Before I describe the powers of the Federal Government it might be desirable to explain what is the essence of a Federal Form of Government.
There is no simpler way of explaining it than by contrasting it with the Unitary Form of Government.
Although the Federal Form of Government is distinct from the Unitary form, it is not easy to see distinction. On the other hand there is, outwardly at any rate, a great deal of similarity between the two. The Government of almost every country in these days is carried on by an inter-related group of Administrative Units operating in specific areas and discharging specific public functions. This is true of a country with a Federal Form of Government and also of a country with a Unitary form of Government. In a Federal Constitution there is a Central Government and there are inter-related to it several Local Governments. In the same way in a Unitary Constitution there is a Central Government and there are inter-related to it several Local Governments. On the surface, therefore, there appears to be no difference between the two.
There is, however, a real difference between them although it is not obvious. That difference lies in the nature of the inter-relationship between the Central and the Local Administrative Units. This difference may be summed up in this way. In the Unitary Form of Government, the powers of the local bodies are derived from an Act of the Central Government. That being so the powers of the Local Government can always be withdrawn by the Central Government. In the Federal form of Government the powers of the Central Government as well as of the Local Government are derived by the law of the Constitution which neither the Local Government nor the Central Government can alter by its own Act. Both derive their powers from the law of the Constitution and each is required by the Constitution to confine itself to the powers given to it. Not only does the Constitution fix the powers of each but the constitution establishes a judiciary to declare any Act whether of the Local or the Central Government as void if it transgresses the limits fixed for it by the Constitution. This is well stated by Clement in his volume on the Canadian Constitution in the following passage:
" Apart from detail, the term federal union in these modem times implies an agreement ............ to commit ............ people to the control of one common government in relation to such matters as are agreed upon as of common concern, leaving each local government still independent and autonomous in all other matters, as a necessary corollary the whole-arrangement constitutes a fundamental law to be recognised in and enforced through the agency of the Courts.
" The exact position of the line which is to divide matters of common concern to the whole federation from matters of local concern in each unit is not of the essence of federalism. Where it is to be drawn in any proposed scheme depends upon the view adopted by the federating communities as to what, in their actual circumstances, geographical, commercial, racial or otherwise, are really matters of common concern and as such proper to be assigned to a common government. But the maintenance of the line, as fixed by the federating agreement, is of the essence of modem federalism; at least, as exhibited in the three great Anglo Saxon federations today, the United States of America, the Commonwealth of Australia, and the Dominion of Canada. Hence the importance and gravity of the duty thrown upon the Courts as the only constitutional interpreter of the organic instrument which contains the fundamental law of the land."
Thus to draw a line for the purpose of dividing the powers of Government between the Central and Local Governments by the law of the Constitution and to maintain that line through the judiciary are the two essential features of the Federal Form of Government. It is these two features which distinguish it from the Unitary Form of Government. In short every federation involves two things :
(1) Division of Powers by metes and bounds between the Central Government and the Units which compose it by the law of the Constitution, which is beyond the power of either to change and to limit the action of each to the powers given and
(2) a Tribunal beyond the control of either to decide when the issue arises as to whether any particular act of the Centre or of the Unit, Legislative. Executive, Administrative or Financial is beyond the powers given to it by the Constitution.
Having explained what is meant by Federal Government, I will now proceed to give you some idea of the Powers which are assigned by the constitution to the Federal Government.
For the purposes of distributing the Legislative Powers the possible subjects of Legislation are listed into three categories. The first category includes subjects, the exclusive right to legislate upon which is given to the Federal Legislature. This list is called the Federal List. The second category includes subjects, the exclusive right to legislate upon which is given to the Provincial Legislature. The list is called the Provincial List. The third category includes subjects over which both the Federal as well as the Provincial Legislature have a right to legislate. This list is called the Concurrent list. The scope and contents of these lists are given in Schedule VII to the Government of India Act.
