Centre-State Relations - Polity and Constitution, UPSC, IAS. | Polity and Constitution (Prelims) by IAS Masters PDF Download

Centre-State Relations

Chapter-15

DISTRIBUTION OF LEGISLATIVE AND EXECUTIVE POWERS
Division of legislative powers proceeds on two lines:-

1. The territory over which the federation and the Units will respectively have their jurisdiction.
2. The subjects to which their respective jurisdiction will extend.

A). Territorial Extent of Union and State Legislation
It is not possible for 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, on the other hand has the power to legislate for the whole or any part pf the Indian Territory [Article 245(4)]. It also possess the power of extraterritorial legislation which means that law made by Parliament will govern not only person and territory within the territory of India but also Indian subjects residents and their property situated anywhere in world.

Limitation to territorial jurisdiction of parliament :-

Subject to some special provision of the constitution:-

1.   As regards to some UTs, regulation may be made by parliament and such Regulation may repeat or amend a law made by parliament in relation to such territory[ Article  240 (2)]
2. The application of Acts of Parliament to any scheduled area may be barred or modified by the Governor by a notification.

B).distribution of subjects

(1) DISTRIBUTION OF LEGISLATIVE SUBJECTS [Art. 246]

There are 3 lists in Schedule 7^th of the constitution-

LIST I or UNION LIST- 99 subjects over which the Union shall have exclusive

power of legislation: These includes defence, foreign affairs, banking insurance,

currency and coinage, Union duties and taxes.

LIST II or STATE LIST-

61 items or entries over which the State legislature shall have exclusive power of legislation: These include public Order and police, local government, public health and sanitation, agriculture, forests, fisheries, state taxes and duties.

LIST III or CONCURRENT LIST –

52  items over which both has power of legislation such as criminal law and  procedure, civil procedure marriage, contracts, torts, trusts, welfare of labour, economic and social planning and education.

In case of overlapping of a matter as between the three lists, predominance has been given to the Union legislature.

         The power to legislate any matter not enumerated in the three lists- in the union legislature [Article 248] and the final power as to determine whether a particular matter falls under the residuary power or not is that of the Supreme Court.

EXPANSION OF UNION’S LEGISLATIVE POWER UNDER DIFFERENT CONDITION

1). Parliament shall have the power to make law with respect to any matter in State lists for temporary period  if Rajya Sabha declares by a 2/3^rd  majority resolution, that it is necessary in national interest[ Article 249].

2). During Emergency Parliament shall have similar power to legislate on State subjects, which cease to have effect on the expiration of a period of  6 months after emergency cease to operate.

3). By agreement between states.

4)  To enact legislation for carrying out its international obligation [Article 253]

eg. Governor Convention Act 1960, Anti Hijacking Act, 1982.

(2). DISTRIBUTION OF EXECUTIVE POWERS

1. The executive power of State share extends only to its own territory and with respect to subjects included in state list. Where the union shall have the exclusive power over all the exclusive executive power over all matters under parliament to made law (list I).
2. With the consent of state government, the union may entrust its own executive functions relating to any matter to such government or its officers [Article 258(1)].

Conversely, with the consent of union government, it is competent for state government to entrust any of its executive functions to the former [article 258A].

1. Under Article 258 (2), a law made by Parliament relating to a Union subject may authorize the central government to delegate its functions or duties to the state government or its officers.

(3).  DISTRIBUTION OF FINANCIAL POWERS

(i). DISTRIBUTION OF LEGISLATIVE POWER TO LEVY TAXES

Given under State and Union Legislative lists in Schedule VII.Thus, while the state has the power to levy estate duty on agricultural land, the power to levy estate duty in respect of non agricultural land belongs to union legislature.

