Cooperative Federalism in India: Constitutional Provisions, Case Laws, and Taxation - Prof, Study Guides, Projects, Research of Constitutional Law

Download Cooperative Federalism in India: Constitutional Provisions, Case Laws, and Taxation - Prof and more Study Guides, Projects, Research Constitutional Law in PDF only on Docsity! Cooperative Federalism in The Lines of Article 256 And 265 of the Constitution on India Abstract This article provides an overview of cooperative federalism in India, focusing on constitutional provisions, recent case laws, and taxation principles. It highlights the role of cooperative federalism in fostering inclusive development and equitable governance, with recent case laws illustrating the dynamic nature of federal-state interactions. Introduction The term federalism is derived from the Latin word "foedus," which meaning treaty or agreement. As a result, a federation is a new state strategy that combines the principles of centralization with the authority of decentralized entities. India is made up of several states with distinct cultures, therefore federalism adaptability is critical. In India, the concept of cooperative federalism strengthens both the center-state relationship and the cooperation between states and local administrations. Federalism is a form of governance in which powers are distributed between the center and its constituent portions, such as states or provinces. In India, cooperative federalism shows a concept of a stable partnership between the central government and other entities. It encourages all governing entities to step up and collaborate to address common social, political, economic, and civic issues. Constitutional Framework The authority of the State and the Union has been divided in Article 246 of the Constitution, it divides the Union and State's powers into three lists. They are: the Union List, the State List, and the Concurrent List. Union list: The Union List is a list of 100 issues over which the Union or Centre government has supreme authority. It consists of issues of national importance, such as defense, foreign affairs, finance, atomic energy, railways, and postal services. State list: The state list consists of 61 issues over which state legislatures have authority. It covers topics like as public order, prisons, public health, the production, manufacturing, transportation, buying, and sale of intoxicating liquors, agricultural education and research, fisheries, and state public services, among others. Concurrent list: The concurrent list consists of 47 issues over which both the Union and State governments have competence. It covers topics such as criminal law, criminal process, preventative detention, forests, wild animal and bird protection, trade unions, industrial and labour conflicts, and so on. The idea that tasks of national importance should be delegated to the Centre and those of local interest to the state is a key criterion used to decide which subjects should be assigned to which level of government. This test does not produce a consistent pattern of power and function distribution between the two levels of government in all federal nations because it is rather broad and serves as an ad hoc formula. This discrepancy stems from the failure to categorize what is of broad or national relevance from what is of local importance. Defense, foreign policy, and financial matters are all deemed to be of national importance and hence assigned to the Centre. What other disciplines should be included in the Centre, however, is determined by the needs of the country, people's attitudes, and the philosophy popular at the time the Constitution was drafted, as well as the function the Centre is projected to play in the future. Predominance of Union Law and Limitations of State Legislatures: Predominance of Union Law and Limitations of State Legislatures When three lists overlap on a specific issue, the Union Law takes priority. In the concurrent arena, Union Law takes priority over State Law in situations of disagreement or conflict on the same matter. The Union List comprises a number of problems that would normally come under the purview of the states, such as industry, elections and audits, interstate commerce, and so on. The Union is granted the authority to legislate on any subject not covered in any of the three categories. One example is taxes. In some situations, the Union Legislature's jurisdiction is expanded. Parliament may make legislation dealing with State List concerns in the following situations: When a two-thirds majority vote of the Rajya Sabha, or Council of States, determines that it is required in the national interest. When a state of emergency is declared. When the constitutional machinery of the state fails. To execute international accords and conventions, governments must agree and have their legislatures approve them. Certain types of legislation cannot be submitted in state legislatures without the President's by law. As a result, it essentially means that every stage of the process must meet the criterion. Furthermore, a taxation act must not violate Article 13 of the Indian Constitution, which states that it shall not impinge on basic rights guaranteed by the constitution. It should not violate the equal protection provision of Article 14, the reasonable limits clause of Article 19, or the freedom of trade and commerce provided by Article 301 of the Indian Constitution. In the case of Pratibha R.C.C. Spun, pipe and cement products V/s State of Karnataka, the imposition of a certain tax was rejected in light of Article 265 of the Indian Constitution. In this situation, a tax was levied in the form of a fee. The tax was considered unconstitutional since there was no parliamentary legislation to support it. To summarize, simply issuing an executive order is insufficient for levying and collecting a tax; parliamentary authorization is required. Furthermore, in addition to imposing the tax, the government must also authorize its collection by a statute or act. Financial Allocation Mechanisms Articles 268 to 281 of the Indian Constitution contain detailed regulations that instruct the center in the allocation of financial resources among the states. It establishes guidelines for the central government and states to coordinate tax levying and collecting through systematic procedures. For the time being, the provisions are listed here, but will be described in greater depth later. This includes: Taxes imposed by the Union but collected and retained by the states (Article 268). Taxes raised and collected by the Union but allocated to the states (Article 269). Taxes imposed and dispersed between the Union and the States (Article 270). Grant-in-aid from the center to the states (Article 273, Article 275 and Article 282). Distribution of profits from other taxes. The Finance Commission, as specified in Article 280, is critical in making recommendations on the allocation of finances between the central and the states. The 101st Amendment to the Constitution and the implementation of GST in the Indian economy have drastically altered the landscape of financial ties between the Centre and the States. As a result, it is critical to understand what GST is, how it works, and the various forms it takes. Position before GST Prior to the establishment of GST, the center and states levied various taxes, and their distribution was unclear and non-uniform. It includes taxes like as service tax, central excise, customs duty, and state VAT. However, with the GST, the notion of one nation, one tax was implemented. Position before GST is classified as CGST, SGST, or IGST. Central Goods and Services Tax (CGST) CGST: is a tax levied on intra-state deliveries of goods and services that is administered by the CGST Act. Along with this, SGST/UTGST will be charged on the same transaction, as defined by the SGST/UTGST Act. It signifies that in the event of intra- state deliveries of goods and services, CGST and SGST are combined and collected concurrently, with CGST going to the center and SGST going to the state. The proportions of SGST and CGST are equivalent. It should be emphasized, however, that any tax assessed by the center or state on intra-state deliveries of products and/or services should not exceed 14% each. State Goods and Services Tax (SGST) The SGST: is a tax imposed by the state on intra-state deliveries of goods and/or services by the state government. It is controlled by the SGST Act. As previously stated, it is levied and collected simultaneously with the CGST. The UGST Act governs what is known as UGST in Union territory. Integrated Goods and Services Tax (IGST) IGST or Integrated Goods and Services Tax: is a levy imposed on all interstate supply of goods and/or services. It is controlled by the IGST Act. IGST is levied on any supply of products and/or services, whether imported into or exported from India. Although exports will be zero-rated. According to Article 269A, IGST tax is divided by the central and the states. The most significant success of GST was the introduction of a single uniform tax system with dual tax characteristics in which money is split between the central and the states. The GST council, as indicated in Article 279 A, is responsible for making decisions about the GST rate, inter-supply transactions, and other GST-related issues. Conclusion India's cooperative federalism is a governance model that promotes collaboration between the central government and states, addressing socio-economic challenges. It is based on constitutional provisions and ensures a balanced distribution of authority. However, challenges arise when overlapping powers occur, requiring Union law precedence. The taxation framework and financial allocation mechanisms have revolutionized fiscal relationships, promoting greater fiscal autonomy and efficiency. This model aims for inclusive development and equitable governance, ensuring collective progress and prosperity for all citizens.