Module 2

MODULE 2
Centre-State relations - Federalism ingrained in the various provisions of the Constitution -

Legislative relations (Art 245-255)- Administrative relations Art (256-263) and Financial
Relations (Art 268-291) between the Union and States.
Asst. Prof Prince S A
Nehru Academy of Law | Constitutional Law 1 | 5s2

Centre-State relations.
Part XI of the Indian Constitution specifically deals with centre-state relations. It has been
bifurcated into legislative and administrative relations. Further, in Part XII, provisions related
to financial relations are laid down. All three categories have been discussed in detail hereafter.
o Legislative relations
Articles 245 to 255 deal with legislative relations between the Union and the states i.e. the
Parliament and state legislatures. It discusses the extent of law-making powers given to the
Union and states. On analysing the provisions, it is evident that the Parliament clearly has
superseding powers as compared to state legislatures. The different provisions lay down the
subject matters on which they can legislate, the effect of inconsistency between state and
national law, residuary powers of the Parliament and many other provisions. It is this chapter
that provides for Schedule VII which deals with the Union List, State List and Concurrent List.
o Administrative relations
Articles 256 to 263 deal with administrative relations i.e. Central Government and various state
governments. Though India is federal yet it has unitary features and thus in Article 256 itself,
it is stated that the state governments should ensure that they abide by the laws made by
Parliament and do not perform any executive or administrative function in contravention of the
same. The Sarkaria Commission urged for cooperative federalism in case of administrative
relations between the Centre and states to ensure better relations between the two. The same
was important since there often arises the situation of different parties working at the Central
and state levels which creates chaos and distrust thereby leading to inefficient administration.
o Financial relations
Articles 264 to 293 of Part XII of the Constitution deal with financial relations between the
Centre and state. Since India is a federal country, it follows the separation of powers relating
to taxes and it is the duty of the Centre to allocate funds to the states. All such related provisions
have been covered herein. The power of the Centre and states to levy taxes has been mentioned
in Schedule VII. Further, it has many other provisions relating to levy and allocation of taxes
by centre and states, grants to states, surcharges etc. A very recent example of financial centre-
state relation is the Goods and Services Tax which is a dual structure tax. The tax is imposed
and collected by both the Centre and state and then is distributed between the Centre and states.
To simplify, CGST and SGST are received by Centre and state respectively and IGST is
received by the Centre and redistributed between states. This is a precise example of
cooperative federalism in the financial sphere.
Legislative relations
The legislative ties between the centre and state are governed by Articles 245 to 255 of Part XI
of the Constitution. It sets out a double division between the Union and the states with
legislative powers i.e, in territorial recognition and relation to the subject.
o Territory jurisdiction:
Concerning the territory, Article 245(1) requires a State Legislature to make law for the entire
or any part of the State to which it belongs, subject to the dispositions of this constitution.
Unless the boundaries of the state itself are broadened by an act of the Parliament, a State
legislature cannot broaden territorial jurisdiction in any circumstance. On the other hand,
Parliament has the right to legislate “on all or part of India’s territory, which does not only
include the States but also Indian Union territory.” It also has the strength of extra-territorial
laws that no state legislature has. This means that the laws made by Parliament would apply
not only to individuals and territory but also to Indian subjects living anywhere in the world.
However, there are other limitations on Parliament’s territorial competence. However, certain
unique clauses of the constitution are subject to the plenary territorial competence of
Parliament. These are the following:
1. The President can make regulations that are equivalent to the laws of Parliament, some
territories of the Union, such as the Andaman and Lakshadweep Region, and these
regulations may revoke or amend a law adopted by Parliament on the said territories
(Article 240).
2. Notifications can be issued by the governor (Para 5 of Schedule 5(3) of the Indian
Constitution) that prevent or change the application of the Acts of Parliament to any
programmed area of government.
3. Para 12(1)(6) of schedule VI says that, by public notification, the Governor of Assam
may, subject to such exceptions or adjustments as may be stated in the notification,
direct that any other act of Parliament shall not apply to the autonomous region or
district of the state of Assam or apply to that region or section.
In the case of A.H. Wadia v. CIT, the court held that if there is an appropriate relation or link
between the State and the object, i.e. subject matter of legislation, the State legislature cannot
make extraterritorial law (objects cannot be located physically within territorial limits of the
State). In the case of Wallace Bros, v. CIT, a licensed business in England was a partner in an
Indian venture. Indian revenue tax authorities were aiming to tax the company’s entire income.
The Court affirmed that the derivation for a year of the substantial part of its revenue from
British India has given a corporation sufficiently territorial relation to justify that it is regarded
domestically in India for all purposes of income taxation.
Subject matter:
A federal structure demands that the centre and States share their forces. The nature of the
distribution is different in every region, depending on the local and political context. For
instance, in America, sovereign states did not like the absolute central government
subordination. Therefore, although maintaining the remainder, they believed in confiding
subjects of popular interest to the central government. Australia was pursuing just one set of
forces in the United States. There are double listings in Canada, leaving the residue in the centre
by the federal and provincial governments. The Canadians were mindful of the tragic
circumstances that resulted in the Civil War of 1891 in the United States of America. We knew
the vulnerabilities of the centre. And it was a good core that they wanted. The Canadian regime
chose a strong centre as a result of the Indian Constitution-Makers. However, they have added
one more list-a a concurrent list.
o Article 246
The provision deals with the subject matters on which the Centre and states can make laws.
List-I deals with subjects on which the Centre can make laws. List-II deals with subjects on
which states can make laws. List-III deals with laws on which both can make laws. This
promotes legislative relations between the Centre and states.
The Constitution uses the Government of India Act of 1935 as its basis and subdivides authority
into three lists between the Union and the States. These are:
(i)The Union list,
(ii) the State list, and
(iii) the Concurrent list.
There are 98 subjects on the Union List, over which the Union has exclusive authority. The
topics on the Union list, for example, security and foreign relations, are of national significance,
etc. There are 59 topics in the State List over which countries have exclusive jurisdiction. The
concerns listed on a State list, such as public order, police and public safety, are of local or
national importance. The Concurrent List contains 52 subjects like criminal and civil cases,
marriage and divorce, economic and special planning unions, money, media, magazines,
employment, management of the population and preparation of the families, etc. and both the
Union and States can enact laws on this list but the federal rule prevails over state law in the
case of a dispute between the law of the Central and the State law. The purpose of the
constitutional inclusion of the list was to ensure continuity in key legal principles across the
country. Legislatures both in the parliament and in the State may make laws on matters
mentioned above, but a preliminary and ultimate right of the centre is to legislate on established
matters. In the event of a conflict between the law of the State and the law of the Union on a
subject in the Concurrent List, the law of the Parliament shall prevail.
o Article 246A
The provision relates to GST. No authority had the power to levy GST since the same was not
mentioned in the Seventh Schedule. Therefore, by the 101st Constitution Amendment Act,
2016, GST was made valid. It is important since India follows a dual GST structure in which
both the Centre as well as the states have an important role to play.
o Article 247: Power of Parliament to Provide for the Establishment of Certain

Additional Courts
Special Courts: Parliament can establish additional courts for better administration of laws
made by Parliament or any existing law concerning matters enumerated in the Union List.
o Residuary powers of legislation
The Constitution also confers on the Union Parliament residual powers (subjects not mentioned
on any of the three lists). Article 248 notes that, concerning anything that is not listed in any of
the three lists, the Parliament has the exclusive authority to make legislation. It represents the
constitutionalist inclinations to a strong core. Another unique feature of the residual powers is
that the final judgment on whether or not a particular matter falls within the residual powers of
the court. In comparison to the convention of other federations around the world, residual
powers have been granted to the Union, where the residual powers are assigned to the States.
In the case of a dispute, however, it is up to the court to determine whether a particular issue
falls under the residual power or not. The Parliament is therefore allowed to enact any
legislation on any issue not mentioned in List II or III. This authority shall include the authority
to legislate, which does not include a tax on either of them (the Governor-General, and not a
federal legislature which exercised these powers, must be observed until independence).
Entry 97 of List I also provide for the exclusive powers of Parliament to make laws on all
subjects not mentioned in List II or III. The remaining powers of legislation shall be solely
delegated to the Union Parliament under Article 248 and Entry 97 List I. The spectrum of
residual powers, however, is limited as all the topics included in all three lists and residual
powers come under, or not, the Court’s view of a case. The reasoning for this power is that it
allows the House to legislate on any issue that has avoided the House’s oversight and on the
subject that currently cannot be recognized. It requires Parliament, therefore, to enact
legislation on topics that have taken society forward. The constitutional framers intended,
however, that the use of residual powers should be the final and not the first step.
In the case of Kartar Singh v. State of Punjab and UOI v. H.S. Dhillon’s case, the court held
that parliament may combine its power with the residual power under Article 248 under entry
into the Union List or Competition List. Also in the case of UOI v. H.S. Dhillon, it was held
that Gift Tax Act, Inquiry Act Commissions, etc. are valid under the parliamentary residuary
power. In the case of State of A. P. v. National Thermal Power Corpn. Ltd. the Supreme
court held that unless an entry does not state an exclusion from the area of legislation that is
evident at the time of obvious reading, the absence of exclusion can not be read, if a particular
clause in the Constitution that forbids such legislation is valid, as allowing the legislative power
not expressly excluded from it.
o Parliament’s power to legislate on State List
Although the Central Government does not have the power in the common circumstances to
legislate on matters mentioned in that State, the Parliament of the Union may only make laws
on such matters under some special conditions. These special conditions are:
a) In the National Interest (Art.249)
Several Articles of the Indian Constitution defined the parliament’s predominance in the
legislative area. Article 249 provided that, where Rajya Sabha has declared, by a resolution
approved by not less than two-thirds of the members present and voting, that it is required or
reasonable, in the national interest for Parliament to lay down laws in respect of any matter
mentioned in the State List referred to in the resolution, it becomes lawful for Parliament to lay
down laws for the whole or any part of the proceedings. For the time in question, such a
resolution was in place not for more than one year. However, the Rajya Sabha could extend the
term of such a resolution for a further duration of one year from the date on which it would
otherwise have ceased to operate. The law of Parliament, which Parliament should have been
responsible for passing such a resolution by Rajya Sabha, ceased to have any effect on the
expiry of a term of six months after the date on which the resolution ceased to be in force,
except in the case of things done or omitted to be done before the expiry of that time. This
provision allowed the Rajya Sabha, representing the States, to place any matter of local
significance but national interest in the concurrent list. The Rajya Sabha can do so at any
moment, whether emergency or not.
How It Works:
o Initiation by Rajya Sabha:
Resolution Required: The process begins in the Rajya Sabha (Council of States). A resolution
must be passed by at least two-thirds of the members present and voting.
National Interest: The resolution must declare that it is necessary or expedient in the national
interest for Parliament to legislate on a matter listed in the State List.
o Effect of the Resolution:
Parliament's Authority: Once the resolution is approved, it grants Parliament the power to make
laws on the specified state subject for the entire country or any part of it.
Duration: The resolution remains in effect for one year but can be extended by the Rajya Sabha
for additional periods of one year at a time.
o Laws Made Under This Power:
Temporary Validity: Any law made by Parliament under this provision will continue to be valid
until six months after the resolution ceases to operate.
Expiry of Resolution: If the resolution is not renewed, the law remains valid for an additional
six months after the resolution's expiry, ensuring a smooth transition.
o Significance:
National Interest Focus: This provision allows Parliament to address matters of national
importance even if they fall under state jurisdiction, ensuring unified action on critical issues.
Flexibility: Rajya Sabha, representing states, can use this power anytime, whether during an
emergency or not, to bring local issues of national importance under central legislation.
b) Under Proclamation of National Emergency (Art. 250)
Article 250 notes that in the case of a declaration of emergency, Parliament shall have the
power to make law on any item on the State List. This legislation shall extend in the case of a
national emergency (Article 352) and every State in compliance with the Order of the President
(Article 356) or the event of a financial emergency (Article 360). Thus, the Parliament as a
whole will legislate on the subjects specified in the State List while the National Emergency
Declaration is in effect. However, the laws enacted by the Parliament according to this clause
shall cease to affect the expiration of a period of six months after the termination of the
Proclamation, except in the case of items done or omitted to be done before the expiration of
that time.
Examples:
• Parliament passed various laws under Article 250 during the national emergencies
declared in 1962 (Indo-China war), 1971 (Indo-Pak war), and 1975-1977 (internal
disturbance).
Article 251: Inconsistency between Laws Made by Parliament under Articles 249 and 250
and Laws Made by the Legislatures of States
Precedence of Parliamentary Law: Laws made by Parliament under Articles 249 and 250
take precedence over state laws. However, state laws that are inconsistent with these laws will
be ineffective only to the extent of the inconsistency. This means that if there is a conflict
between a law made by Parliament under these articles and a law made by a state legislature,
the parliamentary law will prevail.
Extent of Inconsistency: If a state law is inconsistent with a parliamentary law made under
Articles 249 or 250, the state law will become ineffective only to the extent of the
inconsistency. This means that only the conflicting part of the state law will be overridden by
the parliamentary law, not the entire state law.
Example
Imagine Parliament makes a law under Article 249 regarding environmental regulation, which
is usually a state subject. If a state has an existing law on environmental regulation that conflicts
with the new parliamentary law:
o The part of the state law that conflicts with the parliamentary law will be considered
invalid.
o The rest of the state law, which does not conflict, will remain in effect.
c) By Agreement between States (Art. 252)
Article 252 provides for regulation by invitation. If the Legislatures of two or more States adopt
a resolution and order the centre to make a law on a specific item of the State Register, it shall
be legal for the Parliament to make a law. In the first place, such law shall apply to the States
which have made such a request, unless any other State may subsequently follow it by passing
such a resolution. Third, such laws can only be amended or repealed by Parliament. The
parliament may also make laws about a State subject if two or more states’ legislatures agree
that a parliament is allowed to make laws concerning any issue mentioned in the State List
concerning that Matter. Subsequently, any act passed by the Parliament shall extend to those
States and to any other State which has passed such a resolution. Parliament also has the power
to amend or revoke any act of this kind.
Article 252 of the Indian Constitution provides a mechanism for states to jointly empower
Parliament to legislate on a matter in the State List. Here's a detailed explanation:
How It Works:
1. State Resolutions:
o Initiation: The process begins when the legislatures of two or more states pass
resolutions requesting Parliament to enact a law on a specific subject that is
within the State List.
o Agreement: These resolutions must be adopted by the states independently,
indicating their consent and request for central legislation.
2. Parliament's Role:
o Legislation: Once the resolutions are passed, it becomes lawful for Parliament
to make laws on the specified subject for the consenting states.
o Applicability: Initially, the law applies only to the states that have passed the
resolution. However, other states can adopt the same law later by passing
similar resolutions.
3. Amendment and Repeal:
o Exclusive Power: The law enacted by Parliament under Article 252 can only
be amended or repealed by Parliament, even though it pertains to a subject in
the State List.
o Uniformity: This ensures uniformity in the law across all consenting states.
Example to Illustrate
Example: Wildlife Protection
• Background: Suppose the states of Maharashtra and Gujarat identify a need for a
uniform law to protect wildlife across their regions.
• Resolutions: The legislatures of both states pass resolutions requesting Parliament to
create a comprehensive wildlife protection law.
• Parliamentary Law: Parliament enacts the Wildlife Protection Act, which initially
applies to Maharashtra and Gujarat.
• Adoption by Other States: Later, if Karnataka decides to adopt this law, its
legislature passes a similar resolution, making the law applicable in Karnataka as
well.
• Amendment: Any changes or repeals to this Wildlife Protection Act can only be done
by Parliament, ensuring consistent protection measures across all participating states.
Significance
1. Cooperative Federalism:
o Interstate Collaboration: Article 252 promotes cooperative federalism by
allowing states to collectively address common concerns through central
legislation.
2. Uniformity in Law:
o Consistency: It helps achieve legal uniformity across states on specific issues,
preventing fragmented regulations.
3. Flexibility:
o State Initiative: States retain the initiative to seek central legislation and can
extend the application of such laws to other states.
Key Points
• State Resolutions Required: Two or more states must pass resolutions requesting
Parliament to legislate.
• Initial and Extended Applicability: The law initially applies to the states that
requested it and can be extended to others later.
• Exclusive Amendment Power: Only Parliament can amend or repeal the law once
enacted.
Comparison with Other Articles
• Article 249: Deals with national interest and allows Parliament to legislate on State
List subjects with Rajya Sabha's approval.
• Article 250: Allows Parliament to legislate on State List subjects during a national
emergency.
• Article 252: Facilitates central legislation on State List subjects based on interstate
agreements.
d) To Implement Treaties (Art. 253)
To implement treaties or international conventions, Parliament shall have the power to legislate
concerning any subject. In other words, even about a state issue, the usual distribution of
powers does not preclude Parliament from passing legislation to satisfy its foreign obligations
or through such legislation (Article 253). The Parliament may pass any Treaty, international
agreement or convention, with any other country or state, or any decision taken during an
international conference, association or other entity, within the whole and any part of the
territory of India. Any law enacted by this Parliament shall not, in that it covers the subject
listed in the list of States, be invalidated.
e) Under Proclamation of President’s Rule (Art. 356)
By Article 356 and Article 357 of the Indian Constitution, the prevalence of Parliament was
further defined. Article 356 stipulated that if the President was satisfied that there existed a
situation in which the government of the State cannot be enforced according to the provisions
of the Constitution, he may declare exercisable by or under the competence of the Parliament
the powers of the Legislature of that State. Parliament must delegate the legislative power to
the President, as provided for in Article 357. The President may also allow the Parliament to
exercise the powers of the State legislature during the Declaration of the Rule of the President
as a result of the collapse of constitutional machinery in the State. Nevertheless, all such
regulations passed by Parliament cease functioning six months after the declaration of the rule
of the President is over.
Differences Art 250 and Art 356
Circumstances:
Article 250: Invoked during a national emergency declared under Article 352.
Article 356: Invoked due to failure of constitutional machinery in a state.
Authority:
Article 250: Parliament acquires legislative power over state matters.

