Centre State Relationship

Union and State Relationship
The basic principle of federations is that the legislative and

executive authority is partitioned between the centre and the
states not by any law to be made by the centre, but by the
constitution itself.... The states are in no way dependent upon the
centre for their legislature or executive authority. The states and
the centre are coequal in this matter”.
Dr. B.R. Ambedkar
•LEGISLATIVE RELATIONS
•ADMINISTRATIVE RELATIONS AND
•FINANCIAL RELATIONS
• LEGISLATIVE RELATIONS
Chapter I of Part XI (Article 245-254) of the Indian

Constitution specified two-fold division of Legislative
powers between the Union and the States...
(1) with respect of territory &
(2) with respect of subject matter
Chapter I of Part XI (Article 245-254) of the Indian

Constitution specified two-fold division of Legislative
powers between the Union and the States...
(1) with respect of territory &
(2) with respect of subject matter
(1) Territorial Jurisdiction (Art-245)
Extent of laws made by Parliament and by the Legislatures

of States
(1)Subject to the provisions of this Constitution,
Parliament may make laws for the whole or any part of the
territory of India, and the Legislature of a State may make
laws for the whole or any part of the State
(2) No law made by Parliament shall be deemed to be
invalid on the ground that it would have extra territorial
operation
As regards territory, Article 245 (1) provides that subject to

the provisions of this constitution, a State Legislature may
make laws for the whole or any part of the state to which
it belongs. It is not possible for a State Legislature to
enlarge its territorial jurisdiction under any circumstances
except when the boundaries of the state itself are
widened by an act of Parliament. Parliament has, on the
other hand, the power to legislate for ‘the whole or any
part of the territory of India, which includes not only the
states but also the union territory of India [Art. 246 (1).

It also possess the power of ‘extra-territorial legislation
[Art. 245 (2), which no state legislature possesses. This
means that laws made by parliament will govern not only
persons and property within the territory of India but also
Indian subjects resident and this property situated
anywhere in the world.
{A.H. Wadia vs. Income Tax Commissioner, Bombay}
S.C... In the case of Sovereign Legislature, the
question of extra-territoriality of any enactment can
never be raised in the Municipal courts as a ground for
challenging its validity.
Thus in other words we can say that legislature of the

state may make laws for the whole or any part of the
state. This means that state laws would be void if it
has extra-territorial operation i.e, takes effect outside
the state.
Doctrine of Territorial-Nexus:-
However there is one exception to this general rule.
“A state law of extra-territorial operation will be valid

if there is sufficient Nexus between the object & the
State “
It signifies that the object to which the law applies
need not be physically located within the territorial
boundaries of the state, but must have a sufficient
territorial connection with the state.
A state may levy a tax on a person, property ,object or

transaction not only when it is situated within its
territorial limits, but also when it has a sufficient and
real territorial connection with it.
In Wallace v. Income-tax Commissioner, Bombay
A company that was registered in England was a
partner in a firm in India. The Indian Income-tax
Authorities sought to tax the entire income made by
the company. The privy council applied the Doctrine of
Territorial Nexus and held the levy tax valid.
State of Bombay vs RMDC, AIR 1957, SC
Facts- The Respondent was not residing in Bombay but he conducted
Competitions with prize money through a newspaper printed and published from
Banglore having a wide circulation in Bombay. All the essential activities like filling
up of the forms, entry fees etc for the competition took place in Bombay. The
state govt. sought to levy tax the respondent for carrying on business in the state.
Issue- The question for decision before the Supreme Court was if the respondent,
the organizer of the competition, who was outside the state of Bombay, could be
validly taxed under the Act.
Decision-It was held that as all the activities which the competitor is ordinarily
expected to undertake took place most , if not in entirety, within Bombay. These
circumstances constituted a sufficient territorial nexus which the entitled state of
Bombay to impose a tax on the respondent.
Tata Iron And Steel Company vs. Bihar State
The state of Bihar passed a Sales Tax Act for levy of sales tax
Issue- whether the sale was concluded within the state or outside if

the goods were produced, found and manufactured in the state .
Decision-The court held there was sufficient territorial nexus and

upheld the Act as valid. Whether there is sufficient nexus between
the law and the object sought to be taxed will depend upon the
facts and circumstances of a particular case.
It was pointed out that sufficiency of the territorial connection

involved consideration of two elements- a) the connection must be
real and not illusory b) the liability sought to be imposed must be
pertinent to that connection.
(2)with respect of subject matter (Art-246)
“Predominance of the Union List”
246. Subject matter of laws made by Parliament and by the
Legislatures of States
(1)Notwithstanding anything in clauses ( 2 ) and ( 3 ), Parliament has
exclusive power to make laws with respect to any of the matters
enumerated in List I in the Seventh Schedule (in this Constitution
referred to as the Union List)
(2) Notwithstanding anything in clause ( 3 ), Parliament, and, subject
to clause ( 1 ), the Legislature of any State also, have power to make
laws with respect to any of the matters enumerated in List III in the
Seventh Schedule (in this Constitution referred to as the Concurrent
List)
“Predominance of the Union List”
246. Subject matter of laws made by Parliament and by the
Legislatures of States
(3) Subject to clauses (1) and (2), the Legislature of any State 1[***]
has exclusive power to make laws for such State or any part thereof
with respect to any of the matters enumerated in List II in the
Seventh Schedule (in this Constitution referred to as the “State
List”).
(4) Parliament has power to make laws with respect to any matter
for any part of the territory of India not included (in a State )
notwithstanding that such matter is a matter enumerated in the
State List.
248. Residuary powers of legislation

