Centre–State Relations — Legislative, Administrative & Financial — Constitutional Law II Notes

Distribution of Legislative Powers

When Parliament wanted a uniform law on a subject the Constitution had given to the States, it did not simply grab it — it had to find a door the Constitution left open. Articles 249, 250, 252, 253 and 356 are those five doors. Knowing they exist is the difference between saying “the Centre cannot touch the State List” (wrong) and explaining exactly when it can.

How law-making power is divided

The Constitution does not leave “who can make this law?” to chance. Article 246 read with the Seventh Schedule splits all subjects into three lists:

Union List (List I) — on which only Parliament can legislate: defence, foreign affairs, banking, currency, inter-State trade, citizenship (originally 97 entries, now about 98 after amendments).
State List (List II) — on which only the State Legislature can legislate: police, public health, agriculture, land, local government, State taxes (originally 66 entries, now about 59 — several were moved to the Concurrent List by the 42nd Amendment).
Concurrent List (List III) — on which both can legislate: criminal law, marriage, contracts, education, forests (originally 47 entries, now about 52). If both make a law and they clash, Article 254 decides.

Residuary power — any subject in no list (e.g. cyber law when the Constitution was written) belongs to Parliament (Article 248 + Entry 97, List I). This is another Centre-leaning feature.

Article 245 fixes the territorial reach: Parliament makes law for the whole (or any part) of India; a State legislates for its own territory. A law is not void merely because it has some effect outside the State, if there is a real connection — the doctrine of territorial nexus.

A. Parliament’s five routes into the State List

Normally Parliament cannot legislate on a State subject. But the Constitution opens five doors:

Article 249 — in the national interest. If the Rajya Sabha passes a resolution (2/3 majority) that a State subject has become one of national importance, Parliament may legislate on it for up to one year at a time.
Article 250 — during a National Emergency. While a Proclamation under Article 352 is in force, Parliament may legislate on any State subject.
Article 252 — at the request of States. If two or more States pass resolutions asking Parliament to legislate on a State subject for them, Parliament may do so (and other States may adopt it).
Article 253 — to implement international agreements. To give effect to a treaty or an international convention, Parliament may legislate even on a State subject.
Article 356 — President’s Rule. When a State is under President’s Rule, Parliament exercises the State Legislature’s powers.

B. The doctrines that decide “which list?”

Because entries overlap, courts use three doctrines:

Doctrine of pith and substance [pith and substance = the true nature and character of a law]. If a law’s real subject falls within the legislature’s list, it is valid even though it incidentally touches a subject in another list. You look at the law’s core, not its edges.
Doctrine of colourable legislation [colourable = disguised / a pretence]. “What you cannot do directly, you cannot do indirectly.” If a legislature dresses up a law to look like it is on a subject it can legislate on, while its real aim is a forbidden subject, the law is struck down as a fraud on the Constitution.
Doctrine of territorial nexus. A State law with some extra-territorial effect is valid if (a) the connection with the State is real, and (b) the liability is relevant to that connection.

C. Repugnancy — when a Concurrent-List clash arises (Article 254)

On a Concurrent subject, both can legislate. If a Central law and a State law conflict and cannot stand together, Article 254(1) makes the Central law prevail and the State law void to the extent of the repugnancy. Exception (Article 254(2)): if the State law was reserved for and received the President’s assent, it prevails in that State — but Parliament can still override it later by a fresh law.

Article 254(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, … the law made by Parliament … shall prevail and the law made by the Legislature of the State shall, to the extent of the repugnancy, be void.”

In Simple Terms: On a shared (Concurrent) subject, if Centre and State laws crash, the Centre’s law wins and the clashing part of the State law dies — unless the State law had earlier got the President’s nod, in which case the State law survives inside that State until the Centre legislates again.

🧩 WORKED EXAMPLE — pith and substance in action

Facts. A State passes a Money-Lenders Act (money-lending is a State subject, Entry 30, List II). It incidentally affects promissory notes (a Union subject, Entry 46, List I).

Rule. Doctrine of pith and substance — look at the law’s true nature.

Apply. The Act’s core purpose is regulating money-lenders in the State; the effect on promissory notes is only incidental.

Conclusion. The Act is valid — an incidental encroachment on a Union entry does not invalidate a law whose pith and substance is a State subject.

flowchart TD
    ROOT["Distribution of Legislative Powers<br/>(Art 246 + 7th Schedule)"]:::root
    ROOT --> L1["Union List — Parliament only"]:::leaf
    ROOT --> L2["State List — State only"]:::leaf
    ROOT --> L3["Concurrent List — both (Art 254 resolves clash)"]:::leaf
    ROOT --> R["Residuary — Parliament (Art 248)"]:::leaf
    ROOT --> D["Doctrines: pith & substance / colourable / nexus"]:::leaf
    classDef root fill:#FFF8DC,stroke:#000,stroke-width:1px,color:#000;
    classDef leaf fill:#E6F3FF,stroke:#1E3A8A,color:#000;
    linkStyle default stroke:#888,stroke-width:1px;

Case Laws

State of Bombay v F.N. Balsara (1951) — pith and substance upheld: a State Prohibition Act whose core was a State subject was valid despite incidentally touching import (a Union subject).
K.C. Gajapati Narayan Deo v State of Orissa (1953) — the classic statement of colourable legislation: the question is whether the legislature had the competence, not its motive.
State of Bihar v Charusila Dasi (1959) — territorial nexus: a State law reaching trust property partly outside the State was valid because the nexus was real.
M. Karunanidhi v Union of India (1979) — repugnancy under Article 254 explained; there is repugnancy only where both laws occupy the same field and directly conflict.

