Residuary Power
Chapter Ten
Syllabus topic 1, "Federalism".
Pages 44 to 47 of 304
In one line
Whatever the Constitution's three Lists forgot belongs to Parliament, and the practical effect is that a central law only has to avoid the State List.
In the wording a student can write in an exam: article 248 provides that Parliament has exclusive power to make any law with respect to any matter not enumerated in the Concurrent List or the State List, and that such power includes the power of making any law imposing a tax not mentioned in either of those Lists. Entry 97 of the Union List says the same from within the List. The residuary power therefore rests with the Union, which is the reverse of the position in the United States and Australia, where the residue remains with the units. In Union of India v. H.S. Dhillon the Supreme Court held that the consequence is that when a central Act is challenged the only enquiry is whether it legislates on a matter in the State List, because that is the only field from which Parliament is barred.
Why the residue exists at all
No list of subjects can be complete. The Constituent Assembly was allocating the world of government as it stood in 1949, and the world did not stop there. Television, computer software, space, biotechnology, digital payments and artificial intelligence are not in any of the three Lists, because nobody could have put them there.
Every federal constitution therefore has to answer the question: when something turns up that the lists do not mention, who may legislate about it? The answer says a great deal about the federation.
Coming-together federations give the residue to the units. The units existed first and gave the centre a defined list of powers; anything not given was never given away. The Tenth Amendment to the United States Constitution and section 107 of the Australian Constitution both work this way.
Holding-together federations give the residue to the centre. The whole existed first and devolved defined powers on the units; anything not devolved was never devolved. India and Canada both work this way, and Canada is the model the Indian drafters had in front of them.
What articles 246, 248 and Entry 97 do together
There are three provisions and students often wonder why the same rule is stated twice.
Article 246(1) gives Parliament exclusive power over the matters in List I.
Entry 97 of List I is itself an entry: "Any other matter not enumerated in List II or List III including any tax not mentioned in either of those Lists."
Article 248 states the same power directly: exclusive power in Parliament over any matter not enumerated in List II or List III, including the power to impose a tax not mentioned in them.
Residuary Power
The duplication is deliberate belt and braces. Entry 97 makes the residuary power part of the Union List, so that everything said about List I in article 246 applies to it. Article 248 makes it a free-standing grant, so that it does not depend on the construction of an entry. Either route reaches the same place.
Article 247 is a different provision that sits nearby and is often confused with these. It empowers Parliament to provide for the establishment of additional courts for the better administration of laws made by Parliament or of existing laws with respect to a matter in the Union List. It has nothing to do with residuary legislative power.
The case that fixed the method
Facts. Union of India v. H.S. Dhillon, AIR 1972 SC 1061, (1972) 2 SCR 33, decided 21 October 1971. Section 24 of the Finance Act 1969 amended the Wealth Tax Act 1957 so that agricultural land was included among the assets by reference to which net wealth is computed. The High Court held the amendment beyond Parliament's competence, reasoning that a tax which took account of agricultural land could be imposed only by a State under Entry 49 of List II, "taxes on lands and buildings".
Held. The amendment is valid. Article 248 with Entry 97 of List I means that any matter, including a tax, which has not been allotted exclusively to the State legislatures under List II or concurrently under List III falls within List I. The Court then drew the consequence that has become the working rule:
If this is the true scope of residuary powers of Parliament, then when dealing with a Central Act the only enquiry is whether it is legislation in respect of any matter in List II, for, this is the only field regarding which there is a prohibition against Parliament. If a Central Act does not enter or invade these prohibited fields there is no point in trying to decide as to under which entry or entries of List I or List III a Central Act would rightly fit.
Why it matters. It inverts the enquiry for a central law. For a State law the question is "which entry of List II or List III authorises this", and if no entry does, the law fails. For a central law the question is only "does this invade List II", and if it does not, the law stands, whether or not any particular entry of List I can be identified. That is a large practical advantage for Parliament and it is worth saying so in a federalism essay.
The limits on the residuary power
The power is wide but it is not unlimited, and an answer that says only "the residue goes to the Centre" is incomplete.
Residuary Power
It cannot be used to reach a subject that is in List II. That is the whole of the Dhillon test read the other way. Entry 97 is "any other matter not enumerated in List II or List III", so a matter that IS enumerated there is outside it by definition.
It cannot be used to enlarge an entry that already exists. If a subject falls within an entry of List II, Parliament cannot reach it by calling it residuary merely because the State entry is narrower than Parliament would like.
It is subject to the fundamental rights. Legislative competence and constitutional validity are different questions, and a law within the residuary power is still void if it violates Part III.
It is subject to the basic structure when exercised to amend. That is [The Basic Structure], and it does not arise from article 248 itself.
Why the residue matters more than it looks
Two consequences run through modern constitutional argument, and both are worth a paragraph in an essay.
New subjects belong to the Centre by default. Everything that did not exist in 1950 arrives in Parliament's hands unless it can be fitted into a State entry. Over seventy-five years that is a substantial and continuing transfer of power towards the Union, achieved without a single amendment.
The taxing residue is where the money is. Article 248 expressly includes the power to impose a tax not mentioned in the Lists, and taxes on new forms of wealth and new kinds of transaction have repeatedly been traced to it. Service tax, before the goods and services tax absorbed it, was levied under the residuary power for years before an entry was inserted for it. The revenue consequences of that are dealt with in [Fiscal Federalism].
A worked example
Parliament enacts a law imposing a levy on the transmission of data by satellite, and regulating who may operate such a transmission. A State challenges it, saying that no entry of the Union List mentions satellites or data, that broadcasting is not the same thing, and that in the absence of an entry the subject must belong to the States.
The State's argument inverts the correct test. For a central Act the question is not "which entry of List I authorises this". Dhillon holds that the only enquiry is whether the Act legislates on a matter in List II, because List II is the only field from which Parliament is barred.
So ask: is data transmission by satellite in List II? If no entry of the State List covers it, the enquiry ends and the Act is valid, whether or not any entry of List I or III can be identified, because article 248 with Entry 97 puts the residue with Parliament.
Residuary Power
On the levy. Article 248 expressly includes the power to impose a tax not mentioned in the Lists, so the absence of a taxing entry is not a defect. But note the corollary: if the levy could be brought within a State taxing entry, the residuary power is unavailable, because Entry 97 is "any other matter not enumerated in List II or List III".
The limit worth stating. The residuary power cannot be used to enlarge a narrow State entry or to reach a subject List II already covers. And a law within the residuary power is still void if it violates Part III: competence and validity are different questions.
Quick revision
- Article 248 and Entry 97 of List I put the residue with Parliament, including the power to tax what the Lists do not mention.
- India follows the Canadian model, not the American or Australian one, because it is a holding-together federation.
- Article 247 is about additional courts and is not a residuary power at all.
- Dhillon: for a central Act the only question is whether it invades List II; if not, no entry of List I or III need be identified.
- The power cannot reach a subject already in List II, cannot enlarge an existing entry, and is subject to Part III.
- Everything invented since 1950 falls to the Centre by default, which is a quiet and continuing centralisation.
Test yourself
1. Where does the residuary power lie in India, and how does that differ from the United States and Australia? Explain the difference by reference to how each federation was formed.
2. Why does the Constitution state the residuary power twice, in article 248 and in Entry 97?
3. State the test in Union of India v. H.S. Dhillon and explain why it inverts the enquiry for a central Act.
4. What is article 247, and why is it not a residuary power?
5. "Everything invented since 1950 belongs to the Centre by default." Discuss.
The rest of this subject
These notes are cut from the University's printed syllabus. Open the syllabus itself, or the past papers, for the same subject.