Introduction

In a federal structure such as the one seen in India, complex contemporary governmental
administration allows for the distribution of legislative legislation that may not neatly fit into any
one of the three Lists’ entries. Unexpected events and new issues might emerge that require
government intervention. It would then become necessary to determine which level of
government—the federal or state—has the authority to enact laws pertaining to those issues.

Although all subjects that were likely identifiable during the constitution’s framing and for which
a government could theoretically be asked to enact laws in the present day have been assigned to
one of the three lists under Art. 246 of the Indian Constitution, the lists are quite detailed.
However, it is not humanly feasible to anticipate every potential activity and categorise it into a
certain List. In order to address this challenge, the Indian Constitution stipulates in Article 248
that the Parliament (Centre) may enact laws related to the matter through the exercise of its
residuary powers. As long as the topic of the legislation is not covered by any of the entries in
any of the three Lists in the Seventh Schedule to the Constitution, Parliament’s authority cannot
be restricted or rejected on the grounds that the people who drafted the constitution knew it
would be addressed.

Historical Background of the Residuary Powers of Legislation

The Federal Legislature and the provincial legislatures were not granted the residuary power of
legislation under the Government of India Act, 1935. The Governor-General was free to delegate
these powers to any of the two Legislatures. One could only consider using the residual powers
when every category in the three Lists had been completely depleted.2. However, the Act’s Lists
were so comprehensive that they left very little to nothing in the residual space. It should be
emphasised that the authority to arrange for the acquisition of a commercial or industrial
undertaking was the only documented instance in which the residuary power of the law under the
Government of India Act, 1935, was applied.
The notion of Residuary Powers of the Legislation, which originated with the Government of
India Act of 1935, has been inadvertently included into our Constitution.The Indian federal
system has endowed the Centre with residuary powers over the legislature, which serves to
reinforce the Center’s position within the system

As the Chairman of the Union Powers Committee, Pt. Jawahar Lal Nehru, declared in the
Constituent Assembly:

“We believe that the Centre should continue to hold Residuary Powers. Due to the three lists we
used being so comprehensive, the residual subjects could only speak to things that, even though
they might someday be recognised, are currently unidentifiable and not currently included in the
Lists.

Though the Three Lists model has been revived under the current Constitution, with the
distinction that the central now maintains residual power despite the fact that the lists have been
significantly expanded and rendered exhaustive in character. Since there was very little overlap
in the lists of concerns when the Government of India Act, 1935 was adopted, our Constitution
benefited from the advances the Act brought about in the division of legislative power.

Residuary powers, in contrast to India, are vested in the competent States in the United States
and Australia, but in Canada they belong to the Centre. This is because the Canadian
Constitution’s framers believed that the American system of granting residuary powers to the
state led to the Federal Government’s weakness, so they reversed the process, leaving the residue
in the hands of the Dominion Parliament and granting only those powers to the Provincial
Legislatures that are necessary for local purposes.

Nature of The Residuary Power of Legislation In The Indian Constitution:

It is easy to see that the goal of the Government of India Act, 1935 and the Indian Constitution is
to make the Legislative Lists as comprehensive as feasible. The Government of India Act, 1935
contains 97 entries as opposed to 59 in List I, 66 entries as opposed to 54 in List II, and even List
III is larger in the current Constitution. These three lists were so exhaustive that they left little to
nothing for the residual field. Because of this, the Government of India Act, 1935, which is still
in effect under the current Constitution, should only be used as a last resort.
When there are two feasible constructions, the one that avoids using the residuary power and the
other that does, the first one should be chosen. However, this does not imply that the Court
would be justified in interpreting any of the Entries in an ambiguous manner or in making the
Residuary Entry completely meaningless in order to avoid resorting to the residual authority.
This article, or Art. 248(1), relates to how the Union and the States interact. According to article
246 (4), Parliament has unrestricted authority over the Union Territories. Even with the
tremendous care with which the different Entries in the three lists provided under our
Constitution’s seventh schedule have been crafted, certain legislative or taxation authority may
nonetheless not fall under any of these Entries. Under Art. 248(2), the Union Parliament will
have the authority to enact legislation pertaining to this type of taxes. The division of legislative
authority between the federal government and the states is discussed in Art. 248(2), which
stipulates that this authority extends to subjects not included in the Lists, such as taxes. The
Indian Constitution’s Article 248(2) read with Article 246(4) grants the Parliament the authority
to pass laws. Additionally, Entry 97 of the Union List (List I) provides an explanation of the
legislative residuary power.