Article 356: The President assumes control of state functions.
Scope and Duration:
Article 250: Applies to all states or any part of the country; laws remain effective during the
emergency and for six months after it ends.
Article 356: Specifically targets a single state; can last up to three years with periodic approvals.
Purpose:
Article 250: Allows central intervention in legislative matters of states during a national crisis.
Article 356: Ensures governance in a state where the state government fails to function
according to the Constitution.
Article 254: Inconsistency between Laws Made by Parliament and Laws Made by the
Legislatures of States
In case of inconsistency between central and state laws on subjects in the Concurrent List, the
central law prevails. State laws conflicting with central laws are void to the extent of the
conflict, unless they receive presidential assent.
Doctrine of Repugnancy
Doctrine of Repugnancy refers to the principle that in case of a conflict between central and
state laws on a matter in the Concurrent List, the central law prevails. The state law, to the
extent of its inconsistency with the central law, becomes void. However, there are nuances to
this rule:
Concurrent List:
o Both Parliament and state legislatures can legislate on subjects listed in the Concurrent
List.
o Conflicts often arise when both central and state laws cover the same subject.
Prevalence of Central Law:
o In case of a direct conflict, the central law prevails over the state law.
o The state law becomes void to the extent of the inconsistency.
Presidential Assent:
o If a state law, inconsistent with a central law, receives the President's assent, the state
law prevails in that state.
o However, Parliament retains the power to override such a state law by enacting a
subsequent law.
Key Case Laws
M. Karunanidhi v. Union of India (1979):
Facts: The case involved the repugnancy between a state law (Tamil Nadu Public Men
(Criminal Misconduct) Act, 1973) and the Prevention of Corruption Act, 1947.
Judgment: The Supreme Court held that repugnancy must be direct and irreconcilable. If both
laws can operate without conflict, there is no repugnancy. However, where there is a clear
conflict, the central law prevails.
Deep Chand v. State of Uttar Pradesh (1959):
Facts: The case concerned the repugnancy between the UP Transport Act and the Motor
Vehicles Act, 1939.
Judgment: The Supreme Court held that if both laws are inconsistent, the central law prevails.
The state law becomes void to the extent of the inconsistency.
Hoechst Pharmaceuticals Ltd. v. State of Bihar (1983):
Facts: The case involved a conflict between the Drug (Price Control) Order issued under the
Essential Commodities Act (a central law) and the Bihar Sales Tax Act.
Judgment: The Supreme Court ruled that in cases of repugnancy, the central law prevails unless
the state law has received presidential assent.
o Differences Article 251 and Article 254
Scope of Application:
Article 251: Applies to laws made by Parliament under special circumstances (Articles 249 and
250).
Article 254: Applies to laws on the Concurrent List under normal circumstances.
Conflict Resolution Mechanism:
Article 251: Laws made by Parliament under Articles 249 and 250 automatically take
precedence over state laws.
Article 254: Central laws prevail over conflicting state laws unless the state law has presidential
assent.
Extent of Voidness:
Article 251: State laws are ineffective to the extent of the inconsistency with parliamentary
laws made under Articles 249 and 250.
Article 254: State laws are void to the extent of the conflict unless protected by presidential
assent.
o Article 255: Requirements as to Recommendations and Previous Sanctions to Be

Regarded as Matters of Procedure Only
Procedure: No law made by Parliament or state legislatures will be invalid due to non-
compliance with recommendations or previous sanctions, provided the necessary approval is
obtained before the law is enacted.
Example: Financial Bills
Requirement: A financial bill needs the recommendation of the President before it is introduced
in Parliament.
Non-Compliance: Suppose the bill is introduced without the President's recommendation.
Effect: According to Article 255, the bill is not invalidated solely because of this procedural
lapse. If the President's recommendation is obtained before the bill is enacted, the procedural
defect is cured, and the bill remains valid.
Conclusion
As a result, it is very clear from the scheme of allocation of legislative powers between the
Union and the States that framers have bestowed more authority on the Parliament than against
the States. The States do not have sole authority over the topics given to the States by the
Constitution and therefore rendering the States, to that degree, subordinate to the Centre. The
centralization pattern is contradictory with the fundamental values but, rather than adopting
conventional provisions of a federal constitution, the legislative system is more concerned with
country unity. All these provisions of the constitution are therefore justified as they offer
clarification and eradicate the confusion between the powers of the centre and state. Unless this
theory of legislative supremacy were to be removed, there would be a risk of two similarly
dominant pieces of government giving rise to a dispute, agitation, confrontation, and confusion
as a result of competing legislation. These provisions guarantee that there is an overarching
regulatory framework and that there is continuity in the basic laws.
Delegated Legislation
Delegated legislation refers to laws or regulations created by an individual or body under

authority given to them by a primary legislation enacted by Parliament or a legislative
assembly. Essentially, it allows bodies other than the main legislative body to create detailed
rules and regulations within the framework established by the primary legislation.
Delegated legislation, also known as secondary or subordinate legislation, refers to laws or
regulations that are not enacted directly by the primary legislative body (such as Parliament)
but by an individual or body under powers given to them by an Act of Parliament. This process
allows for laws to be made more efficiently and flexibly, especially for technical or detailed
matters that require frequent updates.
Key Points
1. Enabling Act:
o Definition: The primary legislation that grants the power to make delegated
legislation is known as the enabling act or parent act.
o Example: The Environmental Protection Act might give the environment
minister the power to create detailed pollution control regulations.
2. Types of Delegated Legislation:
o Statutory Instruments: Common in the UK, these are formal documents
issued by an authorized person or body to create detailed provisions.
o Bylaws: Created by local authorities or corporations for local issues, such as
parking regulations.
o Rules and Regulations: Issued by government departments to address specific
details within their domain, like health and safety standards.
3. Advantages:
o Efficiency: Allows for quicker law-making, especially for technical details that
require frequent updates.
o Expertise: Utilizes the expertise of specialists in drafting detailed regulations.
o Flexibility: Can be easily updated or modified as needed.
4. Disadvantages:
o Lack of Oversight: Potentially less scrutiny compared to laws passed by the
main legislative body.
o Complexity: Can create a complex web of regulations that may be hard to
navigate.
o
5. Control Mechanisms:
There are two types of control over delegated legislation—

1. Judicial control.
2. Parliamentary control.
Judicial control-The Courts have power to consider whether the delegated or

subordinate legislation is consistent with the provisions of the 'enabling Act'. Their
validity can be challenged on the ground of ultra vires i.e., beyond the competence of
the Legislature. The Courts can declare the parent Act unconstitutional on the ground
of excessive delegation or violation of fundamental rights or if it is against the scheme
of distribution of Legislative powers under Art. 246 of the Constitution. The parent Act
may be constitutional but the delegated legislation emanating from it may come in
conflict with some provisions of the Constitution and hence it can be declared
unconstitutional.
Parliamentary control- It is the primary duty of the Legislature to supervise and
control the exercise of delegated power by the executive authorities. Parliamentary
control over the delegated legislation is exercised at three stages. The first stage is the
stage when power is delegated to the subordinate authorities by Parliament. This stage
comes when the Bill is introduced in the Legislature. The second stage is when the rules
made under the statute are laid before the Houses of Parliament through the committees
on subordinate legislation. The Committee on subordinate legislation scrutinise the
rules framed by the executive and submits its report to the Legislature if the rules are
beyond the permissible limits of delegation. These rules are laid before the Legislature
and debated in the Legislature. If they are ultra vires (beyond the power) questions may
be put to the Minister concerned and if necessary, even a motion of censure on the
Minister responsible for the rules and regulations may be moved.
Publication of delegated legislation -This is a very sound safeguard against the misuse
of the delegated legislation by the executive authorities. This safeguard was
incorporated in the Acts in Britain and in United States of America. In India such type
of Act have not been passed, but the safeguard of publication of delegated legislation
is available under judicial decisions. The Supreme Court has held that unless the
delegated legislation is published it cannot be enforced.'
Consultation: Often, there is a requirement to consult with affected parties before
finalizing the regulations.
Example
Environmental Regulations
• Enabling Act: The Clean Air Act authorizes the environment minister to set air quality
standards.
• Delegated Legislation: The minister issues regulations specifying permissible
emission levels for factories and vehicles.
Summary
Delegated legislation allows for detailed and technical rules to be made efficiently under the
framework of a primary legislation. While it offers advantages in terms of efficiency and
expertise, it requires mechanisms for oversight to ensure transparency and accountability.
Case Law Example
R v Home Secretary, ex parte Fire Brigades Union (1995)
• Context: The Home Secretary issued a scheme using delegated powers which was
challenged.
• Outcome: The court found that the Home Secretary had exceeded his powers,
illustrating the judicial control over delegated legislation.
By understanding delegated legislation, we see how it plays a crucial role in modern

governance by enabling detailed and timely law-making within a structured and accountable
framework.
Doctrine of Territorial Nexus
The Doctrine of Territorial Nexus is a legal principle that allows a legislature to make laws
affecting people, property, or events outside its territorial boundaries if there is a substantial
connection between the subject matter of the law and the territory of the legislature.
Key Points:
1. Legislative Power:
o Normally, a legislative body (like a state or national government) can only make
laws for its own territory. Article 245 of the Indian Constitution generally
restricts the legislative powers of the Parliament and State legislatures to their
respective territories.
2. Extra-Territorial Operation:
o Sometimes, laws made by a legislature can apply to actions or entities outside
its territory.
o This is allowed if there is a significant link between the territory and the subject
matter of the law.
3. Substantial Connection:
o The law must have a "real and substantial connection" with the territory of the
legislature.
o For example, if a state makes a law about a business operating within its borders,
the law can also apply to parts of that business located outside the state if those
parts affect the state's interests.
Example Cases:
1. State of Bombay vs. R.M.D. Chamarbaugwala (1957):

o The Bombay legislature imposed a tax on lottery tickets sold in Bombay but
organized outside the state. The court upheld the law because there was a
substantial connection (the sale of tickets) within Bombay.
2. Tata Iron & Steel Co. Ltd. vs. State of Bihar (1958):
o Bihar imposed a tax on goods manufactured in the state but sold outside. The
court found a sufficient nexus since the manufacturing happened within Bihar.
Why It Matters:
• Flexibility in Lawmaking:
o This doctrine gives legislatures flexibility to regulate activities that affect their
territories, even if those activities partially occur outside their borders.
• Maintaining Order:
o It helps maintain legal and economic order by allowing laws to address cross-
border activities that impact a state or country.
The Doctrine of Territorial Nexus allows a legislature to create laws that affect people,
properties, or activities outside its territorial limits if there is a significant connection between
those subjects and the territory of the legislature. This ensures that legislatures can effectively
regulate and manage issues that cross territorial boundaries, maintaining order and addressing
local concerns even when they involve external elements.
Principles of Interpretation of Lists in the Indian Constitution
The Indian Constitution outlines the division of powers between the Union and State
governments through three lists in the Seventh Schedule: the Union List, the State List, and the
Concurrent List. The interpretation of these lists is crucial for understanding the extent of
legislative powers of both the Union and the States. The judiciary has developed several
principles and doctrines to interpret these lists.
Key Principles of Interpretation
1. Doctrine of Pith and Substance:
• Definition: This principle is used to determine the true nature or character of a

legislation. If a law, when scrutinized, predominantly pertains to a subject within the
competence of the legislature that enacted it, then it is considered valid even if it
incidentally touches upon matters beyond its jurisdiction. This doctrine was
significantly developed and articulated in the case of In re The Insurance Act, 1932
(Reference re The Insurance Act, 1932, [1932] A.C. 41), decided by the Judicial
Committee of the Privy Council.
• Main Idea:
o When evaluating a law, the primary focus is on its main subject or purpose.
o If the main purpose of the law falls within the power of the legislature that
created it, the law is considered valid.
o This is true even if the law also affects subjects beyond the legislature’s power.
• Practical Application:
o Imagine a state government creates a law about regulating businesses (which is
within the state's power).
o If this law also indirectly impacts banking (which is under central government
control), the law remains valid as long as its main purpose is business regulation,
not banking.
• Why It Matters:
o This doctrine helps prevent unnecessary invalidation of laws due to minor
overlaps with another government’s jurisdiction.
o It ensures laws serve their intended primary purpose without getting struck
down for incidental overlaps.
• Example
State of Bombay v. F.N. Balsara (1951):
o The Bombay Prohibition Act was primarily about prohibiting alcohol within the
state.
o It incidentally affected import and export of liquor (a central subject).
o The Supreme Court upheld the act because its main purpose was within the
state's power (alcohol regulation).
2. Doctrine of Colourable Legislation:
• Definition: This doctrine implies that what cannot be done directly cannot be done
indirectly. If a legislature enacts a law that it does not have the power to legislate on,
and it is evident that it is a colourable exercise of power, such legislation is invalid.
• Main Idea:
o Direct vs. Indirect: If a legislature does not have the power to make a law
directly on a certain matter, it cannot achieve the same result by making a law
on a related matter.
o Intent Matters: The real intent or purpose behind the law is examined. If the
intent is to legislate on a subject outside the legislature’s jurisdiction, the law is
invalid.
o Suppose a state legislature creates a law that appears to regulate trade within the
state (a state subject).
o However, if the true purpose of the law is to regulate international trade (a
central subject), it is invalid.
• Why It Matters:
o This doctrine ensures that legislative bodies stay within their defined powers.
o It prevents legislatures from disguising their laws to encroach on the powers of
another legislative body.
• Example
K.C. Gajapati Narayan Deo vs. State of Orissa (1953):
o The Orissa government passed a law that seemed to deal with agricultural
income.
o However, it was found that the real intent was to tax non-agricultural income,
which the state did not have the power to do.
o The Supreme Court invalidated the law as it was a colorable exercise of power.
The Doctrine of Colorable Legislation ensures that legislatures cannot bypass constitutional
limits on their powers.
3. Harmonious Construction:
• Definition: When there is an apparent conflict between entries in different lists, the
principle of harmonious construction is applied to interpret the entries in such a manner
that they do not conflict with each other. The objective is to ensure that each entry is
given effect without rendering any entry redundant. The Principle of Harmonious
Construction is a rule used to resolve conflicts between entries in different legislative
lists.
• Main Idea:
o Avoiding Conflict: When two entries in different lists seem to overlap or
conflict, this principle is used to interpret them in a way that avoids conflict.
o Effective Interpretation: The goal is to ensure that both entries are given effect
and neither is rendered meaningless or redundant.
o If there is a central law about “communications” and a state law about “trade
within the state,” and these seem to overlap, the principle of harmonious
construction will be used to interpret the laws in a way that both can coexist
without conflict.
• Why It Matters:
o This principle maintains the balance of power between the Union and State
legislatures.
o It ensures that laws are effective and respects the intentions of both central and
state authorities.
• Example
Tika Ramji vs. State of Uttar Pradesh (1956):
o The central government had laws about sugarcane industries, and the state had
laws about sugarcane regulation.
o The Supreme Court used the principle of harmonious construction to allow both
laws to operate together without conflict, recognizing the central laws' focus on
industrial regulation and the state laws' focus on agricultural aspects.
4. Doctrine Ancillary or Incidental Powers:
• Definition: This principle allows the legislature to make laws on matters that are
incidental or ancillary to the subjects enumerated in the lists. It is based on the idea that
the power to legislate on a principal subject includes the power to legislate on ancillary
or subsidiary matters. The Doctrine of Ancillary or Incidental Powers allows a
legislature to make laws on matters that are related or supplementary to the subjects
listed in their legislative authority. Here's a simplified explanation:
• Main Idea:
o Principal and Ancillary Matters: When a legislature has the power to legislate
on a main subject, it also has the power to legislate on related or supplementary
matters necessary to fully implement the law on the main subject.
o Comprehensive Legislation: This principle ensures that the legislature can
create comprehensive and effective laws.
o If the Union has the power to legislate on “national defence,” it can also make
laws on related subjects like the production of defence equipment or the training
of military personnel.
o Similarly, if a state can legislate on “public health,” it can also regulate related
areas like hospitals, medical staff, and health insurance within the state.
• Why It Matters:
o This doctrine prevents gaps in the legislative power that could arise if a
legislature could not address related or necessary aspects of a subject.
o It allows for more practical and effective governance.
• Example
State of Rajasthan vs. G. Chawla (1959):
o The Supreme Court held that the state legislature could regulate loudspeakers
under its power to legislate on public health and sanitation. The regulation of
loudspeakers was considered incidental to the main subject of maintaining
public health.
5. Doctrine of Mutual Exclusivity:
• Definition: This principle is derived from the need to ensure that the subjects in the
Union List and State List are mutually exclusive, preventing overlap and conflict
between the powers of the Union and the States. The Doctrine of Mutual
Exclusivity ensures that the subjects in the Union List and State List are kept distinct,
preventing overlap and conflict between the legislative powers of the Union and the
States. Here's a simplified explanation:
• Main Idea:
o Separate Domains: The subjects listed in the Union List (central government)
and the State List (state governments) are meant to be exclusive to each
jurisdiction. This means each level of government legislates independently
within its own domain.
o Avoiding Overlap: This principle ensures that there is no overlap or conflict
between the powers of the Union and the States.
o If the Union has the power to legislate on "foreign affairs," the states cannot
make laws on this subject.
o Similarly, if a state has the power to legislate on "public health," the Union
cannot make laws on this specific subject within that state’s territory.
• Why It Matters:
o This doctrine maintains clear boundaries between the legislative powers of the
Union and the States.
o It helps in avoiding legislative conflicts and ensures smooth governance by
clearly defining the scope of legislative authority.
• Example
Calcutta Gas Company v. State of West Bengal (1962):
o The Court examined the relevant entries in the Seventh Schedule of the
Constitution, which divides powers between the Union and State legislatures. It
held that the Act fell under Entry 42 of the Union List (List I) concerning
"acquisition and requisitioning of property," and not under any State List (List
II) entry. Therefore, the West Bengal legislature lacked the competence to enact
the law.
o In this case, the Supreme Court emphasized the exclusive nature of the Union
and State Lists to avoid legislative conflicts. The court held that the legislative
powers should be interpreted to respect the mutual exclusivity of the subjects in
these lists.
6. Residuary Powers (Article 248):
o Definition: Any matter not enumerated in the Union, State, or Concurrent List
falls under the residuary powers of the Union Parliament. This principle ensures
that new and unforeseen subjects can be legislated upon by the Union.
o Example: In State of West Bengal vs. Union of India (1963), the Supreme Court
upheld the Union's power to legislate on residuary matters, including those
related to entry 97 of the Union List.
7. The Doctrine of Occupied Field
The Doctrine of Occupied Field is a principle in constitutional law that deals with the legislative
powers and their distribution between the Union (central) and State governments, particularly
in the context of a federal structure like that of India. This doctrine comes into play when both
the Union and State legislatures have the power to make laws on a particular subject, but there
is potential for conflict or overlap between these laws.
Key Principles of the Doctrine of Occupied Field
1. Concurrent List Jurisdiction: The doctrine primarily applies to subjects listed in the
Concurrent List (List III) of the Seventh Schedule of the Indian Constitution. Both the
Union and State legislatures can make laws on these subjects.
2. Precedence of Union Law: When both the Union and a State have legislated on the
same subject, the central law prevails over the state law if there is a conflict. This is
articulated under Article 254 of the Constitution.
o Article 254(1): States that if any provision of a law made by the Legislature of
a State is repugnant to any provision of a law made by Parliament, the latter will
prevail and the former shall be void to the extent of the repugnancy.
3. State Law with Presidential Assent: If a State law on a Concurrent List subject
receives the President’s assent, it can prevail over a conflicting Union law in that State.
o Article 254(2): Allows a state law that is inconsistent with a Union law to
prevail in that state if it has received the President's assent, although Parliament
retains the power to override such state law by making a subsequent law on the
same matter.
Application and Examples
Example 1: Education
• Both Union and State legislatures can make laws regarding education. If the central
government enacts a law on a specific aspect of education, like the Right to Education
Act, it occupies the field. Any state law on the same subject must conform to the central
law, and in case of conflict, the central law prevails.
Example 2: Labour Laws
• Labour is another subject on the Concurrent List. Both Union and State governments
can legislate on labour matters. If the Union enacts comprehensive legislation covering
various aspects of labour laws, it occupies the field. State laws must align with the
central framework.
Judicial Interpretations
M. Karunanidhi v. Union of India (1979)
• Context: This case involved the conflict between the Tamil Nadu Public Men (Criminal
Misconduct) Act, 1973, and the Prevention of Corruption Act, 1947.
• Ruling: The Supreme Court ruled that the central law on corruption occupied the field
and the state law, to the extent it was inconsistent with the central law, was void.
Deep Chand v. State of Uttar Pradesh (1959)
• Context: In this case, the question was whether the U.P. Transport Service
(Development) Act, 1955, was inconsistent with the Motor Vehicles Act, 1939, enacted
by Parliament.
• Ruling: The Supreme Court held that the Union law occupied the field of regulating
motor vehicles, and the state law was repugnant to it. Therefore, the state law was
declared void to the extent of repugnancy.
Implications
• Legislative Clarity: The Doctrine of Occupied Field ensures that there is clarity in
legislative competence and avoids duplication or conflict of laws between the Union
and States.
• Federal Balance: It maintains a balance between the federal structure by allowing both
the Union and States to legislate on subjects of concurrent interest while ensuring that
national interests, as represented by Union laws, take precedence.
• Legal Certainty: This doctrine provides legal certainty and predictability in the
application and enforcement of laws, particularly in areas where both levels of
government have the competence to legislate.
The Doctrine of Occupied Field is thus a crucial aspect of maintaining the federal structure in
India, ensuring both cooperative and coordinated legislative efforts while giving primacy to
central legislation in cases of conflict.
8. Doctrine of Implied Powers
The Doctrine of Implied Powers is a legal principle that allows a government entity to perform
acts and make decisions necessary to execute its explicitly granted powers, even if those acts
and decisions are not expressly provided for in the constitution or legal framework. In the
context of the Indian Constitution, this doctrine helps ensure that the Union and State
governments can effectively carry out their constitutional duties and responsibilities.
Key Principles of the Doctrine of Implied Powers
1. Necessity for Execution: The powers that are necessary for the execution of explicitly
granted powers are implied even if they are not expressly mentioned in the Constitution.
2. Effectiveness of Governance: This doctrine ensures that the government can function
effectively and efficiently without being overly constrained by a strict interpretation of
constitutional provisions.
3. Support for Explicit Powers: Implied powers are used to support and enable the
execution of explicit powers, ensuring that the government can achieve the objectives
and functions assigned to it by the Constitution.
Application in the Indian Context
1. Union and State Powers: Both the Union and State governments can invoke implied
powers to ensure that they can effectively exercise their explicit powers listed in the
Union, State, and Concurrent Lists of the Seventh Schedule.
2. Judicial Recognition: Indian courts have recognized and upheld the doctrine of
implied powers in various judgments, ensuring that the government has the necessary
authority to function effectively.
Examples and Case Laws
Example 1: Emergency Powers
• Context: The President of India has the explicit power to declare a state of emergency
under Article 352. The execution of this power implies the authority to take necessary
actions to address the emergency, even if those actions are not explicitly mentioned.
Example 2: Administrative Efficiency
• Context: The Union or State government may establish agencies or bodies to