Administrative & Financial Relations; Co-operative Federalism

Dividing law-making power is only half the job. A State can have the power to make a law but no money to run the scheme, or the Centre can have a national policy but no field staff to carry it out in a village. So the Constitution also lays down administrative relations (who executes) and financial relations (who gets the money) — and here, again, the Centre holds the stronger hand.

Administrative relations (Articles 256–263)

The rule is that the Union and the States must not step on each other’s toes, but the Centre can direct the States in defined ways:

Duty of States to comply (Article 256) — a State must exercise its executive power so as to ensure compliance with laws made by Parliament; the Centre may give directions to that end.
Centre’s directions (Article 257) — the State’s executive power must not impede the Union’s; the Centre may direct States on matters like protecting railways and constructing/maintaining communications of national importance.
Sanction for non-compliance (Article 365) — if a State fails to comply with a Union direction, the President may hold that the State’s government cannot be carried on per the Constitution — a gateway to Article 356 (President’s Rule).
All-India Services (Article 312) — officers of the IAS/IPS serve both levels, giving the Centre a presence inside State administration.
Inter-State Council (Article 263) — the President may set up a Council to inquire into and advise on Centre-State and inter-State disputes — an instrument of co-operative federalism.
Disputes over waters and adjudication (Articles 262, 263) — Parliament may provide for adjudication of inter-State river-water disputes.

Financial relations (Articles 268–293)

Money follows a scheme that leaves the big taxes with the Centre but shares the proceeds:

Separate tax fields — the Union and States each have their own taxing entries; a tax not mentioned in any list is a Union subject (residuary).
Taxes levied by the Union but shared or assigned — several taxes are collected centrally and distributed to States (Articles 268–270); GST (Article 246-A, 279-A) is now a shared source with a joint GST Council.
Grants-in-aid (Articles 275, 282) — the Centre gives grants to States, especially the weaker ones, and for specific schemes.
Finance Commission (Article 280) — a body the President appoints every five years to recommend how tax proceeds are divided between the Centre and the States and among the States. It is the balancing wheel of fiscal federalism.
Borrowing (Articles 292–293) — the Union can borrow freely; a State’s borrowing can be conditioned on the Centre’s consent if the State is already indebted to the Centre.
Inter-governmental tax immunities (Articles 285 and 289) — the two levels cannot freely tax each other. Article 285 exempts the property of the Union from all taxes imposed by a State or a local authority (unless Parliament provides otherwise). Article 289 correspondingly exempts the property and income of a State from Union taxation — but with a key exception: the Union may tax a State’s trade or business activities (Article 289(2)), for otherwise a State running a commercial enterprise would enjoy an unfair advantage over private competitors. This mutual immunity keeps the federal partners from crippling each other through taxation, while the trade/business exception prevents its abuse.

Article 289(1): “The property and income of a State shall be exempt from Union taxation.” Article 289(2) allows the Union to tax (or authorise the taxing of) a trade or business carried on by a State, or operations connected with it.

In Simple Terms: The Centre can direct a State to obey national laws and even punish disobedience by recommending President’s Rule; and while both levels have their own taxes, the Centre controls the largest revenue sources and passes a share back to the States on the Finance Commission’s advice. Neither level may ordinarily tax the other’s property (Union property is immune from State tax under Article 285, and State property and income from Union tax under Article 289), though the Union may tax a State’s ordinary trade or business. This financial dependence and the mutual tax immunity are both features of the fiscal relationship, and the dependence is a major reason the system tilts towards the Centre.

flowchart TD
    ROOT["Centre-State Relations"]:::root
    ROOT --> A["Administrative (Arts 256-263)"]:::leaf
    ROOT --> F["Financial (Arts 268-293)"]:::leaf
    A --> A1["Directions to States (256, 257)"]:::leaf
    A --> A2["All-India Services (312)"]:::leaf
    A --> A3["Sanction: Art 365 -> Art 356"]:::leaf
    F --> F1["Shared taxes; GST (279-A)"]:::leaf
    F --> F2["Grants-in-aid (275, 282)"]:::leaf
    F --> F3["Finance Commission (280)"]:::leaf
    classDef root fill:#FFF8DC,stroke:#000,stroke-width:1px,color:#000;
    classDef leaf fill:#E6F3FF,stroke:#1E3A8A,color:#000;
    linkStyle default stroke:#888,stroke-width:1px;

Case Laws

State of West Bengal v Union of India (1963) — the Centre’s power to legislate and act extends deep into State affairs; the States are not sovereign.
State of Rajasthan v Union of India (1977) — Article 356 (backed by Article 365) shows the reach of the Centre’s control over State administration.
S.R. Bommai v Union of India (1994) — while the Centre is strong, its supervisory powers are not unlimited; federal balance is judicially protected.

📄 Full notes + Question Bank (₹199) — every topic in depth, model answers to all past KSLU questions, in one printable PDF. Get the bundle · 10 Solved Problems · All Constitutional Law II topics