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LEGISLATIVE RELATIONS – (Art. 245 to 255); Part XI


Territorial extent of Central and state legislation:

• Parliament/ State legislature can make laws for the whole or any part of the territory of India/ State.

• Extraterritorial legislation (Indian citizens and their property in any part of the world) = By parliament alone

• Constitution restrictions on the territorial jurisdiction of the parliament.

• The President can make regulations for the peace, progress and good governance of the four UTs – Andaman and Nicobar Islands, Lakshadweep, Dadra and Nagar Haveli and Daman and Diu. A regulation so made has the same force and effect as an act of Parliament. It may also repeal or amend any act of Parliament in relation to these union territories.

• The Governor is empowered to direct that an act of Parliament does not apply to a Scheduled Area in the state or apply with specified modifications and exceptions.

• The Governor of Assam may likewise direct that an act of Parliament does not apply to a Tribal Area (autonomous district) in the state or apply with specified modifications and exceptions. President enjoys the same power with respect to Meghalaya, Tripura and Mizoram.





Distribution of legislative subjects:

• Center list à 97 (Present – 100)

• State list à 66 (Present – 61)

• Concurrent list à 47 (Present – 52)

1935 act Governor General
India at present Parliament
Canada Center
US States
Which laws prevails?

• Union list > Concurrent list > State list

• Normally, Central law prevails over the state law. But there is an exception.

• If the state law has been reserved for the consideration of the president and has received his assent, then the state law prevails in that state.






Parliamentary legislation in the state field

When Rajya Sabha Passes a Resolution:

• Necessary in the national interest

• Must be supported by 2/3 of the members present and voting

• Remains in force for one year

• Does not restrict the power of a state legislature to make laws

During presidents’ rule (Art 356):

• Parliament empowered to make laws with respect to any matter in the State List in relation to that state.

• Even after the president’s rule, Parliament law continues to be operative

• Such law can be repealed or altered or re-enacted by state legislature

During a National Emergency (Art 352):

• Parliament acquires power to legislate with respect to State List

• state legislature can make laws on same subject, but center law will prevail

• Ceased to exist after 6 months

When States Make a Request:

• When two or more state legislature pass resolutions

• Law enacted applies only to concerned states.

• Amended or repealed only by Parliament and not by state legislature. EX: Wild Life Act, 1972; Water Act, 1974

To Implement International Agreements:

• Can make laws on any matter in the State List for implementing the international treaties, agreements or conventions. EX: Geneva Convention Act, 1960; TRIPS.

Centre’s control over state legislation:

• Governor can reserve certain types of bills passed by State Legislature for consideration of the President. President enjoys absolute veto over them.

• Bills on certain matters in State List can be introduced in state legislature only with previous sanction of the president. EX: Bills imposing restrictions on freedom of trade and commerce – Art. 301).

• Reserve money bills and other financial bills passed by state legislature for President’s consideration during a financial emergency













Distribution of executive power

• Co-extensive with legislative power.

• On concurrent list, parliament law can override state law. (exception-president assent on reserved bill)

• However, laws on concurrent list are executed by states.

• Centre’s Directions to the States (Art. 257)

• Mutual delegation of states:

Cooperation between Center and state

Constitutional restrictions on the executive power of the state:

• Art. 256 – Power of state should be exercised to ensure compliance to laws of the Parliament and GOI can also give direction for that.


Two restrictions on the executive power of the states:

1. to ensure compliance with the laws made by the Parliament

2. not to impede or prejudice the exercise of executive power of the Centre.

All India Services (Art 312) Art 312: Constitution authorises the Parliament to create new All-India Services (AIS) on the basis of a Rajya Sabha resolution.

• AIS are controlled jointly by the Centre and the states. The ultimate control lies with the Central government while the immediate control vests with the state governments.

Integrated Judicial System

• Dual polity – Centre and state

• No dual system of administration of justice

Parliament can establish a common high court for two or more states. EX: Maharashtra and Goa or Punjab and Haryana.

Relations During Emergencies:

1. National Emergency (Art.352) – the Centre becomes entitled to give executive directions to a state on ‘any’ matter. Thus, the state governments are brought under the complete control of the Centre, though they are not suspended.

2. President’s Rule (Art. 356) – The President can assume to himself the functions of the state government and powers vested in the Governor or any other executive authority in the state.

3. Financial Emergency (Art. 360) – the Centre can direct the states to observe canons of financial propriety and can give other necessary directions including the reduction of salaries of persons serving in the state.


Other provisions:

Article 355: To protect states against external aggression and internal disturbance + To ensure state governments should be carried on in accordance with the provisions of the Constitution.

Governor– Appointed by President + Acts as an agent of Centre.

State election commissioner: Appointed by Governor + Removed by President.

Extra-Constitutional Devices NITI Aayog + National Integration Council + Zonal Councils + North-Eastern Council


FINANCIAL RELATIONS (Art. 268 – 293; Part XII)
  • 265 – Taxes not to be imposed save by authority of law – “No tax shall be levied or collected except by authority of law”.
  • No tax can be imposed by an executive order.