implement policies and programs. The creation of such entities is often implied as
necessary to fulfill the government's responsibilities, even if not explicitly mentioned
in the Constitution.
Key Case Laws
Hamdard Dawakhana v. Union of India (1960)
• Context: The case involved the Drugs and Magic Remedies (Objectionable
Advertisements) Act, 1954. The petitioners challenged the Act, arguing that it exceeded
the legislative competence of Parliament.
• Ruling: The Supreme Court upheld the Act, stating that Parliament had the implied
power to legislate on matters necessary to regulate commerce and protect public health,
even if those powers were not explicitly listed.
State of West Bengal v. Union of India (1963)
• Context: This case dealt with the Union government's acquisition of private land for
public purposes, which was challenged by the State of West Bengal.
• Ruling: The Supreme Court held that the Union government had the implied power to
acquire property for public purposes necessary for exercising its constitutional
functions.
I.C. Golaknath v. State of Punjab (1967)
• Context: This landmark case addressed the issue of Parliament's power to amend the
Constitution.
• Ruling: The Supreme Court discussed the implied powers of Parliament, ultimately
ruling that certain fundamental rights could not be amended, highlighting the balance
between explicit and implied powers.
Implications of the Doctrine of Implied Powers
1. Flexibility in Governance: The doctrine provides flexibility, allowing the government

to adapt to new challenges and circumstances by using powers that are necessary for
executing its constitutional mandates.
2. Legal and Constitutional Adaptability: It ensures that the legal and constitutional
framework remains relevant and effective in changing times, supporting the
government's ability to govern efficiently.
3. Judicial Oversight: The judiciary plays a crucial role in interpreting and applying the
doctrine of implied powers, ensuring that these powers are used appropriately and do
not exceed constitutional limits.
The Doctrine of Implied Powers is an essential aspect of constitutional law that supports the
effective functioning of government by allowing the exercise of necessary powers not
explicitly mentioned in the Constitution. This doctrine ensures that both the Union and State
governments can fulfill their constitutional duties and responsibilities, maintaining a balance
between explicit and implied powers for efficient governance.
Administrative Relations
The Indian Constitution establishes a federal system of governance where powers and
responsibilities are distributed between the Union (central) government and the State
governments. This distribution of powers necessitates a framework to manage and coordinate
administrative functions effectively. Administrative relations between the Union and the States
are vital for ensuring smooth governance and cooperation within the federal structure.
Administrative relations in the Indian Constitution describe how the Union (central
government) and State governments interact and manage their respective responsibilities.
These provisions ensure cooperation and smooth governance across India.
Key Objectives of Administrative Relations:
1. Coordination and Cooperation: To ensure that both levels of government work

harmoniously and effectively.
2. Compliance with Union Laws: To guarantee that state actions are in accordance with
national laws and policies.
3. Implementation of National Policies: To facilitate the execution of policies and
programs that have nationwide significance.
Constitutional Provisions for Administrative Relations:
The administrative relations between the Centre and the States are stated under Article 256 to
Article 263 of the Constitution of India. The Government of India has also constituted
the Punchhi Commission in 2007, to determine the Centre-State Relations.
The Indian Constitution, through various articles, outlines the framework for administrative
relations. These provisions ensure that both the Union and State governments can carry out
their functions without encroaching on each other’s domain.
1. Article 256:
Article 256 of the Indian Constitution deals with the obligation of states to ensure that their
executive actions comply with the laws made by Parliament and the authority of the Union
government to ensure such compliance. Here’s an explanation of Article 256 along with
relevant case laws to illustrate its application:
Key Provisions of Article 256:
1. Obligation of States:
o State governments must ensure that their actions are in compliance with the laws
made by Parliament.
2. Executive Power of the Union:
o The Union government can issue directions to state governments to ensure that
they comply with parliamentary laws.
Practical Significance:
• Uniformity: Article 256 helps maintain uniformity in the application of national laws
across all states, ensuring that there is no disparity in the legal framework of different
states.
• Central Oversight: It provides a mechanism for the central government to oversee and
guide states in the execution of laws passed by Parliament, thereby reinforcing the
federal structure of governance.
• Cooperation: The provision encourages cooperation between the Union and state
governments, ensuring that national policies are effectively implemented at the state
level.
Explanation:
Article 256 ensures that the state governments act in accordance with the laws enacted by
Parliament. This is crucial for maintaining uniformity in the application of national laws across
all states. The Union government has the power to direct state governments to comply with
such laws, thereby ensuring that the central policies and laws are effectively implemented at
the state level.
Relevant Case Laws:
1. State of West Bengal v. Union of India (1963):

o In this case, the Supreme Court held that the executive power of the Union
extends to giving directions to the states in matters where it is necessary to
ensure compliance with the laws made by Parliament. The Court emphasized
that Article 256 is crucial for maintaining the supremacy of Parliament’s laws
and ensuring uniform implementation across the country.
2. Rajasthan v. Union of India (1977):
o This case dealt with the President’s rule under Article 356, but it also discussed
the broader context of the Union’s power to ensure state compliance with
parliamentary laws. The Supreme Court noted that the Union government’s
power to issue directions under Article 256 is a preventive measure to ensure
that states do not deviate from the legal framework established by Parliament.
3. State of Karnataka v. Union of India (1977):
o The Supreme Court, in this case, discussed the extent of the Union’s power to
issue directions to states. It reiterated that Article 256 allows the Union to ensure
that states comply with parliamentary laws, emphasizing that this power is
essential for the harmonious functioning of the federal structure.
4. Bhikhaji Narain Dhakras v. State of Madhya Pradesh (1955):
o Though primarily dealing with the issue of post-Constitution laws, this case
highlighted the principle that state laws and actions must not contravene
parliamentary laws. The Supreme Court stated that Article 256 supports this
principle by empowering the Union to direct states to ensure compliance.
Practical Implications:
• Environmental Regulations: If Parliament enacts a law regarding environmental

protection, states are required to implement and enforce this law within their
jurisdictions. The Union can issue directives to states to take necessary actions for
compliance.
• Public Health Measures: During a national health crisis, the Union can direct states to
follow specific guidelines and protocols to manage the situation effectively, ensuring a
coordinated response across the country.
• Education Policies: If Parliament passes a law to implement a new national education
policy, states must adopt and enforce this policy. The Union can guide states in this
process to ensure uniform educational standards.
2. Article 257
Article 257 deals with the control of the Union over states in specific matters to ensure the
harmonious functioning of both executive powers. This article extends the Union's power to
issue directions to states for various national interests.
Article 257(1): Ensuring Non-Interference with Union Powers
• Provision: States must exercise their executive power in a manner that does not impede
or prejudice the exercise of the Union's executive power. Additionally, the Union can
issue necessary directions to states for this purpose.
Example: If a state government is planning a project that could affect national infrastructure,
the Union can direct the state to modify or halt the project to protect national interests.
Article 257(2): Directions for Means of Communication
• Provision: The Union can issue directions to states regarding the construction and
maintenance of means of communication declared to be of national or military
importance. This power overrides the fact that "communications" is a state subject.
• Proviso: This does not restrict Parliament's power to:
o Declare certain highways or waterways as national highways or waterways.
o Construct and maintain means of communication for naval, military, and air
force purposes.
Example: The Union can direct a state to construct or maintain a road that is vital for military
logistics.
Article 257(3): Protection of Railways
• Provision: The Union can issue directions to states on measures needed for the
protection of railways within the state.
Example: If there is a threat to the railway infrastructure in a state, the Union can instruct the
state government to take specific protective measures.
Article 257(4): Reimbursement of Extra Costs
• Provision: If states incur additional costs due to compliance with directions under
Article 257(2) or (3), the Union government must reimburse these costs. If there is no
agreement on the sum, an arbitrator appointed by the Chief Justice of India will
determine the amount.
Example: If a state spends extra money on protecting a railway line as directed by the Union,
the Union government will reimburse these expenses. If there is a dispute about the amount, it
will be resolved by an arbitrator.
Relevant Case Laws
1. State of Rajasthan v. Union of India (1977):

o Facts: The case examined the extent of the Union’s power to issue directions to
states.
o Judgment: The Supreme Court upheld the Union's power to issue directions to
states, emphasizing the need for cooperative federalism.
o Key Point: This case reinforces the Union’s authority to guide states in matters
of national importance.
2. West Bengal v. Union of India (1963):
o Facts: This case dealt with the Union’s power to manage national projects and
direct state actions.
o Judgment: The Supreme Court validated the Union's right to direct states under
Articles 256 and 257.
o Key Point: The case highlights the Union's overarching role in ensuring that
state actions align with national interests.
3. Centre for Public Interest Litigation v. Union of India (2000):
o Facts: This case involved issues related to infrastructure and the Union’s
directives to states.
o Judgment: The Court underscored the importance of state compliance with
Union directives to maintain national infrastructure.
o Key Point: It affirms the Union’s directive power under Article 257 for
infrastructure of national importance.
Practical Implications
• Coordination and Efficiency: Ensures that state actions do not conflict with national
policies and projects, promoting coordinated governance.
• Infrastructure and Security: Provides a mechanism for the Union to maintain and
protect critical infrastructure like railways and highways.
• Financial Fairness: Ensures that states are reimbursed for additional costs incurred due
to compliance with Union directives.
Article 258
Article 258 provides a framework for the delegation of Union powers to State governments
and their officers. This article ensures efficient administration and cooperation between the
Union and the states by allowing for such delegation.
Article 258(1): Delegation by the President
• Provision: The President, with the consent of the State Governor, can entrust the State
Government or its officers with functions related to any matter within the executive
power of the Union.
• Non-obstante Clause: The clause overrides anything contained in the Constitution that
might otherwise prevent this delegation.
Example: The President might delegate the function of collecting a certain type of tax to the
State government. This delegation can be conditional or unconditional, depending on the terms
set by the President.
Article 258(2): Powers Conferred by Parliament-made Law
• Provision: A law made by Parliament applicable in any State can confer powers and
impose duties on the State Government, its officers, or authorities. This can occur even
if the State Legislature does not have the power to make laws on that matter.
• Non-obstante Clause: This provision ensures that Parliament's law is applicable
regardless of the State Legislature's authority.
Example: If Parliament enacts a law related to environmental protection, it can impose duties
on State officers to enforce this law, even if the State Legislature lacks the authority to legislate
on environmental issues.
Article 258(3): Costs of Administration
• Provision: The Government of India must pay the States for the extra costs incurred in
administering the powers and duties conferred under Article 258(1) and 258(2). If there
is a disagreement on the amount, an arbitrator appointed by the Chief Justice of India
will determine the sum.
Example: If the State incurs additional expenses while collecting a tax delegated by the Union,
the Union government must reimburse these costs. If the State and the Union disagree on the
amount, an arbitrator appointed by the Chief Justice of India will resolve the dispute.
Relevant Case Laws
1. Jayantilal Amrit Lal Shodhan v. F. N. Rana (1964):

o Facts: The case involved the President's delegation of certain powers to State
officers.
o Judgment: The Supreme Court held that such delegation is valid and does not
diminish the Union’s control over those functions.
o Key Point: The Court affirmed the President's authority under Article 258 to
delegate powers, ensuring efficient local administration without compromising
Union control.
2. Union of India v. V. Sriharan (2015):
o Facts: This case primarily dealt with different legal aspects but reiterated the
principle of the Union’s delegation of functions to States.
o Judgment: The Supreme Court underscored that the Union retains ultimate
authority even after delegating powers.
Key Point: The delegation fosters cooperative federalism and ensures that
o
Union directives are efficiently implemented at the State level.
3. Shamsher Singh v. State of Punjab (1974):
o Facts: The case discussed the broader aspects of executive power delegation.
o Judgment: The Supreme Court upheld the view that delegation under Article
258 is practical and necessary for effective governance.
o Key Point: This case supports the mechanism of delegation to enhance
administrative efficiency and local implementation of Union functions.
• Enhanced Local Governance: Delegation of Union functions to State governments

enables more effective and localized administration.
• Financial Accountability: The provision for reimbursing States ensures that they are
not financially burdened by the additional responsibilities.
• Conflict Resolution: The involvement of an arbitrator appointed by the Chief Justice
of India ensures impartial resolution of financial disputes between the Union and States.
Differences: Art 256,257 and 258:
1. Scope of Control vs. Delegation:

