Article 246 of the Constitution of India: A Keystone of Federal Legislative Distribution

Introduction

Article 246 of the Constitution of India stands as the architectural cornerstone of the nation's federal structure, meticulously delineating the legislative competence between the Union and the States. By distributing subject matters of law-making into three distinct lists within the Seventh Schedule, the provision seeks to create a functional, albeit intricate, demarcation of powers. This design aims to balance the need for national uniformity on critical issues with the imperative of regional autonomy for addressing local concerns. As the Supreme Court of India noted in THE STATE OF TELANGANA v. M/S TIRUMALA CONSTRUCTIONS (2023), Article 246 is a primary source of authority to legislate, declaring the power of Parliament and State Legislatures with respect to the matters enumerated in the three lists. The operationalization of this constitutional scheme, however, is not without its complexities, giving rise to jurisdictional disputes that have necessitated the evolution of profound judicial doctrines such as 'pith and substance' and 'repugnancy'. This article provides a comprehensive analysis of the constitutional framework of Article 246, examining its textual provisions, the judicial doctrines developed for its interpretation, and its dynamic interplay with other constitutional articles, all through the lens of landmark jurisprudence.

The Constitutional Framework of Article 246

Article 246 is the operative provision that gives effect to the Seventh Schedule. Its structure is hierarchical, establishing a clear order of precedence to resolve potential legislative overlaps and conflicts.

Textual Analysis and the Principle of Federal Supremacy

The text of Article 246, as articulated in cases like Uco Bank And Another v. Dipak Debbarma (2016), establishes a clear hierarchy of legislative power through its use of non-obstante clauses:

Clause (1) begins with "Notwithstanding anything in clauses (2) and (3)," granting Parliament exclusive power to legislate on matters in List I (the Union List). This clause establishes the primacy of the Union legislature in its designated field.
Clause (2) states, "Notwithstanding anything in clause (3)," empowering both Parliament and State Legislatures to make laws on matters in List III (the Concurrent List). This power is, however, explicitly "subject to clause (1)," meaning concurrent legislative power cannot override the Union's exclusive domain.
Clause (3) grants State Legislatures exclusive power over matters in List II (the State List), but this power is expressly "Subject to clauses (1) and (2)." This subordinates the State's exclusive sphere to the Union's exclusive and concurrent powers.

This deliberate phrasing enshrines the principle of federal supremacy. As the Supreme Court observed in Govt. of A.P. v. J.B. Educational Society (2005), cited in G.Jayakumar v. Union Of India (2008), in the event of an unavoidable and irreconcilable conflict, "the parliamentary legislation would prevail notwithstanding the exclusive power of the State Legislature to make a law with respect to a matter enumerated in the State List."

The Three Legislative Lists: Demarcating Spheres of Power

The Seventh Schedule, read with Article 246, divides legislative subjects into three categories, a structure that the Orissa High Court in M/S.SGS MINES AND INDUSTRES PVT LTD v. STATE OF ORISSA (2022) described as the core of the division of power between the Union and the States.

List I (Union List): Contains subjects of national importance like defence, foreign affairs, currency, and regulation of industries and mines declared by Parliament to be of public interest (Entry 52, Entry 54).
List II (State List): Includes subjects of local or regional importance such as public order, police, public health, agriculture, and markets and fairs (Entry 28).
List III (Concurrent List): Comprises subjects where both uniformity and local considerations are important, such as criminal law, marriage, and trade and commerce in essential commodities (Entry 33).

This tripartite division is intended to foster a cooperative federalism, though the hierarchical structure of Article 246 ensures national integrity is maintained.

Parliament's Plenary Power over Union Territories: Article 246(4)

A unique feature of this framework is Article 246(4), which grants Parliament the power to legislate on any matter for any part of India not included in a State, even if the matter is enumerated in the State List. This provision effectively makes Parliament the repository of all legislative powers for Union Territories. The Delhi High Court in New Delhi Municipal Committee v. The State Of A.P. (1975) extensively analyzed this clause, concluding that a tax levied in a Union Territory under a law made by Parliament (or a law extended by it) constitutes "Union taxation" for the purposes of Article 289(1), thereby exempting State properties from such a tax. The court noted that in interpreting Article 246(4), "the distinction between the States and the Union Territories could not be lost sight of."

Judicial Doctrines for Interpreting Legislative Competence

The judiciary has developed several interpretive tools to navigate the complexities arising from the distribution of powers under Article 246. These doctrines are essential for maintaining the constitutional balance.

The Doctrine of Pith and Substance

This is the most significant doctrine for resolving issues of legislative competence. It requires a court to ascertain the "true nature and character" or the "pith and substance" of a law to determine which list it falls under. If the substance of the legislation is within the competence of the legislature that enacted it, the law is not deemed invalid merely because it incidentally trenches upon a subject in another list.

Landmark cases illustrate its application:

In State Of Rajasthan v. Shri G. Chawla (1958), a state law controlling the use of sound amplifiers was challenged as encroaching on the Union's power over broadcasting (Entry 31, List I). The Supreme Court held that the law's pith and substance was public health and tranquility, a State subject, and the encroachment was merely incidental.
In Itc Ltd. v. Agricultural Produce Market Committee (2002), the Court held that state laws levying market fees on tobacco sales were valid. It reasoned that the "industry" of tobacco (Entry 52, List I) relates to manufacture and production, whereas the state acts dealt with the "sale" of tobacco in markets (Entry 28, List II), a distinct legislative field.
Similarly, in Hoechst Pharmaceuticals Ltd. v. State Of Bihar (1983), a state surcharge on dealers was upheld as a tax on the sale of goods (Entry 54, List II), even though it was challenged as interfering with the pricing of essential drugs regulated by the Centre under the Concurrent List.