                                The residuary powers as regards to taxation belong to parliament and gift tax and Expenditure tax have been held to derive their authority from this residuary power. There is no concurrent sphere in matter of taxation .In certain matters the state power is subject to certain restrictions. Thus-

1. Profession Tax:-
   While state legislature can levy profession tax but total amount paid by an individual to the state shall not exceed Rs. 2500 per annum.
2. Sales Tax :-
   Article 286 ensures that sales tax imposed by states do not interfere with imports and exports or inter-state trade and commerce, which are matter of national concern and should therefore be beyond the competence of the states.
   Even though a sale does not take place in the ---------- of inter- state trade, state taxation would be subject to restriction and conditions imposed by parliament if the sale relates to goods declared by parliament , to be of special importance ( e.g sugar, tobacco, cotton, silk and Woolen fabrics.)
3. Tax on ELECRICITY ‘SALE’ :-
   No state shall impose tax if it is-
4. Consumed by government of India or sold to government of India.
5. Consumed in construction, maintenance or operation of any railway by government of India.
6. EXEMPTION OF UNION AND ATATE PROOERTIES FROM MUTUAL TAXATION [ARTICLE 285(10]

(ii). DISTRIBUTION OF PROCEEDS OF TAXES

 Tax revenues:-

(a). TAXES BELONGING TO THE UNION EXCLUSIVELY

1. Custom   2.  Corporation Tax 3.  tax on capital value of assets of individual and companies 4. Surcharge on income Tax 5.  Fees on matter in list I.

(b). TAXES BELONGING TO STATES EXCLUESIVELY
1). Land revenue
2). Stamp duty except in document included in union list.
3). Succession duty, state duty and income tax on agriculture land.
4). Taxes on passengers and goods carried on inland welfares.
5). Taxes on land, buildings, mineral rights.
6). Taxes on animals and boats or road vehicle, advertisement, consumption of electricity on luxuries and amusement etc.
7). Taxes on entry of goods into local area.
8). Sales tax
9). Tolls
10). Fees on matters in list 2.
11). Taxes on Profession, trade etc, not exceeding rupees 2500 per annum.

(c).   DUTIES LEVIED BY UNION BUT COLLECTED AND APPROPRIATED BY      STATES [ARTICLE 268].
Stamp duties on bill of exchange etc. and excise duties on medicinal and toilet preparations containing alcohol through though are included in the union list and levied by the union.

(d). TAXES LEVIED AND COLLECTED BY UNION BUT ASSIGNED TO STATE [ARTICLE 269].

• Duties on succession to property other than the agricultural land.
• Estate duty in respect of property other the agricultural land.
• Terminal taxes on goods and passengers carried by railway,  air or sea.
• Taxes on railway fares and flights.
• Taxes on stock exchange other than stamp duties.
• Taxes on sales of and advertisement in newspapers.
• Taxes on sales and purchase of goods other than newspapers, where such sale or purchase takes place in the course of interstate trade.
•  Taxes on inter state consignments of goods.

(e). TAXES LEVIED AND COLLECTED BY THE UNION AND DISTRIBUTION BETWEEN UNION AND THE STATES.

[Article 270] –Taxes on income other than on agricultural income.

Duties of excise, excepting medicinal and toilet preparation.[Article 272].

(f). NON –TAX REVENUE OF UNION

Receipts from Railways, post and Telegraph, Broadcasting, opium, currency and mint, PSU (IA, AI, SAIL)

(g). NON TAX REVENUE OF STATES 

 Forests, irrigation, commercial enterprises, industrial undertaking

GRANT IN AID
Constitution provides that grant in aid shall be made in each year by union to states in need of assistance, particularly for the promotion of welfare of tribal areas [Article 275].

SAFEGUARDING THE INTEREST OF THE STATE IN THE SHARED TAXES

Article 274 provides that no Bill or amendment, which shall be introduced in parliament except on the recommendation of the President which –

1. Varies the rate of tax or duty in which states are interested.
2. Affects the principle on which money is distributable according to the forgoing provision of the constitution.
3. Imposes any surcharge or tax or duty for the purpose of the union.

FINANCIAL CONTROL BY THE UNIION IN EMERGENCIES

1. While a proclamation of emergency is made by President, all provisions relating to division of taxes between union and states and grant in aid will be suspended.
2. During financial emergency, union can give direction to reduce salaries and allowances of all person serving in connection with the affairs of state including High Court judges.
3. To reverse the money of finance Bill for President’s consideration, after they passed by the state legislature.

