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THE PHILOSOPHY OF TERRITORIAL NEXUS

Niti Singh, AO32170123115, LLB (H) 2023-2026, is the person responsible for submitting this work.

To the attention of:

Dr. Gunjan Sharma DOCTRINE

OF

TERRITORIAL CONNECTIONS

BEGINNING WITH...

To get a better grasp on this theory and the significance of it, it is essential that you have a common
understanding of the meanings of the terms doctrine, territorial, and nexus. In common parlance,
the word "doctrine" refers to a principle or body of principles pertaining to a particular branch of
knowledge, a belief system, or a tenet of the law. The term "territorial" refers to a specific geographic
location, and "nexus" refers to the connection between two or more distinct entities. As a
consequence of this, the straightforward interpretation of the doctoral thesis on territorial nexus is
presented as the primary focus of the investigation, which was concerned with the allocation of
legislative authority and the application of the law in relation to the territory. In spite of the fact that
the Indian constitution did not express India as a federation, it unequivocally establishes that India
has a hybrid form of government that combines elements of both federal and unitary systems. The
principle that underpins federation is known as "the dispersal of authority or powers," and by
definition, this refers to the way in which power is parceled out between the central government and
the various state governments. It is important to note that the division of authority or power
between the central government and the state governments It is important to note that the ultimate
tendency of federalism is the division of powers and the establishment of a dual polity, with the state
and the center at an edge. In addition to this, it gives each person the ability to exercise their own
sovereign authority in the jurisdictions that the constitution has designated for them. The executive,
legislative, and financial power that was shared between the central government and the states was
disrupted not in the slightest by any of the states, but rather by a constitutional compromise agreed
upon by all of the states.

TERRITORIAL CONNECTIONS

According to the Constitution of India, Article 245, which states:

1. The Congress possesses the authority to enact laws governing extraterritorial operations, as well
as those governing the entire country or a specific region of it.

2. The power to legislate for the entirety of the state rests with the state legislature.

As a result, we are able to say that the Union and the State each have legislative competence relative
to their respective territories.
It was declared, in accordance with Article 246, that:

1.The Union List (List I of the 7th Schedule) specifies the subjects for which Parliament possesses
express legislative authority.

2. The State has the authority to legislate on any of the topics that are included on the State List (List
II of the 7th Appendix).

3. Both the state and the trade unions have the authority to regulate the matters that are included
on the concurrent list (List Ill of the 7th Appendix).

Article 245(2) of the Indian Constitution stipulates the following:

No one will be able to challenge the legality of a law that was passed by Parliament regarding
activities that take place outside of the country.

As a consequence, the legality of the statute cannot be challenged. In this instance, the court is
obligated to enforce the laws that have been passed concerning activities that take place outside of
their territorial jurisdiction. It is not possible to overturn this Act.

Depending on the territory, legislative powers are distributed as follows:

The Constitution of India, in its Article 245(1), stipulates the following:

Laws can be passed by Parliament that apply to the entire territory of India or to a specific region
within it. Parliament also has extraterritorial jurisdiction, which it can use to legislate, and these laws
cannot be overturned on the basis that they are ineffective outside of India because that argument
cannot be made.

A.H. Wadia v. Commissioner of Income Tax is the name of the court case.
It was decided that the question of the extrinsic nature of a law cannot ever be brought up against
the supreme legislature for the purpose of calling into question the validity of the law. There is a
possibility that it is not in accordance with the rules of international law, and there is also a
possibility that difficulties may arise when putting it into practice; however, these are questions of
policy that fall under the purview of national courts or in water.

It is necessary to demonstrate a connection between an extraterritorial purpose and the state in

order for laws that were passed by the state for such a purpose to be considered legitimate. Within
the boundaries of the state's jurisdiction, legislative authority rests with the state legislature. If a
state can demonstrate that there is a connection between the topic at hand and the state, then they
can use one of the exceptions that allow them to legislate for activities that occur outside of their
territory. This exception is called "territorial connection."

The Wallace Brothers and Company, Limited v. the Commissioner of Income

In this instance, the company has been officially registered and incorporated, and it is also operating
in India via a limited partnership in order to conduct business there. During the current fiscal year,
the company has posted enormous profits. The tax authorities intended to assess a tax liability on
the defendant's business. The defendant brought a challenge against the decision made by the
authority in charge of income tax, but the Privy Council ruled that there was a theory of territorial
connection and upheld the validity of the tax. It is believed that a significant portion of this revenue
originated from British India, and that this revenue alone was sufficient to found a territorial
association.

The State Legislature in Relation to Territorial Nexus

The states are granted the authority to legislate their own internal affairs by our Constitution.
The question that needs to be asked at this point is whether or not the state legislature that enacts
the law has the authority to do so.

It is within the authority of state legislatures to enact laws that serve their particular interests. The
territorial connectivity principle is only applicable in the event that the following conditions are
satisfied. These conditions are as follows:

1. The nexus has to be in good standing.

2. The legal responsibility must be proportional to the degree of the territorial connection.

These conditions are sufficient to prove that the link is legal, and the court will not doubt the validity
of the argument once it is presented to them. In some cases involving the law of taxes, it has been
presumed that the territorial boundaries of a state will not prevent the sale of goods. A reasonable
basis for maintaining the state's taxing power will be the buying and selling of assets.

