Legislative Relations Between Union and States in India

The legislative relations between the Union and the States in India are
governed by the Constitution of India, primarily under Part XI
(Articles 245-255). These provisions define the scope and limitations
of the legislative powers of both the Parliament and the State
Legislatures. The division of powers is based on the principle of
federalism, ensuring a balance between central authority and
regional autonomy.
1. Constitutional Provisions Governing Legislative Relations
(A) Territorial Extent of Laws (Article 245)
1. Parliament may make laws for the whole or any part of India.
2. State Legislatures can make laws for the entire state or any
part of it.
3. Parliament can legislate for territories not forming part of
any state (e.g., Union Territories).
4. No law made by Parliament shall be deemed invalid on the
ground that it has extraterritorial operation.
🔹 Example: Parliament can pass laws applicable to citizens outside
India, such as the Indian Penal Code (IPC), 1860.
🔹 Case Law: A.H. Wadia v. Income Tax Commissioner (1949) – The
Privy Council held that the Parliament's power to legislate extends
even to extra-territorial matters if there is a sufficient nexus.
(B) Distribution of Legislative Powers (Article 246)
The Seventh Schedule divides legislative subjects between Union
and State Legislatures into three lists:
1. Union List (List I - 100 subjects): Parliament has exclusive
power to legislate on subjects of national importance.
o Examples: Defence, Atomic Energy, Foreign Affairs,
Railways, Banking.
 2. State List (List II - 61 subjects): States have exclusive
authority over matters of regional and local importance.
o Examples: Police, Public Health, Agriculture, Land, Water
Supply.
3. Concurrent List (List III - 52 subjects): Both Parliament and
State Legislatures can legislate.
o Examples: Criminal Law, Marriage & Divorce,
Bankruptcy, Education.
o In case of conflict, Central law prevails over State law
under Article 254.
🔹 Example: The Indian Penal Code (IPC) is a subject under the
Concurrent List, allowing both Parliament and State Legislatures to
amend provisions.
🔹 Case Law: State of Bombay v. Narottamdas (1951) – The Supreme
Court held that in case of repugnancy, Central law shall prevail over
State law in matters listed under the Concurrent List.
(C) Parliament's Power to Override State Laws (Article 249-252)
1. Article 249: If the Rajya Sabha passes a resolution (by a two-
thirds majority) that it is necessary for Parliament to legislate
on a State subject in the national interest, Parliament gets
temporary power to legislate on that subject.
🔹 Example: In 1954, Parliament enacted laws on Water Disputes
under Article 249.
2. Article 250: During a Proclamation of Emergency, Parliament
can legislate on any subject in the State List.
🔹 Example: During the 1975 Emergency, Parliament passed laws on
state subjects like law & order and public health.
3. Article 251 & 252:
 o If Parliament makes a law on a State subject after two
or more states pass a resolution requesting it, that law
becomes applicable to those states and any other state that
adopts it later.
🔹 Example: The Wildlife Protection Act, 1972, was initially
applicable only to states that adopted it, but later Parliament extended
it to the whole country.
4. Article 253: Parliament can legislate on any subject (including
State List) to implement international agreements,
conventions, or treaties.
🔹 Example: The Environment Protection Act, 1986, was enacted to
give effect to international environmental treaties.
(D) Doctrine of Repugnancy (Article 254)
 If there is inconsistency between Central and State laws on a
subject in the Concurrent List, the Central law prevails unless
the State law has received Presidential assent.
 If the Parliament later amends or makes a new law on the
same subject, the State law becomes void.
🔹 Case Law: M. Karunanidhi v. Union of India (1979) – The Supreme
Court ruled that repugnancy arises only if:
1. Both State and Central laws cover the same matter.
2. There is direct conflict between the two laws.
3. Central law intended to occupy the entire field.
🔹 Example: The Land Acquisition Act, 2013, enacted by Parliament,
overruled several State land acquisition laws.
2. Special Provisions Affecting Legislative Powers
(A) Governor’s Role (Article 200 & 201)
 The Governor can withhold assent to a State Bill and reserve it
for Presidential consideration.
  The President may either approve, reject, or ask for
reconsideration.
🔹 Example: The Tamil Nadu NEET Exemption Bill was reserved
for Presidential assent and remained pending.

