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# What is Federal Polity
A federal constitution establishes the dual polity with the Union at the Centre and the States at the periphery, each endowed with the sovereign powers to be exercised in the field assigned to them respectively by the constitution.
# Indian Federal System
In the Indian federal set-up, the constitution divides powers between Centre and states as:
- Parliament law for whole or part of India; extraterritorial as well; State legislature only for the state or part of it (Article 245)
- (I) Union list; (II) State list ; (III) Concurrent List. (Article 246)
- Dispute between Centre and state; SC to adjudicate (Article 131); Doctrine of Pith and Substance; the doctrine of colorable legislation.
- Residuary powers of legislation (Article 248)
- Parliament shall have power
- Including powers to impose taxation on such matters.
Article 249 – Power of Parliament to legislate with respect to the matter in state list in the national interest
- Special resolution by Rajya Sabha; 2/3rd of members Present and Voting.
- Law can be made by Parliament
- Law passed will cease to be in force 6 months after the expiration of resolution.
Article 250 – Power of Parliament to legislate with respect to the matter in state list during Proclamation of Emergency
- Parliament can legislate on any matter in the state list; during the proclamation of emergency.
- Only 6 months after the invocation of the National Emergency.
Note: Power of Parliament under Article 249 and 250 doesn’t deprive the state legislature power; State Legislature concurrently makes legislation; to the extent of contravention State Legislature Act becomes inoperative.
Article 252 – Power of Parliament to legislate for two or more States by consent and adoption of such legislation by any other state
- When two or more states pass a resolution on any matter in the State list; Parliament can pass legislation on such items; amended and repealed only by Parliament.
- Such law applies only to such states; other state legislatures can pass resolution and adopt it.
Article 253 – To implement international treaties
- Parliament to make laws to implement international treaties.
- Even related to the state list.
Article 256 – Parliament to make laws w.r.t. all matters in the State list when Article 356 is imposed.
- A law made so by the Parliament continues to be operative even after the President’s rule.
Obligation of states and the Union (Article 256)
- Executive power of every state shall be exercised as to ensure compliance with laws made by parliament; and any existing laws in that state.
- The executive power of the union extends to giving such directions for state as may appear necessary to Government of India.
Control of union over State in certain cases (Article 257)
- Union government can give directions to the state
- Construction/maintenance of communication lines declared as national or military importance
- Declare National highways or waterways
- Protection of Railway in the state.
- Cost incurred by the state in performing such duties shall be paid by Government of India.
Power of Parliament to confer powers on states in certain cases (Article 258)
- President with the prior consent of the Governor of a state; confers powers upon state executive on which executive power of union extends.
- Also, through laws made by Parliament even under the Union list.
Power of the state to entrust functions to the Union (Article 258A)
- of state with the consent of the GoI; entrust to GoI any function to which the executive power of the state extends.
Public acts, records and Judicial Proceedings
- Full faith and credit shall be given throughout the territory of India to public acts, records and judicial proceedings of the union and every state.
- Articles 268 to 293 in Part XII of the Constitution deal with Centre–state financial relations.
- No taxes shall be exercised except by authority of law (Article 265)
- There must be a law
- Law must authorize tax
- Tax must be levied and collected according to law
- Stamp duties within a state to be levied by the union; but collected and appropriated by the state (Article 268).
- Union and states should have adequate financial resources at their disposal; distribution of financial resources;
- Distribution of legislative power to levy taxes
- Union has the power to levy taxes on items in Union list. Example: Non Agricultural land; income tax etc.
- Union has the power to levy taxes on all items in state list. Example: Agricultural land, Agricultural income etc.
- Residuary power of taxation belongs to the union (Entry 97 list I). Example: gift tax, expenditure tax.
- The Constitution also provides for specific for specific grants for promoting the welfare of the scheduled tribes in a state or for raising the level of administration of the scheduled areas in a state including the State of Assam.
- The statutory grants under Article 275 (both general and specific) are given to the states on the recommendation of the Finance Commission.
- Discretionary Grants – Article 282 empowers both the Centre and the states to make any grants for any public purpose, even if it is not within their respective legislative competence. Under this provision, the Centre makes grants to the states.
- Other Grants – The Constitution also provided for a third type of grants-in-aid, but for a temporary period.
- Parliament can provide for grants-in-aid to states by the Centre. Such sums are charged on the Consolidated Fund of India.
Distribution of Tax Revenues
- Taxes belonging to the states exclusively. Example: profession tax; taxes on agricultural land etc.
- Duties levied by the union but collected and appropriated by the states. Example: Stamp duties on bills of exchange (Article 268).
- Taxes levied as well as collected by the Union but assigned to the States. Example: taxes on interstate consignment of goods (Integrated GST).
- Taxes exclusively belonging to union govt. Example: surcharges, cess, etc.
- Taxes to be levied and collected by the Union and distributed between Union and States. Example: Income tax, GST (CGST), etc. (Article 246A)
Note: There is no concurrent power of taxation due to Article 248. Residuary powers of taxation lay with central government. Exception GST (Article 246A) CGST and SGST
Sources of Non-Tax Revenues
- Centre: railways; post; currency and mint; broadcasting; commercial undertakings. Example: SAIL, Hindustan Shipyard Ltd. etc.
