Centre-State Relations

⇒ According to Article 249 if the Rajya Sabha declares that it is necessary in the national interest that Parliament should make laws with respect to a matter in the State List, then the Parliament becomes competent to make laws on that matter.

⇒ Such a resolution must be supported by two-thirds of the members present and voting.

⇒ The resolution remains in force for 1 year; it can be renewed any number of times but not exceeding one year at a time.

⇒ The laws cease to have effect on the expiration of six months after the resolution has ceased to be in force.

⇒ This provision does not restrict the power of a State Legislature to make laws on the same matter.

⇒ The Parliament acquires the power to legislate with respect to goods and services tax or matters in the State List, while a proclamation of national emergency or the President’s rule is in operation. The laws become inoperative expiration of six months after the emergency has ceased to operate.

⇒ According to the provisions of Article 253 the Parliament can make laws on any matter in the State List for implementing the international treaties, agreements or conventions. This provision enables the Central Government to fulfill its international obligations and commitments.

⇒ Article 256-263 in Part XI of the Constitution deal with the administrative relations between the Centre and the States. Besides, there are various other articles pertaining to the same matter. Article 312 of the Constitution authorizes the Parliament to create new All-India Services on the basis of a Rajya Sabha resolution to that effect. Under Article 263 the President can establish an Inter-State Council to investigate and discuss subject of common interest between the Centre and the States.

⇒ Article 268 to 293 in the Part XII of the Constitution deal with Centre-State financial relations. Besides these, there are other provisions dealing with the same subject.

⇒ The 80th Amendment Act of 2000 and the 101st Amendment Act of 2016 have introduced major changes in the scheme of the distribution of tax revenues between the Centre and the States.

⇒ The 101st Amendment provided for subsuming of various central indirect taxes and levies such as Central Excise Duties, Additional Excise Duties, Excise Duty levied under the Medicinal and Toilet Preparations (Excise Duties) Act, 1955, Service Tax, Additional Customs Duty, commonly known as Countervailing Duty, Special Additional Duty of Customs and Central Surcharges and Cesses so far as they related to the supply of goods and services.

⇒ Similarly, the Amendment provided for subsuming of State Value Added Tax/Sales Tax, Entertainment Tax (other than the Tax levied by the local bodies), Central Cess Tax (Levied by the Centre) and Collected by the states, Octroi and Entry Tax, Purchase Tax, Luxury Tax, Taxes on Lottery, Betting and Gambling and State Surcharges and Cesses in so far as they related to the supply of goods and services.

⇒ Further, the amendment deleted Article 268-A as well as Entry 92-C in the Union List, both were dealing with service tax.

⇒ Major Sources of the Centre: Posts and Telegraphs, Railways, Banking, Broadcasting, Coinage and Currency, Central Public Sector Enterprises, Escheat and Lapse and others.

⇒ Major Sources of the State: Irrigation, Forests, Fisheries, State Public Sector Enterprises, Escheat and Lapse and other.

⇒ To resolve the contentious issues between the Centre and the States mainly four commissions. 1. Administrative reforms commission 1966 (Chairman -Moraraji Desai, followed by K. Hanumanthayya). 2. Rajamannar Committee in 1969 (Chairman Dr. P.V. Rajamannar) 3. Sarkaria Commission in 1983 (Chairman -Justice R. S. Sarkaria were constituted. 4. Punchhi Commission in 2007 (Chairman – Justice Madan Mohan Punchhi)

⇒ Sarkaria Commission: In 1983, the Central government appointed a three-member Commission on Centre – state relations under the chairmanship of R.S. Sarkaria, a retired judge of the Supreme Court. The commission was asked to examine and review the working of existing arrangements between the Centre and states in all spheres and recommend appropriate changes and measures. It was initially given one year to complete its work, but its term was extended four times. It submitted it’s report in 1988. The Commission made 247 recommendations to improve Centre-state relations. The Central Government has implemented 180 (out of 247) recommendations of the Sarkaria Commission. The most important is the establishment of the Inter-State Council in 1990.

⇒ Punchhi Commission: The Second commission on Centre-State Relations was set-up by the Government of India in April 2007 under the Chairmanship of Madan Mohan Punchhi, former Chief Justice of India. Other four members of the five member commission were 1. Dhirendra Singh 2. Vinod Kumar 3. Prof. N.R. Madhav Mennon and 4. Dr. Amresh Bagchi. After the demise of Dr. Bagchi, Mr. Vijay Shankar was appointed as the new member of this commission. It was required to look into the issues of Centre-State relations keeping in view the sea-changes that have taken place in the polity and economy of India since the Sarkaria Commission had last looked at the issue of Centre-State relations over two decades ago. The Commission submitted its report to the government in April 2010. In finalising the 1,456 page report, in seven volumes, the Commission took extensive help from the Sarkaria Commission report, the National Commission to Review the Working of the Constitution (NCRWC) report and the Second Administrative Reforms Commission report. In all, the Commission made over 310 recommendations, touching upon several significant areas in the working of Centre-State relations.