(B) Parliament’s Power over Union Territories (Article 239A &

240)
 Parliament has the power to make laws for Union Territories,
even on State List subjects.
 However, Delhi, Puducherry, and Jammu & Kashmir have
legislative assemblies with limited powers.
🔹 Example: The Government of NCT of Delhi Act, 1991, restricts
the Delhi government’s legislative power over "Police, Land, and
Public Order."

3. Judicial Interpretation & Case Laws

(A) State of West Bengal v. Union of India (1963)
 The Supreme Court ruled that Indian federalism is different
from the American model, as the Union is more powerful
than the States.
(B) Kuldip Nayar v. Union of India (2006)
 The Supreme Court upheld Parliament’s power to regulate the
election process of Rajya Sabha MPs, reinforcing the
supremacy of the Union.
(C) Hoechst Pharmaceuticals v. State of Bihar (1983)
 The Supreme Court ruled that Parliamentary laws prevail over
State laws in the Concurrent List under Article 254.
Administrative Relations Between Union and States in India
The administrative relations between the Union and the States in
India are governed by Part XI, Chapter II (Articles 256-263) of the
Indian Constitution. These provisions ensure smooth coordination
between different levels of government in a quasi-federal structure,
where the Union has a dominant role, but States also enjoy
autonomy in their respective spheres.
1. Constitutional Provisions Governing Administrative Relations
(A) Distribution of Executive Powers (Article 256-257)
(1) Obligation of States to Follow Parliamentary Laws (Article
256)
 The executive power of every State shall be exercised in a
manner that ensures compliance with the laws made by
Parliament.
 The Union can give directions to States to ensure such
compliance.
🔹 Example: If Parliament enacts a law on environmental protection,
State governments must implement and enforce it.
🔹 Case Law: State of Karnataka v. Union of India (1978) – The
Supreme Court held that the Centre can issue directions to ensure
States implement Parliamentary laws effectively.
(2) Control of the Union Over States in Certain Cases (Article
257)
 The executive power of the States shall not interfere with the
exercise of the executive power of the Union.
 The Union can issue directions to States in matters related to:
o Construction and maintenance of railways.
o Protection of national highways.
 o Ensuring national interest in waterways and
communication.
🔹 Example: The Centre can direct a State to remove obstructions on
national highways, even though road transport is a State List
subject.
🔹 Case Law: Rajasthan v. Union of India (1977) – The Supreme
Court ruled that State governments cannot refuse to follow Union
directives under Article 257.
(B) Role of the President in Resolving Administrative Disputes
(1) Delegation of Union Functions to States (Article 258 & 258A)
 Article 258(1):
o The President can delegate certain Union functions to
State governments, provided the State agrees.
o Parliament may authorize a State to carry out Union
duties, with or without conditions.
 Article 258(2):
o A law made by Parliament may permit State officials to
carry out functions related to Union subjects.
🔹 Example: Enforcement of Central Motor Vehicle Rules by State
Transport Departments.
 Article 258A:
o States can voluntarily entrust their administrative
functions to the Union, subject to mutual agreement.
🔹 Example: Some State police forces assist Central agencies in
handling national security threats.
(C) Coordination Between Union & States (Article 261-263)
(1) Public Acts, Records, and Judicial Proceedings (Article 261)
  Article 261(1): Full faith and credit shall be given to public
acts, records, and judicial proceedings of the Union and every
State.
 Article 261(2): The manner in which such acts and records are
proved shall be determined by Parliament.
🔹 Example: A court judgment from Maharashtra must be
recognized as valid in Karnataka without the need for fresh
litigation.
(2) Inter-State Water Disputes (Article 262)
 Article 262(1): Parliament can legislate to adjudicate disputes
over inter-state rivers and water resources.
 Article 262(2): The Supreme Court’s jurisdiction can be
excluded in these matters.
🔹 Example: The Inter-State Water Disputes Act, 1956, was enacted
under this Article.
🔹 Case Law: State of Karnataka v. State of Andhra Pradesh (2000) –
The Supreme Court upheld the Cauvery Water Tribunal’s decision
under Article 262.
(3) Inter-State Council for Dispute Resolution (Article 263)
 The President can establish an Inter-State Council to:
1. Investigate and advise on inter-state disputes.
2. Coordinate policies between Union and States.
3. Discuss administrative efficiency.
🔹 Example: The Inter-State Council was set up in 1990 on the
Sarkaria Commission's recommendation to strengthen Centre-State
relations.
2. Special Provisions Affecting Administrative Relations
(A) Emergency Provisions and Union Control
(1) President’s Rule (Article 356)
 If the Governor reports that a State government cannot
function as per the Constitution, the President can assume
control.
 The Governor then acts on behalf of the Union government.
