Constitution-II Module 1
MODULE 1: CENTRE–STATE RELATIONS
1. Legislative Relations Between Centre and State (Articles 245–255)
1.1 Two-Fold Basis of Legislative Distribution
The distribution of legislative power between Parliament and the State Legislatures under Part XI proceeds on two bases:
(1) territorial extent — Article 245, and (2) distribution of subject-matter — Article 246 read with the Seventh Schedule.
1.2 Territorial Extent of Laws — Article 245
Article 245(1): Parliament may make laws for the whole or any part of the territory of India; a State Legislature may make
laws for the whole or any part of the State. Article 245(2): No law made by Parliament shall be deemed invalid on the
ground that it would have extra-territorial operation.
A.H. Wadia v. Commissioner of Income Tax, Bombay, AIR 1949 FC 18
Facts: The appellant was the agent of the Gwalior Durbar (a princely state) which carried on a large money-lending
business in British India. A loan of Rs. 50 lakhs was advanced outside British India but was found to be part of a
business connected with British India; the interest income was taxed under the Indian Income-tax Act, and the tax was
challenged as extra-territorial.
Holding: The Federal Court (Kania C.J.) held that for a sovereign legislature, extra-territoriality of an enactment can
never be raised in a municipal court as a ground of invalidity — that is a question of policy for the legislature, not a
ground of invalidity before a domestic court.
Wallace Brothers & Co. Ltd. v. Commissioner of Income Tax, Bombay, AIR 1948 PC 118
Facts: The appellant company was incorporated in England but was a partner in a firm doing business in India and
derived the major part of its income from British India for the relevant year. The Indian tax authorities sought to tax its
entire income.
Holding: The Privy Council applied the territorial nexus doctrine and upheld the levy — deriving the major part of its
income from British India gave the company sufficient nexus to justify taxing its whole income.
Doctrine of Territorial Nexus (State Legislatures): A State Legislature can make laws only for its own territory — no
inherent extra-territorial power. Exception: if there is a sufficient, real (not illusory) nexus between the State and the object
taxed/regulated, the law survives even if part of the transaction occurs outside the State.
State of Bombay v. R.M.D. Chamarbaugwala, AIR 1957 SC 699
Facts: The respondent ran a prize competition through a newspaper printed in Bangalore, but with wide circulation and
entry/fee flow within Bombay State. Bombay's levy on the competition was challenged as extra-territorial.
Holding: Sufficient territorial nexus existed (wide circulation plus flow of money and entries into Bombay); the levy was
valid.
1.3 Distribution by Subject-Matter — Article 246 and the Seventh Schedule
Article 246: (1) Parliament — exclusive power over the Union List. (2) Parliament and States — concurrent power over the
Concurrent List. (3) States — exclusive power over the State List, subject to (1)–(2). (4) Parliament — power over Union
Territories, even on State List matters.
List Original (1950) Present Notes
Union List 97 ~100 Parliament's exclusive domain
State List 66 61 5 entries moved to Concurrent List by the 42nd Amendment, 1976
Concurrent List 47 52 47 original + the 5 transferred entries
Doctrine of Pith and Substance (see §2.2 below — the same doctrine governs whether a law "belongs" to a particular
List).
Residuary Power — Article 248 and Entry 97, Union List: Parliament has exclusive power over matters not enumerated
in the State or Concurrent Lists; Entry 97 gives Parliament this power for taxes too.
Union of India v. H.S. Dhillon, AIR 1972 SC 1061
Facts: The Finance Act, 1969 amended the Wealth Tax Act, 1957 to include agricultural land in taxable "assets," despite
Entry 86 (List I) expressly excluding agricultural land from the Union's wealth-tax entry.
Holding: Since the tax wasn't covered by Entry 49, List II (a direct tax on land as a unit, not a personal tax on aggregate
wealth) or any other List II/III entry, Parliament could tax it under the residuary power (Art. 248 + Entry 97, List I).