- States: forest; commercial enterprises (road, electricity etc.), industrial undertakings (soap, sandalwood, iron and steel, paper in MP).
Goods and Services tax
GST (101st Constitutional Amendment Act) aims to make India a common market with common tax rates.
The important changes made to the Constitution are:
Article 246A – This is a new article inserted in the constitution.
- It says that Parliament and the Legislature of every State, has power to make laws with respect to goods and services tax.
- Parliament has exclusive power to make laws with respect to goods and services tax where the supply of goods, or of services, or both takes place in the course of inter-State trade or commerce.
Article 269A – Goods and services tax on supplies in the course of inter-State trade or commerce shall be levied and collected by the Government of India and such tax shall be apportioned between the Union and the States in the manner as may be provided by Parliament by law on the recommendations of the Goods and Services Tax Council.
Goods and Services Tax Council (Article 246A)
- Union Finance Minister (Chairperson)
- Minister of state in charge of revenue or finance (member)
- Minister in-charge of finance (Concerned state) (member)
- Functions of the council
- Taxes, cess and surcharges to be levied on goods and services
- goods that may be exempted from GST
- Principles governing apportionment of GST levied on Inter-state goods and services (IGST)
- Special rates during certain period
- Any other matter reported to the council
- Quorum: One-half of the total members of the council.
- The majority required: 3/4th of the weighted votes of members present and voting.
- 1/3rd weightage to central govt.
- 2/3rd weightage to state govt.
- GST council shall establish any mechanism to adjudicate dispute between Centre and state or between State vs. States or Centre and state or state vs. state
- GST council shall establish any mechanism to adjudicate dispute between Centre and state or between State vs. States or Centre and state or state vs. state
The GST would replace the following taxes currently levied and collected by the Centre:
- Central Excise Duty
- Duties of Excise (Medicinal and Toilet Preparations)
- Additional Duties of Excise (Goods of Special Importance)
- Additional Duties of Excise (Textiles and Textile Products)
- Additional Duties of Customs (commonly known as CVD)
- Special Additional Duty of Customs (SAD)
- Service Tax
- Central Surcharges and Cesses so far as they relate to supply of goods and services
State taxes that would be subsumed under the GST are:
- State VAT
- Central Sales Tax
- Luxury Tax
- Entry Tax (all forms)
- Entertainment and Amusement Tax (except when levied by the local bodies)
- Taxes on advertisements
- Purchase Tax
- Taxes on lotteries, betting and gambling
- State Surcharges and Cesses so far as they relate to supply of goods and services
An Integrated tax (IGST) would be levied and collected by the Centre on inter-State supply of goods and services. Accounts would be settled periodically between the Centre and the States to ensure that the SGST/UTGST portion of IGST is transferred to the destination State where the goods or services are eventually consumed.
Inter-State River Water Sharing Disputes
Adjudication of disputes relating to waters of Inter State Rivers and river valleys (Article 262)
- Parliament may by law provide for adjudication of any Inter-State River Water Dispute.
- Parliament by law provides neither Supreme Court nor any other court have jurisdiction over such issues.
- The resolution of water dispute is governed by the Inter-State River Water Disputes Act, 1956.
- According to its provisions, if a State Government makes a request and the Central Government is of opinion that the water dispute cannot be settled by negotiations, then a Water Disputes Tribunal is constituted for the adjudication of the water dispute.
- The act was amended in 2002, to include the major recommendations of the Sarkaria Commission which mandated a one year time frame to setup the water disputes tribunal and also a 3 year time frame to give a decision.
INTER – STATE COUNCIL
- Article 263 of Indian constitution gives provision for establishment of an Inter-State Council.
- President by an order establish Inter-State Council in public interest and also define nature of duties.
- Inquiring and advising into disputes arising between states.
- Investigating and discussing subjects in which some or all states and union have common interest.
- Making a recommendation on any such subject for better co-ordination of polity.
- First Council in 1990 on recommendation of Sarkaria Commission.
- Composition –
- PM- Chairperson
- CM – All the states and UTs
- UTs – Administrators
- 6 cabinet ministers of Union as nominated by the PM
- In 26 years, it has met only 11 times. Recently the meeting was held after a gap of 10 years in Delhi in July 2016.
Zonal Councils aim at promoting cooperation and coordination between States, UTs and the Centre.
- They discuss and make recommendations regarding common matters.
- They are only deliberative and advisory bodies.
- These are statutory bodies created by States Reorganization Act of 1956.
The Act divided the country into 5 zones:
- Northern Zone
- Central Zone
- Eastern Zone
- Western Zone
- Southern Zone
Each zonal council consists of:
- From Centre – Home Minister (acts as a chairman)
- From States – CM of all States in Zone + 2 other ministers (Each CM acts as a Vice-Chairman by rotation, holding office for a period of 1 year at a time)
- Administrators of all UTs in the zone
- Following can be associated as advisors (without right to vote)
- One person nominated by Planning Commission.
