Between The Union And The States

The Constitution of India makes a division of legislative powers between the Union and the States under Seventh Schedule. The Union Parliament has powers to make laws for the whole or any part of the territory of India, while the Legislature of a State can make laws for the State concerned. Also, like the Government of India Act, 1935, there is three· fold distribution of powers between the Union and the States:

(1) Union List: It includes 99 subjects ovel' which the Union Parliament has exclusive power of Legislation such as Defence, Foreign Affairs, Banking, Currency, etc.

(2) State List: It comprises 61 items over which the State Legislatures have exclusive powers of Legislation, e.g., Health, Agriculture, etc.

(3) Concurrent List: It comprises 52 items in which the Union and the State Legislatures both can make laws, e.g., criminal law and procedure, marriages, economic planning, education, etc.

(4) Residuary Powers: According to Art. 248 of the Constitution, the residuary powers are vested in the Union Legislature, Le., the Parliament have the exclusive right to make any law with regard to any matter not specified in the Concurrent or State List.

Conflict of Jurisdiction:
In case of the overlapping of a matter as between the lists, predominance has been given to the Union Legislature. Thus, in the case of repugnancy between a law of the State and a valid Union law, the latter will prevail and the law made by the State to the extent of repugnancy shall he void. If, however, the legislation relates to a concurrent subject, the State legislation may prevail, notwithstanding any repugnancy, if the State law had been reserved for the President and received his assent.


The Union Government have the power to give directions to the Slate Governments as regards exercise of their executive r"wers in respect of the following matters:
(A) Normal Time Directions
(1) To ensure compliance with Union laws and existing laws which apply in that State. [Art. 257J
(2) To ensure that the exercise of executive powers of State do not interfere with the executive powers of the Union.[Art. 257(I)J
(3) To ensure maintenance construction of the means and of communication of national or military importance by the state. [Art. 257(2)]

(4) To ensure ,protection of railways within the State. [Art. 257(3)J

(5) To ensure drawing and execution of schemes specified in the dirt:ctions to be essential for the welfare of the Scheduled Tribes in the State. [Art. 339(2)J

(6) To ensure the provisions of adequate facilities for instruction in the mothertongue at the primary stage of education to children belonging to the linguistic minorities. [Art. 350-AJ

(7) To ensure the_ development of Hindi language. [Art. 351]

(8) During Emergency
(1) During a proclamation of Emergency, the Union Government is empowered to give directions to any State as to the manner in which the executive power of the State is to be exercised. [Art.353(a)]
(2) During a proclamation of failure of constitutional machinery in a State, the President may assume to himself all or any of the executive powers of the State. (Art.35G(I)
(3) During the proclamation of Financial Emergency, the executive authority of the Union extends to the giving of directions to any State:
(i) to observe such canons of financial ~ropriety as may be specified in the directions;
(li) to red uce t he salaries and allowances of all or any class of persons serving in connection with the affairs of State or Union including Judges of Supreme Court and High Courts; and
(iii) to require that all Money Bills and other financial Bills be reserved :Cor consideration by the Preside.nt when passed by the State
Legislature. [Art. 30(4)]
Sanction for Ensuring Compliance with Directives Article 35 of the Constitution provides that in case of non-compliance of directives given to
a State by the Union, it shall be lawful for the President to declare that a situation has arisen in which the Government of the State cannot be
carried in accordance with the provisions of the Constitution. On such a declaration being made, the provisions of Art. 356 regarding
failure of constitutional machinery will come into operation and t he President will assume to himself all or any of the executive powers and
thereby have the violated directives carried out.


Ideally speaking, the best system of federal finance would be one which effected a clear-cut division of sources of the revenue between the Federal and the State Governments so as to make each of the parties financially independent of each other. Indian Constitution make elaborate provisions regarding the distribution of revenues between the Centre and the States. The financial relations between the Union and the States can be studied under the following heads:

(1) Duties levied by the Union but Collected and Appropriated by the States: Stamp duties and duties of excise on the medical and toilet preparations are levied by the Government of India, but collected and appropriated by the States within which such duties are leviable except in the Union Territories where they are coll~cted by the Union Government. [Art. 268]

(2) Taxes Levied and Collected by the Union but Assigned to the States within which they a,re Leviable:

(i) Succession duty in respect of property other than agriculture land;

(ii) Estate duty in respect of property other than agricultural land;

(ill) Terminal taxes on goods or passengers carried by railways, sea or air;

(iv) Taxes on railway fares and freights ;

(v) Taxes on transactions in stock exchanges;

(vi) Taxes on sale and purchase of newspapers, including advertisements published therein;

(vii) Taxes on the sale and purchase of goods other than newspapers, where such purchase takes place in the cow·se of inter-state trade or commerce. [Art. 269]

(3) Taxes Levied and collected by the Union and distributed between the Union and the States: Certain taxes are levied as well as collected by the Union, but their proceeds are divided between the Union and the States in a certain proportion in order to effect an equitable distribution of the financial resources. There are:

(a) taxes on income other than agricultural income; and

(b) excise duties as are included in the Union List, excepting medicinal and toilet prepara.tions.

(4) Surcharge: The Parliament is, however, authorized to levy surcharge on the taxes mentioned at (2) above and on income-tax for the purpose of the Union.

(5) Grants-in-Aid: Parliament may make grants-in-aid from the Consolidated Fund of India to such States as are in need of assistance, particularly for the promotion of welfare of tribal areas, including special grant to Assam.

(6) Loans: The Union Government may make loan to any State or give guarantees with respect to loans raised by any States.

(7) Previous Sanction of the President: No Bill or amendment can be introduc:ed or moved in either House of Parliament without" the previous sanction of the President, if:

(a) it imposes or varies any tax in which the States are interested; or
(b) it varies the meaning of the expression "Agricultural Income" as defined in the Indian lncome-Tax Act; or
(c) it affects the principles on which money are distributed to the States; or
(d) it imposes a surcharge on the State taxes for the purpose of the Union.
8) According to Article 301, freedom oftrade, commerce and intercourse throughout the territory of India is guaranteed, but the Parliament has the power to impose restrictions in public interest.

(9) Although taxes on income, other than agricultural income, are levied by the Union, yet the State Legislatures can levy taxes on profession, trade, etc., provided that the total amount of such taxes payable in respect of anyone person should not exceed Rs. 2500 per month.

(10) Provision has been made for the constitution of a Finance Commission to recommend to the President certain measures for the distribution of financial resources between the Union and the States.

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