BORROWING POWER OR THE UNION [Art.292] & THE STATES[Art 293]

The union shall have unlimited power of borrowing upon the security of CFI either within India or outside.

The borrowing power of a state is, however, subject to a number of constitutional limitations:-

1. It can not borrow outside India but within the consent of centre.
2. Within the territory of India, limitation may be imposed by state legislature. So long as such a loan remains outstanding, no fresh loan can be raised by state without the consent of government of India.

Chapter-15 A

In a federal state a unit would require its recognition by and cooperation of the units of federation. Therefore the units are required to observe in their treatment of each other. These rules and agencies relates to such matters as-

A). RECOGNITION OF PUBLIC ACTS, ETC:-

 Since the jurisdiction of each state is confined to its own territory the acts and records of one state might have been refused to be recognized in another state. Therefore, Constitution provides that statutory instruments or judgements of order of one state shall be given recognition in another state in the same manner as the statute, etc,of the latter state itself.

B). EXTRAJUDICIAL SETTLEMENTS OF DISPUTES:-

In order to maintain the strength of the union it is essential that there should be adequate provision for judicial determination of disputes by extra – judicial bodies. Article 131 provides for the judicial determination of disputes between states by vesting the Supreme Court with exclusive jurisdiction in the matter, Article 262 provides for the adjudication of one class of such disputes by an extrajudicial tribunal, like in water disputes or any inter – state river dispute, parliament by law can exclude the jurisdiction of all courts including Supreme Court.   Article 263 provides for the prevention of inter-state disputes by navigation and recommendation by an administrative body. Under it, the President can establish an inter-state councilfor enquiring into and advising upon inter-state disputes.

C). COORDINATION BETWEEN STATES:-

 The power of President to set up interstate council may also be exercised for the purpose of investigation and discussing subjects in which some or all of the states or union and one or more states have a common interest. President has constituted e.g. Central Council for Health, Local self- Government.

ZONAL COUNCILS: - set up by an act of Parliament, five in number-

Central Zone:-  comprising Uttaranchal, U.P, M,P, Chhattisgarh.

Eastern Zone:-  comprising Bihar, Jharkhand,Orrisa,West Bengal.

Western Zone:- comprising Gujarat, Maharashtra,Goa,Daman and Diu, Dadra & Nagar Haveli.

North Zone:- comprising J&K ,H.P,Punjab, Haryana, Rajasthan, Delhi, Chandigarh.

South Zone: - comprising Andhra Pradesh, Tamilnadu, Karnatka, Derala, and Pondicherry.

Each council consists of CM and two other ministers of each States in the zone and administrator in case of UT. The union home minister has been nominated to be the common chairman of all the zonal councils. Zonal councils discuss matter of common concerns of the states and union territories of each zone such as of the economic and social planning, border disputes, interstate transport, matters arising out of the organization of states and to give advice to the government of states concerned as well as government of India.

RIVER BOARD:- the River board Act 1956 provides for the establishment of river boards for the purpose of advising the government interested in relation to the regulation or development of an interstate river.

WATER DISPUTES TRIBUNAL:-  for an inter-state river dispute , where award would be final, according to Article 262(2).

D). FREEDOM OF INTER-STATE TRADE AND COMMERCE:- This freedom is sought to be secured b the provision Article 301 to Article 307 in part XIII of our Constitution. Subject to exceptions laid down in this part, no restriction can be imposed on the flow of trade, commerce and intercourse, not only points within the territory of India.

The limitations upon above freedom are:

1. Under Article 302, Non-discriminatory restrictions may be imposed by parliament in public interest.
2. Discriminatory or preferential provision may be made by Parliament , for the purpose of dealing with a scarcity of goods arising in any part of India[ article 302(2)].

Non- discriminatory taxes may be imposed by state on goods imposed from states or UTs, similarly as on interstate goods.