Module 05: Relations between Union and the States

Introduction
Dr. B.R. Ambedkar once said that the basic principle of the federations is that the legislative and
executive authority is divided between the centre and the states not by any law to be established by the
centre, but by the constitution itself. In no way does the member states rely on the centre for their
legislative or executive authority. The states and the centre are the same in this matter. The above
statement makes it very clear that the Constitution of India establishes a federal framework as the basic
structure of the government of the country. It is from the Constitution, which separates all competences-
legislative, executive and financial-that union and states derive their power. As a result, the states do not
delegate to the Union but are autonomous within their spheres as provided for in the Constitution.
Centre-State legislative relations
The Constitution of India establishes a dual constitutional authority with a simple separation of powers,
each of which is sovereign within its domain. The Indian federation is not the result, and Indian units
cannot leave the union, as a consequence of an arrangement between independent units. There are also
extensive provisions in the constitution to govern the various dimensions of relations between the
centre and the states. Central-state relations are separated by the following:
1. The Legislative relations;
2. The Administrative relations;
3. Financial relations.
The legislative ties between the centre and state are governed by Articles 245 to 255 of Part XI of the
Constitution. It sets out a double division between the Union and the states with legislative powers i.e, in
territorial recognition and relation to the subject.

Territory jurisdiction: Article 245(1)

Concerning the territory, Article 245(1) requires a State Legislature to make law for the entire or any part
of the State to which it belongs, subject to the dispositions of this constitution. Unless the boundaries of
the state itself are broadened by an act of the Parliament, a State legislature can not broaden territorial
jurisdiction in any circumstance. On the other hand, Parliament has the right to legislate "on all or part of
India's territory, which does not only include the States but also Indian Union territory." It also has the
strength of extra-territorial laws that no state legislature has. This means that the laws made by
Parliament would apply not only to individuals and territory but also to Indian subjects living anywhere
in the world. However, there are other limitations on Parliament's territorial competence. However,
certain unique clauses of the constitution are subject to the plenary territorial competence of
Parliament. These are the following:
1. The President can make regulations that are equivalent to the laws of Parliament, some territories of
the Union, such as the Andaman and Lakshadweep Region, and these regulations may revoke or amend
a law adopted by Parliament on the said territories (Article 240).
2. Notifications can be issued by the governor (Para 5 of Schedule 5(3) of the Indian Constitution) that
prevent or change the application of the Acts of Parliament to any programmed area of government.

3. Para 12(1)(6) of schedule VI says that, by public notification, the Governor of Assam may, subject to
such exceptions or adjustments as may be stated in the notification, direct that any other act of
Parliament shall not apply to the autonomous region or district of the state of Assam or apply to that
region or section.

In the case of A.H. Wadia v. CIT, the court held that if there is an appropriate relation or link between
the State and the object, i.e. subject matter of legislation, the State legislature cannot make
extraterritorial law (objects can not be located physically within territorial limits of the State).
In the case of Wallace Bros, v. CIT, a licensed business in England was a partner in an Indian venture.
Indian revenue tax authorities were aiming to tax the company's entire income. The Court affirmed that
the derivation for a year of the substantial part of its revenue from British India has given a corporation
sufficiently territorial relation to justify that it is regarded domestically in India for all purposes of income
taxation.
Hence, the above particular requirements have been adopted since the areas mentioned in the question
are outdated and may cause difficulties or other injurious effects if they are implemented
indiscriminately.

Subject matter:
A federal structure demands that the centre and States share their forces. The nature of the distribution
is different in every region, depending on the local and political context. For instance, in America,
sovereign states did not like the absolute central government subordination. Therefore, although
maintaining the remainder, they believed in confiding subjects of popular interest to the central
government. Australia was pursuing just one set of forces in the United States. There are double listings
in Canada, leaving the residue in the centre by the federal and provincial governments. The Canadians
were mindful of the tragic circumstances that resulted in the Civil War of 1891 in the United States of
America. We knew the vulnerabilities of the centre. And it was a good core that they wanted. The
Canadian regime chose a strong centre as a result of the Indian Constitution-Makers. However, they have
added one more list-a a concurrent list.
The extent of laws made by Parliament and by the legislatures of states
So far as the subjects of law are concerned, the Constitution uses the Government of India Act of 1935
as its basis and subdivides authority into three lists between the Union and the States. These are:
(i)The Union list,[ 98 subjects , over which the Union has exclusive authority. The topics on the Union
list, for example, security and foreign relations, are of national significance, etc.]
(ii) the State list, [There are 59 topics in the State List over which countries have exclusive jurisdiction.
The concerns listed on a State list, such as public order, police and public safety, are of local or national
importance.]
(iii) the Concurrent list.[52 subjects like criminal and civil cases, marriage and divorce, economic and
special planning unions, money, media, magazines, employment, management of the population and
preparation of the families, etc.]

Both the Union and States can enact laws on this list but the federal rule prevails over state law in the
case of a dispute between the law of the Central and the State law. The purpose of the constitutional
inclusion of the list was to ensure continuity in key legal principles across the country. Legislatures both
in the parliament and in the State may make laws on matters mentioned above, but a preliminary and
ultimate right of the centre is to legislate on established matters. In the event of a conflict between the
law of the State and the law of the Union on a subject in the Concurrent List, the law of the Parliament
shall prevail.
Residuary powers of legislation [Article 248]
Residual powers are legislative powers on subjects not mentioned in any of the three lists (Union List,
State List, and Concurrent List).
1. Constitutional Provision:
Article 248: Parliament has exclusive power to make laws on any matter not mentioned in the three lists.
Entry 97, Union List (List I): Confirms that Parliament can legislate on subjects not found in List II or III.
2. Unique Feature:
 In India, residual powers are given to the Union Parliament (Centre).
 In contrast, in many other federal countries (like the U.S., Canada, Australia), residual powers are
usually with the States/Provinces.
3. Role of Courts:
 If there is a dispute on whether a matter falls under residual powers, the courts decide.
 Example: Parliament can only legislate on such a matter if the Court agrees it is truly “residual.”
4. Scope & Limitations:
 Residual powers are not very wide because many matters are already covered in the three lists.
 Parliament cannot use this power to impose taxes unless explicitly allowed.
5. Purpose of Granting Residual Powers to Parliament:
 To ensure that new or unforeseen subjects (like modern technologies, digital laws, etc.) can still be
legislated upon.
 To avoid legislative gaps in a rapidly developing society.
 Framers of the Constitution intended that residual powers should be used as a last resort, not the
first option.

In the case of Kartar Singh v. State of Punjab and UOI v. H.S. Dhillon's case, the court held that
parliament may combine its power with the residual power under Article 248 under entry into the Union
List or Competition List. Also in the case of UOI v. H.S. Dhillon, it was held that Gift Tax Act, Inquiry Act
Commissions, etc. are valid under the parliamentary residuary power. In the case of State of A. P. v.
National Thermal Power Corpn. Ltd. the Supreme court held that unless an entry does not state an
exclusion from the area of legislation that is evident at the time of obvious reading, the absence of
exclusion can not be read, if a particular clause in the Constitution that forbids such legislation is valid, as
allowing the legislative power not expressly excluded from it.

Parliament's power to legislate on State List

Although the Central Government does not have the power in the common circumstances to legislate on
matters mentioned in that State, the Parliament of the Union may only make laws on such matters under
some special conditions. These special conditions are:
a) In the National Interest (Art.249)
Several Articles of the Indian Constitution defined the parliament's predominance in the legislative area.
 Provision: Article 249 empowers Parliament to legislate on any matter in the State List if Rajya
Sabha passes a resolution declaring it necessary in the national interest for Parliament to lay down
laws in respect of any matter mentioned in the State List referred to in the resolution, it becomes
lawful for Parliament to lay down laws for the whole or any part of the proceedings.
 Procedure:
Resolution must be passed by two-thirds majority of members present and voting in the Rajya Sabha.
This resolution empowers Parliament to legislate on a specific matter in the State List.
 Duration:
Initially valid for 1 year. Can be extended annually through fresh resolutions.
 Cessation:
Any law passed under this Article remains valid 6 months after the resolution ceases to operate.
 Significance:
This mechanism gives the Union Parliament power in matters where a national interest is at stake, even
in the absence of an emergency.
 Example: Regulation of industries declared to be of national importance

b) Under Proclamation of National Emergency (Art. 250)

 Provision: When a National Emergency under Article 352 is proclaimed, Parliament obtains the
power to legislate on matters in the State List.
 Supremacy of Central Law: As per Article 251, if a State law conflicts with a law made by Parliament
under emergency, the Parliament’s law prevails.
 Duration: These laws remain effective only during the Emergency, and continue for 6 months after
the Emergency ends.
 Purpose: To enable the Centre to handle extraordinary situations affecting national security,
sovereignty, or financial stability.
 Example: During the 1975–77 Emergency, Parliament passed laws impacting State subjects for
national coordination.
This legislation shall extend in the case of a national emergency (Article 352) and every State in
compliance with the Order of the President (Article 356) or the event of a financial emergency (Article
360). Under this time, the laws of the State or States shall remain inoperative to the degree that they are
contrary to the law of the centre (Art. 251). Thus, the Parliament as a whole will legislave on the subjects
specified in the State List while the National Emergency Declaration is in effect.

c) By Agreement between States (Art. 252)

 Provision: If the Legislatures of two or more States pass resolutions requesting Parliament to
legislate on a matter in the State List, Parliament is empowered to do so.
 Extent of Law:
o Initially, the law applies only to the States that requested it.
o Other States can adopt the law later by passing a similar resolution.
 Exclusive Power to Amend/Repeal:
o Only Parliament can amend or repeal such laws; States cannot.
 Purpose:
o To ensure uniformity in law across States on certain issues of common concern.
 Examples:
o Wildlife (Protection) Act, 1972.
o Water (Prevention and Control of Pollution) Act, 1974.
Article 252 provides for regulation by invitation. If the Legislatures of two or more States adopt a
resolution and order the centre to make a law on a specific item of the State Register, it shall be legal for
the Parliament to make a law. The parliament may also make laws about a State subject if two or more
states' legislatures agree that a parliament is allowed to make laws concerning any issue mentioned in
the State List concerning that Matter. Subsequently, any act passed by the Parliament shall extend to
those States and to any other State which has passed such a resolution. Parliament also has the power to
amend or revoke any act of this kind.

d) To Implement Treaties International Agreements or Conventions (Article 253)

 Provision: Parliament has the power to make laws on any matter, including those in the State
List, to:
1. Implement treaties.
2. Fulfil international agreements or conventions.
3. Give effect to decisions made at international conferences.
 Purpose: To ensure India fulfils its international obligations uniformly across the country.
 Effect: Such laws cannot be challenged on the ground that the subject falls within the State List.
 Examples: Environment Protection Act, 1986 (passed to implement obligations from the Stockholm
Conference on Environment, 1972). TRIPS Agreement implementation under WTO.
In other words, even about a state issue, the usual distribution of powers does not preclude Parliament
from passing legislation to satisfy its foreign obligations or through such legislation (Article 253). The
Parliament may pass any Treaty, international agreement or convention, with any other country or state,
or any decision taken during an international conference, association or other entity, within the whole
and any part of the territory of India. Any law enacted by this Parliament shall not, in that it covers the
subject listed in the list of States, be invalidated.

e) Under Proclamation of President's Rule (Art. 356)

 Provision:
When the President is satisfied that a State government cannot be carried on in accordance with the
Constitution (breakdown of constitutional machinery), he may declare President’s Rule under Article
356.
In such a case, the powers of the State Legislature are assumed by Parliament.
 Delegation: Under Article 357, Parliament may delegate the State Legislature’s power to the
President or any other authority specified.
 Duration: Laws made during President’s Rule cease to operate 6 months after it ends.
 Purpose: To maintain governance and law-making when the State government collapses.
 Examples: In States like Jammu & Kashmir, Punjab, or Uttar Pradesh during periods of President’s
Rule, Parliament legislated on State matters.