o Article 256: Focuses on ensuring State compliance with central laws. it means
that the Constitution mandates that State governments must act in accordance
with the laws enacted by the Parliament of India
o Article 257: Deals with Union control over State actions to prevent interference
with Union functions.
o Article 258: Facilitates delegation of Union functions to States for
administrative efficiency.
2. Nature of Directions vs. Entrustment:
o Article 256: Union can issue directions to States to ensure compliance with
laws.
o Article 257: Union can issue directions to States to protect national interests in
specific areas.
o Article 258: Union can entrust its functions to States, enabling cooperative
administration.
3. Financial Provisions:
o Articles 257 and 258: Include provisions for the Union to reimburse States for
extra costs incurred due to compliance with Union directions or delegated
functions.
o Article 256: No specific financial provisions related to reimbursement are
mentioned.
Article 258A
Article 258A of the Indian Constitution allows for the transfer of certain functions from a state
to the Union. This can be done conditionally or unconditionally, with the mutual consent of
both the Governor of the state and the Union Government.
Key Provisions of Article 258A
1. Non-obstante Clause: The article begins with a non-obstante clause, which means it
overrides any other provision of the Constitution that might be inconsistent with it.
2. Mutual Consent: The Governor of a state, with the consent of the Union Government,
can entrust functions that are within the executive power of the state to the Union
Government or its officers.
3. Conditional or Unconditional Entrustment: This entrustment can be made
conditionally or unconditionally, depending on the terms agreed upon by both parties.
Explanation with Case Laws
1. Jainarayan v. State of Rajasthan (1963)

o Facts: The Rajasthan Government entrusted certain administrative functions to
the Central Government.
o Judgment: The Supreme Court upheld the validity of the entrustment, stating
that such an arrangement was within the constitutional powers provided under
Article 258A.
o Key Point: This case demonstrates the practical application of Article 258A in
delegating state functions to the Union Government.
2. Rajasthan SEB v. Mohan Lal (1967)
o Facts: The case involved the Rajasthan State Electricity Board and the
delegation of certain regulatory functions to the Central Electricity Authority.
o Judgment: The Supreme Court supported the delegation, emphasizing the
importance of cooperative federalism.
o Key Point: Reinforces the constitutional provision allowing states to entrust
functions to the Union, ensuring efficient administration and governance.
3. UOI v. Shiv Kant Shukla (1976)
o Facts: During the Emergency period, certain state functions were delegated to
the Union Government.
o Judgment: The Supreme Court validated the transfer of functions, underlining
the flexibility provided by the Constitution for such arrangements in times of
necessity.
o Key Point: Highlights the adaptability of the Constitution to allow temporary
transfers of power for effective governance during exceptional circumstances.
• Enhanced Coordination: Facilitates better coordination between the state and Union
governments, ensuring smoother administration.
• Flexibility in Governance: Allows for the temporary or permanent transfer of
functions to address specific administrative needs or crises.
• Efficiency: Helps in leveraging the Union Government's resources and expertise in
areas where the state might lack sufficient capability.
Article 260
Article 260 allows the Government of India, through agreements with foreign territories, to
undertake executive, legislative, or judicial functions within those territories. This engagement
is contingent on any prevailing law relating to the exercise of foreign jurisdiction.
Detailed Explanation
1. Scope of Authority:
o Executive Functions: The Government of India can perform administrative
functions in foreign territories.
o Legislative Functions: India can enact laws that are applicable within the
foreign territory as per the agreement.
o Judicial Functions: India can establish judicial procedures or courts to
administer justice within the foreign territory.
2. Agreement Requirement:
o The exercise of these functions must be based on a formal agreement between
the Government of India and the government of the foreign territory.
o Such agreements must comply with any existing laws governing foreign
jurisdiction.
Relevant Case Laws and Examples
1. Berubari Union Case (1960):

o In this landmark case, the Supreme Court of India interpreted the scope of
India's powers in relation to territories not forming part of India. The Court ruled
that the Government of India could cede territory to a foreign country only
through a constitutional amendment, highlighting the limitations and the need
for adherence to existing laws and procedures when dealing with foreign
jurisdictions.
Validity and Interaction
Article 260:
• Validity: Article 260 remains valid and functional as part of the Constitution. It is used
for specific administrative, legislative, or judicial functions in cooperation with
territories outside India.
• Application: It does not directly address the transfer of Indian territory but rather the
administration of external territories by agreement.
Berubari Union Case:
• Validity: The ruling remains a critical precedent in Indian constitutional law. It clarified
that the transfer of any part of India's territory requires a constitutional amendment,
emphasizing the importance of legislative procedures in such matters.
• Impact: Reinforces the need for parliamentary approval and constitutional amendment
for any territorial cession, ensuring such actions reflect the will of the legislature.
• Article 260 enables India to manage foreign jurisdictional functions efficiently through
formal agreements, without altering territorial boundaries.
• The Berubari Union Case provides a judicial check on the executive's powers,
ensuring any territorial changes adhere to constitutional processes and maintain the
integrity of India's territory.
2. Agreement with Bhutan:
o Historically, India had an agreement with Bhutan where it provided various
administrative and judicial services until Bhutan developed its own capabilities.
This exemplifies the practical application of Article 260, where India undertook
certain functions in a foreign territory based on a mutual agreement.
3. Sikkim’s Accession:
o Before Sikkim became a part of India in 1975, India had certain administrative
responsibilities in Sikkim under a treaty agreement. This arrangement was
governed by laws related to foreign jurisdiction until Sikkim was fully
integrated into India.
Practical Applications and Implications
• Foreign Agreements: Article 260 facilitates India's ability to assist and engage with
neighbouring countries through formal agreements, enhancing diplomatic and
administrative cooperation.
• Legal Compliance: Any agreement or exercise of jurisdiction under Article 260 must
align with the legal framework governing foreign jurisdiction, ensuring legality and
adherence to international norms.
Article 261
Article 261 of the Indian Constitution ensures the nationwide recognition and enforcement of
public acts, records, and judicial proceedings across India. Here’s a breakdown and explanation
of each clause, along with relevant case laws.
Article 261(1)
Provision:
• Full faith and credit shall be given throughout the territory of India to public acts,
records, and judicial proceedings of the Union and every State.
Explanation:
• This clause ensures that the official acts, records, and judicial decisions made by any
state or the Union are respected and recognized across the entire country.
Case Law:
• Ishwar Dass Jain v. Sohan Lal (2000):

o Facts: The case involved the execution of a judgment passed by a civil court in
one state being enforced in another state.
o Judgment: The Supreme Court affirmed the principle that judgments delivered
by courts in one state must be respected and enforceable in other states under
Article 261(1).
o Key Point: The case reinforces the uniformity and consistency of judicial
proceedings across state boundaries.
Article 261(2)
Provision:
• The manner in which and the conditions under which such acts, records, and
proceedings shall be proved and their effect determined, shall be as provided by law
made by Parliament.
Explanation:
• This clause empowers Parliament to enact laws specifying how public acts, records,
and judicial proceedings should be authenticated and the conditions for their
recognition and enforcement.
• This clause grants the Parliament the authority to establish laws that specify the
methods and conditions for proving the authenticity of public acts, records, and judicial
proceedings from one state when presented in another state. Additionally, Parliament
can determine the legal effects of such recognition and enforcement.
Case Law:
Satya v. Teja Singh (1975):
• Context: This case dealt with the recognition of a divorce decree passed by a foreign
court.
• Outcome: The Supreme Court of India held that Indian courts are not bound to
recognize foreign judgments if they are not in accordance with Indian laws. This case
indirectly underscores the importance of having clear parliamentary laws for the
authentication of domestic public acts, records, and judicial proceedings under Article
261.
Article 261(3)
Provision:
• Final judgments or orders delivered or passed by civil courts in any part of the territory
of India shall be capable of execution anywhere within that territory according to law.
Explanation:
• This clause ensures that civil court judgments or orders made in any part of India can
be executed throughout the country. This avoids the need for re-litigation or new
proceedings in different states.
Case Law:
• Maharashtra State Electricity Board v. Commissioner of Sales Tax (1975):

o Facts: The case involved the enforcement of a tax recovery order issued by one
state in another state.
o Judgment: The Supreme Court upheld the enforceability of such orders across
state boundaries, in line with Article 261(3).
o Key Point: The judgment emphasized that civil orders and judgments should
have nationwide enforceability to ensure the efficient administration of justice.
Summary
Article 261 facilitates the seamless recognition and enforcement of public acts, records, and
judicial decisions throughout India, promoting legal uniformity and consistency across states.
This constitutional provision ensures that:
1. Uniform Recognition: Public acts, records, and judicial proceedings of any state or the
Union are recognized and respected nationwide.
2. Parliamentary Regulation: Parliament has the authority to legislate the procedural and
conditional aspects of proving and enforcing such acts and records.
3. Nationwide Enforcement: Civil court judgments can be executed anywhere in India,
ensuring that legal decisions have a consistent and binding effect across all states.
Article 262
Article 262 of the Indian Constitution deals with the adjudication of disputes relating to the
use, distribution, or control of inter-state rivers or river valleys. It grants Parliament the
authority to legislate on these matters and, if necessary, to exclude the jurisdiction of the
Supreme Court or any other court in such disputes.
Breakdown of Article 262:
1. Article 262(1):
o Provision for Adjudication: This clause empowers Parliament to create laws
for the adjudication of any dispute or complaint regarding the use, distribution,
or control of waters of inter-state rivers or river valleys. Essentially, it gives
Parliament the ability to set up mechanisms or institutions specifically designed
to handle such disputes.
2. Article 262(2):
o Non-Obstante Clause: This clause allows Parliament to enact laws that prevent
the Supreme Court or any other court from exercising jurisdiction over disputes
mentioned in Article 262(1). This means that Parliament can establish a special
tribunal or body to exclusively handle these disputes, without interference from
the judiciary.
Key Points and Interpretation
1. Parliament's Authority:
o The Parliament has exclusive power to make laws for resolving disputes
involving inter-State rivers and river valleys. This includes framing laws about
the use, distribution, and control of such waters.
2. Judicial Exclusion:
o The clause allows the Parliament to legislate that neither the Supreme Court nor
any other court can have jurisdiction over these disputes. This is intended to
ensure that water disputes are resolved through specialized mechanisms rather
than through regular court litigation.
3. Concurrent Legislative Powers:
o Both the States and the Union have legislative competence over water issues
under Entry 17 (State List) and Entry 56 (Union List) of Schedule VII,
respectively. This creates a framework for shared responsibility but also
potential conflicts, which Article 262 aims to manage.
Inter-State Water Disputes Act, 1956
• In exercising the powers under Article 262, the Parliament enacted the Inter-State
Water Disputes Act, 1956.
• Purpose:
o To provide a mechanism for resolving disputes between states over the sharing
of river waters.
• Process:
o If negotiations fail, the Central Government can set up a Water Disputes
Tribunal to adjudicate the dispute.
Active Water Disputes Tribunals
There are currently five active tribunals:
• Ravi and Beas Water Tribunal

• Krishna Water Disputes Tribunal – II
• Vasundhara Water Disputes Tribunal
• Mahadayi Water Disputes Tribunal
• Mahanadi Water Disputes Tribunal
Cauvery Water Dispute (1991) - Explanation
Background
The Cauvery Water Dispute is a long-standing conflict between the Indian states of Karnataka
and Tamil Nadu, with Kerala and Puducherry also being stakeholders. The dispute primarily
revolves around the sharing of water from the Cauvery River, which originates in Karnataka
and flows through Tamil Nadu before reaching the Bay of Bengal. The river is a crucial water
source for irrigation and drinking purposes for both states, leading to intense competition and
conflict over its usage.
Historical Context
The dispute dates back to the agreements made during the British colonial period:
• 1892 Agreement: Between the princely state of Mysore (now Karnataka) and the
Madras Presidency (now Tamil Nadu), which outlined water sharing and irrigation
projects.
• 1924 Agreement: Further detailed the allocation of Cauvery water, but it had a 50-year
validity, expiring in 1974.
Post-independence, the states could not reach a consensus on water sharing, leading to legal
and political battles.
Formation of the Cauvery Water Disputes Tribunal (CWDT)
In 1990, under the Inter-State Water Disputes Act, 1956, the Government of India constituted
the CWDT to adjudicate the dispute. The tribunal was tasked with assessing the requirements
and historical usage of the river water by the disputing states and providing a fair distribution.
The Tribunal's Interim Award (1991)
In 1991, the CWDT issued an interim order, which became highly contentious. The key points
of the interim award included:
• Interim Allocation: Karnataka was directed to release 205 thousand million cubic feet
(TMC) of water to Tamil Nadu annually.
• Regulated Release: The water release was to be scheduled to ensure an adequate
supply during the crucial agricultural seasons.
This interim order led to protests and political opposition, particularly in Karnataka, which felt
the allocation was unfair and detrimental to its farmers.
The Final Award (2007)
After years of deliberations, the CWDT delivered its final award in 2007. The main allocations
were as follows:
• Tamil Nadu: 419 TMC

• Karnataka: 270 TMC
• Kerala: 30 TMC
• Puducherry: 7 TMC
The remaining water was to be accounted for natural evaporation and other losses. The award
also included provisions for setting up a Cauvery Management Board to monitor water
distribution and ensure compliance.
Supreme Court's Verdict (2018)
The states continued to contest the CWDT's final award. In 2018, the Supreme Court of India
delivered a final verdict, making minor adjustments:
• Karnataka's Allocation: Increased by 14.75 TMC, thus reducing Tamil Nadu's share.
• Monitoring and Compliance: The Supreme Court ordered the establishment of the
Cauvery Water Management Authority to ensure the implementation of its decision.
Legal and Doctrinal Principles Applied
The adjudication process incorporated several legal doctrines:
• Doctrine of Riparian Rights: Ensuring that all riparian states have equitable access to
water.
• Doctrine of Equitable Apportionment: Balancing the needs and rights of the states
based on historical usage, current needs, and sustainability.
• Reasonable Use: Ensuring that water usage does not harm the interests of other riparian
states.
Legal Doctrines Related to Inter-State Waters
1. Doctrine of Riparian Rights
The Doctrine of Riparian Rights is a principle of water law that grants rights to the owners of
land abutting a watercourse (such as a river, stream, or lake) to reasonable use of the water that
flows through or borders their property. This doctrine is based on the concept of natural use
and does not allow for the transfer of water rights separate from the land itself. Key elements
include:
• Natural Flow: Each riparian owner has the right to the natural flow of the watercourse
without significant alteration.
• Reasonable Use: Riparian rights are subject to the reasonable use of water, ensuring
that one owner's use does not harm the rights of another.
• Equal Rights: All riparian owners have equal rights to use the water, and disputes are
typically resolved based on principles of equity.
Case Law: In Re: Cauvery Water Dispute (1991)
Background
The Cauvery Water Dispute involves the states of Karnataka, Tamil Nadu, Kerala, and
Puducherry over the sharing of Cauvery River water. This dispute is one of the most prolonged
and contentious water disputes in India.
Application of Doctrine of Riparian Rights
The Cauvery Water Disputes Tribunal (CWDT), established in 1990, applied the doctrine of
riparian rights among other principles to adjudicate the dispute. Key points from the tribunal's
approach include:
1. Equitable Apportionment: The tribunal aimed to distribute the water equitably among
the states while considering historical usage patterns.
2. Reasonable Use: Each state's usage of the Cauvery River water was assessed based on
the principle of reasonable use to ensure that one state's use did not disproportionately
affect another.
3. Sustainable Utilization: The tribunal emphasized the need for sustainable use of water
resources to cater to agricultural, drinking, and other needs.
Tribunal's Decision
• Water Allocation: The CWDT allocated specific quantities of water to each state based
on the needs and contributions of each riparian state.
• Monitoring Mechanism: A monitoring committee was established to ensure
compliance with the tribunal's decision and to address future disputes.
Supreme Court's Role
The Supreme Court of India, in subsequent years, upheld the CWDT's decision while making
minor modifications. It emphasized that the doctrine of riparian rights must be balanced with
principles of equitable distribution and sustainable management.
Importance
The application of the doctrine of riparian rights in the Cauvery Water Dispute highlights the
balance between traditional water rights and modern principles of equitable distribution and
sustainability. This case illustrates how riparian rights are interpreted and applied within the
broader context of inter-state water disputes in India.
2. Doctrine of Prior Appropriation
The Doctrine of Prior Appropriation is a legal principle used in water law, primarily in the
western United States, but it has also influenced water rights disputes in other regions,
including India. This doctrine is based on the principle of "first in time, first in right," which
means that the first person to use a quantity of water from a particular source for a beneficial
purpose has the right to continue to use that quantity of water for that purpose.
The doctrine contrasts with the Doctrine of Riparian Rights, which allocates water use rights
based on land ownership adjacent to the water source. Under Prior Appropriation, water rights
are not necessarily tied to land ownership but rather to the act of appropriating the water for
beneficial use.
Key Principles
1. Priority Date: The date when the water was first put to beneficial use is crucial. This
establishes the seniority of the water right.
2. Beneficial Use: Water must be used for a beneficial purpose, such as irrigation,
domestic use, or industrial use.
3. Continuous Use: The right is maintained as long as the water continues to be used
beneficially without significant interruption.
4. Transferability: Water rights under this doctrine can often be sold or transferred,
independently of the land.
The Narmada Bachao Andolan vs. Union of India (2000) case is a landmark decision by the
Supreme Court of India involving the construction of the Sardar Sarovar Dam on the Narmada
River. This case highlights the conflicts between development and environmental concerns,
along with the displacement and rehabilitation of affected populations.
Background
The Narmada River project, involving the construction of numerous dams including the Sardar
Sarovar Dam, was initiated to provide water for irrigation, drinking, and electricity generation.
However, the project faced significant opposition from various groups, particularly the
Narmada Bachao Andolan (NBA), led by Medha Patkar. The NBA argued that the project
would lead to the displacement of thousands of people, destruction of their homes, and
ecological damage without proper rehabilitation and resettlement plans.
Key Issues
1. Displacement and Rehabilitation: The primary contention was the inadequate