In accordance with the fundamental principles of Federation a law made by the Federal Legislature if it relates to a matter which is included in the Provincial List, would be ultra vires and a nullity.Similarly, if the Provincial Legislature were to make a law relating to a matter falling in the Federal List such a Provincial Law would be ultra vires and therefore a nullity. This is, however declared by statute and section 107 is now the law on the point. Cases of conflict of legislation touching the Federal List and the Provincial List are not likely to occur often. But cases of conflict between the two are sure to arise in the concurrent field of legislation. The law as to that you will find in section 107. Sub-section (7) lays down when a Federal Law shall prevail over a Provincial Law. Sub-section (2) lays down as to when a Provincial Law shall prevail over the Federal Law. Reading the sub-sections together the position in law is this. As a rule a Federal Law shall prevail over a Provincial Law if the two are in conflict. But in cases where the Provincial Law, having been reserved for the consideration of the Governor-General or for the signification of His Majesty's pleasure, has received the assent of the Governor-General or His Majesty, the Provincial Law shall prevail until the Federal Legislature enacts further legislation with respect to the same matter.
With regard to the question of this distribution of powers of legislation every Federation is faced with a problem. That problem arises because there can be no guarantee that enumeration of the subjects of legislation is exhaustive and includes every possible subject of legislation. However complete and exhaustive the listing may be there is always the possibility of some subject remaining unenumerated. Every Federation has to provide for such a contingency and lay down to whom the powers to legislate regarding these residuary subjects shall belong. Should they be given to the Central Government or should they be given to the Units ? Hitherto there has been only one way of dealing with them. In some Federations. these residuary powers are given to the Central Government, as in Canada. In some Federations they are given to the Units, as in Australia. The Indian Federation has adopted a new way of dealing with them. In the Indian Federation they are neither assigned to the Central Government nor to the Provinces. They are in a way vested in the Governor-General by virtue of section 104. When a Legislation is proposed on a subject which is not enumerated in any of the three lists it is the Governor-General, who is to decide whether the powers shall be exercised by the Federal Legislature or by the Provincial Legislature.
The first question is, what is the extent of the executive powers of the Federation ? Is it co-extensive with the legislative powers ? In some of the Federations this was not made clear by statute. It was left to judicial decision. Such is the case in Canada. The Indian Constitution does not leave this matter to courts to decide. It is defined expressly in the Act itself. The relevant section is section 8(7). It says that the executive authority of the Federation extends—
(a) to matters with respect to which the Federal Legislature has powers
to make laws;
(b) to raising in British India on behalf of His Majesty of naval, military and air forces and to the governance of His Majesty's forces borne on the Indian establishment ;
(c) to the exercise of such rights, authority and jurisdiction as are exercisable by His Majesty by treaty, grant, usage, sufference, or otherwise in and in relation to the tribal areas.
There is no difficulty in following the provisions of this sub-section. There might perhaps be some difficulty in understanding sub-clause (a). It says that the executive powers must be co-extensive with the legislative powers of the Federation. Now the legislative power of the Federation extends not only to the Federal List but also to the Concurrent List Docs the executive power of the Federation extend to subjects included in the Concurrent List ? Two points must be borne in mind before answering this question. First, the Concurrent List is also subject to the legislative authority of the Province. Second, according to section 49(2) that the executive authority of each Province extends to the matters with respect to which the Legislature of the Province has power to make laws. The answer to the question whether the executive authority of the Federation extends also to the Concurrent list is that the Executive Authority in respect of the Concurrent List belongs to the Federal Government as well as to the Provincial Government. This is clear from the terms of section 126(2). It belongs to Provincial Government except in so far as the Federal Legislature has covered the field. It belongs to the Federal Government except in so far as the Provincial Legislature has covered the field.
The Concurrent List is not the only list which is subject to Legislation by the Federal Legislature. The Federal Legislature has the right to legislate even on Provincial subjects under Section 102 in causes of emergency and under Section 106 to give effect to international agreements. Does the Executive Authority of the Federation extend to such matters also? The answer is that when a field is covered by Federal Legislation that field also becomes the field of Executive Authority of the Federation.