Conclusion
The Constitution authorizes the centre in the following ways to have control over the state legislature:
1. The Governor can withhold for President's consideration those forms of bills approve by the State
legislature. The President has an absolute veto on them.
2. In the State legislature, even with the prior approval of the President as imposing limitations on free
trade and commerce can bill are made on such matters enumerated in the State list
3. It is necessary for the President for the States to withhold the bills of funds and other budgetary
measures approved during national crises by the State legislature.
As a result, it is very clear from the scheme of allocation of legislative powers between the Union and
the States that framers have bestowed more authority on the Parliament than against the States. The
States do not have sole authority over the topics given to the States by the Constitution and therefore
rendering the States, to that degree, subordinate to the Centre. The centralization pattern is
contradictory with the fundarnental values but, rather than adopting conventional provisions of a federal
constitution, the legislative system is more concerned with country unity. All these provisions of the
constitution are therefore justified as they offer clarification and eradicate the confusion between the
powers of the centre and state. Unless this theory of legislative supremacy were to be removed, there
would be a risk of two similarly dominant pieces of government giving rise to a dispute, agitation,
confrontation, and confusion as a result of competing legislation, These provisions guarantee that there
is an overarching regulatory framework and that there is continuity in the basic laws.

Article 247 – Power of Parliament to establish additional courts

 Provision: Parliament may by law establish additional courts for the better administration of laws
made by Parliament or of any existing laws relating to a matter in the Union List.
 Meaning:
o This gives Parliament the authority to set up special or additional courts, if required, to
handle Union List matters (e.g., taxation, central excise, customs, etc.).
o It overrides the usual distribution of judicial powers between Centre and States.
 Example: Establishment of special courts under central legislations like the Narcotic Drugs and
Psychotropic Substances Act (NDPS Courts) or Special CBI Courts.

Article 251 – Inconsistency between State laws and Parliamentary laws under Articles 249 and 250
 Context: Applies to situations where Parliament legislates on State List subjects under Art. 249
(national interest) or Art. 250 (during national emergency).
 Provision:
o States can continue to legislate on matters in the State List.
o However, if a State law conflicts with a law made by Parliament under Art. 249 or 250, then:
 Parliament’s law prevails.
 The State law becomes inoperative to the extent of repugnancy, but only so long as
Parliament’s law remains in force.
 Key Point: Once Parliament’s special law ceases (after expiry of the resolution/emergency), the State
law revives automatically.

Article 254 – Inconsistency between Central and State laws (Concurrent List)
This deals with repugnancy in the Concurrent List (both Union & States can legislate).
1. Clause (1): General Rule
o If a State law is inconsistent with a Parliament law (validly made on a Concurrent subject),
the Parliament law prevails.
o The State law is void to the extent of repugnancy.
2. Clause (2): Exception with Presidential Assent
If a State law on a Concurrent subject is inconsistent with a prior Parliament law, but the State law has
been: Reserved for the President’s consideration, and Received Presidential assent,→ then the State
law prevails in that State only.
 o Proviso: Parliament can override this law anytime by enacting another law.
Example:
 M. Karunanidhi v. Union of India (1979): Laid down tests for repugnancy.
 State of Kerala v. Mar Appraem Kuri Co. (2012): Parliament’s power is always supreme even if
Presidential assent is given to a State law.

Article 255 – Recommendations and previous sanctions

If a law requires prior recommendation or sanction (of the Governor, Rajpramukh, or President), but it
was not obtained, the law does not become invalid if:
o The Governor or President later gives assent to the law.
 Meaning: This provision treats such recommendations or sanctions as procedural only, not
substantive.
 Purpose: Prevents laws from being struck down merely on technical grounds of missing
recommendations.

Administrative Relations between Union and the States (Articles 256 to 263)
Introduction
The Union of India reflects a unique fusion of federal and unitary features. The Constitution establishes
a distribution of powers between the Centre and the States, while also recognising the importance of
local self-government.
 The Union List contains subjects of national importance (e.g., defence, foreign affairs, currency)
under the exclusive jurisdiction of the Union Parliament.
 The State List contains matters of local or regional importance (e.g., police, public health,
agriculture), reserved primarily for State legislatures.
 The Concurrent List covers subjects where both the Union and the States can legislate (e.g.,
education, criminal law, marriage). In case of a conflict, Union law prevails (Article 254).
In addition, the Constitution also allows delegation of powers:
 The Union may delegate certain legislative or executive powers to the States.
 States, in turn, may further sub-delegate such functions to local authorities (Municipalities,
Panchayats, and other institutions of self-government).

Administrative relationship between the Union and the States

Chapter II, Article 256 to Article 263 of the Constitution of India, 1949 deals with the administrative
relationship existing between the Union and the States, and also with the Central's methods of
controlling the States. The following are the ways through which the Center exercises control over the
States:

A) Direction to the State Governments by the Union Government

According to Constitutional expert DD Basu; the Union's idea of directing the States is foreign and
repugnant to the federal rule. However, this idea was adopted by our Constitution framers from the
Government of India Act, 1935, viewing the peculiar scenario of India and special circumstances
resulting in the emergence of the federation.
 The obligation of the Union and the States [Article 256]
The executive power of every State is required to be exercised in compliance with the laws made by
Parliament.
The Union is empowered to issue directions to a State to ensure compliance with such Parliamentary
laws.

 Control of the Union over the States in certain matters [ Article 257]
 The executive power of a State must not impede or prejudice the exercise of the Union’s executive
power.
 To secure this, the Union may issue directions to the States.
 Specific areas where directions may be given include:
a) Construction and maintenance of communication routes of national or military importance.
b) Measures for the protection of railways situated within the State.
 Such directions do not affect Parliament’s legislative power to declare highways or waterways as
national highways or to construct communication routes as part of Union functions relating to
defence.
 Financial Aspects
 If States incur extra expenditure in carrying out Union directions (e.g., for national/military
communications or railway protection), the Union must pay compensation as mutually agreed.
 In case of disagreement, the matter shall be decided by an arbitrator appointed by the Chief Justice
of India.
Thus, while these powers seem to intrude upon State autonomy, they are designed to ensure national
integration, defence preparedness, and smooth functioning of vital infrastructure.

B) Delegation of Union’s function upon the States

1. Power of the Union to confer powers, etc on the State in certain matters [Article 258]
1. The Parliament may, with the consent of the State Government, either conditionally or
unconditionally, entrust the state or its officers with functions relating to the executive power of the
Union.
2. The Parliament is also empowered to use the State machinery for enforcing the Central laws and may
confer and impose duties upon the State or its officers in this regard. It is notable that the delegation of
power mentioned under clause 1 is delegated with the State's consent, whereas the delegation under
clause 2 can be done by the Parliament without the consent.
3. If a law conferring delegated powers and duties is passed, it would be the duty of the officers of the
State to implement it. Thus, the Parliament capable of interfering in the State's administrative affairs
even without the State's consent.
II. Powers of the States to entrust functions on the Union [Article 258A]
the Governor of a state with the consent of the Union Government, may entrust it or its officers with
functions, relating to any matter which is under the domain of the Union's executive power.
Examples
 A State may entrust the Union with the responsibility of maintaining law and order in a disturbed
area by inviting Central Armed Police Forces (CAPFs).
 State Governments often entrust major criminal investigations to Central agencies like the CBI
(with Union consent).
C) Full faith and credit clause [Article 261]
According to Article 261; full faith and credit shall be provided throughout the Indian territory to the
following:
1. Public acts,
2. Records, and
3. Judicial Proceedings of the Union and each State.
Also, final judgment or orders passed by Civil Courts in any part of the territory can be executed
anywhere in the country.

D) Disputes relating to Water [Article 262]

The Parlia. has authorization to legally provide adjudication of any dispute or complaints with respect to-
1. The uses;
2. Control or distribution over the waters of any interstate river or river valley.
The Parliament may legislate to withhold the Supreme Court or any other Court to have jurisdiction over
disputes relating to the water of the inter-state rivers and river valleys.

E) Grants in aid
The economic resources of the State are very limited although they have to perform many social
upliftment, tasks under the requirement of the Directive Principles. In order to cope with their ever-
expanding needs, the Central Government grants aid to the States.
These aid grants serve a twofold purpose-
The Central Government exercises strict control over the States because these grants are subject to two
certain conditions and it is withdrawable if any State disagrees with these conditions. It forms a center-
state coordination & cooperation.

F) All-India Services [Article 312]

if the Rajya Sabha passes a resolution of national interest supported by a majority, the Parlia. may
legislate to create one or more All-India Services, specifying the conditions for persons appointed to any
service.
This provision is objected at ensuring greater inter-state coordination and implementation of the policies
of the Central Government. Also, this helps the Central Government to implement the Union laws
through the State Government.