resettlement and rehabilitation of people who would be displaced by the dam.
2. Environmental Concerns: The NBA raised concerns about the environmental impact
of the project, including deforestation, loss of biodiversity, and alteration of the river
ecosystem.
3. Economic and Social Costs: The petitioners questioned the economic viability of the
project and its social costs, suggesting that the benefits did not justify the adverse
impacts on the local population and environment.
Court's Decision
The Supreme Court delivered a divided judgment, with a majority decision allowing the
continuation of the dam construction under specific conditions:
1. Compliance with Rehabilitation Policies: The court mandated that the project must
adhere to the conditions laid out for the rehabilitation and resettlement of the displaced
people. It required the government to provide land for land and ensure proper
rehabilitation before further construction.
2. Environmental Safeguards: The court emphasized the need for strict environmental
safeguards, mandating comprehensive impact assessments and adherence to
environmental norms.
3. Monitoring and Accountability: The court appointed a monitoring committee to
oversee the rehabilitation process and ensure that the displaced communities were
adequately resettled.
Significance
The judgment in Narmada Bachao Andolan vs. Union of India is significant for several
reasons:
• Balancing Development and Rights: It attempted to strike a balance between

developmental needs and the rights of the affected populations, emphasizing that
development projects must not proceed at the cost of human and environmental rights.
• Rehabilitation Precedence: The judgment underscored the importance of prior
rehabilitation and resettlement, setting a precedent that infrastructure projects should
ensure the welfare of displaced communities.
o Environmental Accountability: It highlighted the necessity of environmental

accountability in large-scale projects, reinforcing the need for rigorous environmental
impact assessments and adherence to ecological norms.
While not directly applying the doctrine, the case revolved around the equitable distribution
and historical usage of the Narmada River's water resources. The Supreme Court had to balance
developmental needs against historical and traditional usage by downstream users, reflecting
the tensions present in prior appropriation contexts.
Judgment: The Supreme Court allowed the construction of the Sardar Sarovar Dam,
emphasizing development while also acknowledging the need for rehabilitation and
resettlement of affected people, indirectly touching upon principles of historical usage and
rights.
3.Doctrine of Territorial Sovereignty
The Doctrine of Territorial Sovereignty is a principle in international law that asserts the
exclusive right of a state to exercise its powers within its boundaries, free from external
interference. This doctrine is crucial in defining the legal rights and obligations of states in
relation to their territories and resources.
Explanation
The doctrine rests on the following key points:
1. Exclusive Authority: States have the exclusive right to control and utilize their
territory and resources.
2. Non-Intervention: Other states cannot interfere in the domestic affairs of a sovereign
state.
3. Equality of States: All states are equal under international law, regardless of size or
power.
Application in Water Disputes
In the context of inter-state water disputes, this doctrine implies that a state has sovereignty
over the waters within its territory. However, when a river flows through multiple states or
countries, the doctrine must be balanced with principles of equitable use and no-harm rule to
prevent conflicts and ensure fair sharing of resources.
Case Laws
1. The Indus Waters Treaty (1960): This treaty between India and Pakistan, brokered
by the World Bank, divided the use of the Indus River system between the two
countries. It highlights how the doctrine of territorial sovereignty is balanced with
international agreements to manage shared water resources.
2. The Nile River Dispute: Egypt's assertion of historic rights over the Nile contrasts with
the claims of upstream countries like Ethiopia. The construction of the Grand Ethiopian
Renaissance Dam (GERD) has led to complex negotiations and conflicts, showing the
interplay between territorial sovereignty and equitable utilization.
3. Kansas v. Colorado (1907): In this U.S. Supreme Court case, Kansas sued Colorado
over the diversion of waters from the Arkansas River, which flowed through both states.
The Court recognized Colorado's rights to use the river's water but also emphasized that
such use should not significantly harm downstream states like Kansas.
Principles Balancing Territorial Sovereignty
1. Equitable and Reasonable Utilization: States should use shared water resources in a
manner that is fair and reasonable, considering the needs and interests of all riparian
states.
2. No Significant Harm: States must ensure that their use of water resources does not
cause significant harm to other states sharing the same resources.
Significance
The doctrine of territorial sovereignty underscores the importance of respecting the territorial
integrity and political independence of states. However, in practice, it is often tempered by
other principles and international agreements to address the complexities of shared resources,
particularly in the context of rivers and water bodies.
4.Doctrine of Equitable Apportionment
The Doctrine of Equitable Apportionment is a principle used to resolve disputes over the
allocation of shared water resources between states or countries. This doctrine aims to ensure
that water from a river or water system is fairly and reasonably distributed among all parties,
considering their respective needs, uses, and contributions.
Explanation
The doctrine is based on the following key principles:
1. Equitable and Reasonable Utilization: Each state is entitled to a fair share of the
water, based on various factors such as population, area, contribution to the river flow,
and existing uses.
2. No Harm Rule: States should use shared water resources in a manner that does not
significantly harm other states sharing the resource.
3. Balance of Interests: The allocation should consider the balance between economic,
social, and environmental needs of the states involved.
Key Factors Considered
• Geographic, climatic, and hydrological factors

• The population dependent on the water resource
• Existing and potential uses of the water
• Economic and social needs
• The contribution of each state to the flow of the water
• Availability of alternative water resources
Cauvery Water Dispute: Involving states like Tamil Nadu, Karnataka, Kerala, and the Union
Territory of Puducherry, the dispute over the sharing of the Cauvery River waters led to the
formation of a tribunal. The tribunal’s award and subsequent modifications by the Supreme
Court have applied principles akin to equitable apportionment to balance the needs and rights
of the states involved.
5. Doctrine of Community of Interest
The Doctrine of Community of Interest is a principle used in the context of inter-state water
disputes. This doctrine emphasizes that rivers and their resources should be considered
common property, shared among all riparian states. It recognizes that rivers do not belong
exclusively to any one state but rather to the community of states through which they flow. The
goal is to promote cooperation and equitable utilization of water resources, ensuring that all
states benefit fairly from the shared resource.
Key Case Laws in India
1. Narmada Water Dispute
The Narmada Water Dispute is a significant example where the Doctrine of Community of
Interest was applied. The dispute involved the allocation of water from the Narmada River
among the states of Madhya Pradesh, Gujarat, Maharashtra, and Rajasthan. The Narmada
Water Disputes Tribunal (NWDT) emphasized the need for cooperative use and mutual benefit
among the states.
• Case Reference: Narmada Bachao Andolan v. Union of India (2000)

• Key Points: The Tribunal's award allocated water to the states based on equitable
distribution, ensuring that each state had access to the river's resources for irrigation,
drinking water, and other uses. The decision reflected the principle that the river should
serve the common interest of all states involved.
Article 263: Inter-State Council
Provision and Establishment
Article 263 empowers the President of India to establish an Inter-State Council if he believes
it would serve the public interest. The President can define the Council's duties, organization,
and procedures. The duties of the Council include:
• Advising on Disputes Between States: The council can look into and provide advice on
any disputes that arise between states, helping to resolve conflicts.
• Discussing Common Interests: It can investigate and discuss topics that are of common
interest to multiple states or to both the Union and one or more states. This can include issues
like transportation, water sharing, or environmental policies.
• Making Recommendations: The council can make recommendations on any matter it

discusses, especially focusing on how to better coordinate policies and actions among states
and between the states and the Union government.
Establishment of the Inter-State Council
The Inter-State Council was recommended by the Sarkaria Commission in 1988 and
established in 1990 by a Presidential Order. This Council acts as a permanent national forum
for consultation and cooperation between the Union and states.
Composition and Reconstitution
The Council, reconstituted in 2019, is chaired by the Prime Minister. It includes six Union
Ministers and the Chief Ministers of all states and Union territories.
Financial Relations
Financial Relations in the Indian Constitution
In our Indian Constitution Part XII (Art 264-300A) deals with Finance, Property, Contracts
and Suits. And part XII is divided into 3 chapters:
o Chapter 1 Finance (Art 264- 291)

o Chapter 2 Borrowing (Art 292 & 293)
o Chapter 3 Property, Contracts, Rights, Liabilities, Obligations and Suits.(Art 294-
300)
o Chapter 4 Right to Property (Art 300A)
Among these articles Article 268- 291 deals with financial relations.
1. Importance of Financial Relations:
• Financial relations define how financial resources are divided between the central and
state governments. This ensures efficient and fair distribution of resources necessary
for governance and development.
Imagine a Family Budget:
• Head of the Family (Central Government): Has primary income sources like salary,
investments(central taxes) and decides on major expenses like housing, mortgage,
major renovations (national projects).
• Other Family Members (State Governments): Have their own incomes (state taxes)
and manage daily expenses like groceries (state projects).
• Shared Expenses: Some costs are shared, and family meetings (Finance Commission)
decide how to split these fairly.
• Extra Help: If a member needs extra money (grants-in-aid), the head provides it for
specific needs.
• Borrowing Rules: The head can take loans from banks (domestic and international),
while members can only borrow with the head's approval.
2. Division of Financial Powers:
Division of Financial Powers

Central Government State Governments
Revenue Sources
- Customs Duties - Land Revenue
- Income Tax (excluding agriculture) - State Excise Property
- Central Excise (non-alcoholic) - Sales Tax
- Corporation Tax - Agricultural Income Tax
- Service Tax - Stamp Duty
- Wealth Tax - Entertainment Tax
- Gift Tax -Taxes on Vehicles
- Taxes on Capital Transactions
Shared Taxes
- Income Tax - Income Tax
- Central Excise - Central Excise
Grants-in-Aid
- Financial Assistance to States - Utilized for Welfare Schemes
- Specific Projects and Development - Development Projects
Borrowing Powers
- Domestic Borrowing - Domestic Borrowing
- International Borrowing - Needs Central Approval for International
Borrowing
3.Central Government Revenue Sources:
o Customs Duties:
o Definition: Taxes levied on goods imported into or exported out of India.
o Example: When a company imports electronic goods from another country,
customs duties are imposed based on the value of the goods.
o Income Tax (excluding agricultural income):
o Definition: Taxes levied on the income earned by individuals, businesses, and
other entities.
o Example: An individual's salary income, profits earned by a company, or
interest income from investments are subject to income tax.
o Central Excise (non-alcoholic products):
o Definition: Taxes levied on the manufacture of goods within India, excluding
alcoholic products.
o Example: Excise duty is imposed on the production of cars, machinery, and
other non-alcoholic goods manufactured within the country.
o Corporation Tax:
o Definition: Taxes levied on the profits earned by companies operating in
India.
o Example: A multinational company operating in India pays corporation tax on
its profits generated from its business activities in the country.
o Service Tax:
o Definition: Taxes levied on services provided in India.
o Example: Service tax is applicable on services such as telecommunication,
banking, insurance, and professional consulting services provided within
India.
o Other Taxes:
o Wealth Tax: Tax levied on the net wealth of individuals and Hindu
Undivided Families (HUFs) exceeding a specified threshold.
o Gift Tax: Tax levied on gifts received above a certain value.
o Taxes on Capital Transactions: Taxes imposed on transactions involving
capital assets like stocks, bonds, and real estate.
1. State Government Revenue Sources:
o Land Revenue:
o Definition: Taxes levied on land ownership and usage within the state.
o Example: Land revenue is collected from farmers, landowners, and other
entities based on the size and use of the land.
o State Excise (including alcoholic products):
o Definition: Taxes levied on the manufacture and sale of alcoholic products
within the state.
o Example: State excise duty is imposed on the production and sale of liquor
and alcoholic beverages within the state boundaries.
o Property Tax:
o Definition: Taxes levied on the ownership and use of property (land and
buildings) within the state.
o Example: Property tax is collected annually from property owners based on
the assessed value of their properties.
o Sales Tax / VAT (Value Added Tax):
o Definition: Taxes levied on the sale of goods within the state.
o Example: VAT is imposed on goods sold within the state at each stage of
production or distribution chain, based on the value added at that stage.
o Agricultural Income Tax:
o Definition: Taxes levied on income derived from agricultural activities within
the state.
o Example: Farmers earning income from agricultural activities such as crop
cultivation, animal husbandry, and forestry may be subject to agricultural
income tax.
o Stamp Duty:
o Definition: Taxes levied on legal documents (like sale deeds, agreements, and
leases) executed within the state.
o Example: Stamp duty is paid when purchasing property or executing
agreements in states like Maharashtra or Karnataka.
o Entertainment Tax, Taxes on Vehicles:
o Definition: Taxes levied on entertainment activities (such as movie tickets)
and ownership or use of vehicles (like road tax).
o Example: Entertainment tax is added to the ticket price of movies and
concerts held within the state, while road tax is paid annually for vehicles
registered within the state.
2. Shared Taxes:
• Income Tax and Central Excise: These taxes are collected by the central government
but shared with the states based on recommendations by the Finance Commission.
3. Grants-in-Aid:
• Purpose: Financial assistance provided by the central government to states for specific
projects, development schemes, and to address financial disparities.
4. Borrowing Powers:
• Central Government: Can borrow both domestically and internationally.

• State Governments: Can borrow within the country but require central government
approval for international borrowing.
5. Key Articles Related to Financial Relations:
• Article 268-269: Details about duties and taxes.

• Article 270: Sharing of taxes between the centre and states.
• Article 275: Grants-in-aid to states.
• Article 280: Finance Commission.
• Article 293: Borrowing by states.
Chapter 1 Finance:
General
o Article 265
Article 265 of the Indian Constitution establishes a fundamental principle regarding taxation
in India. Here's an explanation of its key provisions:
1. Authority of Law:
Article 265 states, "No tax shall be levied or collected except by authority of law." This simple
yet significant statement ensures that taxation in India must be based on a law enacted by the
appropriate legislature, whether it is the Parliament (for Union taxes) or the State Legislature
(for State taxes).
2. Implications:
• Legislative Authority: Taxation cannot be arbitrary or discretionary. It must be

authorized by a law passed by the Parliament or State Legislature, depending on the
level of government imposing the tax.
• Constitutional Limitation: This article reinforces the principle of constitutionalism
and the rule of law. It prevents the executive branch from unilaterally imposing taxes
without the backing of legislation, thereby ensuring that tax policy is transparent and
accountable.
• Judicial Review: Courts can review the validity of taxes imposed to ensure they
comply with the legislative authority granted by the Constitution. If a tax is imposed
without the authority of law, it can be declared unconstitutional and struck down by the
courts.
3. Exceptions:
• Emergency Situations: During a financial emergency under Article 360, the President
of India can issue directions for the reduction of salaries and allowances of all or any
class of persons serving in connection with the affairs of the Union, including the judges
of the Supreme Court
o Article 266
Article 266 of the Indian Constitution delineates the structure and management of financial
accounts at both the Union (central government) and state levels. Here's a simple explanation
of each clause:
1. Consolidated Fund of India and Consolidated Fund of a State:
o Consolidated Fund of India: This fund includes all revenues received by the
Government of India (such as taxes and duties), all loans raised by issuing
treasury bills or other means, and all repayments of loans received by the central
government.
o Consolidated Fund of a State: Similarly, this fund comprises all revenues
received by the government of a state, loans raised by the state through treasury
bills or other means, and repayments of such loans.
2. Public Account:
o Apart from the Consolidated Fund, there exists a Public Account of India and
Public Account of a State. This account is used for holding all other public
moneys received by or on behalf of the Union or a state government, such as
funds held in trust, provident funds, and other special funds.
3. Appropriation and Use of Funds:
o Moneys from the Consolidated Fund of India or a State cannot be spent or
appropriated except as authorized by law and for purposes specified in the
Constitution. This ensures that all expenditures are legally sanctioned and align
with the constitutional provisions regarding financial management.
In essence, Article 266 establishes clear distinctions between the Consolidated Fund (for
general revenues and loans) and the Public Account (for specific designated funds) at both the
Union and state levels. It ensures transparency, accountability, and lawful utilization of public
funds by the respective governments in India.
o Article 267
Article 267 of the Indian Constitution pertains to the establishment and functioning of
Contingency Funds at both the Union (central government) and state levels. Here’s a simple
explanation of each clause:
1. Contingency Fund of India:

