Administrative relations and the economic union

Detail

1. The basic rule: executive power follows legislative power

• Executive power means the power to carry out laws and run the government. In India it follows legislative power (the power to make laws):
• the Union runs subjects in the Union List;
• a state runs subjects in the State List;

• for the Concurrent List, states usually carry out the laws, but the Union can give them directions.

• Union supremacy: if the two clash, the Union's executive power wins. These rules sit in Part XI, Chapter II, "Administrative Relations" (Arts. 256–263) [2].

2. Union directions to states (Arts. 256, 257, 365)

• Union directions to states are orders from the Union government that a state government must follow. They are the Union's main tool of administrative control.
• Art. 256 (duty of states to obey Union laws):
• a state must use its executive power so that laws made by Parliament, and existing laws that apply in the state, are obeyed;

• the Union may give the state any directions it thinks necessary for this purpose [2].

• Art. 257(1): a state's executive power must not "impede or prejudice" (block or harm) the Union's executive power. The Union can give directions to make sure of this [3].

• Art. 257(2): the Union can direct a state to build and maintain means of communication of national or military importance.
• Art. 257(3): the Union can direct a state on how to protect railways inside the state [3].
• Cost: if following a direction under 257(2) or 257(3) costs the state extra, the Union pays it. If they do not agree on the amount, an arbitrator appointed by the Chief Justice of India decides (Art. 257(4)).
• What happens if a state disobeys (Art. 365):
• the state fails to follow a valid Union direction →
• the President may hold that the state can no longer be run according to the Constitution (a breakdown of constitutional machinery) →
• this opens the way to President's rule under Art. 356 (Union rule over the state, with the state assembly suspended or dissolved).

• Arts. 355–356 are covered in the emergency-provisions note.

• Art. 257A, a provision that no longer exists:

• the 42nd Amendment (1976) added it, with effect from 3 January 1977;
• it let the Union send "any armed force of the Union" to a state for "any grave situation of law and order";
• the 44th Amendment (1978) removed it, with effect from 20 June 1979 [4].

3. Passing functions both ways (Arts. 258, 258A)

Provision	Who gives the function	To whom	Condition
Art. 258(1)	President (Union)	State government or its officers	State's consent needed. The handover can be with or without conditions [5]
Art. 258(2)	Parliament, by law	State, its officers or authorities	No consent needed. A Union law can give powers and duties to the state directly [5]
Art. 258A (7th Amendment, 1956)	Governor (state)	Union government or its officers	Union's consent needed

• Art. 258(3): the Union pays the state any extra cost of running these functions. If they cannot agree on the amount, an arbitrator appointed by the Chief Justice of India fixes it [5].
• Why it matters: this two-way handover lets work be shared flexibly. It is one practical form of cooperative federalism (the Union and states working together instead of in separate boxes).

4. Full faith and credit clause (Art. 261)

• Full faith and credit clause: every part of India must fully recognise the public acts, records and court proceedings of the Union and of every state.
• Art. 261(3): a final civil judgment or order from a court anywhere in India can be enforced anywhere in India, according to law.
• Art. 261(2): Parliament makes the law on how such acts and records are proved.
• Effect: a birth record, land record or court decree from one state cannot be ignored in another. This makes India one legal space.

5. Instruments of central control

• All-India services (Art. 312):
• the IAS and IPS (and the IFoS) are recruited by the Union but serve in state cadres;
• Parliament can create a new all-India service if the Rajya Sabha first passes a resolution supported by two-thirds of members present and voting;
• only the Centre can take serious disciplinary action (punishments such as dismissal) against these officers, even while they serve a state;

• so officers who run state districts answer finally to the Union. Details are in the civil-services note.

• Art. 33: Parliament can restrict or remove the fundamental rights of members of the armed forces, police forces and similar forces, so they do their duty and stay disciplined.

• Art. 34: Parliament can pass a law to protect officials from legal action for things done to restore order in an area under martial law (temporary military rule).
• AFSPA (Armed Forces (Special Powers) Act):
• once an area is declared "disturbed", the armed forces get special powers there to search, arrest and use force;
• the Supreme Court upheld the Act in 1998;
• states such as Assam have issued notifications declaring areas "disturbed" under it (for example, Assam in September 2021) [9].

6. Current flashpoints (verify current)

• CBI and general consent:
• the CBI works under the Delhi Special Police Establishment (DSPE) Act, 1946;
• under s.6, the CBI needs the state government's consent to investigate inside a state;
• a general consent covers whole classes of cases. Several states, such as West Bengal, have withdrawn it, so the CBI now has to ask case by case;
• West Bengal sued the Union under Art. 131, the Supreme Court's original jurisdiction over Centre–state disputes (a dispute that goes straight to the Supreme Court, not through lower courts) [10];

• in State of West Bengal v. Union of India (July 2024), the Court held the suit maintainable (fit to be heard). The Court said the CBI is under the Union's control, so the dispute is a real Centre–state dispute.

• NIA: the National Investigation Agency can investigate listed offences, such as terrorism, in any state without the state's consent. This gives it concurrent jurisdiction (power over the same cases as the state police).

• BSF jurisdiction (2021):
• Under the BSF Act, 1968, the Union can notify areas where the BSF may search, seize and arrest [11];
• in October 2021, this belt was made 50 km deep in Punjab, West Bengal and Assam;

• Punjab and West Bengal objected that this cut into police and public order, which are State List subjects.