The Administrative Powers of the Federation follow upon the Executive Powers of the Federation just as the Executive Powers of the Federation follow upon the Legislative Powers of the Federation.
To this there is one exception. That exception relates to the administration of subjects included in the Concurrent List. The Concurrent List is a list to which the Legislative Authority of the Federation extends by virtue of Section 100. As has already been pointed out the executive authority of the Federation extends in so far as Federal Legislation has covered the field. But the administrative powers for subjects falling in the Concurrent List do not belong to the Federation. They belong to the Provinces.
The revenues of the Federal Government are derived from four different sources: (1) Revenue from Commercial Enterprise, (2) Revenue from Sovereign Functions; (3) Revenue from Tributes; and (4) Revenue from Taxes.
Under the first head fall all revenues from Posts and Telegraphs. Federal Railways, banking profits and other commercial operations. Under the second head come revenues from currency and coinage, from bona vacantia and territories administered directly by the Federal Government. Under the third head are included Contributions and Tributes from the Indian States.
The classification of Revenue from taxes follows upon the Powers of Taxation given to the Federal Government by the Constitution. The Powers of Taxation given to the Federal Government fall into three main categories. in the first category fall those powers of taxation which is wholly appropriableby the Federal Government. In the second category, fall those powers of taxation which areexercisable for raising revenue which is divisible between the Federal Government and the Provincial Governments.
The heads of revenue which fall under the first category of Taxing Powers cover those which are specifically mentioned is the Federal List—
produced in India except— (a) alcoholic liquors for human consumption ; (b) opium, Indian hemp and other narcotic drugs and narcotics, non-narcotic drugs;
(c) medical and toilet preparations containing alcoholic, or any substance included in sub-paragraph (b) of this entry.
3. Corporation tax.
4. Salt
9. The rates of stamp duty in respect of bills of exchange, cheques. promissory notes, bills of lading,letters of credit, policies of insurance proxies and receipts.
10. Terminal taxes on goods or passengers carried by railway or air; taxes on railway fares and freights.
1. Marriage and divorce.
Being in the Concurrent list, the Federal Legislature has power to legislate upon with respect to these. Can the Federal Legislature also while legislating upon them raise revenue from them ? The Act does not seem to furnish any answer to this question. It may however be suggested that the rules contained in section 104 regarding the exercise of Residuary Powers will also apply here.
(1) Income Tax other than Corporation Tax and (2) Jute Export duty. Those which are made divisableaccording to the Federal Law are : (1) Duty on Salt,
(2) Excise duty on Tobacco and other goods and (3) Duties of Export.
In respect of the financial powers of the Federation there is one feature which by reason of its peculiarity is deserving of attention. The Act in giving the Federal Government the right to tax, makes a distinction between power to levy the tax and the right to collect it and even where it gives the power to levy the tax it does not give it the right to collect it. This is so in the case of surcharge on Income tax and the Corporation tax. The Income tax is only leviable in the Provinces and not in the States although it is a tax for Federal purposes. The State subjects are liable to pay only a Federal surcharge on Income Tax because such a surcharge is leviable both within the Provinces as well as the Slates. But under section 138 (3) the Federal Government has no right to collect it within the States. The collection is left to the Ruler of the State. The Ruler, instead of collecting the surcharge from his subjects, may agree to pay the Federation a lump sum and the Federation is bound toaccept the same. Similar is the case with regard to the Corporation tax. The Federation can levy it on State subjects but cannot collect it directly by its own agency. Section 139 provides that the collection of the Corporation tax shall as of right be the function of the Ruler.
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(Kale Memorial Lecture)
Address delivered on 29th January 1939 at the Annual Function
of the Gokhale Institute of Politics and Economics held in the Gokhale Hall, Poona
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