(Pith-and-substance case law and the Dhillon case were not in your original notes on this topic but are the standard
authorities paired with it; added for completeness.)
1.4 Exceptions to Article 246(3)
Article Trigger Key safeguards
249 Rajya Sabha resolution, national Two-thirds of members present & voting; must specify the matter; valid
interest for 1 year at a time (renewable); the law lapses 6 months after the
Article Trigger Key safeguards
resolution lapses
250 Proclamation of Emergency (Art. Law ceases 6 months after the Emergency ends
352) in force
252 Two or more States pass resolutions Once Parliament legislates, only Parliament can amend/repeal — not
the consenting States. Example: Prize Competitions Act, 1955.
253 Implementing an international Draws further support from Entry 14, Union List
treaty/agreement/decision
2. Repugnancy, Pith and Substance, and Colourable Legislation
2.1 Doctrine of Repugnancy (Concurrent List conflicts)
Article 254(1): In a conflict between a Union and State law on a Concurrent List matter, the Union law prevails; the State
law is void to that extent. Article 254(2) (exception): If the State Bill is reserved for and receives the President's assent, the
State law prevails in that State — but Parliament can still override it later by a new law on the same subject.
Mangtulal and Anr. v. Radha Shyam and Anr., AIR 1953 Pat 14 (Full Bench, Patna High Court)
Facts: The Bihar Buildings (Lease, Rent and Eviction) Control Act, 1947 restricted landlords' eviction rights, as against
the general eviction right under the Transfer of Property Act, 1882, the Contract Act, and the CPC.
Held: To the extent the Bihar Act's provisions (falling under Concurrent List entries) were repugnant to these central
enactments and lacked the President's assent, they were void under Article 254(1).
Note: This is a Patna High Court Full Bench decision, not a Supreme Court ruling — a real, citable authority, but with
different precedential weight.
Zaverbhai Amaidas v. State of Bombay, AIR 1954 SC 752
Facts: Section 7 of the Essential Supplies (Temporary Powers) Act, 1946 (Union law) prescribed up to 3 years'
imprisonment. Bombay Act No. 36 of 1947 raised this to 7 years, with the Governor-General's assent. Parliament later
(1950) re-enacted Section 7 as a comprehensive punishment code.
Held: The 1950 Central Act, being later Union legislation occupying the same field, prevailed over the Bombay Act
under Article 254(2)'s proviso.
2.2 Doctrine of Pith and Substance
Meaning: The "true and essential character" of a law. Courts examine both purpose (using intrinsic evidence — preamble,
sections, objects — and extrinsic evidence — debates, Statement of Objects and Reasons) and legal effect, to decide
which List a law really belongs to. Incidental encroachment on another List's subject doesn't invalidate an otherwise-
competent law.
State of Rajasthan v. G. Chawla, AIR 1959 SC 544
Facts: The Ajmer (Sound Amplifiers Control) Act, 1952 restricted loudspeaker use; challenged as falling under Entry 31,
Union List (forms of communication) rather than the State's public-health entry.
Held: In pith and substance, the law controlled amplifier use for public health/tranquility, not a "form of communication"
— valid State legislation.
State of Bombay v. F.N. Balsara, AIR 1951 SC 318
Facts: The Bombay Prohibition Act, 1949 restricted liquor possession/use/sale (State List); challenged as encroaching
on the Union's import/export power.
Held: In pith and substance a liquor-regulation law, not an import/export law — valid, with only incidental (non-
substantial) encroachment.
2.3 Doctrine of Colourable Legislation
Meaning: A legislature lacking power over a subject enacts a law dressed up to appear within its competence. Based on
the maxim quando aliquid prohibetur ex directo, prohibetur et per obliquum ("what cannot be done directly cannot be done
indirectly"). The doctrine concerns competence only, never bona fides/mala fides or motive — pith and substance is used
to test the law's true character.