Consolidated Fund (Art. 266):

• Art. 266- There will be Consolidated fund for India and Consolidated fund of State.

• Consolidated Fund of India is related to all revenues received by the government and expenses made by it, excluding the exceptional items.

• No money can be withdrawn from this fund without the Parliament’s approval.

Contingency Fund (Art. 267):

• It is in the nature of an imprest (money maintained for a specific purpose). Accordingly, Parliament enacted the Contingency fund of India Act 1950.

• The fund is held by the Finance Secretary (Department of Economic Affairs) on behalf of the President of India and it can be operated by executive action.




Allocation of taxation powers:

• Constitution divides the taxing powers also placed some restrictions between the Centre and states.

• The residuary power of is vested in the Parliament. Under this provision, the Parliament has imposed gift tax, wealth tax and expenditure tax.

• There are no tax entries in the Concurrent List. In other words, the concurrent jurisdiction is not available with respect to tax legislation.

• The 101st Amendment Act of 2016 has made an exception by making a special provision with respect to GST. This Amendment has conferred concurrent power upon Parliament and State Legislatures to make laws governing GST.




Grants in aid to states:

Art. 275 empowers the Parliament to make grants to the states which are in need of financial assistance and not to every state. These sums are charged on the Consolidated Fund of India every year. Art 282 empowers both the Centre and the states to make any grants for any public purpose, even if it is not within their respective legislative competence.
The Constitution also provides for specific grants for promoting the welfare of the scheduled tribes in a state or for raising the level of administration of the scheduled areas in a state (including the State of Assam) These grants are also known as discretionary grants, the reason being that the Centre is under no obligation to give these grants and the matter lies within its discretion.
The statutory grants under Art. 275 are given to the states on the recommendation of the Finance Commission.



These grants are to help the state financially to fulfil plan targets and to give some leverage to the Centre to influence and coordinate state action to effectuate the national plan.








Other Grants

• The Constitution also provided for a third type of grants-in-aid, but for a temporary period.

• A provision was made for grants in lieu of export duties on jute and jute products to the States of Assam, Bihar, Orissa and West Bengal.

• These grants were to be given for a period of ten years from the commencement of the Constitution.

• These sums were charged on the Consolidated Fund of India and were made to the states on the recommendation of the Finance Commission.



Following bills can be introduced in the Parliament only on the recommendation of the President:

1. bill which imposes or varies any tax or duty in which states are interested;

2. bill which varies the meaning of the expression “agricultural income”

3. bill which affects the principles on which moneys are or may be distributable to states;

4. bill which imposes any surcharge on any specified tax or duty for the purpose of the Centre.




Borrowing by the Centre and the States:

• Can borrow on CFI (Within + Outside India) within limits fixed by parliament.

• Can make loans to any state or give guarantees in respect of loans raised by any state.

• Cannot raise any loan without center consent (If remaining outstanding loan to center)

• Can borrow on CFS (Within but, NOT Outside India) within limits fixed by parliament

Exemption of Union property from taxation of state

(Art. 285)

• Centre’s property is exempted from all taxes imposed by a state or any authority within a state like municipalities, district boards, panchayats and so on. But, the Parliament is empowered to remove this ban.

• The property may be used for sovereign (like armed forces) or commercial purposes.

• The corporations or the companies created by the Central government are not immune (as they are separate legal entity) from state taxation or local taxation.



Exemption of State property from central taxation

(Art. 289)

• The property and income of a state is exempted from Central taxation. Such income may be derived from sovereign functions or commercial functions.

• But the Centre can tax the commercial operations of a state if Parliament provides so.

• The property and income of local authorities situated within a state are not exempted from the Central taxation.

• Likewise, the property or income of corporations and companies owned by a state can be taxed by the Centre.

• The Centre can impose customs duty on goods imported or exported by a state, or an excise duty on goods produced or manufactured by a state – advisory opinion of the Supreme Court, 1963.




Effects of Emergency

• President can modify the constitutional distribution of revenues between the Centre and the states

• Can either reduce or cancel the transfer of finances (both tax sharing and grants-in-aid) from the Centre to the states.

• Such modification continues till the end of the financial year in which the emergency ceases to operate.

Centre can give directions to the states:

1. To observe the specified canons of financial propriety.

2. To reduce the salaries and allowances of all class of persons serving in the state; and

3. To reserve all money bills and other financial bills for the consideration of the President.


Article Levy Collection Appropriation Various Taxes
268 Centre States States Stamp duties on shares, cheques, promissory notes, insurance etc.
269 Centre Centre States


Taxes on interstate trade and commerce.

Revenues do not form part of consolidated fund of India.


Centre Centre Shared between Centre and states All taxes in union list –income tax(other than agricultural income), corporate tax, etc.

Centre Centre Centre Surcharge on taxes under Art 268,269,270.
NA State State state


Sales tax, excise duty on liquor and Narcotics, octroi, professional tax (max of Rs 2500 – limit kept by constitution)




Sarkaria commission (1983) Rajamannar committee – Tamilnadu
Punchhi commission (2007) Anandpur Sahib resolution – Akali dal of Punjab
Administrative Reforms Commission I and II



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