Cooperative Federalism [Article 263]

if at any time the President opines that the public interests would be served by the establishment of a
Council charged with the duty of-
1. Inquiring into and advising on disputes between the States;
2. Investigating and discussing on subject matters of common interest between the States, or the Union
and one or multiple States;
3. To recommend upon any subject, particularly for the better coordination of policy and action, then the
President shall by order establish such council, and define -
 The nature of the duties performed by it,
 Its organization and procedure.
Constitution of the Council
1. The Prime Minister;
2. Chief Ministers from all the States;
3. Chief Ministers of the Union Territories having a legislative assembly and the Administrators form the
Union Territories lacking a legislative Assembly;
4. 6 Cabinet Ministers in the Union Ministerial Council nominated by the Prime Minister.
The Prime Minister shall be the Chairman of this Council and preside over its meeting. In his absence, he
may nominate any Union Cabinet Minister for the purpose.
The Procedure of the Council
1. The Council shall adopt guidelines to identify and select issues which are to be brought before it;
2. The Council may meet 3 times every year;
3. The meeting of the Council shall be recorded by Camera;
4. The members shall form a question for the Council meeting;
5. All such framed questions shall be decided through consensus;
6. The Council may while conducting its business observe such other procedures as it may lay down from
time to time.
All-India Services and Administrative Relations
An important aspect of administrative relations between the Centre and States is the role of All-India
Services such as the Indian Administrative Service (IAS), Indian Police Service (IPS), and Indian Forest
Service (IFS). These services are jointly managed by the Centre and the States, ensuring that the
administrative machinery functions uniformly across the country.
 Article 312 of the Constitution empowers Parliament to create new All-India Services, ensuring
that certain key positions in the bureaucracy are filled by officials who are trained and appointed
by the Union but serve in both the Centre and States.
 These services maintain uniform standards of administration and provide the Union Government
with a means of control over state administration, as All-India Service officers can be transferred
between States or recalled to the Centre.
Relations During Emergencies
The balance of power between the Centre and the States can shift significantly during emergencies, as
outlined in Articles 352, 356, and 360 of the Constitution.
 National Emergency (Article 352): During a national emergency, the Centre can direct States on
any subject, including those under the State List, thereby centralising authority.
 President’s Rule (Article 356): If a State government is unable to function according to
constitutional provisions, the President can assume the powers of the State government. This
provision has been criticised for its potential misuse but is intended to maintain the
constitutional framework.
 Financial Emergency (Article 360): During a financial emergency, the Centre can direct States to
observe financial propriety and reduce salaries of State employees, including judges.
These emergency provisions underscore the Centre’s overriding authority in times of crisis, ensuring that
the integrity and stability of the nation are preserved.

Article 260 – Jurisdiction of the Union in Relation to Territories Outside India

1. Extension of Union’s Functions beyond Indian Territory
 Article 260 empowers the Government of India to undertake executive, legislative, or judicial
functions in relation to territories outside India.
 This can only be done through an agreement between the Union Government and the concerned
foreign territory.
2. Foreign Jurisdiction
 Any such agreement is subject to the laws in force regarding the exercise of foreign jurisdiction.
 This means India cannot act arbitrarily in another country’s territory but must act in conformity with
international law and domestic laws.
3. Practical Implications
 India may undertake responsibilities in another territory for:
Administrative assistance (executive powers), Application of laws (legislative powers), Judicial functions
(judicial powers).
Examples
 Before 1961 (Liberation of Goa, Daman & Diu): Certain Indian laws were extended to these
territories through administrative arrangements.
 Indo-Bhutan Agreement: India provides assistance in defense, foreign relations, and sometimes
technical administration under agreements.
 UN Peacekeeping Missions: India sends its forces to other territories to discharge executive and
sometimes quasi-judicial functions under international agreements.
 Trusteeship or Protectorate Situations (historically): India could exercise certain jurisdiction in
territories that voluntarily sought Indian assistance.

Administrative relationship between the State and the Local bodies

1) The Panchayats
The 73rd Constitutional amendment envisaged Gram Sabha as the plinth of the Panchayati Raj System
for performing functions and powers entrusted upon it by the State Legislatures. The amendment
provides for the establishment of a three-tier system at the village, intermediate, and district levels for a
duration of 5 years, after which there shall be elections.
Gram Sabha [Article 243 A]
may exercise such powers and perform such functions as the State Legislature may legally vest upon it.
This Gram Sabha is the plinth of the Panchayati Raj System, constituted by persons registered in the
electoral rolls of a village comprising the Panchayat area at the village level.
Constitution of Panchayat [Article 243 B]
Article 243-B; in every state, there shall be Panchayats at the village, intermediate, and district levels.
The small States having a population up to 20 lakhs have been given the option of not forming a
Panchayat at the intermediate level.

1. Composition of Panchayat [Article 243 C]

1. the State Legislature may make legal provisions pertaining to the formation of Panchayats.
Provided that the ratio between the population of the Panchayat's territorial area at any level
and the number of electoral seats in such Panchayat shall, as far as practicable, be uniform
throughout the State;
2. All the Panchayat seats shall be filled by persons chosen through direct election from territorial
constituencies in the Panchayat area and, for this purpose, each Panchayat area shall be
categorized into territorial constituencies in a way that the ratio between the population of each
constituency and the number of allotted seats, as much as practicable, has uniformity;
 3. The State Legislature may legally provide the following persons for representing in Panchayats-
 The Chairpersons at the village and intermediate level. In case of a State lacking Panchayats at
the intermediate lavel, in the district level Panchayats;
 The Chairpersons of the Panchayats at the intermediate level, in the Panchayats at the district
level;
 The members of the Lok Sabha and the Vidhan Sabha representing constituencies which
comprise totally or partly a Panchayat area at the level other than the village level;
 The members of the Rajya Sabha and the Legislative Council of the State where they are
registered as electors. The Chairperson of a Panchayat and other Panchayat members
irrespective of being directly elected or not from territorial constituencies in the. Panchayat area
shall have the voting
right in the Panchayat meetings; The Chairman at the village level shall be elected in a manner
specified by the State Legislature, and that for a Panchayat at the intermediate level or district
level, shall be elected by and from amongst, the elected members.

D) Panchayat Elections [Article 243-K]

 The superintendence,
 direction, and
 controlling the preparation of the electoral roll
for conducting all Panchayat elections shall be vested in the State Election Commission;
1. Subject to the legal provisions made by the State Legislature, the conditions of service and tenure
of office of the State Election Commissioner shall be such as the Governor may ascertain by rule;
2. The State Governor shall, on request of the State Election Commission, provide it with necessary
staff for discharging the functions conferred on the State Election Commission under clause 1;
3. Subject to the provisions of this Constitution, the State Legislature may legally provide with
respect to all matters relating to, or in connection with, elections to the Panchayats.

E) Continuation of existing laws & Panchayats [Article 243 N]

notwithstanding anything mentioned here, any existing legal provision relating to Panchayats in a State
immediately before the commencement of the Constitution (73rd Amendment) 1992, having
inconsistency with the provisions of this part, shall continue to operate until amended or repealed by a
competent Legislature or other authority or until the expiration of 1 year from such commencement.
However, the Panchayats existing immediately preceding such commencement shall continue until the
expiration of their duration-
 Unless dissolved earlier by a resolution passed by the State Legislative Assembly; or
 In case of a State having a Legislative Council, by each house of the State Legislature.

2) The Municipalities
1. Constitution of the Municipalities [Article 243 Q]
The following 3 types of Municipal Corporation for urban areas-
a) a Nagar Panchayat for a transitional area,
b) a Municipal Council for a small area, and
c) a Municipal Corporation for a large area
In this article, a transitional area, a smaller urban area, or a larger urban area,
means such area as the Governor may, after considering the-
 Population and the population density,
 the revenue generated for local administration,
 the percentage of employment in non-agricultural activities,
 the economic importance or other necessary factors, specify through public notice.

II. Composition [ Article 243 R]

1. all the seats in a Municipality shall be filled by directly elected representatives from the territorial
constituencies in the Municipal area, and for this purpose, each Municipal area shall be divided into
wards.
2. The State Legislature may legally provide-
a. for representing in a Municipality of-
i) specially acknowledged or experienced persons in the Municipal administration;
ii) the Loksabha members and the Vidhansabha members representing constituencies comprising the
whole or part of the Municipal area;
iii) the members from the States Council and the members of the Legislative Council, who are registered
elected representatives within tile Municipal area;
1. iv) the Chairpersons of the Committees constituted under article 2435.
Provided that the experienced persons shall not have the voting right in the Municipal meetings;
b. the manner of electing the Chairperson of a Municipality.

III. Constitution and Composition of Ward Committees [Article 243 S]

 There shall be the formation of Wards Committees, consisting of one or more Wards, within the
municipal territory having a population of 3 lakhs or higher, shall be formed.
 The State legislature may legally provide for-
1. Wards Committee shall be a member of that Committee.
2. The creation and the territorial extension of a Wards Committee
 A Municipal member representing any municipal ward shall be deemed as 0 a committee member.
 Where a Wards Committee consists of:
1. One ward, the representative member of that ward in the Municipality; or
2. In the case of 2 or more wards, one of the members representing such wards in the
Municipality elected by the members shall be Chairperson of that Committee
Nothing in this article shall prevent the State Legislature from providing for the Constitution of
Committees in addition to the Wards Committees.

IV. Power, authority, and responsibility [Article 243 W]

The State Legislature may legally endow-
1. Such necessary powers and authority upon the Municipality to enable them to function as self-
government institutions and such law may provide for the devolution of powers and responsibilities
upon Municipalities, subject to specified conditions, with respect to-
I. preparing plans for economic development and social justice;
II. performing functions and the implementation of schemes as may be entrusted to them,
including the matters listed in the 12th Schedule;
2. the Committees with such necessary powers and authority to enable them in carrying out the
responsibilities conferred upon them, including those in relation to the matters listed under the 12th
Schedule.

V. Committee for Metropolitan Planning [Article 243 ZE]

1. There shall be a Metropolitan Planning Committee in every Metropolitan Area which has to be
constituted for preparing a draft development plan for the whole Metropolitan area.
2) The State Legislature may legally provide with respect to-
a. the formation of the Metropolitan Planning Committees;
b. the manner involving the filing of seats in such Committees.
c. the representation, in such Central Committees and the State Committees and of such
organizations and institutions, as may be deemed necessary for carrying out the functions
assigned to such Committees.
d. assignment to such Committees, the functions which relate to planning and coordination for
the Metropolitan area;
e. The selection manner of the Chairpersons for such Committees.
3) Every Metropolitan Planning Committee shall, in preparing the draft of development plan-
a. Consider-
i) the plans prepared by the Municipalities and the Panchayats of such area;
ii) common interest matters between the Municipalities and the Panchayats, including-
 co-ordinated spatial planning of the area,
 water distribution and other physical and natural resources,
 the integrated development of infrastructure and environmental conservation
iii) the overall objectives and priorities made by the Union and the State Government;
iv) the extent and nature of investments likely to be made in the Metropolitan area by the
Central and the State Government agencies and other available resources.

b. consult such institutions and organizations as may be specified in the Governor's order.
4) The Chairperson of every Metropolitan Planning Committee shall forward the committee
recommended development plan, to the State Government.