Scope of The Residuary Power of Legislation In The Indian Constitution:

The Indian Constitution gives the legislature’s residuary powers a very broad definition.
Parliament has used its residuary powers on multiple occasions since the Constitution’s adoption.
In the context of Clause (1) of Article 246, which grants Parliament exclusive authority with
regard to matters in List I, the phrase “any matter not enumerated the Concurrent List of State
List” in Article 248 must indicate any matter other than those listed in any of the three Lists.
There is a clear attempt to distinguish between the words “any matter” in Article 248 and “any
other matter” in Entry 97 in List I, which is a distinction without difference. Clearly, the
residuary power granted to Parliament in Article 248 cannot include power that is exclusively
given to Parliament on matters in List I already conferred under Clause (1) of Article 246, and
this is evident. There is no denying that the intention was to assign such residuary power over
matters that could not have been thought of or contemplated at the time the three Lists were
framed. This is evidenced by the fact that the Central Legislature has been granted residuary
power under Article 248 and that this power is consequently translated in Entry 97 in List I. This
is evident from the fact that the Lists include up to 209 items that are carefully and elaborately
worded, using wording that is inclusive in certain cases and exclusive in others, making the
Constitution,

The residuary authority found in Article 248 read with Entry 97, List I, must be regarded as
power in respect of issues not listed in any of the three Lists in the arrangement of such
intricately worded matters in the context of Article 246(1). A issue is considered exclusively to
be within the jurisdiction of Parliament under Entry 97 of the Union List, meaning that if it is not
covered by any entry in any of the three Lists, it must be treated as unenumerated. Because Art.
248 declares that the Parliament alone has the authority to legislate on subjects not listed in Lists
III or II and to impose a tax not specified in either of those Lists, such residuary power cannot
normally be claimed with respect to a matter already addressed under an Article or an entry in
any one of the three Lists. To clear up any confusion, Entry 97 is added to List I, which states
that “Any other matter not enumerated in List II or List III including any tax not mentioned in
either of those Lists” is the scope of legislation covered there.

Because of this, Art. 246 establishes the legislative authorities over the subjects listed in the three
Lists. In the event of a disagreement between the Lists, List I takes precedence over Lists III and
II, and List III takes precedence over List II, according to the non-obstante provision in Clauses
(1) and (2). The principle underpinning the non obstante clause can be invoked, even though the
State Legislatures have exclusive jurisdiction over topics outlined in List II, despite the
predominant role granted to Parliament in this Article 3. In Re C.P. and Berar Sales of Motor
Sprit and Lubricants Taxation Act, this has been noted. Because List II is the sole area in which
Parliament is prohibited, we should always ask if a Central Act was legislation pertaining to any
issue in List II. There is no use in attempting to determine whether entry or entries of List I or
List III a Central Act would properly fit in if it does not enter or invade these forbidden domains.

Validation of Invalid State Laws :

Parliament will have legislative authority over any subject matter over which States lack it.
Sometimes, Parliament can save the day for the State by certifying a statute that has been
declared unlawful due to the legislative incompetence of the State.

The guiding idea here is that the Parliament cannot simply declare a State Act to be operative by
passing an Act. In essence, this is a transfer of legislative authority to the State Legislature.
According to the Supreme Court’s explanation, “Parliament cannot attempt to confer such
legislative competence on the State Legislatures by making a law where a topic is not included
within the relevant list dealing with the legislative competence of the State Legislatures.”

State Legislatures should be granted competence by the Constitution, not by Parliament.

Parliament cannot grant itself the authority to redraw Legislative Lists in order to provide the
State the ability to legislate on any subject falling under its purview; instead, it can reenact laws
that are already illegal. Referential legislation is a useful tool that Parliament can use to avoid
duplicating the entire State Act.

The Supreme Court ruled in Baijnath Kedia v. State of Bihar that a state legislature’s statutory
legislation was unconstitutional since only parliament was authorised to adopt such laws and the
state legislature lacked the authority to implement them. Following that, a Validation Act was
passed by Parliament. The Supreme Court affirmed the act’s validity. The court decided that what
a State Legislature could not pass might be validated retroactively by Parliament. The majority of
these Acts of Validation were passed by Parliament using its Residuary Power. Parliament has
approved a number of validating Acts to support State taxing policies that have been declared
unlawful by the courts. The Himachal Pradesh Assembly approved an Act, but the Supreme
Court declared it illegal in Shree Vinod Kumar v. State of Himachal Pradesh because the
Assembly was not duly constituted and hence lacked the authority to pass the relevant
legislation. The Legislative Assembly of Himachal Pradesh’s proceedings were then deemed
legitimate by Parliament through the passage of a validating Act. It was forbidden for the courts
to cast doubt on the legality of any Assembly act or decision due to a constitutional flaw. The
Supreme Court maintained that Parliament’s Residuary Powers allowed it to pass the Act that
validated the legislation.

Taxation

Parliament may enact laws on “Any other matter not enumerated in List III, including any tax
not mentioned in either of those lists,” according to Entry 97 of List I. This entry is made in
accordance with Art. 248(2) as a residuary entry. Regarding any subject not covered by the
concurrent or State List, Parliament alone has the authority to enact laws. This authority includes
the authority to enact any legislation imposing taxes that aren’t on any of those lists. It must be
regarded as matter not mentioned in any of the three lists if no entry in any of the lists addresses
it. Then, as a subject of legislation, it is solely the property of Parliament and is listed as Entry 97
of the Union List.