K.C. Gajapati Narayan Deo v. State of Orissa, AIR 1953 SC 375
Facts: The Orissa Agricultural Income-tax (Amendment) Act, 1950 sharply raised zamindars' agricultural income tax,
alongside the Orissa Estates Abolition Act, 1952. Challenged as a colourable device to depress the compensation
payable on abolition.
Held: Upheld — the amendment was, in substance, agricultural income-tax legislation (a State subject); since the State
was competent, its underlying motive was irrelevant.
(This case was not in your original notes on colourable legislation, but is the standard authority the doctrine is rarely
examined without; added for completeness.)
3. Administrative Relations Between Centre and State (Articles 256–263,
312, 365)
Extent of executive power:
Union — Article 73: extends to matters on which Parliament can legislate, and to treaty/agreement rights, but does not
extend into a State's Concurrent List domain except as the Constitution or a Parliamentary law expressly provides.
State — Article 162: extends to matters on which the State Legislature can legislate, subject to the Union's expressly-
conferred executive power over Concurrent List matters.
Examples of Concurrent List executive power staying with the State unless a Parliamentary law says otherwise:
under the Electricity (Supply) Act (Entry 38, Concurrent List), administrative power rests wholly with the States; under the
Industrial Disputes Act (Entry 22, Concurrent List), it rests with both Centre and States.
Article Provision
256 Duty of every State to ensure compliance with Union laws; Union can give necessary directions
257 Union's power to direct States: not to impede Union executive power; on communications of national/military
importance; for railway protection
258 President may delegate Union executive functions to a State — conditionally or unconditionally, with the State's
consent
258(2) Parliament, by law, may confer functions on a State (or its officers) without the State's consent — but the Union
must fund the delegated function
258A Governor may entrust State executive functions to the Union
261 Full faith and credit — public acts, records, and judicial proceedings of one State recognised throughout India
262 Parliament may provide for adjudication of inter-State river/river-valley water disputes (by tribunal)
263 President may set up an Inter-State Council to inquire into and advise on disputes/matters of common interest
312 Parliament may create new All India Services, with Rajya Sabha's assent
365 If a State fails to comply with Union directions, President's Rule may follow
4. Financial Relations Between Centre and State (Articles 265, 268–293)
Article 265: No tax shall be levied or collected except by authority of law.
4.1 Taxing Power by Subject
Category Entries Notes
Union taxes 82–92B, Union List Levied by the Centre
State taxes 45–63, State List Levied by the States
Concurrent taxation- 35, 44, List III Principles of taxation on motor vehicles (35) and stamp
related entries duties other than judicial stamps (44)
GST Article 246A (inserted by the 101st Union and States have simultaneous power to legislate
Amendment, 2016) on GST
4.2 Distribution of Union Tax Revenue
Article Mechanism Example
268 Centre levies; State collects and keeps Stamp duties, excise on medicinal/toilet
preparations
269 / Centre levies and collects; proceeds assigned to States Inter-state trade/consignment taxes; IGST
269A
270 Centre levies and collects; proceeds shared between Nearly all Union List taxes not covered by
Union and States 268/269/269A or a 271 surcharge
271 Centre levies, collects, and keeps 100% — a surcharge on —
taxes/duties under 269/270, for Union purposes only
4.3 Grants-in-Aid
Article 275 — Statutory/mandatory grant: given to States on the Finance Commission's recommendation, to bridge
revenue gaps.
Article 282 — Discretionary grant: no obligation on the Centre; can be given selectively, typically for specific
programmes.
4.4 Finance Commission — Article 280
Composition (280(1)): a Chairman and four other members (five members in total).
Qualifications (280(2)): determined by Parliament.
Functions (280(3)): recommending distribution of tax revenue between Centre and States; principles/quantum of
grants-in-aid; measures to augment a State's Consolidated Fund; any other matter referred by the President.
4.5 Borrowing Power — Article 293
The Union may borrow within India or outside (subject to Parliamentary limits); a State may borrow only within India, and
needs the Union's consent for a new loan while an earlier Union loan remains outstanding.
