Concurrent List, then, subject to the provisions of clause (2), the law made by
Parliament, whether passed before or after the law made by the Legislature of
such State, or, as the case may be, the existing law, shall prevail and the law
made by the Legislature of the State shall, to the extent of the repugnancy,
be void.

(2) Where a law made by the Legislature of a State with respect to one of the
matters enumerated in the Concurrent List contains any provision repugnant to the
provisions of an earlier law made by Parliament or an existing law with respect to
that matter, then, the law so made by the Legislature of such State shall, if it has
been reserved for the consideration of the President and has received his
assent, prevail in that State:
Provided that nothing in this clause shall prevent Parliament from enacting at
any time any law with respect to the same matter including a law adding to,
amending, varying or repealing the law so made by the Legislature of the State.
 TESTS OF REPUGNANCY
(Deep Chand v. State of Uttar Pradesh)

• Direct Conflict
• Occupied Field
• Exhaustive Code

CASE LAWS

• Zaverbhai v. State of Bombay (AIR 1954 SC

752)
• M Karunanidhi v. UOI (AIR 199799 SC 898)
• Hoechst Pharmaceuticals Ltd. v. State of Bihar
(1983) 4 SCC 45
 DOCTRINE OF HARMONIOUS CONSTRUCTION

It states that a provision of the statute should not be interpreted

or construed in isolation but as a whole, so as to remove any
inconsistency or repugnancy.

• In Re C P & Berar Sales of Motor Spirit & Lubricants Taxation Act,

1938 (AIR 1939 FC 1)

• Gujarat University v. Krishna Ranganath Mudholkar (AIR 1963 SC

703)

DOCTRINE OF COLORABLE LEGISLATION

What you cannot legislate directly Also Cannot legislate indirectly.

• State of Bihar v. Kameshwar Singh (AIR 1952 SC252)

• K.C. Gajapati Narayan Deo v. State of Orissa (AIR 1953 SC375)
 DOCTRINE OF PITH AND SUBSTANCE

The true character or object and nature of legislation or enactment.

As Sir Maurice Gwyer C.J. said in Subramanyan Chettiar v. Muthuswamy Goudan

(1940):
“It must inevitably happen from time to time that legislation though
purporting to deal with a subject in one list, touches also upon a subject in
another list, and the different provisions of the enactment may be so closely
intertwined that blind observance to a strictly verbal interpretation would
result in a large number of statutes being declared invalid because the
Legislature enacting them may appear to have legislated in a forbidden
sphere. Hence the rule which has been evolved by the Judicial
Committee, whereby the impugned statute is examined to ascertain its
pith and substance or its "true nature and character," for the purpose
of determining whether it is legislation with respect to matters in this
list or in that.”

• Prafulla Kumar v. Bank of Commerce, Khulna (AIR 1947 PC 60)

• State of Rajasthan v. G. Chawla (AIR1959 SC 544)
• State of Karnataka v. Drive-in Enterprises ((2001) 4 SCC 60)
 PREDOMINANCE OF UNION
LEGISLATURE

• Predominance is given to Union List

• Extensive Union List
• Repugnancy
• Residuary Power
• Union Territories
• Centre’s power to legislate on State
subjects
 Parliament’s Power to Legislate on State List

Though under ordinary circumstances the Central Government does not possess
power to legislate on subjects enumerated in the State List, but under certain
special conditions the Union Parliament can make laws even on these subjects.

a) In the National Interest (Art.249)

If the Rajya Sabha declares by a resolution supported by not less than 2/3 of its
members present and voting, that it is necessary or expedient in the national
interest that the Parliament should make laws with respect to any matter
enumerated in the State List (Art.249). After such a resolution is passed, Parliament
can make laws for the whole or any part of the territory of India. Such a
resolution remains in force for a period of 1 year and can be further extended
by one year by means of a subsequent resolution.

b) Under Proclamation of National Emergency (Art.250)

Parliament can legislate on the subjects mentioned in the State List when the
Proclamation of National Emergency is in operation. However, the laws made by the
Parliament under this provision shall cease to have effect on the expiration of a
period of six months after the Proclamation has ceased to operate, except as
respects things done or omitted to be done before the expiry of the said period.
c) By Agreement between States (Art. 252)
The Parliament can also legislate on a State subject if the legislatures of two or
more states resolve that it is lawful of Parliament to make laws with respect to
any matter enumerated in the State List relating to those State. Thereafter, any act
passed by the Parliament shall apply to such states and to any other state which
passes such a resolution. The Parliament also reserves the right to amend or repeal
any such act.

d) To Implement Treaties (Art. 253)

The Parliament can make law for the whole or any part of the territory of India
for implementing any treaty, international agreement or convention with any
other country or countries or any decision made at any international conference,
association or other body. Any law passed by the Parliament for this purpose cannot
be invalidated on the ground that it relates to the subject mentioned in the State
list.

e) Under Proclamation of President’s Rule (Art.356)

The President can also authorize the Parliament to exercise the powers of the
State legislature during the Proclamation of President’s Rule due to breakdown of
constitutional machinery in a state. But all such laws passed by the Parliament
cease to operate six months after the Proclamation of President’s Rule comes to
an end.
ADMINISTRATIVE RELATIONS BETWEEN CENTRE AND STATES
(ART. 256-263)

• Art. 256. Obligation of States and the Union.