Financial Relations between Union and the States (Articles 264 to 290A)
An Overview of the Constitution (One Hundred First Amendment) Act, 2016

Article 246 Subject Matter of Union and States to make laws on Taxation
provides a list of subjects giving power to the different levels of government to make laws on them.
Essentially speaking there are three kinds of lists mentioned under Article 246 that are as follows:
Union list
The Union Government has the authority to make laws relating to the subject matter given under the list
I, called the Union list. It includes taxes like Corporation Tax, Customs and Excise duties and taxes on
income other than agricultural income, etc.
State List
The State Government is vested with the power to frame laws on the subjects mentioned under list II,
called the state list. It includes taxes on vehicles, liquors, land revenue, entertainment, luxuries, stamp
duties and sale or purchase of goods, etc.
Concurrent List While there is another list also known as the Concurrent List, which gives power to both
the centre as well as state government to make laws with regards to the subjects provided by the list III.
List III does not include any major tax as such. This helps in avoiding the competitive exploitation of the
same source by both the authorities and the overlapping of tax-jurisdictions under the Indian
Constitution. Further, in the case of conflict, the central government decision will prevail over the State
government decision.
Distribution of powers - Levying and collection of taxes
Article 268 to 281 of the Indian Constitution has made elaborate provisions that provide directions to the
centre relating to the distribution of financial resources amongst the states. It lays down principles for
the centre and states to work in coordination for levying and collection of taxes through systematic
arrangements.
The provisions, for the time being, can be summarised as follows but will be explained in detail further. It
includes:
1. Taxes levied by the Union but collected and kept by the States (Article 268).
2. Taxes levied and collected by the Union but assigned to the States (Article 269).
3. Taxes levied and distributed between the Union and the States (Article 270).
4. Grant-in-aid from the Centre to the States (Article 273, Article 275 and Article 282).
5. Sharing of proceeds from other taxes.
In giving recommendations with regards to the distribution of funds between the centre and state, the
Finance commission mentioned under Article 280 plays a very important role.
Article 265 – Taxes not to be imposed save by authority of law
Essence
 No tax can be levied or collected except by authority of law.
 Prevents arbitrary taxation by executive orders.
Scope
1. Law
o Refers to statutory law enacted by legislature.
o Tax must be supported by legislation, not just executive order or parliamentary
resolution.
o Example: An executive circular imposing a tax is invalid unless backed by statute.
2. Levy and Collection
o Covers imposition + assessment + recovery of tax.
o Every stage must be authorized by law.
3. Limitations
o Taxing laws must not violate Fundamental Rights:
 Article 13 – must not infringe Part III rights.
 Article 14 – cannot be arbitrary or discriminatory.
 Article 19 – should respect reasonable restrictions.
 Article 301 – cannot hamper free trade and commerce across India.
Case Law : Pratibha R.C.C. Spun Pipe & Cement Products v. State of Karnataka
Tax imposed in the guise of a "fee" without legislative backing held illegal under Article 265.
Conclusion: Both levy and collection of tax must be through valid legislation, not merely executive
action.

Article 266 – Consolidated Funds and Public Accounts

 Consolidated Fund of India (CFI) [Art. 266(1)]
 Includes:
1. All revenues received by Government of India.
2. All loans raised (treasury bills, borrowings, advances, loan recoveries).
3. Interest receipts, repayments.
 Excludes: Public Accounts (Art. 266(2)) + Contingency Fund (Art. 267).
 Features:
o All government expenditure is met from CFI (except unforeseen situations).
o Parliamentary approval is mandatory before withdrawal.
o Commonly referred to as the Annual Budget.
Consolidated Fund of State (CFS)
 Similar provisions at state level.
 Includes state revenues, borrowings, advances, loan recoveries.
 Withdrawal needs State Legislature approval.
Conditions for Withdrawal (Art. 266(3))
1. Must be in accordance with law.
2. Must be for the intended purpose.
3. Must follow constitutional procedure of appropriation.

Public Account (India & States) – Art. 266(2)

 Includes money not belonging to government, but kept in its custody.
o Examples: Provident funds, small savings, insurance deposits, reserve funds.
 Govt acts like a trustee/banker → has to return money to depositors.
 Withdrawal does not require prior legislative approval.
Article 267 – Contingency Fund
Contingency Fund of India
 Created by Parliament under law.
 Purpose: Meet urgent/unforeseen expenditure.
 Nature: An imprest fund (advance fund).
 At the disposal of the President.
No prior parliamentary sanction needed, but later expenditure must be ratified under Art. 115/116
 Fund is replenished by withdrawing equivalent sums from Consolidated Fund.
Contingency Fund of States
 Similar provisions at state level.
 Governor controls fund.
 Later approval by State Legislature required under Art. 205 or 206.

Article 268 – Duties levied by Union but collected and appropriated by States
Key Provisions
 Certain stamp duties levied by Union but collected and retained by States.
  Includes: Duties on bills of exchange, cheques, promissory notes, insurance policies, etc.
 Not part of CFI → goes directly to concerned State’s revenue.
 In Union Territories, such revenue goes to the Government of India.
Issues
 States complain of limited scope and dependence on Centre.
 Centre restricts expansion of state taxation in areas like insurance policies, credit instruments.
Suggestions
Expert committees recommend review of Articles 268 & 269 (last reviewed in 1984, by 8th Finance
Commission). - States need more autonomy in taxation resources.
Amendments
 88th Amendment (2003) – Inserted Art. 268A, brought Service Tax under Union levy but
collected by Centre & States.
 101st Amendment (2016) – Abolished Art. 268A, merged Service Tax into GST regime.
 Excise duty on medicinal & toilet preparations removed from Art. 268, shifted to GST.
Summary of Article 268
1. Applies mainly to stamp duties.
2. Levied by Centre, collected and retained by States.
3. Does not form part of CFI.
4. Resource base for states is limited and reduced post-GST.

Article 269 – Taxes levied and collected by the Union but assigned to the States
Clause (1): Scope
 Union levies and collects → but revenue is assigned to States.
1. Taxes on inter-State sale/purchase of goods (except newspapers & goods covered under Art.
269A).
2. Taxes on consignment of goods in the course of inter-State trade (whether to self or another).
🔹 Examples: Central Sales Tax (CST), Estate Duty (abolished later), Succession Duty
Explanation
1. “Taxes on sale/purchase of goods” – Refers only to inter-State trade, not intra-State.
2. “Taxes on consignment of goods” – Applies when goods are moved inter-State for delivery, even
to self.
Clause (2): Distribution
 Revenue does not form part of Consolidated Fund of India (CFI).
 Entire proceeds go to States (except UTs, where it goes to Centre).
 Parliament decides manner of distribution.
Clause (3): Parliamentary Power
 Parliament has exclusive power to define what constitutes inter-State “sale, purchase or
consignment”.
 Prevents States from encroaching into inter-State taxation.
IGST & Consumer State Principle
 Under GST regime, IGST (Integrated GST) applies on inter-State supply.
 Revenue goes to consuming State (destination-based taxation).
Example:
 Jute bags manufactured in West Bengal and sold to Odisha.
  IGST levied → share of tax goes to Odisha (consumer State), not WB (producer State).

✅ Summary of Article 269

1. Applies to inter-State sale/purchase/consignment of goods (except Art. 269A goods &
newspapers).
2. Union levies & collects, but revenue appropriated by States.
3. IGST proceeds → consuming State.
4. Parliament alone can legislate on inter-State trade taxation.
5. Proceeds not part of CFI.
Article 269A – Taxes on Inter-State Trade & Commerce (GST Regime)
(Inserted by 101st Constitutional Amendment, 2016)
Clause (1): Key Provisions
 Applies to Goods & Services Tax (GST) in inter-State trade/commerce.
 Union levies & collects IGST.
 Revenue apportioned between Union & States (as per Parliamentary law).
 Distribution based on recommendations of GST Counci
Explanation under 269A(1)
 Imports of goods/services → deemed as inter-State supply → subject to IGST.
 Post-GST → IGST replaces Countervailing Duty (CVD).
Position before GST
 Imports attracted CVD + Special Additional Duty (SAD).
 Purpose: protect domestic industry.
Position after GST
 Imports now taxed under IGST.
 Creates a uniform national tax structure.
Clause (2): Consolidated Fund Exclusion
 Revenue shared with States does not enter CFI → directly transferred.
Clause (5): Parliamentary Power
 Parliament decides place of supply rules.
 Determines when a supply is intra-State or inter-State.
Case Law on Inter-State Trade
1. State of Andhra Pradesh v. NTPC Ltd. (2002)
o Movement of goods to another State must be pursuant to contract.
o Three conditions:
1. Contract stipulates inter-State movement.
2. Actual movement of goods must occur.
3. Sale completes in another State.
2. Goodyear India Ltd. v. State of Haryana (1989)
o States cannot levy tax on inter-State consignment of goods.
o Only Parliament has such power → State laws struck down.
✅ Summary of Article 269A
1. Applies to GST on inter-State trade (including imports).
2. Union levies & collects → shared between Union & States.
3. Distribution decided by Parliament based on GST Council.
 4. Amount shared does not form part of CFI.
5. Parliament controls place of supply rules.
Article 270 – Taxes levied and distributed between Union & States
Clause (1): General Rule
 Applies to all taxes & duties, except:
1. Those under Articles 268, 269, 269A.
2. Surcharge under Art. 271.
3. Cess for specific purposes.
 Union levies & collects → but proceeds shared between Union & States.
Examples: Income Tax, Excise Duty (non-GST items like petroleum, tobacco, liquor), Basic Customs
Duty
Clause (1A) – Post-GST (101st Amendment)
 Taxes under Article 246A(1) (intra-State GST) also shared between Centre & States as per Art.
270(2).
Clause (1B) – Post-GST
1. Centre’s share in IGST → to be shared with States.
2. IGST used to pay CGST → also part of divisible pool.
Clause (2): Distribution Rule
 Union taxes form a central pool.
 Shared between Union & States as per Art. 270(3).
 Amount shared → not part of CFI.
Clause (3): Finance Commission Role
 President decides distribution based on Finance Commission recommendations.
 Example: 14th Finance Commission (2015–2020) recommended 42% share to States.
Case Law : T.M. Kanniyan v. ITO, Pondicherry (1967)
o Income Tax is part of divisible pool under Art. 270.
o Union Territories excluded → distribution not mandatory.
o Purpose = equitable distribution between Union & States.
✅ Summary of Article 270
1. Covers all Union taxes, except Articles 268, 269, 269A, surcharge (271) & specific cesses.
2. Union levies & collects, but shared between Union & States.
3. Post-GST → includes CGST & IGST share.
4. Distribution recommended by Finance Commission, approved by President.
5. Revenue shared does not enter CFI.

Article 271 – Surcharge on Certain Duties and Taxes

 Parliament can levy a surcharge on taxes/duties except GST under Article 246A.
 Proceeds go to the Consolidated Fund of India and are not shared with States.
 Based on Sections 136 & 137 of the Government of India Act, 1935.
 No authority can prevent Parliament from imposing surcharge.
Case law: Ved Vyas Chawla v. ITO (1964, All HC)
 “At any time” gives Parliament recurring power.
 Can impose surcharge on a particular class (with reasonable nexus).
Article 273 – Grants in lieu of Export Duty on Jute
  For 10 years after Constitution’s commencement: WB, Bihar, Orissa & Assam got grants-in-aid
from Union from export duty on jute.
 Now obsolete (time-bound provision).
Article 274 – President’s Recommendation Required
Bills/amendments needing President’s prior sanction:
1. Imposition/varying of tax where States are interested.
2. Changing meaning of “agricultural income” (IT Act).
3. Principles of distribution of money to States.
4. Levy of surcharge for Union purposes.
Definition: “Tax in which States are interested” = Whole/part proceeds assigned to a State, or Proceeds
in CF of India but temporarily assigned to States.

