Distribution of legislative powers: the Seventh Schedule and its interpretation

Detail

1. The framework: Articles 245–248

• Federalism: power is shared between two levels of government, the Union and the states. Each level has its own area to make laws in, and the Constitution draws the lines. Part XI, Chapter I (Arts. 245–255) sets out how law-making power is divided.
• Roots in the 1935 Act: the Government of India Act 1935 already had three lists: Federal, Provincial and Concurrent. The Constitution kept this three-list design.
• Art. 245: territorial extent (the area where a law applies):
• Parliament can make laws for the whole of India or any part of it.
• A state legislature can make laws for its own state or any part of it.

• Art. 245(2): a law of Parliament is not invalid just because it works outside India. This is called extraterritorial operation.

• Art. 246: subject-matter (what topics each level can make laws on) [2]:

• 246(1): Parliament has exclusive power over List I (Union List) [2].
• 246(2): Parliament and the state legislatures both have power over List III (Concurrent List) [2].
• 246(3): a state legislature has exclusive power over List II (State List) for that state [2].

• 246(1) begins "notwithstanding anything in clauses (2) and (3)". This means the Union List wins where the lists overlap.

• Seventh Schedule: the part of the Constitution that holds the three lists. It decides which subjects belong only to the Union, which belong only to the states, and which are shared [2].

• Art. 246A: the GST exception, added by the 101st Amendment (2016):
• Parliament and the states can both tax the supply of goods and services.
• Only Parliament can tax supplies between states (inter-state supply).

• This sets aside the usual rule of separate tax entries in separate lists (Section 7).

• Art. 248 + Union List entry 97: residuary powers:

• A residuary power is the power to make laws on any subject that is in none of the three lists.
• In India this power belongs to Parliament. It includes residuary taxation, which means any tax not named in any list.

2. Size of the lists

List	Entries in 1950	Common count today (verify current)	What changed
Union (List I)	97	~98	New entries were added with letters (e.g. 2A, 92A, 92B); some were deleted (e.g. 92, 92C by the 101st Amendment, 2016)
State (List II)	66	~59	Entries were deleted: 4 moved out by the 42nd Amendment (1976), plus tax entries 52 and 55 removed by the 101st Amendment (2016)
Concurrent (List III)	47	~52	5 new entries were added by the 42nd Amendment (11A, 17A, 17B, 20A, 33A)

• Entries keep their old numbers after an amendment. New ones get letters (11A, 17A). So the last entry number does not equal the number of entries.

3. Comparison with other federations

Feature	India	USA	Canada	Australia
Who holds residuary power	Union (Art. 248)	States	Centre	States
Concurrent List	Yes (List III)	No formal list	Limited	Yes (India borrowed the idea from here)

• Exam trap: India copied residuary power with the centre from Canada and the Concurrent List from Australia.

4. Union List (List I): main subjects

• Defence (entry 1), foreign affairs (10), war and peace (15), railways (22), airways (29), posts (31), currency (36), foreign trade (41), banking (45), atomic energy (6).
• These are subjects where the whole country needs one uniform policy.
• Correcting NCERT's word "Energy": NCERT is imprecise here.
• Atomic energy is on the Union List (entry 6).

• Electricity is on the Concurrent List (entry 38).

• Residuary examples: cyber laws (Class 11 NCERT) and computer software (Class 10 NCERT). Neither existed in 1950, so both fall to Parliament under Art. 248.

5. State List (List II): main subjects

• Public order (entry 1), police (2), local government (5), public health (6), intoxicating liquor (8), agriculture (14), livestock (15), land (18), trade and commerce within the state (26), state public services (41).
• These are subjects of local importance, best handled close to the people.
• Built-in limits: some state entries are written as "subject to" a Union or Concurrent entry.
• Entry 26 (trade within the state) is subject to Concurrent entry 33. Entry 33 covers trade in the products of industries that the Union controls.
• Entry 24 (industries) is subject to Union entries 7 and 52. Entry 52 covers industries that Parliament declares are under Union control in the public interest.

6. Concurrent List (List III): main subjects

• Criminal law (entry 1), criminal procedure (2), marriage, divorce, adoption and succession (5), transfer of property other than agricultural land (6), trade unions (22), education (25), electricity (38), forests (17A).
• Both levels can make laws on these subjects.
• When the two laws clash (repugnancy, Art. 254):
• Normally the Union law prevails over the state law.
• A state law can still prevail in that state if it was reserved for the President's assent and received it.

