The Reach of a Legislature
Chapter Twelve
Syllabus topic 1, "Federalism".
Pages 52 to 55 of 304
In one line
Parliament's laws may reach outside India and cannot be struck down for it; a State's laws may reach outside the State only if there is a real connection between the State and what the law is about.
In the wording a student can write in an exam: article 245(1) empowers Parliament to make laws for the whole or any part of the territory of India and a State legislature to make laws for the whole or any part of the State. Article 245(2) provides that no law made by Parliament shall be deemed to be invalid on the ground that it would have extra-territorial operation. A State legislature has no corresponding protection, and a State law with operation outside the State is valid only if the doctrine of territorial nexus is satisfied, that is, if the connection between the State and the subject matter of the law is real and not illusory, and the liability sought to be imposed is pertinent to that connection. Article 255 provides that a requirement of a recommendation or previous sanction is a matter of procedure only, and an Act is not invalid for want of it if it received the necessary assent.
Two different limits
Legislative power is limited in two independent ways, and confusing them is the commonest error here.
Competence by subject matter is article 246 and the Lists: what the legislature may legislate about. That is the last four chapters.
Competence by territory is article 245: how far the law may reach. A legislature may be perfectly competent as to subject and still exceed its territorial reach, and the other way round.
Both must be satisfied. A State law on a State subject that operates wholly outside the State is bad, and a State law within the State on a Union subject is bad.
Parliament and extra-territorial operation
Article 245(2) is short and absolute: no law made by Parliament shall be deemed invalid on the ground that it would have extra-territorial operation.
What it permits. Parliament may legislate for persons, property and conduct outside India. Provisions of the income-tax legislation reaching income arising abroad, and provisions of the criminal law reaching offences committed by Indian citizens outside India, are the standard examples.
What it does not permit. The protection is against a challenge on the ground of extra-territoriality alone. It does not make a law valid that fails for any other reason: want of subject matter competence, or violation of a fundamental right, remain available.
The nexus question for Parliament. It has been argued that a law of Parliament must nevertheless have some connection with India, on the footing that Parliament legislates for India and not for the world. The safer statement for an answer is this: article 245(2) removes extra-territoriality as a ground of invalidity, and a law with no conceivable connection with India would in practice fail on the separate ground that it is not a law for the territory of India within article 245(1).
The Reach of a Legislature
The doctrine of territorial nexus
A State legislature has no equivalent of article 245(2), and it does not need one for the ordinary case: almost every State law operates inside the State. The doctrine deals with the case where a State law has some operation outside.
The rule. A State law is not invalid merely because it affects a person or thing outside the State, provided there is a sufficient territorial nexus between the State and the subject matter of the law. Two conditions have to be met:
One, the connection must be real and not illusory. Some genuine link between the State and the object of the legislation, not a contrived one manufactured to found jurisdiction.
Two, the liability sought to be imposed must be pertinent to that connection. The tax, duty or obligation must relate to what connects the subject matter to the State, and not be a general liability hung on a slender local peg.
Where it typically arises. Sales tax on a transaction with elements inside and outside the State; a tax on a company incorporated elsewhere but doing business in the State; betting and gambling legislation where the bet is placed in one State and accepted in another; and legislation on entertainment broadcast from outside.
How to use it in a problem. Identify the element of the transaction that is inside the State. Ask whether that element is a real part of the transaction or an incident of it. Then ask whether what the State is imposing is related to that element or to the transaction as a whole. A State that taxes the whole of an inter-State transaction because one small part of it happened locally will fail the second condition even if it passes the first.
Delegated legislation and the reach of a law
Two related points that examiners like.
A law may be made to operate prospectively or retrospectively. Neither Parliament nor a State legislature is confined to the future, subject to article 20(1) in the case of criminal liability, which forbids conviction for an act that was not an offence when committed. That is [Article 20: The Protections of an Accused].
A law may be brought into force in different parts of the territory at different times, and may leave the date of commencement to the executive, because fixing a date is not an essential legislative function. The limits on what may be left to the executive are the doctrine of excessive delegation, in [Delegated Legislation].
The Reach of a Legislature
Article 255: a saving for procedure
Several provisions of the Constitution require a recommendation or a previous sanction before a Bill is introduced or a law is passed: the President's recommendation under article 3, or under article 117 for a money Bill, or the Governor's under article 207.
Article 255 provides that no Act, and no provision in an Act, shall be invalid by reason only that some recommendation or previous sanction required by the Constitution was not given, if assent to that Act was given by the Governor, or the President, or by the President after having been reserved for his consideration.
What this means. These requirements are matters of procedure, not of competence. A defect in obtaining them is cured by the assent that follows. It is a sensible provision: a law should not be void years later because a formality was missed at the outset, when the authority whose recommendation was required has since assented to the whole thing.
What it does not cure. A want of legislative competence. If the legislature could not have made the law at all, no assent makes it valid. Article 255 saves procedure and nothing else, and the distinction between a procedural requirement and a substantive limitation is the whole of the article.
A worked example
State T imposes a tax on every lottery ticket sold anywhere in India by a lottery organised, promoted or conducted by State T's own lottery department, and also on tickets of other States' lotteries sold within State T. A ticket buyer in another State challenges the first limb.
Which limit is in question? Not subject matter but territory. Betting and gambling is a State entry, so competence by subject is not the difficulty. Article 245(1) confines a State legislature to making laws for the whole or any part of the State.
Apply the territorial nexus test, both limbs. First, is the connection between State T and the subject matter real and not illusory? For a ticket sold outside the State, in a lottery organised and conducted by State T, with the draw held in State T and the prize paid from State T, there is a genuine connection. Second, is the liability pertinent to that connection? The tax is on the lottery activity that State T itself conducts, so it is.
The second limb is where such laws usually fail. A State that taxes the whole of a transaction because one incidental element occurred locally satisfies the first limb and fails the second. Identify the element that is inside the State, then ask whether what is being imposed relates to that element or to the transaction as a whole.
The Reach of a Legislature
Contrast Parliament. Article 245(2) would remove the objection entirely: a law of Parliament is not invalid on the ground that it has extra-territorial operation. A State has no such protection and must rely on nexus.
Quick revision
- Article 245(1) is territorial reach; article 246 is subject matter. Both must be satisfied and they are independent.
- Article 245(2): a law of Parliament is not invalid for extra-territorial operation. That removes one ground of challenge and no others.
- A State law reaching outside the State needs a territorial nexus: a connection that is real and not illusory, and a liability pertinent to that connection.
- Article 255 makes a missing recommendation or previous sanction a curable procedural defect, provided the necessary assent was given.
- Article 255 never cures a want of competence.
Test yourself
1. Distinguish the limit in article 245 from the limit in article 246, and explain why both must be satisfied.
2. What does article 245(2) protect a law of Parliament against, and what does it not protect it against?
3. State the two conditions of the doctrine of territorial nexus, and explain which of the two most often defeats a State law.
4. What does article 255 cure, and what does it never cure?
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.