🔹 Example: In 1992, President’s Rule was imposed in Uttar
Pradesh after the Babri Masjid demolition.
🔹 Case Law: S.R. Bommai v. Union of India (1994) – The Supreme
Court held that President’s Rule should be used sparingly and is
subject to judicial review.
(2) National Emergency (Article 352)
 During an emergency, the Union can take over State functions
completely.
 State governments must comply with Union directives, even
in State List subjects.
🔹 Example: During the 1975 Emergency, the Centre exercised
complete control over States.
(3) Financial Emergency (Article 360)
 The Union can reduce the powers of the States to manage their
finances.
 The President can direct the State to follow financial
guidelines issued by the Centre.
🔹 Example: Salary cuts for State officials can be ordered if there is
a financial crisis.
3. Judicial Interpretation & Case Laws on Administrative
Relations
(A) Union of India v. State of Rajasthan (1977)
  The Supreme Court ruled that States must comply with Union
directives and cannot refuse implementation unless they prove
constitutional illegality.
(B) State of Bihar v. Union of India (1970)
 It was held that administrative control of the Union cannot
completely undermine the autonomy of the States.
(C) S.R. Bommai v. Union of India (1994)
 The Supreme Court limited the power of the President under
Article 356, stating that judicial review is possible if a State
government is dismissed arbitrarily.
4. Role of Commissions in Strengthening Administrative Relations
(A) Sarkaria Commission (1983)
 Recommended that Article 356 be used only in exceptional
cases.
 Suggested that States be consulted before Union legislation on
Concurrent List subjects.
(B) Punchhi Commission (2007)
 Proposed redefining the role of the Governor to prevent
misuse of Article 356.
 Advocated for greater financial autonomy for States.
5. Takeaways on Administrative Relations
1. Parliament can issue directives to States for proper law
implementation (Article 256).
2. The Union has control over important infrastructure like
railways, highways, and waterways (Article 257).
3. The President can delegate Union functions to States (Article
258).
4. Inter-State Councils and Tribunals help resolve disputes
(Articles 262-263).
5. During emergencies, the Union assumes greater control over
States (Articles 352, 356, 360).
6. Judicial review limits excessive Union interference (S.R.
Bommai case).
Financial Relations Between the Union and the States in India
The financial relations between the Union and the States in India
are governed by Part XII of the Indian Constitution (Articles 268-
293). These provisions ensure a structured system for resource
distribution, taxation, grants, and borrowing, maintaining a
balance between Union control and State autonomy. Since India
follows a quasi-federal structure, financial power is predominantly
centralized, but States also have defined fiscal rights.
1. Constitutional Provisions Governing Financial Relations
(A) Distribution of Taxation Powers (Articles 268-274)
The Seventh Schedule of the Indian Constitution divides taxation
powers between the Union and the States.
(1) Union's Exclusive Power to Levy Taxes (List I, Article 246(1))
Parliament has exclusive power to levy taxes on subjects in the
Union List.
🔹 Examples of Union Taxes:
 Income Tax (except on agricultural income)
 Customs Duties
 Corporation Tax
 Excise Duty (on petroleum, tobacco, etc.)
 Service Tax
 Goods & Services Tax (GST) on inter-state trade (IGST)
🔹 Example: The Finance Act, 2021, introduced cess on crude oil
and agricultural infrastructure, collected by the Union.
🔹 Case Law: State of West Bengal v. Union of India (1963) – The
Supreme Court held that States cannot impose taxes on subjects
exclusively reserved for the Union.
(2) States’ Exclusive Power to Levy Taxes (List II, Article 246(3))
States have exclusive power to levy taxes on subjects in the State
List.
🔹 Examples of State Taxes:
 State Excise (on liquor, narcotics)
 Property Tax
 Stamp Duty (except on Union subjects)
 Electricity Duty
 Vehicle Tax
 Agricultural Income Tax
 Entry Tax
🔹 Example: The Maharashtra Stamp Act, 1958, empowers the
State government to levy stamp duty on property transactions.
🔹 Case Law: Gannon Dunkerley v. State of Rajasthan (1993) – The
Supreme Court ruled that States cannot impose sales tax on the
entire cost of works contracts, except on materials used.
(3) Concurrent Taxing Powers (List III, Article 246(2))
 Both the Union and the States can levy taxes on subjects in the
Concurrent List.
 However, in case of conflict, Union law prevails under Article
254.
🔹 Example: The Goods and Services Tax (GST) applies to both
Union and States, with revenue-sharing mechanisms.
🔹 Case Law: UOI v. Harbhajan Singh Dhillon (1972) – The Supreme
Court upheld Parliament's power to tax residuary subjects.
(B) Taxes Levied by the Union but Collected & Retained by States
(Article 268-269A)
Certain taxes are levied by the Union but collected and assigned to
States.
(1) Duties Collected by the Union but Assigned to States (Article
268)
 Duties on stamp papers and medical/health-related services
