CENTRE-STATE RELATIONS

1. Legislative Relations

Note: The Constitution provides for the division of Executive, Legislative, and Administrative powers, but not Judicial powers due to an integrated judiciary.

1. Territorial Extent of Legislation

Exceptions to Parliament’s Plenary Powers:
1. President & UTs: For four UTs, the President may repeal/amend any Act of Parliament related to peace and good governance.
2. Scheduled Areas: The Governor may direct whether an Act of Parliament/State applies.
3. Tribal Areas:
  - Act of Parliament: Governor (Assam); President (Meghalaya, Tripura, Mizoram).
  - Act of State: Respective Governors decide applicability.

2. Distribution of Legislative Subjects

Union List: 100 (Earlier 97)
State List: 61 (Earlier 66)
Concurrent List: 52 (Earlier 47)

3. Parliamentary Legislation in State Field (5 Extraordinary Situations)

A. Rajya Sabha Resolution (Special Majority: 2/3rd Present & Voting)

Must be renewed every year.
If not renewed, the law ceases after 6 months.
Does NOT restrict the state from legislating on the same subject.
B. President’s Rule (Article 356)
Laws remain valid even after President’s Rule ends (i.e., they are not co-terminus with it).
C. When States Make a Request
Surrender of power → Only Parliament can legislate on the subject.
D. Implementation of International Treaties (Article 253)
Parliament can legislate on any state subject to implement an international treaty.
E. During a National Emergency (Article 250)
Parliament can legislate on state subjects, but such laws cease after six months once the emergency ends.

4. Centre’s Control Over State Legislation

President’s Assent Required:
- Certain state bills require the President’s prior sanction before introduction in the State Legislature.
- Article 360: Financial emergency provisions may affect state financial powers.

2. Administrative Relations

Distribution of Executive Power: In the Concurrent List, states have executive power unless a Parliamentary law directs otherwise.
Obligation of States and Centre:
- Article 256: States must comply with parliamentary laws.
- Article 257: States must not act prejudicially against Union interests.
Centre’s Directions to States (Article 257):
- Means of communication.
- Railways.
- Instruction in the mother tongue.
- Schemes for the welfare of Scheduled Tribes (STs).
Mutual Delegation of Power:
- By agreement (voluntary) or by law (compulsory).
Cooperation Between Centre & States:
- Article 262: Inter-state water disputes.
- Article 263: Inter-State Council.
- Full Faith & Credit Clause (Inter-state recognition of public acts).
- Article 307: Parliament may appoint an authority for inter-state Trade, Commerce, and Intercourse (T,C&I).
All India Services (IAS, IPS, IFS).
Public Service Commissions (Union and State PSCs).
Centre-State Relations During Emergencies:
- Article 352: National Emergency.
- Article 356: President’s Rule.
- Article 360: Financial Emergency.
Integrated Judicial System: Single judiciary for both Centre & States.
Other Provisions:

Article 355: Centre’s duty to protect states.
Governor’s Appointment by the Centre.
State Election Commission (SEC).

3. Financial Relations

Taxation on Concurrent Subjects: Both Centre and State can levy taxes, making them not exclusive.

1. Grants-in-Aid to States

A. Statutory Grants (Article 275):

Parliament provides grants to states in financial need.
Also used for the welfare of Scheduled Tribes (STs).
Given based on Finance Commission recommendations.
B. Discretionary Grants (Article 282):
Given by both Centre and States.
For any public purpose, even beyond legislative competence.

2. Difference Between Cess and Surcharge

3. Bills Needing President’s Recommendation (To Protect State Interests)

Bill imposing or varying any tax/duty in which states are concerned.
Bill modifying the meaning of “Agricultural Income.”
Bill affecting the distribution of revenues between Centre & States.
Bill imposing any surcharge on specific taxes/duties for Centre’s benefit.

4. Borrowing Powers

Centre: Can borrow on the security of the Consolidated Fund of India (CFI), but within limits prescribed by Parliament.
State: Can borrow on state resources but within limits set by the State Legislature.
Centre Giving Loans to States:
- Loans & guarantees given by the Centre are charged on the Consolidated Fund of India (CFI).

5. Intergovernmental Tax Immunities

1. Exemption of Central Property from State Taxation

All property of the Centre is exempt from all state and local taxes.
However, corporations or companies owned by the Centre are NOT exempt.

2. Exemption of State Property from Central Taxation

Property and income of a state are exempt from Central taxation.
However, the Centre can tax the commercial operations of a state if Parliament provides for it.
State corporations and local authority properties are NOT exempt from Central tax.