5. Freedom of Trade, Commerce and Intercourse (Articles 301–307)
Article 301: Guarantees freedom of trade, commerce, and intercourse throughout India — subject to the restrictions in
Articles 302–305. Activities like hiring goondas or trafficking fall outside the protection altogether, since they were never
legitimate "trade" to begin with.
Article 302/303 (Parliament's regulatory power): Parliament may regulate trade in the public interest (302); it cannot give
one State a preference over another (303(1)), except to address a genuine scarcity of goods somewhere in India (303(2)).
Article 304(a) (State's non-discriminatory taxing power): A State may tax goods, but cannot discriminate between goods
imported from other States and locally produced/manufactured goods.
Madhya Pradesh v. Bhailal Bhai, AIR 1964 SC 1006
Facts: Sales tax was imposed on tobacco imported into the State but not on locally-grown tobacco.
Held: The tax was discriminatory and invalid under Article 304(a).
Article 304(b) (State's regulatory power): A State may impose reasonable restrictions in the public interest, but the Bill
needs the President's prior sanction before introduction.
State of Tamil Nadu v. M/s Sanjeetha Trading Co. (Supreme Court, 24 September 1992)
Facts: Tamil Nadu declared timber an "essential article" and completely banned its movement out of the State.
Held: The measure was regulatory, not restrictive — aimed at ensuring fair-price availability of timber within the State
— and therefore fell outside the scope of Articles 301/304 altogether, rather than needing to be independently
justified under Article 304(b).
Article 307: Parliament may by law appoint an authority to carry out the purposes of Articles 301–304.
Atiabari Tea Co. v. State of Assam, AIR 1961 SC 232
Facts: The petitioner grew tea and exported it via Assam to Calcutta; the tea was taxed while passing through Assam
under the Assam Taxation (on Goods Carried by Roads or Inland Waterways) Act, 1954.
Held: The Act directly and immediately restricted free movement of goods — void. Established the "direct and
immediate" test: a restriction that directly and immediately impedes free trade violates Article 301; an indirect or remote
one does not. Traffic regulation, vehicle licensing, and marketing/health regulations remain permissible.
Automobile Transport (Rajasthan) Ltd. v. State of Rajasthan, AIR 1962 SC 1406
Facts: Rajasthan taxed all motor vehicles used/kept within the State.
Held: The tax was compensatory (paid for the use of roads/facilities the State provides) and did not hinder free trade
— valid.
State of Mysore v. H. Sanjeeviah, AIR 1967 SC 1189 (decided 16 January 1967)
Facts: Rules under the Mysore Forest Act banned forest-produce movement between sunset and sunrise.
Held: This was a restrictive, not regulatory, measure — void as infringing Article 301.
6. Official Language (Articles 343–351)
Article 343(1): Hindi in Devanagari script is the Union's official language; the international form of Indian numerals is
used for official purposes.
Article 343(2): English continues for all official Union purposes for 15 years from commencement.
Article 343(3): Parliament may extend this period by law.
Article 344(1): The President may appoint a Commission on Official Language after 5 years from commencement, and
again after every 10 years thereafter — comprising a Chairman and members representing the Eighth Schedule
languages.
Article 344(2) — Commission's duties: recommend progressive use of Hindi; restrictions on English; the language for
Supreme Court/High Court proceedings and legislation; numeral forms; any other Presidentially-referred matter — with
due regard to non-Hindi-speaking people's interests.
Article 344(4)/(5) — Parliamentary Committee: 30 members (20 Lok Sabha, 10 Rajya Sabha), elected by their
respective Houses, to examine the Commission's recommendations and report to the President.
Official Languages Act, 1963: Provides for the continued, indefinite use of English alongside Hindi for official Union
purposes.
Union of India v. Murasoli Maran, AIR 1977 SC 225
Facts: A Presidential Order required Central Government employees under 45 to compulsorily undergo Hindi training.