Grants from the Union to certain States

Apart from the distribution of taxes between the Centre and the States, there are certain articles in the
Constitution which provide the scope for Grants-in-aid.
Under Article 275 and Article 282, the 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 the welfare of tribal
areas, including a special grant to Assam.
Types of Grants
1 Article 275-Statutory grants
These grants are given by the Parliament to the specific states who are in need of assistance.
1. Under this, different amounts of grants are fixed for different states.
2. The amount is given out of the consolidated fund of India.
3. There are two provisos to clause (1) dealing with the granting of aid to the states for any
developmental scheme approved by the government of India for the welfare of scheduled areas and
scheduled tribes, with a special focus to Assam.
According to clause (2) of Article 275, any order made by the Parliament regarding the grants-in-aid as
provided under clause (1) shall need a prior recommendation of the Finance Commission.
Further, it also lays down that the Finance Commission has the power to make recommendations other
than those which are mentioned in provisos to clause (1).
[Link] 282- Discretionary Grants
As per Article 282, the Centre upon its own discretion can grant aid to certain States for the public
purpose. These grants are not compulsory in nature. The centre used to make these grants on the
recommendations of the planning commission. Further, during the planning commission era, the sum
under discretionary grants were even bigger than the statutory grants.
Statutory Grants (Art. 275): Discretionary Grants (Art. 282):
 Parliament may grant aid to needy States.  At Union’s discretion for public purpose.
 Taken from Consolidated Fund of India.  Earlier made via Planning Commission.
 Special provisions for Scheduled Areas &  Usually larger than statutory grants.
Tribes (focus on Assam).
 Finance Commission’s recommendation
required.
Article 276- Taxes on professions, trades, callings and employments
Article 276 empowers a state or other local authority to impose taxes on professions and trades. But the
total amount payable under any such tax shall not exceed two thousand and five hundred rupees per
annum. Earlier this limit was up to two fifty rupees only and was raised after the recommendations of
the Sarkaria Committee in 1988. {Limit = ₹2,500 p.a. (raised from ₹250 in 1988, Sarkaria Commission).}
Tax levied if exceeded the permissible limit
In the case of Commissioner, Quilon vs M/S. Harrisons & Crosfield Ltd, 1964, the Kerala Government
imposed Kerala Profession Tax, 1958 which was held ultra vires by the Supreme Court of India. As the
Kerala legislature was incompetent to impose a tax exceeding the permissible limit. Thus, being violative
d Article 276 was held unconstitutional accordingly.
The overlapping situation with Union List
In the Case of B.M. Lakhani v. Municipal Committee, 1970, two important observations were made by
the Supreme Court that are as follows:
1. The suit for refund of money paid in excess than the amount prescribed under Article 276 is
maintainable in law.
2. Though there is a limitation or cap on the amount of tax to be levied but no such bar exists on the
exercise of this power by the state or local bodies. Further despite the fact that the subject of income tax
is mentioned in the Union list. But the Constitution allows such overlapping under Article 276.

Article 277 - Saving of Pre-Constitutional laws

 Any taxes, duties, cesses, or fees lawfully levied by State Governments, municipalities, or local
authorities before 26th January 1950 will continue to operate even if that subject has now been
shifted to the Union List.
 Such levy will continue until Parliament enacts a law to the contrary.
Object
 To avoid disruption of local finances due to constitutional changes.
 Ensures smooth transition in fiscal arrangements after adoption of the Constitution.
 Prevents sudden loss of revenue to States and local bodies.
(Durga Das Basu: To minimise chances of conflict and dislocation).
Scope
 Limited only to taxes, duties, fees, or cesses.
 Applies only when distribution of taxation powers has shifted from State to Union after
Constitution.
 Not applicable in cases where there was no change in taxing powers.
 Special provision for fiscal laws (while Article 372 applies to all pre-constitutional laws in general).
Judicial Interpretation
1. Town Municipal Committee, Amravati v. Ramchandra Vasudeo Chimote (1964)
o Pre-Constitution: Municipality levied terminal tax on goods (excluding gold/silver).
o Post-Constitution: Power shifted to Union (Entry 89, List I). Municipality amended its law to include
gold & silver.
o Held: Municipality cannot alter or enlarge pre-constitutional levy; violative of Art. 277. Tax was
struck down.
2. Hyderabad Chemical & Pharmaceutical Works Ltd. v. State of A.P. (1964)
o Pre-Constitution: State levied fee under Hyderabad Abkari Act on alcohol used in medicines.
o Post-Constitution: Parlia. passed Medicinal & Toilet Preparations Act, 1955 (exempting such fees).
o Held: State levy stood repealed once Parliament legislated.
o Distinction drawn:
 Tax → Compulsory exaction for public purposes without direct service.
 Fee → Payment for specific service or benefit to the individual.

Article 279 – Calculation of Net Proceeds

 Meaning: Defines “net proceeds” of a tax.
 Clause (1): Net proceeds = Gross tax revenue minus cost of collection.
 Certification: Net proceeds of any tax/duty (whole, part, or specific area) are certified by the
Comptroller and Auditor-General (CAG).
 Finality: CAG’s decision is final (subject to conditions under Clause (2)).
Importance:
 Ensures accurate distribution of revenue between Union and States.
 CAG acts as an independent constitutional authority to avoid disputes over revenue figures.

Article 279A – Goods and Services Tax (GST) Council

(Inserted by the 101st Constitution Amendment Act, 2016)
Objective
 To create a uniform GST framework across India.
 Ensure harmonized national market for goods & services.
 Reduce tax disputes between Union and States.
Composition of GST Council
1. Union Finance Minister → Chairperson.
2. Union Minister of State (Finance/Revenue) → Member.
3. State Finance Ministers / Ministers nominated by States → Members.
4. States’ representatives elect one Vice-President from among themselves.
Quorum & Powers
 Quorum: At least half of members must be present.
 Decision-making powers:
1. Fix threshold exemption limit (turnover limit for GST exemption).
2. Recommend GST rates & special provisions for special category states (J&K, NE states, HP,
Uttarakhand).
3. Frame model GST laws, rules for inter-state supply, and place of supply.
4. Set up a dispute resolution mechanism between Centre and States / among States.
Process of Decision-Making
 Decisions require three-fourth majority of weighted votes:
o Union Government = 1/3 weight.
o All States combined = 2/3 weight.
👉 This ensures that neither Centre nor States can dominate unilaterally
Ratification Process
 Included under Article 368 (Amendment procedure).
  Any amendment to Article 279A (GST Council) → requires:
✅ Special majority in both Houses of Parliament (2/3rd present & voting + 50% total strength).
✅ Ratification by at least half of the State legislatures.

Article 280 – Finance Commission

Origin: Inspired by Australian Commonwealth Commission.
Constitutional mandate: President to constitute Finance Commission every 5 years.
Object:
 Ensure equitable distribution of financial resources between Centre & States.
 Maintain fiscal balance while preserving State autonomy.

Composition:
 5 members (including Chairman) – appointed by the President.
 Chairman → Must have experience in public affairs.
 Other members must have expertise in:
1. Law / High Court Judge.
2. Finance & government accounts.
3. Financial matters & administration.
4. Economics.
Functions (Article 280 + Finance Commission Act, 1951):
1. Distribution of net tax proceeds between Union & States.
2. Principles for grants-in-aid to States (from Consolidated Fund of India).
3. Augment resources of Panchayats & Municipalities (added by 73rd & 74th Amendments).
4. Any other finance-related matter referred by President.
Powers:
 Functions like a civil court: summon witnesses, call for documents, demand information.
Significance:
 Strengthens fiscal federalism.
 Union generally accepts recommendations.
 Has dealt with:
Public undertakings’ returns, States’ debt burdens, Complex Centre–State disputes.
 Still, demand persists for more funds to poorer States → address regional disparities.

Article 281 – Recommendations of Finance Commission

 President must lay: Finance Commission’s recommendations, and Explanatory Memorandum
before both Houses of Parliament.

Borrowing Powers (Arts. 292 & 293)

Centre (Art. 292):
 Unlimited borrowing powers, internally & externally.
 Subject only to Parliament’s laws.
 Can borrow from RBI, domestic markets, international lenders.
States (Art. 293):
 Restricted powers:
 o Cannot borrow abroad.
o Need Central Government consent if any Union loan/guarantee is outstanding.
o Often rely on Centre/RBI.
 Must follow RBI overdraft limits.
 External credits for State projects routed via Centre.
👉 Results in fiscal dependency on Centre.

Effect of Emergencies on Financial Relations

During National Emergency (Art. 352):
 President can suspend grants-in-aid to States.
 Suspension temporary → till end of financial year when emergency ends.
During Financial Emergency (Art. 360):
 Union gains overriding control over States’ finances.
 President may:
1. Direct reduction of salaries (including High Court judges).
2. Alter Centre–State tax distribution.
3. Compel States to reserve all Money Bills for President’s assent.
👉 States lose fiscal autonomy almost completely.

GST Regime - 101st Amendment

The 101st Amendment in the constitution and the introduction of GST in the Indian Economy has
significantly changed the landscape of financial relations between the centre and states. Therefore, it is
extremely important to have a basic knowledge of what GST is, its application and its different forms.
Position before GST
 Before the introduction of GST, there were multiple taxes imposed by the centre and states
separately and the distribution of which was confusing and non-uniform. It included Service Tax,
Central Excise, Customs duty and State VAT etc. But after the GST, the principle of one nation one tax
was adopted.
 GST is categorized into CGST, SGST or IGST depending on whether the transaction is Intrastate or
Interstate supplies
Inter-state and Intra-state Supplies
1) Intra-State supply of goods or services: In these kinds of transactions, the location of the supplier and
the place of supply are in the same state.
ii) Inter-State Supply of Goods and Services: As per the Section 7 of The Integrated Goods, and Services
Tax Act 2017 it can be understood that "Inter-state" trade or commerce basically means:
 when the supplier is located in some other state or union territory and the place of the supply is in
another state/UT, or
 when the supply of goods or services is made to or by a Special economic zone (SEZ) unit.
Central Goods and Services Tax (CGST)
1. CGST is a tax imposed on Intra-state supplies of goods and services and is governed by the CGST Act.
Along with this SGST/UTGST will also be levied on the same transaction and shall be governed by the
SGST/UTGST Act.
2. It implies that in the case of Intra-state supplies of goods and services both CGST and SGST are
combined which are collected simultaneously; where CGST goes to the centre and SGST goes to the
state.
3. The proportion of SGST and CGST is equal.
However, it must be noted that any tax levied on Intra-State supplies of goods and/or services by the
centre and state shall not exceed 14% each.
State Goods and Services Tax (SGST)
1. The SGST is a tax levied by the state on the Intra State supplies of goods and/or services by the State
Government.
2. It is governed by the SGST Act.
3. As already mentioned above it is levied and collected simultaneously with the CGST
4. In the case of Union territories, it is called UGST and governed by the UGST Act.
Integrated Goods and Services Tax (IGST)
1. IGST or Integrated Goods and Services Tax is a tax levied on all Inter-State supplies of goods/services.
2. It is governed by the IGST Act.
3. IGST applies on any supply of goods and/or services in case of both import into India and export from
India. Though the exports will be zero-rated.
4. Tax obtained under IGST is shared between centre and states as per Article 269A.
The biggest achievement of GST is that it introduced a single uniform tax system with dual tax features
where the revenue is shared between both centre and state.
The GST council as mentioned under Article 279 A, shall make decisions in relation to the GST rate, inter
supply transactions and other matters related to GST etc.