The Doctrine of Repugnancy and the Concurrent List (Article 254)

While Article 246(2) provides for concurrent legislative power, Article 254 provides the mechanism for resolving conflicts that arise in this shared field. The general rule under Article 254(1) is that if a State law is repugnant to a Union law on a Concurrent List subject, the Union law shall prevail. The Supreme Court in Hoechst Pharmaceuticals Ltd. (1983) clarified a critical aspect of this doctrine: repugnancy under Article 254 arises exclusively with respect to matters in the Concurrent List (List III). There can be no repugnancy between a law made under List II and a law made under List III. This principle strictly delineates the scope of federal supremacy in cases of legislative conflict, confining it to the shared legislative space.

The Aspect Theory in Taxation

In the realm of taxation, the judiciary has often employed the "aspect theory." This doctrine recognizes that different aspects of a single transaction or activity can be taxed by different legislative bodies under their respective powers. In Imagic Creative (P) Ltd. v. Commissioner Of Commercial Taxes (2008), the Supreme Court noted that in a composite contract involving both goods and services, the service element could be taxed by the Union (Service Tax) and the goods element by the State (VAT/Sales Tax). The Court emphasized that "payments of service tax as also VAT are mutually exclusive" and should be applied based on their respective legislative parameters, demonstrating how Article 246 facilitates parallel, non-conflicting taxation regimes.

Interplay of Article 246 with Other Constitutional Provisions

The functioning of Article 246 is not isolated; it is deeply intertwined with other parts of the Constitution, which together form a cohesive whole.

Territorial Nexus and Article 245

Articles 245 and 246 are complementary. As explained in M/S.SGS MINES (2022) and Gvk Industries Limited v. Income Tax Officer (2011), Article 245 defines the territorial or geographical limits of legislative power ("for the whole or any part of the territory of India"), while Article 246 delineates the subject-matter competence. A valid law must satisfy both conditions: it must be within the territorial jurisdiction of the legislature and concern a subject matter over which that legislature has power.

Legislative Competence in Specific Fields

The judicial interpretation of specific legislative entries reveals the practical application of Article 246.

Education: A frequent area of conflict is between Entry 66 of List I (Union power for "co-ordination and determination of standards in institutions for higher education") and Entry 25 of List III (State power over "education"). In The Gujarat University v. Krishna Ranganath Mudholkar (1962), the Supreme Court held that a State could not impose an exclusive medium of instruction, as this would impinge upon the Union's power to coordinate standards. This principle was reaffirmed in Annamalai University v. Information & Tourism Deptt. (2009), where the Court held that the UGC Act, a central legislation under Entry 66, would prevail over a state's Open University Act.
Mines and Minerals: The interaction between Entry 54 of List I and Entry 23 of List II is illustrative. Entry 23 of List II gives States power over mines, but it is "subject to the provisions of List I." In State Of W.B v. Kesoram Industries Ltd. (2004), the Supreme Court struck down state-imposed cesses on coal, reasoning that once Parliament enacted the Mines and Minerals (Development and Regulation) Act, 1957, under Entry 54 of List I, the legislative field was occupied by the Union, precluding the States from imposing similar levies.
Taxation: The power to tax must be traced to a specific entry. In Godfrey Phillips India Ltd. v. State Of U.P (2005), the Court held that states could not levy a "luxury tax" on tobacco as a commodity under Entry 62 of List II ("taxes on luxuries"). It clarified that this entry pertains to activities of indulgence, not goods themselves, the taxation of which is covered by other specific entries like sales tax or excise duty.

The Modern Evolution: Article 246A and GST

The constitutional framework for taxation underwent a paradigm shift with the introduction of Article 246A for the Goods and Services Tax (GST). As analyzed by the Supreme Court in VKC Footsteps India Private Limited and cited by the Telangana High Court in Sri Sri Engineering Works v. Deputy Commissioner (2022), Article 246A is a self-contained code for GST legislation. It fundamentally alters the scheme of Article 246 for this specific purpose by:

Defining both the source of power and the field of legislation for GST, "obviating the need to travel to the Seventh Schedule."
Granting power to both Parliament and State Legislatures to legislate on GST.
Embodying a principle of "simultaneous levy," which is distinct from the principle of "concurrence" that operates under the Concurrent List.

This amendment showcases the Constitution's capacity to adapt its federal fiscal architecture to meet contemporary economic needs.

Conclusion

Article 246 of the Constitution of India is the bedrock of the country's legislative federalism. Its meticulously crafted structure, characterized by the three lists and the overriding effect of the non-obstante clauses, establishes a robust framework for both exclusive and shared sovereignty. While designed to minimize ambiguity, the inherent complexities of governance in a diverse federal polity have necessitated continuous judicial interpretation. The evolution of doctrines like 'pith and substance' and the clarification of principles like 'repugnancy' have been instrumental in maintaining a functional federal balance. The judiciary's role has been to act as a fulcrum, ensuring that neither the Union nor the States transgress their constitutional boundaries. The recent introduction of Article 246A demonstrates the framework's adaptability. Ultimately, Article 246, as animated by decades of jurisprudence, remains a testament to the Indian Constitution's enduring vision of a cooperative yet strong federal union.