(1) Parliament has exclusive power to make any law with respect to
any matter not enumerated in the Concurrent List or State List
(2) Such power shall include the power of making any law imposing
a tax not mentioned in either of those Lists.
To meet this difficulty, the constitution provides that the Residue

will belong exclusive to the centre. This is provided for in Art-248
read with entry 97 of List-I. these provisions take care of any
unforeseen eventuality.
Entry-97:- Any other matter not enumerated in L-II &L-III including
any tax not enumerated in either of those lists.
{In Int.Tourist corp v. st. of Haryana}:-

Before exclusive legislature competence can be claimed by
Parliament by resort to the residuary power the legislative
incompetence of the State legislature must clearly be
established.
Art-254. Inconsistency between laws made by Parliament
and laws made by the Legislatures of States
“Doctrine of Repugnancy”
Black’s Law Dictionary defines repugnancy as an inconsistency or

contradiction between two or more parts of a legal instrument
(such as a statute or a contract).
Repugnancy means the conflict between two pieces of legislation

which when applied to the same facts produce different results.
Repugnancy arises when the provisions of two laws are so
inconsistent and irreconcilable that it is impossible to do one
without disobeying the other.
Art-254. Inconsistency between laws made by Parliament
and laws made by the Legislatures of States
(1) If any provision of a law made by the Legislature of a
State is repugnant to any provision of a law made by
Parliament which Parliament is competent to enact,
or to any provision of an existing law with respect to one
of the matters enumerated in the Concurrent List,
then, subject to the provisions of clause ( 2 ), the law
made by Parliament, whether passed before or after the
law made by the Legislature of such State, or, as the case
may be, the existing law, shall prevail and the law made by
the Legislature of the State shall, to the extent of the
repugnancy, be void
(2) Where a law made by the Legislature of a State with
respect to one of the matters enumerated in the
concurrent List contains any provision repugnant to the
provisions of an earlier law made by Parliament or an
existing law with respect to that matter, then, the law so
made by the Legislature of such State shall,
if it has been reserved for the consideration of the
President and has received his assent, prevail in that
State:
Provided that nothing in this clause shall prevent
Parliament from enacting at any time any law with respect
to the same matter including a law adding to, amending,
varying or repealing the law so made by the Legislature of
the State
How to determine the Repugnancy??
{M. Karunanidhi v. U.O.I} S.C summarised the test of

repugnancy...
1. There must be clear & direct inconsistency between
the Cent.& Direct Act which is irreconcilable
2. There can be no repeal by implication
3. But where two statutes occupies on a particular field
& there is possibility for both to operate than there is
no repugnancy.
4. Where there is no inconsistency, no question of
repugnancy arises.
Subject Matter
•Article-249
•Article-250
•Article-253
•Article-256
•Besides that... There is indirect control of Parliament..

•Article-31(3)..now omitted
•Article-31-A
•Article-200
•Article-288(2)
•Article-304(b)

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Union and State Relationship

Union and State Relationship

The basic principle of federations is that the legislative and

•ADMINISTRATIVE RELATIONS AND

Chapter I of Part XI (Article 245-254) of the Indian

Chapter I of Part XI (Article 245-254) of the Indian

(1) Territorial Jurisdiction (Art-245)

Extent of laws made by Parliament and by the Legislatures

(1) Territorial Jurisdiction (Art-245)

As regards territory, Article 245 (1) provides that subject to

(1) Territorial Jurisdiction (Art-245)

(1) Territorial Jurisdiction (Art-245)

Thus in other words we can say that legislature of the

“A state law of extra-territorial operation will be valid

A state may levy a tax on a person, property ,object or

Issue- whether the sale was concluded within the state or outside if

Decision-The court held there was sufficient territorial nexus and

It was pointed out that sufficiency of the territorial connection

248. Residuary powers of legislation

To meet this difficulty, the constitution provides that the Residue

{In Int.Tourist corp v. st. of Haryana}:-

Black’s Law Dictionary defines repugnancy as an inconsistency or

Repugnancy means the conflict between two pieces of legislation

{M. Karunanidhi v. U.O.I} S.C summarised the test of

•Besides that... There is indirect control of Parliament..

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