(One Hundred and First Amendment) Act, 2016

Introduction:
The Constitution (One Hundred and First Amendment) Act, 2016, introduced the Goods and Services Tax
(GST) in India, a comprehensive indirect tax system aimed at streamlining the taxation process and
creating a common national market for goods and services.
The amendment’s salient features include:
 Dual GST structure: This includes Central GST (CGST) and State GST (SGST) or Union Territory GST
(UTGST) depending on the transaction type.
 Integrated GST (IGST): For inter-state transactions and imports, the Integrated GST is levied and
administered by the Central Government.
 Destination-based taxation: The GST is a destination-based tax system, meaning that the tax
revenue is collected by the state where the goods or services are consumed, rather than the state
where they are produced.
 GST Council: The amendment establishes the GST Council, a constitutional body comprising
representatives from the Central Government and all States/Union Territories.
 Compensation to states: To address potential revenue losses for states, the amendment provides for
compensation payments for a period of five years from the implementation of GST.
The efficacy of the GST in removing the cascading effect of taxes and providing a common national
market for goods and services can be assessed as follows:
  Removal of cascading effect: By subsuming multiple indirect taxes, such as excise duty, service
tax, and value-added tax, into a single tax, the GST has significantly reduced the cascading effect
of taxes, leading to a more transparent and simplified tax structure.
 Enhanced compliance and reduced tax evasion: The GST’s comprehensive input tax credit
system incentivizes businesses to ensure compliance and reduces opportunities for tax evasion.
 Facilitating a common market: By harmonizing tax rates and eliminating state-level barriers, the
GST has facilitated the creation of a common national market, making it easier for businesses to
trade across state borders and improving economic efficiency.
However, there are some concerns and challenges:
 Multiple tax rates: The GST system still has several tax rates, which can create confusion and
complexity for businesses.
 Compliance burden: Small and medium-sized enterprises (SMEs) may face challenges in
complying with the GST’s digital filing requirements and navigating the tax system.
 Revenue concerns for states: Some states may experience revenue losses despite the
compensation mechanism, as they lose the autonomy to levy their taxes.

Comptroller and Auditor-General of India (Articles 148 to 151)

 Articles 148-151 contained in Chapter V of Part V of the Constitution of India, 1950 (COI) contains
provision in relation to Comptroller and Auditor General of India (CAG).
 It is the Supreme Audit Institution of India.
 The mission of CAG is to promote accountability, transparency and good governance through high
quality auditing and accounting and provide independent and timely assurance to the Legislature,
the Public and the Executive, that public funds are being collected and used effectively and
efficiently.
What are Constitutional Provisions in Relation to CAG?
 Article 148: Comptroller and Auditor General of India
 This article deals with the appointment, oath, tenure and removal of the comptroller and auditor
general of India.
 According to this article, there should be a CAG of India, who the President of India must appoint.
The tenure of CAG is six years or up to 65 years of age, whichever is earlier, and not eligible to be
elected again.
 The President of India can remove him if misbehaviour or incapacity is proven against him in both
the houses of parliament.

 Article 149: Duties and Powers of CAG

The responsibilities of CAG mentioned under this article are to perform the accounting and auditing the
accounts of the Indian government, state government, and other government-owned companies.
 Article 150: Form of Accounts of Union and of States
The State shall be in such form, as President may, on the advice of the Comptroller and Auditor General
of India. The CAG advises the President to maintain the account of States and Union.
 Article 151: Audit Reports
This audit report of CAG of India, which are related to the Union’s account, should be submitted to the
President of India. The CAG submits the reports related to the account of the State to the Governor of
the State. These reports are to be submitted before their respective houses.
 Article 279: Calculation of “net proceeds”
What is the Background of CAG?
 Originally called the Accountant General to the Government of India in 1858. In 1860 it was
designated as the Auditor General of India.
 Under Section 166 of Government of India Act, 1935 the Auditor General of India was appointed by
His Majesty.
 V. Narahari Rao (1948-54) was the first CAG in the independent India.
 First person to hold this position before independence was Hon. Edmund Drummond (1860-62).
What are Appointment and Conditions of Service?
 Article 148(1) of COI provides that the CAG shall be appointed by the President.
 As per Article 148(3) of COI the salary and other conditions of service of the Comptroller and
Auditor-General shall be such as may be determined by Parliament by law and, until they are so
determined, shall be as specified in the Second Schedule.
 Article 148 (4) provides that once CAG ceases to be in office he is ineligible to be appointed in any
office under the Government.
 Article 148 (5) provides that subject to the provisions of this Constitution and of any law made by
Parliament, the conditions of service of persons serving in the Indian Audit and Accounts
Department and the administrative powers of the Comptroller and Auditor-General shall be such as
may be prescribed by rules made by the President after consultation with the Comptroller and
Auditor-General.
 The administrative expenses of the office of the Comptroller and Auditor-General, including all
salaries, allowances and pensions payable to or in respect of persons serving in that office, shall be
charged upon the Consolidated Fund of India.
What is Procedure for Removal of CAG?
 As per Article 148(1) of the COI, the CAG shall be removed in the same manner and on the same
grounds as the judge of a Supreme Court.
 Article 124(4) of COI provides proved misbehavior or incapacity to be grounds of removal of
Supreme Court judge. The procedure is that the resolution should be passed by an order of
President supported by a majority of total membership of the house and the majority of not less
than two third of the members present and voting.
What are the Powers and duties of CAG?
 As per Article 149 of COI the CAG shall perform such functions and duties as prescribed by or under
the law made by the Parliament.
 The Comptroller and Auditor General’s (Duties, Powers and Conditions of Service) Act, 1971 (DPC
Act) is the law governing the same.
Chapter III of the DPC Act provides for the duties and powers of Comptroller and Auditor General of
India.
 Section 10 of DPC Act provides that Comptroller and the Auditor General shall be responsible for
compiling accounts of Union and State.
 Section 11 of DPC Act provides that CAG shall prepare and submit accounts to the President,
Governors of State and the Administrators of Union Territories having Legislative Assembly.
 Section 12 of DPC Act provides that the CAG shall give information and render assistance to Union
and States.
 Section 13 of the Act provides that it shall be the duty of CAG to :
 to audit all expenditure from the Consolidated Fund of India and of each State and of each Union
territory having a Legislative Assembly and to ascertain whether the moneys shown in the
accounts as having been disbursed were legally available for and applicable to the service or
purpose to which they have been applied or charged and whether the expenditure conforms to
the authority which governs it.
 to audit all transactions of the Union and of the States relating to Contingency Funds and Public
Accounts;
 to audit all trading, manufacturing, profit and loss accounts and balance-sheets and other
subsidiary accounts kept in any department of the Union or of a State; and in each case to report
on the expenditure, transactions or accounts so audited by him.
What are the important judgments in relation to CAG?
 Arvind Gupta v. Union of India (2013)
o The Supreme Court held that the CAG's functions to carry out examination into economy,
efficiency and effectiveness with which the Government has used its resources, is in-built in
the 1971 Act.
o The Court observed no unconstitutionality in the Regulations of Audit and Accounts, 2007
framed under the CAG (DPC)Act, 1971 empowering the CAG to conduct performance
audit.
 National Dairy Development Boards v. CAG of India (2010)
o In this case decided by the Delhi High Court, the powers of the CAG to conduct audit under
section 14, 15 and 19 of the CAG (DPC) Act was considered.
o The Petitioner challenged the authority of the CAG to invoke and exercise the powers under
Section 14 (2) of the 1971 Act to conduct audit of accounts of the National Dairy
Development Board (NDDB) which is governed by its own Act viz. NDDB Act, 1987, and
which has a provision of overriding effect to the NDDB Act over any other law.
 Arun Kumar Aggarwal v. Union of India (2013)
o In this case the Supreme Court considered whether a CAG Audit Report by itself can be
accepted by the Court to grant relief or as a basis for initiating action.
o The Court held that CAG's Report is always subject to scrutiny by the Parliament and it is for
the Parliament to decide whether after receiving the report to make its comments on the
CAG's report.
 Shri S. Subramaniam Balaji v. the Government of Tamil Nadu and others (2013)
o The Court held in this case that Article 148 has created a Constitutional functionary in the
form of CAG of India.
o CAG examines the propriety, legality and validity of all expenses incurred by the Government
and exercises effective control over the Government accounts.
 Association of Unified Tele Services Providers & Others v. Union Of India (2014)
o It provides for power of CAG to audit the revenue of telecom companies.

Administration of Union territories (Articles 239 to 241)

 Part VIII of the Constitution of India, 1950 (COI) deals with the articles related to Union Territories
(UTs) within the territory of India.
 The UTs are directly governed by the Central Government and do have their own selected members
unlike the States.
 At present, India has 8 UTs-- Delhi, Andaman and Nicobar, Chandigarh, Dadra and Nagar Haveli and
Daman and Diu, Jammu and Kashmir, Ladakh, Lakshadweep, and Puducherry.
Article 239 – Administration of Union Territories
 Clause (1):
o Every UT shall be administered by the President,
o through an Administrator appointed by him (designation = Lt. Governor /
Administrator).
 Clause (2):
o President may appoint a Governor of a State as Administrator of an adjoining UT.
o In such a case, the Governor functions independently of the State Council of Ministers.
📌 Example: Sometimes the Governor of Punjab is also appointed as Administrator of Chandigarh.
Article 239A – Creation of Legislatures and/or Council of Ministers in certain UTs
 Added by 14th Amendment, 1962.
 Parliament may create, by law, for Puducherry (earlier also Goa, Daman & Diu → now merged;
Mizoram, Arunachal Pradesh, Delhi got separate provisions later):
o (a) A Legislature (elected or partly nominated + elected),
o (b) A Council of Ministers,
o (c) Or both.
 Clause (2): Such a law is not treated as a constitutional amendment under Art. 368 (ordinary
law is enough).
👉 Used to create Puducherry Assembly + Council of Ministers.