• Parliament can later override even that state law.

• Example: the Right to Education (RTE) Act 2009 applies across India because education is concurrent.

7. Moving subjects to the Concurrent List: the 42nd Amendment (1976)

• Transfer of subjects to the Concurrent List means taking a subject out of the State List so that Parliament can also make laws on it. It reduces state autonomy (the states' freedom to decide for themselves).
• The 42nd Amendment (1976), passed during the Emergency, moved five subjects from the State List:

Subject	Old State List entry	New Concurrent List entry
Education	11 (deleted)	Merged into entry 25
Administration of justice (constitution and organisation of courts other than the Supreme Court and High Courts)	Part of 3	11A
Forests	19 (deleted)	17A
Protection of wild animals and birds	20 (deleted)	17B
Weights and measures (except setting standards)	29 (deleted)	33A

• It also added a new subject: population control and family planning (Concurrent entry 20A).
• The direction of change has always been from the states to the Union or Concurrent List, never the other way. This feeds the states' complaint that the system leans towards the centre (a question NCERT Class 11 raises).

8. How courts settle disputes between the lists

Entries often overlap. Courts use a set of doctrines (fixed methods of reading the lists) to decide which legislature had the power.

(a) Pith and substance

• Meaning: the court looks at the true nature and main purpose of a law (its "pith and substance").
• If that main purpose falls in a list the legislature is allowed to use, the law is valid.

• It stays valid even if it touches a subject in another list by the way.

• Prafulla Kumar Mukherjee v. Bank of Commerce, Khulna (Privy Council, 1947):

• The Bengal Money-lenders Act was in substance about money-lending, a provincial subject.

• It was valid even though it affected promissory notes, a federal subject under the 1935 Act.

• State of Bombay v. F.N. Balsara (1951):

• The Bombay Prohibition Act 1949 was in substance about intoxicating liquor, a State List subject.
• It was valid even though it affected the import of liquor, a Union subject.

(b) Incidental encroachment and ancillary powers

• Incidental encroachment: when a valid law touches another list only slightly and by the way, the law does not fail. This follows from pith and substance.
• Ancillary powers: the power over a subject includes power over matters closely connected to it. For example, the power to tax includes the power to stop people from avoiding that tax.

(c) Colourable legislation

• Meaning: a legislature cannot do indirectly what it cannot do directly. The court looks past the law's outward form ("colour") to what it actually does.

• The question is whether the legislature had the power to make the law. Its motive does not matter.

• K.C. Gajapati Narayan Deo v. State of Orissa (1953): the Court explained the doctrine. If the legislature has the power, the law is not colourable just because its motive is suspected.

• State of Bihar v. Kameshwar Singh (1952):
• The Bihar Land Reforms Act let the state take half of the arrears of rent without paying for them.
• The Court held this part colourable. It looked like a rule on compensation but in reality took property without paying for it. It was struck down.

(d) Territorial nexus

• Meaning: a state law can affect persons or things outside the state only if there is a real and close link (nexus) between those persons or things and the state.
• State of Bombay v. R.M.D. Chamarbaugwala (1957):
• A prize competition was run from a newspaper published in Bangalore.
• The paper was sold widely in Bombay, and Bombay readers took part.

• This was a real link, so Bombay could tax the competition.

• For Parliament: GVK Industries v. ITO (2011):

• Read with Art. 245(2), Parliament can make laws on matters outside India.
• But those matters must have some link to India: an effect on, or a connection with, India's interests.

(e) Harmonious construction

• Meaning: courts read entries together, so that every entry has some meaning and no entry is made useless.
• General words in an entry are read widely. Where two entries overlap, the court tries to fit both before it uses the Union-prevails rule of Art. 246.

9. Recent rulings in favour of the states (2024)

Mineral Area Development Authority v. Steel Authority of India (25 July 2024)

• Bench: a 9-judge Constitution Bench decided 8:1. Justice B.V. Nagarathna dissented [3].
• Holding: royalty is not a tax. Royalty is a payment under a contract (an agreement) in return for the right to take out minerals [3].

