Understanding the Concept of the Doctrine of Territorial Nexus | Important Acts and Laws for Judiciary Exams PDF Download

Understanding the Doctrine of Territorial Nexus under Indian Constitution

• The doctrine of territorial nexus, as per Article 245 of the Indian constitution, grants the Parliament the authority to enact laws concerning extraterritorial operations across the country or specific regions.
• Similarly, state legislatures are empowered to formulate laws for their respective territories.
• Both the central and state governments hold the jurisdiction to legislate within their defined territorial boundaries.

Legislative Relations between Central and State Governments

• Legislative powers are distributed concerning both the territory and subjects listed in the 7th schedule.
• This entails delineating which government—central or state—holds authority over specific territories and subject matters.

The Theory of Territorial Nexus

• The theory stipulates that for a state law to affect extraterritorial purposes, a substantive connection or nexus between the object and the state must exist.
• This principle serves as an exception that enables states to establish laws beyond their borders if a legitimate nexus is demonstrated.

Case Laws Illustrating Territorial Nexus

Wallace Bros. And Co. Ltd. vs The Commissioner of Income

• In this case, the Privy Council recognized the doctrine of territorial nexus when a significant portion of income originated from British India.
• Conditions for proving the doctrine include demonstrating a legitimate nexus and liability associated with the concerned territory.

State of Bombay vs R.M. D Chamarbaugwala

• The court ruled that individuals generating income from a specific territory can be taxed by the legislature if there is a substantial territorial nexus.

Tata Iron and Steel Company vs Bihar State Tax Act

• The court emphasized the necessity of a connection between the object and the territory to establish territorial nexus.

State of Bihar vs Charusila dasi

• This case allowed Bihar state government to tax a trust deed related to immovable property outside the state based on a sufficient nexus.

Shirkant Bhalchandra vs State of Gujarat

• The court clarified that laws enacted by state legislatures are applicable within their territorial limits and are not considered extraterritorial.

Legislative Power Division in India

Overview of Legislative Power

• Legislative power in India is divided between the central government and state governments.

Parliament's Authority

• The Parliament holds the authority to enact laws concerning extraterritorial operations.
• State legislatures do not possess this power due to Article 245 and 246.

Exception for State Legislatures

• State legislatures can make laws if a sufficient connection exists between the object and the state.

Conclusion

In conclusion, India's legislative power is intricately divided between the central government and state governments. While Parliament can legislate on extraterritorial matters, state legislatures are limited by Article 245 and 246. However, an exception allows state legislatures to enact laws when a significant connection is established between the object and the state.