- Chief Secretary of each state in the zone.
- Development Commissioner of each state in the Zone.
- In addition to the above Zonal Councils, a North-Eastern Council was created by a separate Act of Parliament—the North-Eastern Council Act of 1971.
- Its members include Assam, Manipur, Mizoram, Arunchal Pradesh, Nagaland, Meghalaya, Tripura and Sikkim.
- Its functions are similar to those of the zonal councils, but with few additions.
- It has to formulate a unified and coordinated regional plan covering matters of common importance.
- It has to review from time to time the measures taken by the member states for the maintenance of security and public order in the region.
# Emergency Provisions
Part XVII (Article 352 – Article 360)
Aims to Protect Sovereignty, unity and Integrity and also Security of the state; exercised on Aid and Advice of Council of Ministers.
NATIONAL EMERGENCY (Article 352)
- National emergency can be declared on the basis of war, external aggression or armed rebellion. The Constitution employs the expression ‘proclamation of emergency’ to denote an emergency of this type.
- President can declare a national emergency when the security of India or a part of it is threatened by war or external aggression or armed rebellion.
- Has been proclaimed 3 times so far; (1962, 1971 and 1975);
- 1962 and 1971 – External Aggression;
- 1975 – Internal Disturbance
- 38th Constitutional Amendment Act – President Satisfaction for proclaiming emergency beyond judicial review.
- 39th ConstitutionalAmendment Act 1975 – Barred Jurisdiction of courts; Election Dispute of PM and Speaker.
- Declared null and void by S.C; Raj Narian case 1975.
- Separation of Power – Basic Structure.
- President invoked Article 359; F.R’S were suspended (Example: Article 14; 21; 22 etc. ADM Jabalpur Case; No Jurisdiction for Courts even it Life and Liberty of Person is Deprived During emergency.
Procedure for Proclamation of National Emergency
- President Declare national emergency (on has Satisfaction)
- 38th CAA (no Indicial review); undone by 44th CAA, 1978
- Written Recommendation from cabinet 44th CAA 1978
- Proclamation to be approved by both the houses within 1 month (44th CAA)
- Proclamation can be extended indefinitely, provided approved by parliament every 6 months (44th CAA)
- Approval by special majority i.e. 2/3rd members present and voting + Absolute majority (44th CAA)
- Proclamation may be revoked by president : Lok Sabha passes a resolution by simple majority
- Executive and legislative relationship (Article 353)
- Centre can give executive directions on any matter to the state
- The parliament can legislate on any matter under state list or confer such power to any offices or authority of the union.
- Financial Relationship (Article 354)
- Distribution of revenue between Centre and states can be modified
- Effect on Fundamental rights
- Article 358 – Automatically suspends Article 19 (war and external aggression)
- Article 359 – suspension done through presidential order; can’t suspend rights under Article 21 and 20.
- Article 355 – Duty of the union government to protect the states against external aggression and internal disturbance
STATE EMERGENCY OR PRESIDENT’S RULE
- Article 356 – President satisfied that state govt. administration not in accordance with the provisions of the constitution. For Example:
- Council of Minister’s lost majority in the assembly
- State administration fail to maintain peace and public order
- State administration against secular values [S.R Bommai case]
- Failure to comply with directions given under Article 365 is a ground to invoke Article 356,
- SR Bommai guidelines 
- President proclamation subject to judicial review
- State govt. should be given opportunity to prove majority; floor test to be the only forum.
- Not to dissolve the state legislative assembly; pending approval of parliament.
- Burden lies on central govt. to prove relevant material existed.
- Court can provide complete justice to affected state govt.
- State pursuing anti-secular politics is liable to action under article356.
- Note: Article 356; extraordinary power; to be sparingly used;
- B.R. Ambedkar envisage it to remain a dead latter in the constitution.
Imposition of President Rule
- Article 356 – President can impose President Rule; receipt of report of governor or otherwise; governance not according to the provisions of the constitution.
- To be approved by both houses within 2 months
- Duration- 6 months; one approved; for a maximum of 3 years.
- Beyond 1 year subject to conditions
- National emergency in whole of India or any part of the state.
- Election commission certifies it’s difficult to conduct election on account of national emergency.
- Simple majority (Approval and extension)
- Proclamation may be revoked by president at any time.
- All the executive authority is taken up by the President or any other authority as decided by the President.
- Legislative powers are exercised by the Parliament (or) confer such power upon the president [Article 357].
- Article 360.
- Financial Emergency is declared when the President satisfied that financial stability and credit of India
- Proclamation to be approved within 2 months by both houses by Simple majority.
- One approved continues indefinitely till revoked.
- President can revoke emergency at any time.
- Union govt. give direction to observe canons of financial propriety
- Reduction in salaries of all or any class of person saving in the state.
- Reservation of money bills or financial bills for consideration of the president.
- Reduction in salaries of any classes of persons serving in the central govt. Including judges of Supreme Court and High Court.