are levied by Parliament but collected and appropriated by
the States.
🔹 Example: Stamp duties on agreements, bills of exchange, and
insurance policies.
(2) Taxes Levied and Collected by the Union but Distributed to
States (Article 269)
 Certain taxes, like Inter-State Sales Tax (prior to GST), were
levied by the Union but assigned to the States.
🔹 Example: Before GST, the Central Sales Tax (CST) was levied
by the Union but distributed to the State of origin.
(3) GST Revenue Sharing (Article 269A, 101st Constitutional
Amendment, 2016)
 GST on inter-state transactions (IGST) is collected by the
Union and shared between the Centre and the States as per
GST Council recommendations.
🔹 Example: A company in Delhi selling goods to a buyer in
Karnataka pays IGST, which is shared between the Centre and the
recipient State (Karnataka).
🔹 Case Law: Mohit Minerals v. Union of India (2022) – The Supreme
Court upheld GST levied on ocean freight imports, clarifying that
GST Council’s recommendations are not binding.
(C) Grants-in-Aid & Financial Assistance (Articles 275-281)
The Union provides financial assistance to States through grants-in-
aid, especially to States with low revenues.
(1) Statutory Grants (Article 275)
  Parliament may grant financial assistance to any State,
particularly for the welfare of Scheduled Tribes and rural
development.
🔹 Example: Grants for education, public health, and
infrastructure in backward States like Bihar and Odisha.
(2) Discretionary Grants (Article 282)
 Both Union and States can make grants for any public
purpose, even beyond their legislative competence.
 These are usually one-time special purpose grants.
🔹 Example: Financial aid for natural disasters like floods or
droughts.
🔹 Case Law: Pradeep Jain v. Union of India (1984) – The Supreme
Court upheld financial aid for migrant medical students from
backward States.
(D) Borrowing Powers of the Union & States (Articles 292-293)
(1) Borrowing Powers of the Union (Article 292)
 The Union can borrow from external and internal sources
for national projects and fiscal needs.
🔹 Example: The Government of India issues Treasury Bills and
Bonds to raise capital.
(2) Borrowing Powers of the States (Article 293)
 States can borrow within India, but they require Union
approval if they are indebted to the Centre.
🔹 Example: Tamil Nadu issuing State Development Loans (SDLs)
to fund welfare projects.
🔹 Case Law: R. Chitralekha v. State of Mysore (1964) – The Supreme
Court ruled that States cannot impose conditions on borrowing
contrary to Union laws.
2. Finance Commission & Resource Distribution (Article 280)
  The President appoints the Finance Commission every five
years to recommend tax distribution between the Union and
States.
🔹 Major Functions:
1. Distribution of net tax proceeds between Union and States.
2. Grants-in-aid for weaker States.
3. Review of State finances and fiscal needs.
🔹 Example: The 15th Finance Commission (2021-26)
recommended 41% devolution of Union taxes to States.
🔹 Case Law: State of West Bengal v. Union of India (1963) – The
Supreme Court upheld the role of the Finance Commission in tax
distribution.
3. Conflicts & Judicial Interpretation in Financial Relations
1. Conflict Over GST Compensation:
o States demanded full compensation for GST revenue
losses during COVID-19.
o The Union delayed payments, leading to fiscal strain.
o Supreme Court ruled that States must be compensated
as per GST Act provisions.
2. Inter-State Water Taxation Disputes:
o Some States (like Punjab & Haryana) imposed taxes on
water supply to other States, leading to disputes.
3. Unequal Fiscal Autonomy:
o Richer States (e.g., Maharashtra, Tamil Nadu) argue they
contribute more in taxes but receive less in grants,
while poorer States get more funds.
4. Takeaways on Financial Relations
 1. The Union has greater financial powers, but States have fiscal
autonomy.
2. Finance Commission ensures fair tax distribution (Article
280).
3. GST ensures uniform taxation but raises Centre-State
tensions.
4. Borrowing powers are restricted for States, requiring Union
approval.
5. Judicial review maintains constitutional balance in financial
matters.
Conclusion
India's financial structure is semi-federal, ensuring strong Union
control with financial assistance to States. The Finance
Commission, GST Council, and judiciary play vital roles in
resolving fiscal disputes. Strengthening State fiscal autonomy while
maintaining national fiscal discipline is essential for cooperative
federalism.
Relevant Doctrines in Indian Constitutional Law
The Indian Constitution incorporates several doctrines that help in
interpreting the distribution of legislative powers between the Union
and the States. These doctrines ensure that laws remain within
constitutional limits and resolve conflicts between different laws.
The following five doctrines are crucial in understanding legislative
relations and constitutional interpretation:
1. Territorial Nexus
2. Harmonious Construction
3. Pith and Substance
4. Repugnancy
5. Colourable Legislation
Each doctrine is supported by constitutional provisions, examples,
and case laws.