However, the legislative incompetence of the State legislature must be proven before Parliament
can assert its exclusive legislative competence by using the residuary power. Entry 97 explicitly
states that an issue may only be presented under it if it is not listed in List II or List III, or if it is
not stated in either list in the event of a tax. In a federal constitution such as ours, where the
legislative subjects are divided but the residuary power is vested in Parliament, the interpretation
of the residuary power cannot be so broad as to reduce the authority of the State legislatures.
That could have an impact on and put the federal concept itself in danger. Because the
Constitution is federal in design, it is necessary to reject any interpretation that would permit
Parliament to use its residual powers to enact laws that interfere with State legislation, so
eliminating or severely restricting State autonomy. The House of Lords noted in Attorney
General for Ontario v. Attorney General for the Dominion:

The Parliament of Canada’s exercise of legislative power with respect to all matters not listed in
Section 92 should be strictly limited to those that are undeniably important and of Canadian
interest. It should also refrain from interfering with provincial legislation regarding any of the
subject classes listed in Section 92. According to their Lordships, to interpret the general power
that Section 91 grants the Parliament of Canada in addition to its listed authorities in any other
way would not only be against the intention Of the Act, but would essentially eliminate the
Provinces’ autonomy.”

In the Federal Court’s ruling in Manikkasundara Bhatter v. R.S. Nayudu, it was noted:

Section 104 of the Indian Constitution Act was added specifically to allow for the enactment of
laws pertaining to topics not included in the three lists in the Seventh Schedule. Therefore, Indian
courts are not required to determine that a subject must be included in one of the Lists’ entries. If
there is a need for legislation, then Section 104 must be used. However, if there is a choice
between two possible interpretations of an entry or entries, one of which will confer legislative
power through an entry or entries in the Lists, and the other will result in a finding of no existing
power, the first interpretation should be preferred based on principles similar to those applied to
the Canadian Constitution.

The Supreme Court heard a challenge to the provisions of the Income Tax Act 1961 pertaining to
annuity deposits in Hari Krishna Bhargava v. Union of India. The argument was that Parliament
lacked the authority to include in the Income Tax Act what was essentially a government
takeover of a class of taxpayers. The Court upheld the legality of the contested provisions and
determined that Parliament was authorised to impose taxes on income sources other than
agriculture under Article 246 read in conjunction with List I Entry 82. Even though the annuity
deposit plan involved borrowing money from income tax payers, parliament nevertheless had the
authority to pass legislation in this area because to Entry 97 of List I. It stated that Parliament
could pass laws requiring the exercise of authority under two or more entries in List I in a single
statute. In a different opinion, Hidayatullah, J. Believed that the scheme may be created
legitimately under List I Entry 82 without using Entry 97 as support. He made it clear that in
order to use Entry 97 of List I, it was necessary to prove that the contested provisions did not
come within any of the three Lists. Subsequently, Hidayatullah, C.J. argued in Second Gift Tax
Officer v. D.H. Nazareth that a piece of legislation must exclusively belong to Parliament under
Entry 97 of List I if it is not covered by any entry in any of the three Lists. In that case, the
legality of the 1958 Gift Tax Act—which imposed taxes on gifts of real estate, including
buildings and land—was at issue. The Supreme Court ruled that Parliament had authority over
the Act. The decision was that Parliament, under Article 248; Entry 49 of List II, it was noted,
could not include purported to use its powers derived from Entry 97 of List I read gift tax as
levied by Parliament because it was acknowledged that no entry in List II or List III specified
such a tax. The Chief Justice cited Article 248 to clarify that Parliament alone possessed the
authority to enact laws pertaining to any subject not listed in List II or List III. For this reason,
and to allay any lingering uncertainties, Entry 97 was additionally added to List I.Therefore, it is
appropriate to grant the State List item a wide and generous meaning in cases when the
competing entries are entries in List II and List I, namely item 97.

As a result, the Constitution’s Article 246 (1) states that the Parliament alone has the authority to
enact legislation pertaining to any of the subjects included in List I of the seventh schedule.
According to article 246 (3), the State Government is the only body having the authority to enact
legislation regarding the subjects included in List II (State List). Both Parliament and State
Governments have the authority to enact laws for the subjects included in List 3 (Concurrent
List), and Parliament is responsible for making the Service Tax within the aforementioned
residuary powers.

CONCLUSION

Federalism results in the creation of a composite entity consisting of state governments and a
separate, independent union government. The Indian Constitution never establishes a strict
framework for relationships. The relationship’s flexible system of rules has always benefited the
powerful union governments that have come before them. In India, the foundation of
parliamentary democracy’s power sharing system is the idea of federalism. While discussing the
idea of federalism in practice, it is important to keep in mind that the idea of unity, as opposed to
diversity, had a significant impact on the federalism process from the beginning of the
Constitution’s drafting.

In addition to the desire to forge a “indestructible union,” there was a strong push to establish the
unity’s dominance over the State in areas that affected the interests of the country. One such idea
that the Indian Constitution’s framers introduced was the Residuary Power of the Legislation.
Their foresight in foreseeing future legislative needs has proven to be beneficial in maintaining
the federal character of our Constitution while establishing a stronger Centre.