Article 239AA – Special Provisions for Delhi (NCT) - Inserted by 69th Amendment, 1991.
 Provisions:
1. Delhi renamed as NCT of Delhi. Administrator = Lt. Governor.
2. Legislative Assembly: Members elected by direct election.
3. Assembly can make laws on State List & Concurrent List (as applicable to UTs), except:
o Police (Entry 2),
o Public Order (Entry 1),
o Land (Entry 18).
4. Parliament retains overriding powers (its law prevails over Assembly’s law).
5. Council of Ministers (max 10% of Assembly strength), led by CM, to aid & advise Lt. Governor.
6. Difference of opinion: Lt. Governor may refer to President → President’s decision binding.
7. Ministers appointed by President on advice of CM.
8. Council is collectively responsible to Assembly.
9. Parliament can supplement provisions by law (ordinary law, not amendment).
10. Ordinance-making power (via Art. 239B) also applies.
📌 Delhi has special “quasi-state” status but Union control remains in key areas → ongoing Delhi Govt vs
Lt. Governor disputes.
Article 239AB – Failure of Constitutional Machinery in Delhi
 If President is satisfied (via Lt. Governor’s report or otherwise) that:
o Administration of NCT cannot be carried on in accordance with Art. 239AA, or
o It is necessary for proper administration,
 Then → President may:
o Suspend operation of provisions of Art. 239AA,
o Or provisions of any law made under it,
o And take over administration (similar to President’s Rule in States)
Article 239B – Ordinance-Making Power of Administrator in certain UTs
 Applies to UTs with Legislature (Puducherry, Delhi, J&K).
 Administrator (with President’s instructions) may promulgate Ordinances during recess of
Legislature.
 Same effect as law made by Legislature, but must be laid before Legislature and lapses in 6
weeks unless approved.
 Cannot promulgate Ordinances if Legislature is dissolved/suspended under Art. 239A law.
Article 240 – President’s Power to Make Regulations for Certain UTs
 Applies to:
o Andaman & Nicobar Islands,
o Lakshadweep,
o Dadra & Nagar Haveli and Daman & Diu,
o (Earlier also Puducherry → now excluded once legislature created).
 Such Presidential Regulations = force of Parliamentary law.
 Can even repeal/amend Parliamentary Acts applicable to UT.
 In Puducherry → President cannot issue regulations once Legislature is functional.
Article 241 – High Courts for Union Territories
1. Parliament may: Constitute a High Court for a UT, or Declare a court in a UT as its High Court.
2. Provisions of Chapter V, Part VI (H.C in States) apply to such UT High Courts with modifications.
3. Existing jurisdiction of High Courts over UTs (before 7th Amendment, 1956) continues.
4. Parliament can extend/exclude jurisdiction of State High Courts over any UT.
📌 Present situation:
 Delhi & J&K → have separate High Courts.
 Other UTs → fall under jurisdiction of nearby State High Courts.
Article 242 – [Deleted by 7th Amendment, 1956]
 Originally related to Coorg (then a Part C State). After reorganisation, it became redundant and
was omitted.

Public Service Commissions: Union and State [Article 312 – 323]

 As per Article 312 of the Indian Constitution, the Parliament is entitled to create one or more All
India services (including an All India Judicial Service) common to the Union and the States.
o The recruitment to all these services is made by the Union Public Service Commission (UPSC).
o For administrative services at the state level, the recruitment is made by the State Public Service
Commission (SPSC).
 The Union Public Service Commission (UPSC) is the central recruiting agency in India.
o It is an independent constitutional body.
The provisions regarding the composition of UPSC, appointment and removal of its members and the
powers and functions of UPSC are provided in Part XIV of the Indian Constitution under Art.315 – 323
Parallel to the UPSC at the Centre, there is a State Public Service Commission (SPSC) in the state.
 The provisions regarding the composition of SPSC, appointment and removal of its members and the
powers and functions of SPSC are provided in Part XIV of the Indian Constitution under Article 315 to
Article 323.
What are the Constitutional Provisions?
 Arti.315: Constitution of Public Service Commissions (PSC) for the Union and for the States of India.
 Article 316: Appointment and term of office of members of UPSC as well as SPSC.
 Article 317: Removal and suspension of a member of both the UPSC or SPSC.
 Article 318: Power to make regulations for the conditions of service of members and staff of the
Commission.
 Article 319: Prohibition of holding the office by members of the Commission upon ceasing to be
such members.
 Article 320: States the functions of Public Service Commissions.
 Article 321: Power to extend the functions of Public Service Commissions.
 Article 322: Expenses of Public Service Commissions.
 Article 323: Reports of Public Service Commissions.
What is the Composition of Union Public Service Commission?
 Appointment of Members: The Chairman and other members of the UPSC are appointed by
the President of India.
 Term of Office: Any member of the UPSC shall hold office for a term of six years or till the age of 65
years, whichever is earlier.
 Reappointment: Any person who has once held the office as a member of a Public Service
Commission is ineligible for reappointment to that office.
 Resignation: A member of the Union Public Service Commission may resign from his/her office by
submitting the written resignation to the President of India.
 Removal/Suspension of Members: The Chairman or any other member of UPSC shall only be
removed from his/her office by order of the President of India.
The President can suspend the Chairman or any other member from his/her office in respect of whom a
reference has been made to the Supreme Court.
 Conditions for Removal: The Chairman or any other member of UPSC may be removed if he/she:
o is adjudged an insolvent.
o engages during his/her term of office in any paid employment outside the duties of his/her office.
o is, in the opinion of the President, unfit to continue in office by reason of infirmity of mind or body.
 Regulating the Conditions of Service: In the case of the UPSC, the President of India shall:
o Determine the number of members of the Commission and their conditions of service.
o Make provisions with respect to the number of members of the staff of the Commission and their
conditions of service.
 Restriction of Power: The conditions of service of a member of UPSC shall not be amended after
his/her appointment that may lead to his/her disadvantage.
 Power to Extend Functions: The Legislature of a State may provide for the exercise of additional
functions by the UPSC or the SPSC as respects the services of the Union or the State and also as
 respects the services of any local authority or other body corporate constituted by law or of any
public institution.
 Expenses of UPSC: The expenses of the UPSC including salaries, allowances and pensions of the
members or staff of the Commission are charged on the Consolidated Fund of India.
 Submission of Reports: The UPSC shall present an annual report to the President of India
containing the work done by the Commission.
The President shall provide a memorandum explaining the cases where the advice of the Commission
was not accepted.
 The reasons for such non-acceptance are presented before each House of Parliament.

What is State Public Service Commission?

 Appointment of Members: The Chairman and other members of the SPSC are appointed by
the Governor of the State.
 Term of Office: A member of the SPSC shall hold office for a term of six years or till the age of 62
years, whichever is earlier:
 Reappointment: Any person who has once held the office as a member of a Public Service
Commission is ineligible for reappointment to that office.
 Resignation: A member of a State Public Service Commission may resign from his/her office by
submitting the written resignation to the Governor of the State.
 Removal/Suspension of Members: The Chairman or any other member of SPSC shall only be
removed from his/her office by order of the President of India.
o The Governor of the state shall suspend the Chairman or any other member from his/her office in
respect of whom a reference has been made to the Supreme Court.
o The conditions for removal of members are the same as those of the UPSC.
 Regulating the Conditions of Service: In the case of the SPSC, the Governor of the State performs
the same duties that are performed by the President of India in case of UPSC.
 Restriction of Power: The conditions of service of a member of SPSC shall not be amended after
his/her appointment that may lead to his/her disadvantage.
 Power to Extend Functions: The conditions for the power to extend functions are the same as those
of the UPSC.
 Expenses of SPSC: The expenses of the SPSC are charged on the Consolidated Fund of the State.
 Submission of Reports: present the annual report of its work to the Governor of the State.
o The Governor shall also provide a memorandum explaining the cases where the advice of
the Commission was not accepted.
The reasons for non-acceptance are presented before the Legislature of the State.

What are the Eligible Appointments After End of Term of Service?

 Chairman (UPSC): The Chairman of the UPSC shall be ineligible for any further employment either
under the Government of India or under the Government of a State.
o Chairman (SPSC): The Chairman of a SPSC shall be eligible for appointment as the Chairman or any
other member of the UPSC or SPSC, but not for any other employment either under the Government
of India or under the Government of a State.
 Other Members (UPSC): A member of UPSC (other than the Chairman) shall be eligible for
appointment as the Chairman of UPSC or a SPSC
 He/She is not eligible for any other employment either under the GOI or under the Govt. of a State.
 Other Members (SPSC): A member of the SPSC (other than the Chairman) shall be eligible for
appointment as the Chairman or any other member of the UPSC or the SPSC.
o He/She is not eligible for any other employment either under the GOI or under the [Link] a State.

What are the Functions of UPSC and SPSC?

 Conducting Exams: It shall be the duty of the Union and the State Public Service Commissions to
conduct examinations for appointments to the services of the Union and the services of the State
respectively.
 Assistance to SPSC: It shall be the duty of the UPSC to assist the States upon their request in framing
and operating schemes of joint recruitment for any services for which candidates possessing special
qualifications are required.
 Consultations with the PSCs: The UPSC and SPSC shall be consulted:
o On all matters relating to methods of recruitment to civil services and for civil posts.
o In making appointments to civil services and posts and in promotions and transfers from one service to
another depending upon the suitability of candidates.
o On all disciplinary matters affecting a person serving under the Government of India or the
Government of a State.
o It shall be the duty of a Public Service Commission to advise on any matter referred to them by the
President of India or the Governor of the State.

What is Joint State Commission?

 Constitution: As per Article 315 of the Indian Constitution, two or more States may agree that there
shall be one Public Service Commission for that group of States.
The resolution to such an agreement shall be passed by each House of the Legislature of each of the
States. - Only then, the Parliament may by law provide for the appointment of a (JSPSC).
 Appointment of Officers: The Article 316 of the Indian Constitution states that the Chairman and
other members of JSPSC shall be appointed by the President of India.
A member of Joint Commission shall hold the office for a term of six years or till the age of 62
years, whichever is earlier
 Resignation: Under Article 317, a member of a JSPSC may submit a written resignation to the
President of India to resign his/her office.
The President is empowered to suspend the Chairman or any other member of the Commission from
his/her office after a reference about the same has been made to the Supreme Court.
 Powers: As per the Article 318 the President of India is empowered to:
o Determine the number of members of the Commission and their conditions of service
o Make provision with respect to the number of members and their conditions of service:
 Reports: As per Article 323, it shall be the duty of the JSPSC to present the annual report to the
Governor of each of the States which have together formed the Commission.
o The Governor of each of the states is responsible for providing a memorandum
explaining the cases the advice of the Commission was not accepted
o The reasons for nonacceptance are laid before the Legislature of each of the States.