Challenged on the grounds that (i) the President's Article 344 power was time-limited to 15 years from commencement,
and (ii) it was inconsistent with Section 3(4) of the Official Languages Act, 1963 (which bars placing a person at a
disadvantage for lack of Hindi proficiency).
Held: The Presidential Order was valid; the power to issue such orders under Article 344 continues to exist even after
15 years, and the transition to Hindi must be gradual, with due regard to non-Hindi-speaking people's interests.
Article 351: Imposes a duty on the Union to promote the spread of the Hindi language.
7. Local Self-Government
7.1 Panchayati Raj — 73rd Amendment (Part IX, Articles 243–243O)
Article 40 (DPSP) directs the State to organise village panchayats as units of self-government; Entry 5, State List
empowers States to legislate on local government.
The 73rd Amendment inserted Part IX (16 Articles: 243, 243A–243O) and the Eleventh Schedule (29 subjects
transferable to panchayats), giving panchayats constitutional status.
Gram Sabha (Art. 243A): all adult registered voters of the village; at least two meetings a year (budget/annual plan,
and the panchayat's report).
Three-tier structure: Gram Panchayat (village level, ward representatives + elected chairman) → Panchayat Samiti
(block level, chairmen of gram panchayats elect their own chairman) → Zilla Parishad (district level, representatives
from panchayat samitis, plus local MLAs/MPs/Collector and district-level officers).
Reservation (Art. 243D): seats reserved for SCs/STs in proportion to population; 1/3rd of total seats reserved for
women.
Duration (Art. 243E): 5 years, unless dissolved earlier.
Disqualification (Art. 243F): minimum age 21; must be a registered voter; no office of profit under government;
criminal conviction disqualifies.
Powers (Art. 243G): per the Eleventh Schedule, expandable by the State Legislature.
Taxation (Art. 243H): State may authorise panchayats to levy/collect/utilise taxes, duties, tolls, and fees.
State Finance Commission (Art. 243I): Governor constitutes it; recommends revenue distribution, grants-in-aid, and
measures to improve panchayats' finances.
Audit (Art. 243J) and Elections (Art. 243K): State Election Commissioner, appointed by the Governor, removable in
the same manner as a High Court judge.
7.2 Municipalities — 74th Amendment (Part IXA, Articles 243P–243ZG)
Three kinds (Art. 243Q): Nagar Panchayat (transitional rural-to-urban areas), Municipal Council (smaller urban areas),
Municipal Corporation (larger urban areas).
Broadly mirrors the Panchayat framework: composition (243R), ward committees (243S), reservation, duration,
disqualification, powers (243W), taxation (243X), finance commission (243Y), and elections (243ZA).
8. Cooperative Federalism
Cooperative federalism developed from an earlier phase of competitive federalism (marked by intergovernmental rivalry
and States guarding their powers), driven by factors like wartime national coordination needs, faster communication, and
the emergence of the social welfare state.
Mechanisms promoting cooperative federalism:
Full Faith and Credit (Art. 261): public acts, records, and judicial proceedings of one State recognised throughout
India.
Inter-State Council (Art. 263): President-appointed; inquires into inter-State disputes, discusses matters of common
interest, and recommends better policy coordination. Example: the Central Council of Health.
Zonal Councils: set up under the States Reorganisation Act, 1956 — five councils in total: Northern, Central,
Eastern, Western, and Southern Zonal Councils. Each comprises the Chief Ministers and two other ministers of the
States in the zone, plus an administrator for any Union Territory in the zone; joint meetings of multiple zonal councils are
possible.
Inter-State River Water Disputes (Art. 262): Parliament has legislative power to provide for adjudication, since a river
flowing through multiple States cannot belong to any single one.
GST Council — 101st Amendment: widely described as a watershed for cooperative federalism; both Parliament and
State Legislatures have simultaneous power to legislate on GST.
Other statutory bodies: the University Grants Commission (promotes uniform standards in university education and
gives grants to State universities); the National Medical Commission (under the National Medical Commission Act,
2019); the All India Council for Technical Education (under the AICTE Act, 1987).