• West Bengal Chief Secretary row (2021): the Union recalled the state's Chief Secretary, an IAS officer, to central deputation. The state refused to release him.

• Proposed IAS (Cadre) Rules amendment (2022): the Union proposed that it could take state-cadre officers on central deputation (a posting to the Union government) without the state's agreement. Many states protested.
• Central forces sent without state consent: states see this as a clash between the Union's duty to protect them (Art. 355) and their own control over police.

7. The economic union: freedom of trade and commerce (Part XIII, Arts. 301–307)

• Freedom of trade and commerce: goods, services and people must be able to move freely across state borders. India should be one common market, not 28 separate markets.
• Art. 301: "Subject to the other provisions of this Part, trade, commerce and intercourse throughout the territory of India shall be free." Here intercourse means movement of people and goods [6].
• Art. 302: Parliament may limit this freedom in the public interest, between states or inside a state.
• Art. 303(1): neither Parliament nor a state may give preference to one state over another, or discriminate between states, through trade or commerce entries in the Seventh Schedule.
• Art. 303(2): Parliament may discriminate if it declares by law that this is needed because of scarcity of goods in any part of India.
• Art. 304 (state powers):
• 304(a): a state may tax goods brought in from other states, but only if similar goods made in that state pay the same tax. In other words, the tax must be non-discriminatory [7];
• 304(b): a state may impose reasonable restrictions in the public interest [7];

• condition for 304(b): the bill can be introduced in the state legislature only with the previous sanction (prior approval) of the President [7].

• Art. 305: existing laws and state monopolies, such as state-run transport, are saved. This links with Art. 19(6).

• Art. 306: omitted by the 7th Amendment (1956).
• Art. 307: Parliament may appoint an authority to carry out Arts. 301–304. No such authority has ever been set up.

8. Key cases on taxes and free trade

Case	Year	Principle
Atiabari Tea Co. v. State of Assam	1961	A tax that directly and immediately blocks the movement of goods is a restriction under Art. 301. To be valid, it must pass Art. 304(b)
Automobile Transport v. State of Rajasthan	1962	Regulatory and compensatory taxes do not breach Art. 301. A compensatory tax is one charged in return for a facility the state provides, such as roads
Jindal Stainless v. State of Haryana (nine judges)	2016	Non-discriminatory entry taxes are valid. A tax breaches Art. 301 only if it discriminates. The "compensatory tax" test was dropped

• Entry tax is a tax on goods entering a local area for use or sale. States levied it under Entry 52 of the State List, read with Art. 304 [8].
• In 2008, the Supreme Court sent the entry-tax question to a larger bench [8]. The 2016 nine-judge ruling finally settled it.
• GST (101st Amendment, 2016): GST is one tax on goods and services across India. It replaced most state entry taxes and checkpoints, which takes the "one market" idea further (see Section 7 of the parent note).

Prelims Hooks

• Art. 256 = states must comply with Parliament's laws. Art. 257 = state executive power must not impede the Union's, and the Union can give directions on railways and on communications of military importance.
• Art. 258 = Union → state, with the state's consent (President). Art. 258A = state → Union, with the Union's consent (Governor), added by the 7th Amendment, 1956.
• Art. 257A was added by the 42nd Amendment (1976) and omitted by the 44th Amendment (1978). Trap: it is not in today's Constitution.
• Art. 365 = a state ignoring Union directions can be treated as a breakdown of constitutional machinery. It is in Part XVIII's neighbourhood but sits in Part XIX (Miscellaneous), not in the emergency chapter.
• Art. 261 = full faith and credit clause. Civil decrees can be enforced anywhere in India.
• DSPE Act, 1946, s.6 = state consent for CBI investigations. State of West Bengal v. Union of India (2024) = the Art. 131 suit is maintainable.
• Art. 303(2): only Parliament, never a state, may discriminate between states, and only because of scarcity.
• Art. 304(b) bills need the previous sanction of the President. Art. 304(a) taxes must be non-discriminatory.
• Case pairs: Atiabari (1961) = the "direct and immediate" test. Automobile Transport (1962) = compensatory taxes are allowed. Jindal Stainless (2016, 9 judges) = non-discriminatory entry taxes are valid.

Mains Points

• Tilt towards the Centre:
• Arts. 256, 257 and 365, together with central control over IAS and IPS officers, give the Union strong control over state administration;
• this is why K.C. Wheare called India "quasi-federal" (a federation with a strong central bias).

• Balance: Art. 258 and Art. 258A allow cooperation in both directions, and the 44th Amendment removed Art. 257A.

• Agency federalism disputes:

• states withdrawing CBI consent, NIA's concurrent jurisdiction, the 50-km BSF belt and the 2022 cadre-rule proposal all ask the same question: who controls policing, which is a State List subject?
• the 2024 Art. 131 ruling shows that courts can act as a forum for federal disputes;

• a possible reform is to settle such disputes through the Inter-State Council (Art. 263), a Union–state body for talks, before they become court cases.

• Economic union and state fiscal autonomy (a state's freedom to raise its own taxes):

• Part XIII has to balance a single national market against states' need for revenue;
• Jindal Stainless (2016) widened states' taxing room, while GST pooled taxing power in the GST Council, where the Union and the states decide together;
• this is a trade-off between market unity and state autonomy, and a good example of cooperative and fiscal federalism.