Part XIV – Services under the Union and the States (Articles 309–313)
Article 309 – Recruitment and conditions of service
 Power of Regulation:
o Recruitment and service conditions of persons serving the Union/State are regulated by Acts
of appropriate Legislature (Parliament/State Legislature).
 Proviso:
o Until such laws are made, the President (for Union services) or Governor (for State services)
may frame rules.
o These rules continue to operate but remain subject to legislation.
 📌 Example: CCS (Conduct) Rules, 1964 were made under this provision.
Article 310 – Doctrine of Pleasure
 General Rule:
o All Union civil servants & defence personnel hold office “during the pleasure of the
President.”
o State civil servants hold office “during the pleasure of the Governor.”
o This is known as the Doctrine of Pleasure (borrowed from UK).
 Exceptions: Constitution itself provides safeguards (esp. under Article 311).
 Special Contracts (Clause 2):
o If a person with special qualifications is appointed under contract, the contract may provide
compensation if his service is terminated before expiry (unless misconduct).
Article 311 – Safeguards to Civil Servants
 Provides protection against arbitrary dismissal, removal, or reduction in rank.
Safeguards:
1. Dismissal authority: Cannot be dismissed/removed by authority subordinate to appointing
authority.
2. Enquiry before action:
o No dismissal, removal, or reduction in rank without:
Informing charges, Holding an inquiry, Giving opportunity to be heard.
o (Second opportunity for representation on penalty → abolished by 42nd Amendment, 1976).
Exceptions to enquiry (Clause 2 proviso):
 No inquiry needed if:
(a) Convicted on a criminal charge.
(b) Authority records reasons why enquiry is not practicable.
(c) President/Governor satisfied that enquiry not expedient for security of the State.
 Decision of authority on practicability is final (Clause 3).
📌 Landmark Case: Union of India v. Tulsiram Patel (1985) → clarified exceptions to Article 311.
Article 312 – Creation of All-India Services
 Parliament can create new All-India Services (besides IAS & IPS) if:
o Rajya Sabha passes a resolution (2/3rd present & voting) declaring it necessary in national
interest.
 Existing Services: IAS & IPS are deemed created under this Article.
 New Services: Provision for All-India Judicial Service (added by 42nd Amendment, 1976) but not yet
implemented.
 Key Feature: Such law can amend relevant provisions of Part VI (re: High Courts, Subordinate Courts)
without being treated as a constitutional amendment under Art. 368.
Article 312A – Parliament’s power to vary/revoke service conditions of certain officers
 Added by 28th Amendment, 1972.
 Applies to officers appointed to civil services of the Crown in India before 1950 but who continued
under Indian Govt after independence.
 Parliament may retrospectively vary or revoke their: Pay, leave, pension, disciplinary matters.
 Judicial Bar: Courts cannot entertain disputes relating to their old covenants or rights under Article
314 (since omitted).
Article 313 – Transitional provisions
 Until new laws are framed under the Constitution, pre-Constitution service laws & rules continue
(insofar as consistent with Constitution).
 Ensured continuity of administration post-1950.

Elections and Election Commission (Articles 324 to 329)

 The Election Commission of India (ECI) is an autonomous and permanent constitutional
body responsible for organizing free and fair elections in the Union and States of India.
 It was established on 25th January 1950.
 Today, the ECI has become the backbone of true democracy in India.
What is Election Commission of India? Articles 324 to 329 contained in Part XV
 The body administers elections to the Lok Sabha, Rajya Sabha, and State Legislative Assemblies
in India, and the offices of the President and Vice President in the country.
 It is not concerned with the elections to panchayats and municipalities in the states.
o For this, the Constitution of India provides for a separate State Election Commission.
What are Constitutional Provisions in Relation to ECI?
 Art.324: Superintendence, control and direction of national and state-level elections are to be
directly handled by the ECI
 Art.325: Inclusion and exclusion of names in electoral rolls are based on Indian Citizenship. No
citizen of India above the voting age should be excluded from the rolls or included in a special
electoral roll based on any criteria such as race, caste, religion or sex.
 Art.326: Defines universal adult franchise as the basis for elections to all levels of the elected govt.
 Art.327: Defines responsibilities of the ECI and Parliament for the conduct of national elections.
 Art.328: Defines the role and responsibilities of the state legislatures concerning state-level election
 Art.329: Prohibits court interference in matters related to elections unless specifically asked to
provide their views.
What is the Background of ECI?
 Originally, the commission had only one election commissioner.
 Two additional Commissioners were appointed to the commission for the first time on
16th October 1989, but they had a very short tenure, ending on 1st January 1990.
 The Election Commissioner Amendment Act, 1989 was adopted on 1st January 1990 which
turned the commission into a multi-member body.
 Presently, it consists of a Chief Election Commissioner (CEC) and two election commissioners.
What are Appointment and Conditions of Service?
 The President of India appoints the Chief Election Commissioner and Election Commissioners.
o The President fixes the service condition and tenures.
 They have tenure of six years, or up to the age of 65 years, whichever is earlier.
They enjoy the same status and receive salary and perks as available to Judges of the S.C of India.
 They can resign at any time by addressing the resignation letter to the President or can also be
removed before the expiry of their term on the grounds similar to that of a S.C judge by parlia
What is Procedure For Removal of CEC & ECs?
 CEC can be removed from his office by the President on the basis of a resolution passed to that
effect by both the houses of Parliament with a two-thirds majority in both the Lok Sabha and the
Rajya Sabha on the grounds of proved misbehavior or incapacity.
 Other Election Commissioners can be removed by the President of India on the recommendation of
the CEC.
 The ECI is in charge of handling almost every duty that will ensure a free and fair election in the
country.
What are the Powers and Functions of ECI?
 To determine the territorial areas of the electoral constituencies throughout the country.
 To prepare and periodically revise electoral rolls and to register all eligible voters.
 To grant recognition to political parties and allot election symbols to them.
 It ensures a level playing field for the political parties in election fray, through strict observance by
them of a Model Code of Conduct evolved with the consensus of political parties.
 It decides the election schedules for the conduct of elections whether general elections or bye-
elections.
 It has advisory jurisdiction in the matter of post-election disqualification of sitting members of
Parliament and State Legislatures.
 The opinion of the Commission in all such matters is binding on the President or, as the case may
be, the Governor to whom such opinion is tendered.
 Further, the cases of persons found guilty of corrupt practices at elections which come before
the Supreme Court and High Courts are also referred to the Commission for its opinion on the
question as to whether such person shall be disqualified and, if so, for what period.
 It vested with quasi-judicial power to settle disputes relating to splits/ mergers of recognized
political parties.
 It has the power to disqualify a candidate who has failed to lodge an account of his election
expenses within the time and in the manner prescribed by law.

What is the Current Scenario?

 In the case of Anoop Baranwal v. Union of India (2023), a 5-judge Constitution Bench has settled
the dispute revolving around appointment of members of the ECI.
 Bench of Justices KM Joseph, Ajay Rastogi, Aniruddha Bose, Hrishikesh Roy and CT Ravikumar gave
the following guidelines:
 The appointment of the CEC and the EC shall be made on the recommendations made by a three-
member Committee comprising of the Prime Minister, Leader of the Opposition of the Lok Sabha
and in case no Leader of Opposition is available, the Leader of the largest opposition party in the
Lok Sabha in terms of numerical strength and the CJI
 It is desirable that the grounds of removal of the EC shall be the same as that of the CEC that is on
the like grounds as a Judge of the SC subject to the “recommendation of the CEC” as provided
under the second proviso to Article 324(5) of the Constitution of India.
 The conditions of service of the EC shall not be varied to his disadvantage after appointment.
Role of Election Commission of India:
 Conducting elections:
Article 324 of the Constitution provides that the power of superintendence, direction and control of
elections to parliament, state legislatures, the office of president of India and the office of vice-president
of India shall be vested in the election commission.
 Ensuring a level playing field:
 The ECI ensures that all political parties and candidates have a level playing field during elections.
 It does this by enforcing the Model Code of Conduct, which lays down guidelines for political parties
and candidates to follow during elections.
 Role with Respect to Political Parties:
 To grant recognition to political parties and allot election symbols to them.
 To act as a court for settling disputes related to granting recognition to political parties and allotment
of election symbols to them.
 Voter education:
 The ECI conducts voter education programs to increase awareness among voters about their rights
and responsibilities.
 This includes educating them about the importance of voting and how to cast their vote.
 Monitoring election expenditure:
The ECI monitors the expenditure of political parties and candidates during elections to ensure that they
do not exceed the limits set by the law.
 Addressing electoral malpractices:
The ECI takes strict action against electoral malpractices such as booth capturing, bogus voting, and
intimidation of voters.
Importance of Election Commission of India:
 Ensuring free and fair elections:
o The primary responsibility of the ECI is to ensure that elections are free and fair.
o This is crucial for maintaining the credibility of the electoral process and ensuring that
the people's mandate is respected.
 Upholding democracy:
o The ECI plays a critical role in upholding democracy in India.
o By ensuring that elections are conducted in a free and fair manner, it helps to maintain
the democratic values of the country.
 Ensuring peaceful elections:
o The ECI's efforts to curb electoral malpractices and ensure a level playing field help to
maintain peace during elections.
o This is crucial for preventing violence and maintaining law and order.
 Promoting voter participation:
o The ECI's voter education programs encourage people to participate in the electoral
process.
o This helps to increase voter turnout and ensures that the voice of the people is heard.

Democracy sustained by free and fair election

Democracy thrives only when citizens can freely choose their representatives through free and fair
elections. In India, described in the Preamble as a “Sovereign, Socialist, Secular, Democratic Republic,”
elections are the foundation of representative governance. To ensure that elections are impartial, the
Constitution established an independent Election Commission of India (ECI) under Article 324. The ECI
plays a vital role in safeguarding the democratic process by ensuring that elections are conducted in a
transparent, fair, and equal manner.

Free and Fair Elections as the Essence of Democracy

1. Free elections → Citizens can vote without coercion, fear, or influence.
2. Fair elections → Equal opportunities to contest, transparent process, impartial supervision.
3. Without free and fair elections, democracy reduces to majoritarianism or electoral autocracy.
Supreme Court in Indira Nehru Gandhi v. Raj Narain (1975) held that free and fair elections are part of
the Basic Structure of the Constitution.

Constitutional Framework
 Article 324: Vests superintendence, direction, and control of elections in the ECI.
 Articles 325–329: Provide for one electoral roll, adult suffrage, Parliament’s law-making power
on elections, and judicial review through election petitions.
 101st CAA also extended ECI’s jurisdiction to delimitation and electoral reforms (periodically).