1. Doctrine of Territorial Nexus

Meaning
 The doctrine of territorial nexus states that a law made by a
State Legislature will be valid even if it has an extra-
territorial operation, provided there is a real and substantial
connection (nexus) between the subject matter of the law and
the State.
Constitutional Provision: Article 245
 Article 245(1): Parliament can make laws for the whole or any
part of India.
 Article 245(2): No law made by Parliament shall be deemed
invalid on the ground that it has extra-territorial operation.
  States, however, can only make laws for their respective
territories unless there is a real nexus with the State.
Essentials of Territorial Nexus
1. There must be a real connection between the object of the
legislation and the State.
2. The connection should not be illusory or arbitrary.
Example
 A State tax on goods manufactured outside the State but sold
within the State can be valid if there is a substantial nexus
between the transaction and the State.
Case Laws
🔹 State of Bombay v. R.M.D. Chamarbaugwala (1957)
 The Bombay legislature imposed a tax on prize competitions
conducted outside Bombay but having participants from
Bombay.
 The Supreme Court upheld the tax, stating there was a real
nexus between the activity and Bombay.
🔹 Tata Iron & Steel Co. v. Bihar State (1958)
 The Bihar government taxed Tata Steel products sold outside
Bihar.
 The Supreme Court ruled the tax was valid as there was a
substantial connection between Tata Steel’s business and
Bihar.