• So the royalty under the MMDR Act 1957 does not use up the states' taxing power.

• States can tax mineral rights: this power belongs to the state legislatures under State List entry 50 (taxes on mineral rights). Parliament's power over mines under Union List entry 54 does not take this taxing power away [3].

• Overruled: India Cement Ltd. v. State of Tamil Nadu (1989), which had said royalty is a tax, and the later cases that followed it [3].
• Follow-up order (14 August 2024): the Court ruled on whether the judgment applies to past years. States could recover past dues only for the period from 1 April 2005, and only in instalments [4].

State of U.P. v. Lalta Prasad Vaish and Sons (23 October 2024)

• Bench: a 9-judge bench decided 8:1, again with Justice Nagarathna dissenting [5][6].
• Holding: "intoxicating liquors" in State List entry 8 covers all alcohol that could be used in a harmful way that damages public health. This includes rectified spirit and industrial alcohol that is not fit to drink [6].
• Effect:
• States can regulate liquor at every stage, from raw materials to consumption [6].

• Parliament cannot use Union List entry 52 (industries it controls) to take over the industry of intoxicating liquor [6].

• Overruled: Synthetics and Chemicals Ltd. v. State of U.P. (1990, 7 judges), which had given industrial alcohol to the Union [5][6].

Prelims Hooks

• Art. 245(2): a law of Parliament is not invalid for operating outside India (extraterritorial operation). Courts require a link to India (GVK Industries, 2011).
• Art. 246(1) begins "notwithstanding" clauses (2) and (3), so the Union List prevails where the lists overlap.
• Residuary power: Art. 248 + Union List entry 97, held by Parliament and including taxation. India follows Canada; in the USA and Australia residuary power lies with the states.
• Concurrent List idea comes from Australia. Its entries rose from 47 to 52 after the 42nd Amendment (1976).
• 42nd Amendment moved five subjects to the Concurrent List: education, forests, weights and measures, protection of wild animals and birds, and administration of justice. It added population control and family planning. Trap: agriculture, police and public health were not moved.
• Energy trap: atomic energy is in List I (entry 6), but electricity is in List III (entry 38).
• Case–doctrine pairs: Prafulla Kumar Mukherjee (1947) and F.N. Balsara (1951) → pith and substance. Gajapati Narayan Deo (1953) and Kameshwar Singh (1952) → colourable legislation. R.M.D. Chamarbaugwala (1957) → territorial nexus.
• MADA v. SAIL (July 2024, 8:1): royalty is not a tax, so states can tax mineral rights (List II entry 50). It overruled India Cement (1989).
• Lalta Prasad Vaish (October 2024, 8:1): industrial alcohol falls under List II entry 8. It overruled Synthetics and Chemicals (1990).
• Art. 246A (101st Amendment, 2016) lets both Parliament and the states tax goods and services. It is the GST exception to the rule of separate tax lists.

Mains Points

• Centralising design, with a reason behind it:
• The Union List wins in an overlap, residuary power lies with the Union, and subjects have moved only one way (42nd Amendment, 1976).
• Together these show a "federation with a strong centre". The framers wanted unity after Partition.

• States argue it reduces their autonomy. A good answer weighs national uniformity (for example, RTE Act 2009) against local needs.

• The judiciary as a balancing force:

• The doctrines of pith and substance and harmonious construction keep both levels' laws alive instead of striking them down.
• Colourable legislation and territorial nexus stop either level from getting around the limits set by the lists.

• The 2024 rulings (MADA, Lalta Prasad Vaish) read State List entries broadly. They strengthen fiscal federalism (the states' power to raise their own money) and regulatory federalism.

• Concurrent List as a meeting ground for cooperative federalism:

• Shared subjects such as education, forests and electricity need the Union to consult the states before it makes a law.
• Without that, Union laws may override state laws under Art. 254 (repugnancy).

• Reform debates ask for prior consultation before Union laws on concurrent subjects, and a review of whether subjects such as education should go back to the states.

• Unclear entries create legal uncertainty:

• Key questions (mineral taxation, industrial alcohol) stayed unsettled for decades and needed 7- and 9-judge benches.
• Clearer drafting of entries, or a regular review of the Seventh Schedule, would cut down Centre–state litigation.