o Parliament has the authority to establish a Contingency Fund known as "the
Contingency Fund of India." This fund operates like an imprest or emergency
fund.
o Funds are deposited into this Contingency Fund as determined by law passed
by Parliament.
o The President of India has discretion to utilize this Fund to provide advances
for unforeseen expenditures that arise before Parliament can authorize such
expenditures through appropriate legislation (as outlined in Article 115 or
Article 116 of the Constitution).
2. Contingency Fund of a State:
o Similarly, the Legislature of a State has the power to establish a Contingency
Fund known as "the Contingency Fund of the State."
o This State Fund functions as an impress and receives deposits as specified by
state law.
o The Governor of the State can use this Fund to provide advances for unforeseen
expenditures that arise before the State Legislature can authorize such
expenditures through legislation (as specified in Article 205 or Article 206 of
the Constitution).
In summary, Article 267 establishes Contingency Funds at both the central and state levels to
address unforeseen financial needs that arise when expenditures are not anticipated or budgeted
for. These Funds ensure that there is a mechanism in place to meet urgent financial
requirements pending formal authorization by the respective legislatures (Parliament for the
Union and State Legislature for states).
Distribution of Revenues between the Union and the States
Article 268
1. Duties Levied by the Union but Collected and Appropriated by the States:
(1) Union Levied Stamp Duties:
• Types of Duties: This article deals with certain stamp duties listed in the Union List.
• Levy and Collection:
o Union Territories: The Government of India both levies and collects these
duties in Union territories.
o States: In the states, these duties are levied by the Government of India but
collected by the respective state governments.
(2) Financial Allocation:
• Proceeds Allocation: The revenue generated from these duties in any state does not go
into the Consolidated Fund of India. Instead, it is assigned to that particular state.
Omission of Article 268A:
• Article 268A previously dealt with the service tax levied by the Union but collected
and appropriated by both the Union and the States.
• Constitutional Amendment: This provision was removed by the Constitution (One
Hundred and First Amendment) Act, 2016, effective from September 16, 2016. This
amendment was part of the implementation of the Goods and Services Tax (GST)
regime, which restructured how indirect taxes are levied and collected in India.
Example:
If a property transaction occurs in Maharashtra, the stamp duty for the transaction (as specified
in the Union List) is levied (imposed) by the Government of India but collected by the
Maharashtra state government. The revenue from this duty will be used by Maharashtra, not
the central government.
Case Context:
This setup ensures that states have a steady stream of revenue from stamp duties, even though
the central government sets the rates. This arrangement helps maintain fiscal federalism by
balancing financial powers between the Union and the states. The removal of Article 268A and
the introduction of GST aimed to streamline and simplify the tax system in India.
Article 269
1. Taxes Levied and Collected by the Union but Assigned to the States:
(1) Types of Taxes:
• Sales and Consignment Taxes: This article deals with taxes on the sale or purchase of
goods and taxes on the consignment of goods in inter-State trade or commerce.
• Exception: Article 269A addresses taxes related to goods and services, specifically
under the GST regime.
• Definitions:
o "Taxes on the sale or purchase of goods": Refers to taxes on sales or
purchases other than newspapers, occurring in inter-State trade or commerce.
o "Taxes on the consignment of goods": Refers to taxes on the consignment
(shipment) of goods, whether self-consigned or consigned to another person, in
inter-State trade or commerce.
(2) Revenue Distribution:
• Net Proceeds: The net revenue from these taxes in any financial year, except for
proceeds attributable to Union territories, is not included in the Consolidated Fund of
India.
• Assignment to States: This revenue is assigned to the States where the tax is levied
and distributed according to principles set by Parliament.
(3) Parliamentary Powers:
• Formulating Principles: Parliament can create laws to establish principles for

determining when a sale, purchase, or consignment of goods occurs in the course of
inter-State trade or commerce.
Key Points to Note:
• Inter-State Trade: This article focuses on transactions that occur across state borders
within India.
• Revenue Allocation: Ensures that states receive the revenue generated from these
inter-State taxes, promoting fiscal federalism.
• Parliamentary Authority: Parliament has the authority to create laws that define the
specifics of these inter-State transactions and their taxation.
Example:
If a company in Maharashtra sells goods to a company in Karnataka, the tax on this sale is
levied and collected by the central government but is then assigned to the state governments
based on where the tax is due. The distribution principles are set by Parliament to ensure fair
allocation. In this case, Karnataka (where the goods are received) will receive the tax revenue.
Parliament sets the principles that determine how the tax revenue is shared to ensure that states
receive a fair share based on various criteria, such as the volume of sales and other economic
factors
Case Context:
This provision ensures that states benefit financially from inter-State trade, even though the
central government is responsible for collecting the taxes. It promotes a balanced distribution
of resources and fiscal cooperation between the central and state governments.
Article 269A
1. GST on Inter-State Trade:
• Levy and Collection: Goods and Services Tax (GST) on supplies made in the course
of inter-State trade or commerce is levied and collected by the Government of India.
• Apportionment: The collected tax is shared between the Union and the States as per
the recommendations of the Goods and Services Tax Council and laws made by
Parliament.
• Explanation Clause: For this article, supplies of goods or services (or both) imported
into India are considered as inter-State trade or commerce.
2. State Apportionment:
• Separate Fund: The portion of GST apportioned to a State does not become part of
the Consolidated Fund of India, meaning it is directly allocated to the States.
3. Usage for State Tax Payment:
• State Tax Credits: If the GST collected under this clause is used to pay the tax levied
by a State under Article 246A, it will not be included in the Consolidated Fund of India.
• Example: If a business pays GST to the central government and later uses that amount
as credit to pay state GST (SGST), this credit is not added to the central government's
consolidated fund. Instead, it offsets the state tax liability.
4. Usage for Union Tax Payment:
• Union Tax Credits: Conversely, if the tax collected by a State under Article 246A is
used for paying GST levied under this article, it will not be included in the State's
Consolidated Fund.
• Example: If a business pays SGST to a state and later uses that amount as credit to pay
central GST (CGST), this credit is not added to the state's consolidated fund. Instead, it
offsets the central tax liability.
5. Determining Place of Supply:
• Parliament's Authority: Parliament can create laws to determine the principles for
deciding the place of supply and when a supply is considered inter-State trade or
commerce.
Key Points:
• GST Apportionment: Ensures that GST revenue from inter-State trade is shared fairly
between the central and state governments.
• Import Transactions: Imports are treated as inter-State transactions for GST purposes,
ensuring consistent tax treatment.
• Financial Allocation: Clearly defines how GST revenue is allocated and managed,
preventing it from being included in the Consolidated Funds of India or the States when
used for tax payments.
Example:
If a company in Maharashtra supplies goods to a company in Karnataka, the GST on this

transaction is collected by the central government. This GST is then divided between
Maharashtra, Karnataka, and the Union government as per GST Council recommendations and
relevant laws.
Case Context:
Article 269A facilitates smooth tax administration and distribution for inter-State trade,
ensuring both the Union and States receive their due share of GST revenue while maintaining
clear guidelines for tax credits and fund allocations.
Summary of Differences: Art 269 and 269A
1. Type of Tax:
o Article 269: Focuses on taxes on the sale/purchase and consignment of goods
in inter-state trade.
o Article 269A: Specifically deals with the Goods and Services Tax (GST) on
inter-state supplies of goods and services.
2. Revenue Assignment:
o Article 269: Taxes collected by the central government are assigned to the states
where the goods are consumed or delivered.
o Article 269A: IGST collected by the central government is shared between the
centre and the states according to a formula prescribed by Parliament.
3. Objective:
o Article 269: Ensures states receive revenue from inter-state sales of goods.
o Article 269A: Ensures a unified GST system for inter-state trade, with revenue
sharing between centre and states.
• Article 269: Primarily relevant for traditional sales tax systems before GST
implementation.
• Article 269A: Integral to the GST regime, facilitating smooth inter-state commerce and
fair revenue distribution under the GST framework.
Summary
• Article 268: Union levies, states collect and appropriate.

• Article 269: Union levies and collects, but revenue is assigned to states.
• Article 269A: GST on inter-state trade, levied and collected by the Union, with
revenue shared between the Union and States.
Article 270
Article 270 of the Indian Constitution outlines the sharing of certain taxes between the central
government (Union) and the state governments. This article ensures that both levels of
government have adequate financial resources to fulfil their responsibilities.
Key Points of Article 270:
1. Taxes Covered:
o Income Tax: Taxes on income, excluding agricultural income.
o Union Excise Duties: Taxes on the production of goods within the country,
excluding certain items like alcoholic beverages.
2. Collection and Distribution:
o These taxes are collected by the central government.
o The revenue from these taxes is then distributed between the central and state
governments based on the recommendations of the Finance Commission.
3. Finance Commission’s Role:
o The Finance Commission, established under Article 280, makes
recommendations on the distribution of these tax revenues between the central
and state governments.
o The Commission considers factors like population, income, and the needs of the
states to ensure a fair distribution.
4. Objective:
o To provide states with a fair share of revenue from centrally collected taxes.
o To ensure financial stability and equitable development across all states.
Example:
• Income Tax Collection:

o The central government collects income tax from individuals and businesses
across the country.
o Based on the Finance Commission’s recommendations, a portion of this
revenue is distributed to the states. This helps states fund their budgets and carry
out public services like education, healthcare, and infrastructure development.
Article 271: Surcharge on Certain Duties and Taxes for Purposes of the Union
Provision: Article 271 allows Parliament to increase any duties or taxes mentioned in Articles
269 and 270 by imposing a surcharge. This surcharge is for the purposes of the Union, and the
entire proceeds from this surcharge go into the Consolidated Fund of India. Notably, this
excludes the Goods and Services Tax (GST) as specified under Article 246A.
Explanation:
• Surcharge: An additional charge or tax added to the existing taxes.

• Purpose: The revenue generated from the surcharge is used exclusively by the Union
government for its financial needs.
• Consolidated Fund of India: All revenues received by the government, loans raised
by it, and money received in repayment of loans form part of this fund, which is used
to meet all the expenses of the government.
Example:
• Suppose the Union government imposes a surcharge of 10% on the income tax. If an
individual pays ₹100,000 as income tax, an additional ₹10,000 (10% of ₹100,000)
would be levied as a surcharge. This ₹10,000 would be added to the Consolidated Fund
of India and used by the Union government for its expenditure.
Article 272: Omitted by the Constitution (Eighty-eighth Amendment) Act, 2000
Provision: Article 272 previously dealt with taxes that were levied and collected by the Union
and could be distributed between the Union and the States. However, this article was omitted
by the Constitution (Eightieth Amendment) Act, 2000.
Explanation:
• Omitted Article: The omission means that the provisions under this article are no
longer in effect or applicable.
• Reason for Omission: This change was part of the reforms to streamline and simplify
the taxation and financial distribution system between the Union and the States,
primarily to introduce the concept of pooling all central taxes and distributing a share
of them to the States.
Context:
• Before Omission: Article 272 allowed certain taxes collected by the Union to be shared
with the States.
• After Omission: Post the Eightieth Amendment, a more comprehensive mechanism
for revenue sharing was established, making Article 272 redundant.
Example:
• Before the amendment, if the Union government collected a specific tax under Article
272, a portion of it could be distributed to the States based on certain criteria.
• After the amendment, all central taxes are pooled, and the Finance Commission
recommends the distribution of a portion of these pooled revenues to the States,
ensuring a more unified and equitable distribution system.
Article 273: Grants in Lieu of Export Duty on Jute and Jute Products
Provision: Article 273 deals with the financial arrangements related to the export duty on jute
and jute products. It specifies that certain states will receive grants from the Union government
instead of a share of the net proceeds from the export duty on jute and jute products.
Explanation:
1. Grants-in-Aid:
o Every year, specific states (Assam, Bihar, Odisha, and West Bengal) receive
grants-in-aid from the Consolidated Fund of India.
o These grants are given in place of a share of the net proceeds from the export
duty on jute and jute products.
2. Duration of the Grants:
o These grants will continue as long as the export duty on jute or jute products is
levied by the Government of India.
o However, this arrangement will not exceed ten years from the commencement
of the Constitution (i.e., from 1950 to 1960).
3. Meaning of “Prescribed”:
o The term “prescribed” in this article has the same meaning as in Article 270,
which refers to the manner and the amount to be determined by the President.
Example:
1. Grants to States:
o If the Government of India levies an export duty on jute, the states of Assam,
Bihar, Odisha, and West Bengal will receive an annual grant from the central
government. This grant is instead of a direct share in the export duty collected.
o For instance, if the export duty collected is ₹100 crore in a year, instead of
giving a portion of this amount directly to the states, the central government
provides a pre-determined grant to these states.
2. Duration Limit:
o The grants were designed to be temporary and were to be provided only as long
as the export duty was being collected, but not exceeding ten years from the
adoption of the Constitution. If the export duty on jute continued beyond 1960,
the grants would stop by that time regardless.
• Compensation Mechanism:
o This provision was a compensatory mechanism to support states heavily
involved in the jute industry, ensuring they received financial support during
the initial years of the Constitution.
• Transition Period:
o It allowed these states to transition smoothly without facing an immediate drop
in revenue from jute exports, providing financial stability during the early years
of independence.
Article 274: Prior Recommendation of President Required to Bills Affecting Taxation in

Which States are Interested
Provision: This article mandates that certain types of bills affecting taxation, which concern
the states, require the prior recommendation of the President before they can be introduced or
moved in either House of Parliament.
Explanation:
1. Types of Bills Covered:

o Bills that impose or change any tax or duty in which states are interested:
These are taxes or duties where the revenue is either wholly or partially assigned
to states.
o Bills that change the definition of "agricultural income": For income tax
purposes.
o Bills that affect the distribution principles of money to states: As specified
in earlier constitutional provisions.
o Bills that impose any surcharge for Union purposes: As mentioned in the
relevant articles of the Constitution.
2. Requirement:
o These bills or amendments cannot be introduced or moved in Parliament
without the recommendation of the President.
3. Definition of “Tax or Duty in Which States are Interested”:
o (a) A tax or duty where all or part of the net proceeds are assigned to any state.
If the central government collects a tax on the sale of goods, and a portion of
this revenue is allocated to the states, then this tax falls under this definition. A
tax or duty where the revenue collected is partially or wholly given to the states.
o (b) A tax or duty where the net proceeds are used to pay sums out of the
Consolidated Fund of India to any state. If the central government collects
income tax and uses part of this revenue to give grants to states for development
projects, this tax is also included under this definition. A tax or duty where the
revenue collected is used by the central government to make payments to the
states.
Example:
1. Introducing a New Tax:

o Suppose the central government wants to introduce a new tax on goods. If part
of the revenue from this tax is supposed to go to the states, the bill for this tax
cannot be introduced in Parliament without the President's recommendation.
2. Changing the Definition of Agricultural Income:
o If the central government wants to change the definition of what constitutes
"agricultural income" for tax purposes, this change affects the states. Hence, the
bill proposing this change requires the President's recommendation before being
introduced.
3. Affecting Revenue Distribution:
o If a bill proposes to change how the central revenue is distributed to states (e.g.,
altering the formula or criteria), it needs the President's recommendation.
• Safeguard for States:

o This provision ensures that the interests of the states are protected when it comes
to central taxation policies that directly affect their revenues. It acts as a check
to prevent the central government from making unilateral decisions that could
negatively impact state finances.
• Presidential Oversight:
o The requirement for the President's recommendation ensures that there is careful
consideration and approval from the highest level of executive authority before
any potentially impactful tax-related legislation is introduced.
Grants-in-Aid
Grants-in-Aid are an important mechanism through which the central government provides
financial assistance to state governments in India. This support helps states in various
developmental and administrative activities. Here's a straightforward explanation of Grants-in-
Aid along with examples and relevant articles from the Indian Constitution:
Definition and Purpose:
Grants-in-Aid refer to financial assistance provided by the central government to state

governments. The purpose is to support states in implementing schemes, projects, and
initiatives that contribute to national objectives or address specific needs.
Examples of Grants-in-Aid:
1. Education Development:
o Purpose: To improve the quality of education in states.
o Example: The central government provides grants to states for constructing
schools, training teachers, and upgrading educational infrastructure.
2. Healthcare Initiatives:
o Purpose: To enhance healthcare facilities and services.
o Example: Grants are given to states for building hospitals, procuring medical
equipment, and running health awareness campaigns.
3. Infrastructure Projects:
o Purpose: To develop roads, bridges, and other public infrastructure.
o Example: Central grants support state projects like constructing highways,
improving water supply systems, and building rural roads.
4. Disaster Relief:
o Purpose: To assist states during natural calamities.
o Example: Immediate financial aid is provided to states affected by floods,
earthquakes, or droughts to support relief and rehabilitation efforts.
Article 275: Grants from the Union to Certain States
Provision: Article 275 provides for financial assistance from the Union government to certain
states that are in need of assistance. These grants are to support the development of the states,
particularly focusing on the welfare of Scheduled Tribes and the administration of Scheduled
Areas.
Explanation:
1. Grants-in-Aid:
o Clause (1): Parliament may by law provide certain sums as grants-in-aid from
the Consolidated Fund of India to states that need financial assistance. Different
amounts can be given to different states based on their needs.
o First Proviso: Specific grants must be given to states to support development
schemes aimed at the welfare of Scheduled Tribes and improving the
administration of Scheduled Areas to match the administration level of other
areas in the state.
oSecond Proviso: Special grants are to be provided to the state of Assam to
cover:
§ (a) The excess expenditure over revenue in the tribal areas during the
two years before the Constitution commenced.
§ (b) Development schemes to improve the administration of these tribal
areas.
2. Autonomous State Provisions:
o Clause (1A): Applies when an autonomous state is formed under Article 244A.
§ (i) Sums payable to Assam for tribal areas will go to the autonomous
state if it includes all those areas, or be divided between Assam and the
autonomous state if it includes only some of those areas, as specified by
the President.
§ (ii) Grants-in-aid will be provided to the autonomous state for
development schemes to improve its administration to match the rest of
Assam.
3. President’s Powers Until Parliamentary Provision:
o Clause (2): Until Parliament makes a provision for grants under Clause (1), the
President can exercise these powers by order.
o Proviso to Clause (2): After a Finance Commission is constituted, the President
can only make orders after considering its recommendations.
Examples:
1. Grants to a Needy State:

o Suppose a state like Bihar is determined by Parliament to be in need of financial
assistance. Parliament passes a law to provide Bihar with an annual grant from
the Consolidated Fund of India to support its developmental projects and
improve its administrative functions.
2. Support for Scheduled Tribes in Odisha:
o Odisha undertakes a development scheme to improve healthcare facilities for
Scheduled Tribes. With the approval of the Government of India, Odisha
receives specific grants from the Union to fund this scheme.
3. Special Grants to Assam:
o For the administration of tribal areas in Assam, which had higher expenditures
than revenues before the Constitution commenced, Assam receives grants
equivalent to the excess expenditure. Additionally, it gets funds for
development schemes to bring the administration of these areas up to par with
the rest of the state.
4. Formation of an Autonomous State:
o If an autonomous state is formed within Assam covering some of the tribal
areas, the President decides how the grants should be divided between Assam
and the new autonomous state. This new state also receives grants for
development schemes to improve its administration.
5. President’s Interim Orders:
o Before Parliament makes specific provisions, the President issues an order
providing a grant to a state like West Bengal for its developmental needs. Once
the Finance Commission is in place, the President considers its
recommendations before making further orders.
Summary
Article 275 allows the Union government to provide financial assistance to states that need
help. These grants support development projects, particularly for Scheduled Tribes and
Scheduled Areas. Special provisions exist for Assam and potential autonomous states within
it. Until Parliament makes laws on this, the President can issue orders for such grants,
considering the Finance Commission’s recommendations once it is established.
Importance of Grants-in-Aid:
• Promoting Equal Development: Helps in reducing regional disparities by supporting