2. Doctrine of Harmonious Construction

Meaning
 When two or more laws conflict, they should be interpreted in
a way that gives effect to both rather than invalidating one.
Constitutional Basis: Interpretation of Lists in the Seventh
Schedule
 Since Union and State legislatures have powers under
different lists (Union List, State List, Concurrent List),
conflicts may arise.
 Courts use the doctrine of harmonious construction to
resolve such conflicts.
Principles of Harmonious Construction
1. Courts should not render one provision useless if another can
be interpreted without conflict.
2. Every statute must be read as a whole to understand the
legislative intent.
3. In case of conflict, courts should attempt to harmonize both
provisions rather than invalidate one.
Example
 Conflict between Parliament's power to regulate industries
(Union List) and State's power to regulate trade & commerce
(State List).
 The court balances both powers through harmonious
construction.
Case Laws
🔹 CIT v. Hindustan Bulk Carriers (2003)
 The Supreme Court ruled that two conflicting provisions in
taxation laws must be interpreted in a way that both remain
valid.
🔹 In Re Kerala Education Bill (1957)
 The Supreme Court applied harmonious construction to
balance the right to manage educational institutions (Article
 30) and the State’s power to regulate education (Entry 25,
List III).

3. Doctrine of Pith and Substance

Meaning
 If a law appears to fall under two lists (Union List & State
List), courts look at its true nature and substance (Pith and
Substance) to determine which legislature has the power to
enact it.
Constitutional Basis: Article 246 & Seventh Schedule
 Article 246(1): Parliament can legislate on Union List
subjects.
 Article 246(3): States can legislate on State List subjects.
 If a law encroaches upon another list, it is still valid if its
main purpose falls within the legislature's competence.
Example
 A State law on money lending (State List) regulating
transactions in banking (Union List) may be valid if its main
focus is money lending, not banking.
Case Laws
🔹 State of Bombay v. F.N. Balsara (1951)
 The Bombay Prohibition Act restricted alcohol sale but
incidentally affected import/export (a Union subject).
 The Supreme Court upheld the Act as it mainly dealt with
prohibition, which is a State subject.
🔹 Prafulla Kumar Mukherjee v. Bank of Commerce (1947)
 A State law regulating money lending and interest rates was
challenged as it affected banking (Union List).
  The court ruled the law valid as its primary focus was money
lending, not banking.

4. Doctrine of Repugnancy
Meaning
 When a State law conflicts with a Central law on a subject in
the Concurrent List, the Central law prevails, and the State
law becomes void.
Constitutional Provision: Article 254
 Article 254(1): If a State law is inconsistent with a Union law
on the same subject, the Union law prevails.
 Article 254(2): A State law can prevail if it receives
Presidential assent, but Parliament can still override it.
Example
 If Parliament enacts a law on marriage and a State law
contradicts it, the Central law prevails.
Case Laws
🔹 M. Karunanidhi v. Union of India (1979)
 The Supreme Court held that repugnancy arises if:
1. Both laws cover the same subject.
2. There is a direct conflict.
3. Parliament intended to cover the entire field.
🔹 Zaverbhai v. State of Bombay (1954)
 Bombay increased the punishment for food adulteration
beyond what the Central law prescribed.
 The Supreme Court struck down the State law, applying Article
254(1).
5. Doctrine of Colourable Legislation
Meaning
 If a legislature tries to do indirectly what it cannot do
directly, the law is considered "colourable" and invalid.
Constitutional Basis: Separation of Powers
 The doctrine ensures that a legislature cannot bypass
constitutional restrictions by enacting laws outside its
competence.
Example
 If a State tries to regulate trade (a Union subject) by passing a
law on property taxation, it may be struck down as
colourable legislation.
Case Laws
🔹 K.C. Gajapati Narayan Deo v. State of Orissa (1953)
 The Supreme Court struck down an Orissa law on zamindari
abolition, stating that it was designed to confiscate land
indirectly.
🔹 R.S. Joshi v. Ajit Mills (1977)
 A Gujarat tax law was challenged as indirectly prohibiting
trade, but the Supreme Court ruled that the tax was valid.

Conclusion
These doctrines help maintain the constitutional balance between
the Union and the States, ensuring cooperative federalism while
preventing legislative overreach.
 Territorial Nexus: Allows a State to legislate beyond its
territory if there is a real connection.
 Harmonious Construction: Ensures different provisions are
interpreted without conflict.
 Pith and Substance: Determines the real nature of legislation.
 Repugnancy: Resolves conflicts between State and Central
laws.
 Colourable Legislation: Prevents legislatures from
circumventing constitutional limits.