Operations Carried Out Outside of the Territory

Legislation can be enacted by Parliament both within its own territorial jurisdiction and for
extraterritorial purposes so long as they have a legal connection to India. Due to the fact that it
possesses the authority to do so, Parliament possesses the competence to enact the law (or laws)
that are relevant to this issue.
The constitutionality of these laws cannot be called into question. In the event that Congress passes
a law that does not establish any nexus with India, that law will be regarded as ultra vires and will be
regarded as a law designed for a country outside of the United States.

It is possible to reach the conclusion that if a law that was passed by Parliament has a real-world
application in India, then that law cannot be declared invalid or in violation of the constitution. If
such laws are passed by Parliament without establishing any nexus with India, then they will be
beyond the scope of the legislative body's authority.

In accordance with the provisions of our Constitution, the legislative powers necessary to enact laws
within Parliament's territorial jurisdiction, as well as the ability to take cognizance of extraterritorial
purposes and exercise such powers, are delegated to Parliament. Power at the state level or at the
collective level. According to the public trust doctrine, any laws that Congress passes that are related
to extraterritorial activities must be enacted for the purpose of protecting the welfare and security of
India. This doctrine also comes to the direct conclusion that no law may apply to extraterritorial
activities unless there is some connection to the activities in question. Or legal system with India.

The importance of establishing a territorial nexus in Indian Legislation

As was discussed earlier in this piece, Article 245 of the Constitution of India details the scope of the
legislative authority that is granted to both the Parliament and the State Legislatures in order for
them to enact laws within the territory of India. The National Assembly possesses the authority to
legislate in those domains over which it has jurisdiction. If not the whole of India, at least a
significant portion of it falls under the purview of Parliament. If there is sufficient nexus between the
law and India, then they can also be approved by Congress for use in extraterritorial operations. It is
not possible to challenge or argue against the validity of these laws. Nevertheless, it is imperative
that the provisions of the Indian Constitution be adhered to by any and all laws.

In order to invoke territorial association jurisdiction, one of the following cases needs to occur:

1. The presence or absence of extraterritorial activities within a state

2. The question of whether there is a legal connection between the topic at hand and the state. The
fact that the object in question must be located beyond the bounds of the state's territory while still
maintaining some kind of territorial connection with the state needs to be made abundantly clear.
THE CASE LAWS

R.M.D. CHAMARBAUGWALA versus the STATE OF BOMBAY

In this particular case, the defendant, who does not reside in Bombay, was the one who organized a
crossword competition to be held in a newspaper that was printed and published in Bangalore. This
piece was published in a number of different Bombay-based publications.

For the purpose of this competition, a deposit has been established so that submission forms and
entry fees can be collected. Because of this, a significant number of individuals have decided to
invest in tickets to watch this competition.

After that, the State Government took control of the respondent company so that it could take part
in a competition that was being held in the State. The decision of the Supreme Court was challenged
by the Respondent, and the question of whether or not a tax could be levied on a person residing
outside the territorial limits of the State was brought up. The United States Supreme Court decided
that there was a sufficient territorial connection, and that the state legislature had the authority to
tax the defendant on the income that his business earned due to the presence of other businesses in
the market.
The case of TATA Iron and Steel Company versus the Bihar State Tax Act

The Sales Tax Act was recently enacted by the government of the state of Bihar, and it mandates the
imposition of sales taxes on all transactions, regardless of whether they take place within or beyond
the state's geographical boundaries. It was also stated that the products had to be produced in the
United States. In this particular instance, it is presumed that there is a distinct connection between
the item being taxed and the law.

These are two of the most important aspects that make up the concept of territorial integration.

CHARUSILA DASI versus the STATE OF BIHAR

In this instance, the state of Bihar enacted a law to protect assets held within Hindu religious trusts.
This Act applies to any and all trusts that are situated within the boundaries of the state of Bihar.
Because of this, the defendant, the Medea Trust, turned over some of its properties that were
located in Bihar and Calcutta. The trust itself was located within the territorial boundaries of Bihar.
Concerning how broadly this law applies, there have been a number of questions raised.

It was decided that the law that was passed by the State of Bihar can be given effect to assets that
are located outside of the territorial limits of Bihar. However, it is important to keep in mind that the
trust must be located within the boundaries of the State and have sufficient nexus with the State.

FINAL REMARKS

It is possible to draw the conclusion that legislative power has been subdivided into two parts and
allocated to both the center and the states.

Although it is a very complicated system, the primary goal of creating a federal state is to ensure an
equitable balance of power between the constituent parts and the central government. This is
accomplished through the practice of federalism. Their powers are separated by the constitution in
such a way that allows them to retain their autonomy in relation to the executive and legislative
branches.

A dual policy between the federal government and the states is established by our constitution,
which has a federal structure. Legislation can be passed by Parliament for the entirety of India, for a
specific region within the country, and even for activities that take place outside of Indian territory.
However, extraterritorial activities cannot be regulated by the state legislature because they lack the
authority to do so. There is, however, a loophole in the rule that enables a state legislature to pass
legislation for extraterritorial purposes if there is a strong enough connection between those goals
and the state. This means that the object in question must be located outside of the country's
territorial boundaries and also have a connection to the territory of the country in question.

The concept of territorial association has a very broad application that can even extend beyond the
geographical boundaries of India. The concept of territorial association is what enables the influence
of law to be felt beyond the confines of a single nation's territory.