less economically developed states with financial resources.
• Facilitating National Programs: Enables states to participate effectively in national
programs and initiatives, ensuring uniformity in developmental efforts across the
country.
• Emergency Assistance: Provides immediate financial relief during emergencies and
disasters, ensuring prompt response and recovery efforts.
Grants-in-Aid play a significant role in fostering cooperative federalism by strengthening the

financial capacity of states and promoting balanced regional development in India.
Article 276: Taxes on Professions, Trades, Callings, and Employments
Provision: This article empowers state legislatures to impose taxes on professions, trades,
callings, and employments, and it clarifies the limits and relationship with income tax laws.
Explanation:
1. State Legislation Validity (Clause 1):

o State laws that impose taxes on professions, trades, callings, or employments
are valid even if these taxes could be considered a tax on income. This means
that states can levy such taxes without the laws being invalidated on the basis
that they overlap with income taxes, which are typically under the purview of
the central government.
2. Limit on Tax Amount (Clause 2):
o There is a cap on the total amount of tax that any one person can be required to
pay to the state or any local authority (such as a municipality, district board, or
local board) for these taxes. The maximum amount is ₹2,500 per year.
o This limit ensures that individuals are not overburdened by these taxes at the
local level.
3. No Limitation on Parliament’s Power (Clause 3):
o The authority given to state legislatures to impose taxes on professions, trades,
callings, and employments does not restrict Parliament's power to impose taxes
on income. This means that while states can levy taxes on these activities, the
central government retains its power to impose income taxes, which may also
apply to income from these activities.
Examples:
1. State Tax on Professions:

o A state government passes a law imposing a tax on all doctors practicing in the
state. Even though this tax is on the earnings from their profession, it is valid
under Article 276 and cannot be challenged on the grounds that it is an income
tax.
2. Limit on Tax Amount:
o If a state law imposes a ₹1,000 annual tax on all teachers and a municipality
within the state imposes an additional ₹1,000 annual tax on teachers in that
locality, the total tax payable by any one teacher would be ₹2,000 per year,
which is within the allowed limit of ₹2,500.
3. Parliament’s Income Tax:
o While the state can tax a lawyer's practice through a professional tax, Parliament
can still impose an income tax on the lawyer’s overall earnings from their
practice. The professional tax does not limit the central government’s ability to
tax the lawyer’s income.
Article 277: Savings
Provision: Article 277 allows the continuation of taxes, duties, cesses, or fees that were
lawfully levied by state governments, municipalities, or other local authorities before the
commencement of the Constitution. These can continue even if they are now listed in the Union
List, until Parliament makes a contrary provision by law.
Explanation:
1. Continuation of Existing Taxes:

o Any taxes, duties, cesses, or fees that were being lawfully collected by a state
or local authority before the Constitution came into effect can continue to be
collected.
o This is true even if those taxes are now included in the Union List, which
generally means they are under the central government's jurisdiction.
2. Application to Same Purposes:
o These taxes can continue to be used for the same purposes for which they were
originally levied.
3. Parliamentary Override:
o Parliament has the power to make a law that overrides this provision. Until such
a law is made, the existing taxes can continue.
Example:
• Pre-Constitution Tax: Before the Constitution, a municipality in Maharashtra was

collecting a local tax for road maintenance.
• Post-Constitution Continuation: After the Constitution came into effect, this tax can
continue to be collected and used for road maintenance, even if road taxes are now
under the Union List, until Parliament decides otherwise.
Article 279: Calculation of “Net Proceeds”
Provision: Article 279 outlines how the “net proceeds” of any tax or duty are to be calculated
and certified. It also gives Parliament and the President authority to make laws and orders
related to the calculation and distribution of these proceeds.
Explanation:
1. Definition of “Net Proceeds” (Clause 1):

o “Net proceeds” refers to the total revenue collected from any tax or duty minus
the cost of collecting that tax or duty.
o The Comptroller and Auditor-General (CAG) of India is responsible for
determining and certifying the net proceeds of any tax or duty, and their
certification is final.
2. Parliament and Presidential Orders (Clause 2):
o Parliament or the President can create laws or orders that specify:
§ How the proceeds are to be calculated.
§ When and how payments should be made to the states.
§ How to make adjustments between financial years.
§ Any other related or incidental matters.
Examples:
1. Net Proceeds Calculation:

o Suppose the central government collects ₹1,000 crore from a specific tax. If the
cost of collecting this tax is ₹100 crore, the net proceeds would be ₹900 crore.
This calculation and certification are done by the CAG.
2. Parliamentary Law on Distribution:
o Parliament may pass a law stating that the proceeds from a particular tax should
be distributed to the states based on population size. The law might specify that
the payments should be made quarterly and outline procedures for adjusting
payments if there are discrepancies in the estimated vs. actual collections.
3. Presidential Order:
o The President could issue an order specifying that the tax proceeds collected in
one financial year need to be adjusted in the next financial year if there were
any discrepancies or changes in the collection costs.
Summary
• Net Proceeds Definition: Revenue collected from a tax or duty minus the cost of
collecting it.
• Certification by CAG: The Comptroller and Auditor-General certifies the net
proceeds, and their certification is final.
• Authority of Parliament and President: They can make laws and orders detailing
how proceeds should be calculated, distributed, and adjusted.
• For States: Ensures transparency and fairness in the distribution of tax revenues
between the canter and states.
• For Central Government: Provides a clear framework for calculating and distributing
tax proceeds, facilitating better financial management and planning.
Article 279A: Goods and Services Tax Council
Provision: Article 279A establishes the Goods and Services Tax (GST) Council, which is
responsible for making recommendations on various aspects of the GST to ensure a harmonized
and effective implementation across India.
Explanation:
1. Constitution of GST Council (Clause 1):

o Within 60 days of the commencement of the Constitution (One Hundred and
First Amendment) Act, 2016, the President must constitute the GST Council.
2. Composition of the GST Council (Clause 2):
o Chairperson: Union Finance Minister.
o Member: Union Minister of State in charge of Revenue or Finance.
o Members: Ministers in charge of Finance or Taxation from each state, or any
other minister nominated by the state governments.
3. Vice-Chairperson (Clause 3):
o The state ministers (referred to in sub-clause (c) of clause 2) will choose one
among themselves to be the Vice-Chairperson of the Council.
4. Functions and Recommendations (Clause 4):
o The GST Council will make recommendations on:
§ Taxes, cesses, and surcharges to be subsumed under GST.
§ Goods and services to be taxed or exempted under GST.
§ Model GST laws and principles of levy.
§ Threshold limits for GST exemption.
§ GST rates, including floor rates with bands.
§ Special rates for natural calamities.
§ Special provisions for certain north-eastern and hilly states.
§ Any other GST-related matters.
5. GST on Petroleum Products (Clause 5):
o The Council will recommend the date when GST should be levied on petroleum
crude, diesel, petrol, natural gas, and aviation turbine fuel.
6. Harmonization and National Market (Clause 6):
o The Council will work towards creating a harmonized GST structure and
developing a unified national market for goods and services.
7. Quorum (Clause 7):
o Half of the total members of the GST Council constitute a quorum for meetings.
8. Procedure (Clause 8):
o The Council determines its own procedures.
9. Decision-Making (Clause 9):
o Decisions require a three-fourths majority of the weighted votes of the members
present and voting.
§ The Central Government's vote has a weightage of one-third.
§ The State Governments' votes together have a weightage of two-thirds.
10. Validity of Proceedings (Clause 10):
o The Council's acts or proceedings cannot be invalidated due to vacancies,
defects in constitution, appointment issues, or procedural irregularities.
11. Dispute Resolution (Clause 11):
o The Council will establish a mechanism to adjudicate disputes:
§ Between the Government of India and one or more states.
§ Between the Government of India and any state(s) on one side and one
or more other states on the other.
§ Between two or more states.
Examples:
1. Tax Subsumed under GST:

o Before GST, both central and state governments levied multiple indirect taxes
(e.g., VAT, service tax). The GST Council recommended subsuming these taxes
into GST to simplify the tax structure.
2. Threshold Limit:
o The Council set a threshold limit of annual turnover below which businesses are
exempt from GST. For example, businesses with turnover less than ₹20 lakhs
are exempt from GST.
3. GST Rates:
o The Council decided on different GST rates for various goods and services. For
instance, essential items like food grains have a lower GST rate or are exempt,
while luxury items have a higher rate.
4. Special Provisions:
o The Council may make special provisions for northeastern states like Arunachal
Pradesh and Assam to address their unique economic conditions.
5. GST on Petroleum:
o The Council will decide when to bring petroleum products under GST, which
are currently outside the GST regime.
Summary
• Establishment: The GST Council is established by the President within 60 days of the
GST Amendment.
• Composition: Includes Union and state finance ministers.
• Recommendations: Covers various GST aspects like tax rates, exemptions, model
laws, etc.
• Decision-Making: Requires a majority with weighted votes.
• Dispute Resolution: Mechanism to resolve disputes related to GST recommendations
and implementation.
The GST Council plays a crucial role in shaping and harmonizing India's GST system to ensure
a unified and efficient tax regime.
The Finance Commission's Role:
The Finance Commission is a constitutional body established under Article 280 of the Indian
Constitution. Its primary responsibility is to recommend the distribution of taxes and grants-
in-aid between the Union government and the state governments. Here's how the Finance
Commission functions and its significance:
1. Recommendations on Tax Distribution:
o The Finance Commission recommends the percentage of share for states in the
divisible pool of taxes, such as income tax and central excise duties.
o This recommendation is based on factors like population, area, revenue needs,
and fiscal capacity of states.
2. Grants-in-Aid:
o Purpose: Recommends grants-in-aid to states based on specific needs, such as
local governance, disaster management, and social sector programs.
o Criteria: Considers factors like revenue deficits, development gaps, and special
circumstances of states.
3. Review of Financial Position:
o Conducts periodic reviews of the financial position of both the Union and state
governments.
o Recommends measures to improve fiscal management, resource mobilization,
and efficiency in public expenditure.
4. Role in Budgetary Planning:
o The recommendations of the Finance Commission are crucial for both Union
and state governments in budgetary planning and allocation of resources.
o Helps in maintaining fiscal discipline and equitable distribution of resources.
Articles Related to the Finance Commission:
Article 280: Finance Commission
Provision: Article 280 of the Indian Constitution provides for the establishment of the Finance
Commission, which is tasked with making recommendations to the President regarding the
distribution of financial resources between the Union and the States.
Explanation:
1. Constitution of the Finance Commission (Clause 1):

o The President must establish a Finance Commission within two years of the
Constitution's commencement and subsequently every five years or earlier if
necessary.
o The Commission will have a Chairman and four other members appointed by
the President.
2. Qualifications and Selection (Clause 2):
o Parliament can determine the qualifications required for the members and how
they will be selected through legislation.
3. Duties of the Commission (Clause 3):
o The Commission's main role is to make recommendations to the President on:
§ (a) Distribution of Taxes: How the net proceeds of taxes should be
distributed between the Union and States, and how these proceeds
should be allocated among the States.
§ (b) Grants-in-Aid: Principles for providing grants-in-aid to the States
from the Consolidated Fund of India.
§ (bb) Panchayat Funds: Measures needed to augment the State’s
Consolidated Fund to supplement the resources of Panchayats based on
the State Finance Commission's recommendations.
§ (c) Municipal Funds: Measures needed to augment the State’s
Consolidated Fund to supplement the resources of Municipalities based
on the State Finance Commission's recommendations.
§ (d) Other Matters: Any other financial matter referred to the
Commission by the President.
4. Procedure and Powers (Clause 4):
o The Finance Commission will determine its own procedures.
o Parliament may confer additional powers to the Commission through
legislation.
Examples:
1. Distribution of Taxes:
o Suppose the Finance Commission recommends that 42% of the net proceeds of
central taxes be distributed among the states. If the total net proceeds of central
taxes are ₹100,000 crore, then ₹42,000 crore would be distributed among the
states according to a formula recommended by the Commission.
2. Grants-in-Aid:
o The Commission might recommend grants to less economically developed
states to ensure a more balanced economic development. For example, a grant
might be given to Bihar to improve its healthcare infrastructure.
3. Panchayat and Municipal Funds:
o Based on the State Finance Commission’s recommendations, the Finance
Commission might suggest measures to increase funds available to local bodies
like Panchayats and Municipalities. For instance, it might recommend
additional transfers to Tamil Nadu’s Panchayats to support rural development
projects.
4. Other Matters:
o The President might ask the Commission to review and recommend measures
for a state facing a financial crisis due to a natural disaster. The Commission
would then analyse the situation and suggest appropriate financial assistance.
Summary
• Establishment: The President establishes the Finance Commission every five years or
earlier if needed.
• Composition: The Commission includes a Chairman and four members.
• Roles and Recommendations:
o Tax Distribution: Recommendations on how to share central taxes between the
Union and States.
o Grants-in-Aid: Principles for providing financial assistance to States.
o Local Bodies: Measures to augment funds for Panchayats and Municipalities.
o Other Matters: Recommendations on any other financial issues referred by the
President.
• Procedure: The Commission determines its own procedure and may have additional
powers as legislated by Parliament.
The Finance Commission ensures a fair and equitable distribution of financial resources,
promoting balanced economic development across the country.
Article 281: Recommendations of the Finance Commission
Provision: Article 281 mandates that the President must present every recommendation made
by the Finance Commission, along with an explanatory memorandum detailing the actions
taken based on those recommendations, to both Houses of Parliament.
Explanation:
1. Presentation to Parliament:
o The President is required to ensure that all recommendations from the Finance
Commission are laid before each House of Parliament.
o This includes an explanatory memorandum that explains what actions have been
taken in response to the recommendations.
Example:
1. Finance Commission Recommendation:

o Suppose the Finance Commission recommends increasing the share of states in
central taxes from 42% to 45%.
2. Action Taken:
o The government decides to implement this recommendation and increase the
states' share accordingly.
3. Laying Before Parliament:
o The President will present the Finance Commission's recommendation (increase
to 45%) and the government's action (decision to implement the increase) to
both the Lok Sabha and the Rajya Sabha.
o The explanatory memorandum might state: "Based on the Finance
Commission's recommendation to increase the states' share in central taxes to
45%, the government has decided to implement this recommendation starting
from the next fiscal year."
Summary
• Requirement: The President must present the Finance Commission’s

recommendations and an explanatory memorandum to both Houses of Parliament.
• Content: The memorandum explains the actions taken on the recommendations.
• Transparency: This process ensures transparency and accountability in how the
recommendations of the Finance Commission are handled and implemented.
By laying the recommendations and the corresponding actions before Parliament, it ensures
that the legislative body is informed and can discuss and oversee the implementation of the
financial distribution and other related decisions.
Miscellaneous Financial Provisions
Article 282: Expenditure Defrayable by the Union or a State out of its Revenues
Provision: Article 282 allows the Union or a State to make any grants for any public purpose,
even if that purpose is not within their legislative competence.
Explanation:
• The Union or State governments can provide financial assistance (grants) for purposes
that benefit the public, regardless of whether they have the power to make laws on those
specific purposes.
Example:
• Union Grant: The Central Government can give financial assistance to a State for
developing a local tourism project, even though tourism may primarily fall under the
State's jurisdiction.
• State Grant: A State Government can provide grants to municipalities for building
local roads, even if the state does not have direct control over municipal governance.
Article 283: Custody, etc., of Consolidated Funds, Contingency Funds and Moneys
Credited to the Public Accounts
Provision:
• Clause (1): Concerns the management of the Consolidated Fund and the Contingency
Fund of India, and other public monies received by or on behalf of the Government of
India. This is regulated by laws made by Parliament.
• Clause (2): Similar provisions apply for the Consolidated Fund and the Contingency
Fund of a State, regulated by laws made by the State Legislature.
Explanation:
• The laws will determine how funds are managed, including how money is paid into or
withdrawn from these funds.
Example:
• Central Level: Rules might specify how the Central Government can withdraw funds
from the Consolidated Fund of India for infrastructure projects.
• State Level: State legislation might outline the procedures for withdrawing money
from the State’s Contingency Fund during a natural disaster.
Article 284: Custody of Suitors' Deposits and Other Moneys Received by Public Servants
and Courts
Provision: Any money received by public officials or courts that is not government revenue
must be paid into the public account of India or the State.
Explanation:
• Ensures that money held in trust by public servants or courts is properly accounted for
and managed.
Example:
• If a court receives a deposit from a litigant as part of a case, this money must be placed
into the public account and not be treated as general government revenue.
Article 285: Exemption of Property of the Union from State Taxation
Provision:
• Clause (1): Union property is exempt from State taxes unless Parliament decides
otherwise.
• Clause (2): States can continue to tax Union property if it was already being taxed
before the Constitution commenced, until Parliament decides otherwise.
Explanation:
• Union government property cannot be taxed by States, ensuring central operations are
not hindered by local taxes.
Example:
• Union Property: A building owned by the Central Government in a State cannot be

subjected to State property tax unless Parliament allows it.
Article 286: Restrictions as to Imposition of Tax on the Sale or Purchase of Goods
Provision:
• Clause (1): States cannot impose taxes on sales or purchases that occur outside the
State, during import/export, or involve interstate trade.
• Clause (2): Parliament can formulate principles to determine when a sale or purchase
happens in the scenarios mentioned.
Explanation:
• Prevents States from taxing transactions that are outside their jurisdiction, ensuring
uniformity in trade.
Example:
• A State cannot tax the sale of goods from Maharashtra to Karnataka, as it is an interstate
sale.
Article 287: Exemption from Taxes on Electricity
Provision: States cannot tax electricity consumed or sold to the Government of India or used
by railways unless Parliament provides otherwise.
Explanation:
• Ensures that electricity essential for national operations (like railways) remains
affordable and untaxed by States.
Example:
• Electricity used by Indian Railways in maintenance operations cannot be taxed by a