• Art. 257.Control of the Union over States in certain cases.
• Art. 258. Power of the Union to confer powers, etc., on States in certain

cases.

• Art. 258A. Power of the States to entrust functions to the Union.

• Art. 260. Jurisdiction of the Union in relation to territories outside India.
• Art. 261. Public acts, records and judicial proceedings.
• Art. 262. Adjudication of disputes relating to waters of inter-State rivers

or river valleys. Co-ordination between States

• Art. 263. Provisions with respect to an inter-State Council.

 FINANCIAL RELATIONS BETWEEN CENTRE AND STATES
(PART XII, ART. 268-293)

• Art. 265- No tax shall be levied or collected except by authority

of law.

• Art. 246- Distribution of power

Seventh Schedule
Union list- It includes taxes like Corporation Tax, Customs and
Excise duties and taxes on income other than agricultural income,
etc.
State List- It includes taxes on vehicles, liquors, land revenue,
entertainment, luxuries, agriculture, stamp duties and sale or
purchase of goods, etc.
Concurrent List- List III does not include any major tax.

• Residuary power- Union

 Levying and Collection of Taxes

Distribution of Tax Revenue Between Union and State as follows:-

• Article 268: Duties levied by the Union but collected and appropriated by
the state

• Article 268A: Service Tax (Repealed By 101st Amd.)

• Article 269: Tax levied and collected by the Union but assigned to the state

• Article 269A: Levy and Collection of GST for Inter-State Supply-

apportioned b/w Union and State

• Article 270: Taxes levied and distributed between the Union and the States
• Article 271: Parliament can at any time levy the surcharges on taxes and
duties referred to in Articles 269 and 270. This includes cesses of different
kinds. The proceeds of such surcharges go to the Centre exclusively and
states have no share in them.
• Article 276: Taxes on professions, trades, callings and employments-
State.

• Article 286: Restrictions as to imposition of tax on the sale or

purchase of goods- (1) No law of a State shall impose, or authorise the
imposition of, a tax on the supply of goods or of services or both,
where such supply takes place—
• (a) outside the State; or
(b) in the course of the import of the goods or services or both into, or
export of the goods or services or both out of, the territory of India.

• Article 287: Exemption from taxes on electricity- (a) consumed by the

Government of India; or (b) consumed in the construction, maintenance
or operation of any railway

• Article 285: Exemption of property of the Union from State taxation

• Article 289: Exemption of property and income of a State from Union

taxation
 Grant-in-aid from the Centre to the States

• (Article 273, Article 275 and Article 282).

• Article 280: The President has the power to set up a Finance

Commission after a period of every five years. The Finance
Commission will assist the President by making recommendations
to him regarding the distribution of net proceeds of taxes to be
divided between the centre and the states.

• Article 281: The President shall cause every recommendation

made by the Finance Commission under the provisions of this
Constitution together with an explanatory memorandum as to the
action taken thereon to be laid before each House of Parliament.

• Article 282: Expenditure defrayable by the Union or a State out

of its revenues.—public purpose
 BORROWING

• Article 292. Borrowing by the Government of India- The executive power of the Union
extends to borrowing upon the security of the Consolidated Fund of India within such limits, if
any, as may from time to time be fixed by Parliament by law and to the giving of guarantees
within such limits, if any, as may be so fixed.

• Article 293. Borrowing by States- (1) Subject to the provisions of this article, the executive
power of a State extends to borrowing within the territory of India upon the security of the
Consolidated Fund of the State within such limits, if any, as may from time to time be fixed by
the Legislature of such State by law and to the giving of guarantees within such limits, if any,
as may be so fixed.

(2) The Government of India may, subject to such conditions as may be laid down by or under
any law made by Parliament, make loans to any State or, so long as any limits fixed under
article 292 are not exceeded, give guarantees in respect of loans raised by any State, and any
sums required for the purpose of making such loans shall be charged on the Consolidated Fund
of India.

(3) A State may not without the consent of the Government of India raise any loan if
there is still outstanding any part of a loan which has been made to the State by the
Government of India or by its predecessor Government, or in respect of which a guarantee
has been given by the Government of India or by its predecessor Government.

(4) A consent under clause (3) may be granted subject to such conditions, if any, as the
Government of India may think fit to impose.