State government.
Article 288: Exemption from Taxation by States in Respect of Water or Electricity in

Certain Cases
Provision:
• States cannot tax water or electricity managed by an inter-state authority unless the
President allows it.
• If State laws do tax these, they need the President's consent.
Explanation:
• Ensures coordinated management of inter-state resources, like river waters or electricity

projects.
Example:
• A State cannot impose a tax on electricity generated by a dam managed by an inter-

state river authority unless it gets presidential consent.
Article 289: Exemption of Property and Income of a State from Union Taxation
Provision:
• Clause (1): State property and income are exempt from Union taxes.
• Clause (2): Union can tax State businesses if Parliament allows.
• Clause (3): Certain State trades/businesses can be declared exempt by Parliament.
Explanation:
• States' revenues from property and income are protected from central taxes to avoid
double taxation.
Example:
• A State-owned company’s revenue is not taxed by the Union unless Parliament decides
the business is taxable.
Article 290: Adjustment in Respect of Certain Expenses and Pensions
Provision: This article addresses how expenses or pensions that span both Union and State
responsibilities should be shared and managed.
Explanation:
• When certain expenses or pensions are charged to the Consolidated Fund (either of
India or of a State), adjustments can be made to ensure fair contributions from both the
Union and the State(s) involved.
• If a court, commission, or individual serves both Union and State interests, the costs
should be shared accordingly.
• If there is no agreement on the contributions, an arbitrator appointed by the Chief
Justice of India will decide the allocation.
Examples:
1. Expenses of a Court or Commission:

o If a court funded by the Union also serves the needs of a State, the State may
need to contribute to the costs.
o For instance, if the Supreme Court of India (funded by the Union) is handling
cases that also benefit a particular State, that State might be asked to share some
of the expenses.
2. Pensions of a Public Servant:
o A public servant who worked under the Crown before independence and later
served both the Union and a State may have their pension paid from the
Consolidated Fund of India. However, if part of their service was for a State,
the State should contribute to the pension costs.
o For example, a judge who served both in a State High Court and the Supreme
Court would have their pension costs shared between the State and the Union.
3. Shared Services:
o If a commission set up by the Union also addresses issues pertinent to a specific
State, the State may need to cover part of the commission's expenses.
o An example could be a water dispute tribunal set up by the Union but
specifically dealing with water sharing issues between two States. The costs
might be shared between the Union and the concerned States.
This article ensures that when the Union or States benefit from shared services or personnel,
the financial burden is distributed fairly, promoting fiscal cooperation and equity.
Article 290A: Annual Payment to Certain Devaswom Funds
Provision: Specific annual payments from the State Consolidated Funds of Kerala and Tamil
Nadu to certain Devaswom (temple) funds.
Explanation:
• Ensures consistent funding for temple maintenance based on historical agreements.
Example:
• Kerala and Tamil Nadu make annual payments to temple funds as specified, supporting
religious and cultural heritage.
These provisions collectively ensure proper financial management and delineation of tax and
expenditure responsibilities between the Union and the States, maintaining fiscal federalism
and accountability in India.
Borrowing Powers
Borrowing powers in India are governed by specific rules and conditions outlined in the Indian
Constitution to ensure fiscal discipline and stability at both the central and state government
levels. Here’s an explanation of borrowing powers along with relevant articles from the Indian
Constitution:
Borrowing Rules and Conditions:
1. Central Government Borrowing:

o Authority: The central government has the authority to borrow funds both
domestically and internationally.
o Article 292: Provides the legal basis for the central government to borrow
money within India.
§ Purpose: The central government borrows to finance its expenditures,
infrastructure projects, and developmental initiatives.
§ Conditions: Borrowings must be approved by the Parliament through
legislation, known as the Annual Financial Statement (Budget).
2. State Government Borrowing:
o Authority: State governments can borrow funds within India, subject to certain
conditions.
o Article 293: Specifies the conditions under which state governments can
borrow.
§ Conditions: State governments can borrow only after obtaining consent
from the President of India. This ensures coordination and prevents
excessive borrowing that could lead to financial instability.
§ Purpose: States borrow for financing development projects,
infrastructure development, and other state-specific expenditures.
3. Limits and Conditions:
o Debt Sustainability: Borrowing limits are set to ensure debt sustainability and
avoid overburdening future generations with excessive debt.
o Interest Payments: Borrowings must include provisions for interest payments
and repayment of principal amounts within specified periods.
o Fiscal Responsibility and Budget Management (FRBM) Act: Provides a
framework for fiscal discipline, debt management, and fiscal transparency at
both central and state levels.
4. International Borrowing:
o Central Government Approval: States require approval from the central
government to borrow funds internationally.
o Purpose and Conditions: International borrowings are typically for large
infrastructure projects or specific developmental needs. The terms and
conditions of international loans are often stricter and require careful
consideration of repayment capabilities and foreign exchange risks.
Importance of Borrowing Powers:
• Infrastructure Development: Allows governments to finance large-scale

infrastructure projects such as highways, bridges, and power plants, which are crucial
for economic growth and development.
• Crisis Management: Provides flexibility in managing financial crises or emergencies,
such as natural disasters or economic downturns, by mobilizing resources quickly.
• Developmental Initiatives: Facilitates funding for social welfare programs, education,
healthcare, and poverty alleviation initiatives.
Article 292: Borrowing by the Government of India
Provision:
• This article grants the Government of India the authority to borrow money.
• The borrowing is done on the security of the Consolidated Fund of India.
• Parliament may set limits on the amount the government can borrow and the guarantees
it can give.
Explanation:
• Borrowing Authority: The Government of India can raise funds through borrowing to
meet its financial needs, such as for development projects or to cover budget deficits.
• Security: The loans are secured against the Consolidated Fund of India, which is the
government's main account for all its revenues and expenditures.
• Parliamentary Limits: Parliament can pass laws that define the maximum borrowing
limits and conditions under which the government can give financial guarantees.
Example:
1. Infrastructure Projects:
o The Government of India decides to build a new network of highways. To fund
this project, it borrows money from international lenders like the World Bank.
This borrowing is done by pledging the Consolidated Fund of India as security.
o Parliament might set a limit that the government can borrow up to ₹1 trillion for
infrastructure projects.
2. Budget Deficit:
o Suppose the government’s expenditure exceeds its revenue in a financial year,
creating a budget deficit. To bridge this gap, the government can borrow funds.
o If the deficit is ₹500 billion, the government might issue government bonds or
take loans to cover this amount, within the borrowing limits set by Parliament.
Article 293: Borrowing by States
Provision:
1. State Borrowing Authority: States can borrow money within India using their
Consolidated Fund as security, within limits set by their legislatures.
2. Loans from the Central Government: The Government of India can lend money to
states or guarantee loans for states, within limits set by Parliament.
3. Restrictions on State Borrowing: If a state still owes money on a previous loan from
the central government, it cannot borrow more without the central government's
consent.
4. Conditions for Consent: The central government can impose conditions when giving
consent for states to borrow more money.
Explanation:
• State Borrowing: Similar to the central government, states can also borrow funds for
their needs, like infrastructure development or budget deficits. The borrowing must be
within the limits set by the state legislature.
• Central Government Loans and Guarantees: The central government can provide
financial assistance to states by lending money or guaranteeing their loans. The funds
for these loans come from the central government's Consolidated Fund.
• Consent Requirement: If a state has not fully repaid a previous loan from the central
government, it must get permission before taking new loans. This ensures states do not
accumulate excessive debt.
• Conditions for Borrowing: The central government can set conditions on how the
borrowed funds should be used or other financial management practices.
Example:
1. State Infrastructure Project:

o Maharashtra wants to build a new metro system in Mumbai. To fund this
project, the state government decides to borrow ₹10,000 crores. The
Maharashtra state legislature sets the borrowing limit, and the state borrows
within this limit, using the state's Consolidated Fund as security.
2. Central Government Loan:
o West Bengal is facing a financial crisis and needs immediate funds. The central
government lends ₹5,000 crores to West Bengal, charging this amount to the
Consolidated Fund of India. The loan comes with conditions like ensuring a
certain portion is spent on public health.
3. Consent for New Loans:
o Tamil Nadu owes ₹2,000 crores to the central government from a previous loan.
Tamil Nadu now wants to borrow an additional ₹3,000 crores for a new highway
project. Before borrowing, Tamil Nadu must seek consent from the central
government. The central government may grant consent but might impose
conditions like reducing administrative expenses to improve financial health.
Conclusion: Article 293 provides a framework for state governments to manage their
borrowing responsibly, with oversight and support from the central government to ensure fiscal
stability and prudent financial management.
By allowing the government to borrow funds, Article 292 ensures that the government has the
flexibility to manage its finances effectively while maintaining oversight and control through
parliamentary limits.
Intergovernmental Tax Immunity in the Indian Constitution
Intergovernmental Tax Immunity refers to the principle that one level of government cannot
tax the income, property, or operations of another level of government. This doctrine is
essential to maintaining the sovereignty and financial independence of each level of
government within a federal system.
In India, this principle is embodied in specific provisions of the Constitution:
1. Article 285: Exemption of property of the Union from State taxation.

o Clause (1): "The property of the Union shall, save in so far as Parliament may
by law otherwise provide, be exempt from all taxes imposed by a State or by
any authority within a State."
o Clause (2): "Nothing in clause (1) shall, until Parliament by law otherwise
provides, prevent any authority within a State from levying any tax on any
property of the Union to which such property was immediately before the
commencement of this Constitution liable or treated as liable, so long as that tax
continues to be levied in that State."
2. Article 289: Exemption of property and income of a State from Union taxation.
o Clause (1): "The property and income of a State shall be exempt from Union
taxation."
o Clause (2): "Nothing in clause (1) shall prevent the Union from imposing, or
authorizing the imposition of, any tax to such extent, if any, as Parliament may
by law provide in respect of a trade or business of any kind carried on by, or on
behalf of, the Government of a State, or any operations connected therewith, or
any property used or occupied for the purposes of such trade or business, or any
income accruing or arising in connection therewith."
Examples of Intergovernmental Tax Immunity
1. Union Property Exempt from State Taxes
Example: If the Union government owns a building in a state, the state cannot impose property
tax on that building. This immunity ensures that state taxation powers do not interfere with the
operations and property of the Union government.
Case Law: State of West Bengal v. Union of India (1963) - The Supreme Court held that
Union property is exempt from State taxation under Article 285. In this case, the state of West
Bengal tried to impose a property tax on properties owned by the Union government. The court
ruled that such taxation was unconstitutional as it violated the immunity provided under Article
285.
2. State Income and Property Exempt from Union Taxes
Example: If a state government owns a piece of land or earns income from state-operated
services, the Union government cannot impose taxes on that property or income. This immunity
ensures that the financial activities of state governments are not hindered by Union taxation.
Case Law: New Delhi Municipal Committee v. State of Punjab (1997) - The Supreme Court
clarified that the income generated from property owned by a state is exempt from Union
taxation as per Article 289, except when it pertains to commercial activities.
Case Laws
1. State of West Bengal v. Kesoram Industries Ltd. (2004)
• Citation: (2004) 10 SCC 201

• Key Issues: The power of the State Legislature to levy a cess on coal bearing land, and
the scope of legislative competence under the Seventh Schedule.
• Ruling: The Supreme Court held that the levy of cess by the State of West Bengal on
coal-bearing lands was within the legislative competence of the State Legislature under
Entry 49, List II of the Seventh Schedule. The case clarified the distribution of taxation
powers between the Union and the States.
• Significance: This case is significant for understanding the scope of State powers in
imposing taxes and the interpretation of legislative lists in the Seventh Schedule.
2. Union of India v. H.S. Dhillon (1971)
• Citation: AIR 1972 SC 1061

• Key Issues: The constitutionality of the Wealth Tax Act, 1957 as applied to agricultural
land.
• Ruling: The Supreme Court held that the Union Parliament had the power to impose a
wealth tax on agricultural land under Entry 86 of List I, notwithstanding Entry 49 of
List II which relates to taxes on land and buildings.
• Significance: This case is crucial for understanding the overlapping powers of taxation
and the distribution of financial powers between the Union and the States.
3. Union of India v. H.C. Gupta (2012)
• Citation: (2012) 6 SCC 235

• Key Issues: Binding nature of the recommendations made by the Finance Commission.
• Ruling: The Supreme Court observed that the recommendations of the Finance
Commission, as provided under Article 280, are not binding on the President. However,
they carry great weight and are usually followed.
• Significance: This case highlights the advisory nature of the Finance Commission’s
recommendations and their impact on Union-State financial relations.
4. Sanjeev Coke Manufacturing Company v. Bharat Coking Coal Ltd. (1983)

• Key Issues: The levy of coking coal cess by the State and its conflict with Union
taxation.
• Ruling: The Supreme Court upheld the validity of the coking coal cess imposed by the
Bihar State Legislature, holding that it was a fee and not a tax, hence within the
competence of the State.
• Significance: This case helps to delineate the difference between taxes and fees and the
respective legislative powers of the Union and the States.
5. M.P.V. Sundararamier & Co. v. State of Andhra Pradesh (1958)

• Key Issues: The scope of Article 286 which deals with restrictions on the imposition
of tax on the sale or purchase of goods.
• Ruling: The Supreme Court clarified the meaning of "outside the State" sales and
interstate commerce, thus interpreting the restrictions imposed by Article 286 on State
taxation powers.
• Significance: This case is fundamental in understanding the limitations on State
taxation powers concerning interstate trade.
6. Godfrey Phillips India Ltd. v. State of UP (2005)
• Citation: (2005) 2 SCC 515

• Key Issues: Imposition of luxury tax by States and its constitutional validity.
• Ruling: The Supreme Court held that the luxury tax imposed by various State
legislations was valid and did not infringe upon the Union’s legislative competence.
• Significance: This case underscores the extent of State powers in levying luxury taxes
and their compatibility with the Union’s legislative authority.
7. State of Kerala v. Thechikkottukara Payyannur Educational Agency (1995)
• Citation: (1995) 4 SCC 272

• Key Issues: The power of the State to levy building tax.
• Ruling: The Supreme Court upheld the power of the State of Kerala to levy building
tax, stating that it fell within the State’s legislative competence under Entry 49 of List
II.
• Significance: This case highlights the State's power to impose property taxes within its
jurisdiction.
8. Buxa Dooars Tea Co. Ltd. v. State of West Bengal (1989)

• Key Issues: The power of the State to levy cess on land used for tea cultivation.
• Ruling: The Supreme Court upheld the validity of the cess levied by the State of West
Bengal on tea plantations, underlining that it was within the legislative competence of
the State.
• Significance: This case illustrates the scope of State taxation powers concerning
specific industries and land use.

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MODULE 2

Centre-State relations - Federalism ingrained in the various provisions of the Constitution -

Asst. Prof Prince S A

Nehru Academy of Law | Constitutional Law 1 | 5s2

(i)The Union list,

(ii) the State list, and

(iii) the Concurrent list.

o Article 247: Power of Parliament to Provide for the Establishment of Certain

o Parliament’s power to legislate on State List

a) In the National Interest (Art.249)

o Initiation by Rajya Sabha:

o Effect of the Resolution:

o Laws Made Under This Power:

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

c) By Agreement between States (Art. 252)

Example: Wildlife Protection

Comparison with Other Articles

d) To Implement Treaties (Art. 253)

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

Article 250: Parliament acquires legislative power over state matters.

Scope and Duration:

Prevalence of Central Law:

Key Case Laws

M. Karunanidhi v. Union of India (1979):

Deep Chand v. State of Uttar Pradesh (1959):

Hoechst Pharmaceuticals Ltd. v. State of Bihar (1983):

o Differences Article 251 and Article 254

Conflict Resolution Mechanism:

o Article 255: Requirements as to Recommendations and Previous Sanctions to Be

Example: Financial Bills

Non-Compliance: Suppose the bill is introduced without the President's recommendation.

Delegated legislation refers to laws or regulations created by an individual or body under

There are two types of control over delegated legislation—

Judicial control-The Courts have power to consider whether the delegated or

Case Law Example

R v Home Secretary, ex parte Fire Brigades Union (1995)

By understanding delegated legislation, we see how it plays a crucial role in modern

1. State of Bombay vs. R.M.D. Chamarbaugwala (1957):

Key Principles of Interpretation

1. Doctrine of Pith and Substance:

• Definition: This principle is used to determine the true nature or character of a

State of Bombay v. F.N. Balsara (1951):

K.C. Gajapati Narayan Deo vs. State of Orissa (1953):

Tika Ramji vs. State of Uttar Pradesh (1956):

4. Doctrine Ancillary or Incidental Powers:

State of Rajasthan vs. G. Chawla (1959):

5. Doctrine of Mutual Exclusivity:

Calcutta Gas Company v. State of West Bengal (1962):

Key Principles of the Doctrine of Occupied Field

Application and Examples

Example 2: Labour Laws

M. Karunanidhi v. Union of India (1979)

Deep Chand v. State of Uttar Pradesh (1959)

8. Doctrine of Implied Powers

Key Principles of the Doctrine of Implied Powers

Application in the Indian Context

Examples and Case Laws

Example 1: Emergency Powers

Example 2: Administrative Efficiency

• Context: The Union or State government may establish agencies or bodies to